It takes a special kind of economist like Harper to introduce a massive new tax that REDUCES overall tax revenue. And everybody in Ottawa and the press pretends like it hasn’t and isn't happening? With moves like this, Canada is sure to go to Hell in a hand basket:
Critic says taxing trusts will cost feds billions
By Dan Healing 05-08-2009
The Pipeline
CALGARY HERALD
The federal government is looking at a massive drop in its corporate tax revenue in 2010, figures Scott Saxberg, president and chief executive of Calgary-based Crescent Point Energy Trust, because of its decision in 2006 to change tax laws for energy trusts.
The company is in the process of converting to a corporation because it has reached the end of the federally regulated "safe harbour" growth limitations.
It's converting about 18 months ahead of Jan. 1, 2011, when trusts start being taxed similar to corporations. Trusts pay out most of their cash to unitholders, who pay taxes on the distributions the receive as income.
Saxberg said he's met with Finance Minister Jim Flaherty to warn of the impending shortfall and suggest solutions but to no avail.
"The government right now, and this is what we walked through with them, they're going to lose probably $5 billion worth of tax revenue in 2011 when all of the trusts convert over to corporations," he said.
"(The oil and gas companies) are either going to cut their dividends or their distributions. We kept it so we're one of the unique guys, but we're going to use our tax pools now and not pay taxes by using up our tax pools. . . Most of the oil and gas companies will use up their tax pools."
Tax pools, made up of undepreciated capital cost balances and unclaimed losses, are considered assets of the company because they can be used as credits to offset future taxable income. Many trusts have large accumulated pools.
"On top of that," says Saxberg, "there's the difference between what corporations pay, at max, probably a 15 per cent tax, whereas individuals will pay on the max side 40 per cent, so there's a huge difference in the revenue the government will get."
Crescent Point plans to maintain its payouts after conversion in July, although they will be called dividends instead of distributions.
And dividends get special tax treatment.
"Individuals only pay 20 per cent on their dividends, versus 40 per cent (maximum, on distributions), so there's a significant revenue difference. We hand out 23 cents a month, in distributions and normally you'd get 14 cents after tax. Now, as a corp, you'll get 20 cents after tax."
"So that six cents would have gone to the government but now it goes to the individual."
Saxberg has been a vocal opponent of the Conservatives' decision in 2006 to tax energy trusts, in spite of the government's decision since then to allow conversions to corporations without the usual costs.
It's worth remembering the changes affecting royalty trusts were introduced by Flaherty in October 2006 because he said the trust model was costing the country about $500 million annually in lost tax revenue.
If Saxberg is right, the cost in the short term could be considerably more.
Dan Healing, dhealing@theherald.canwest.com
Saturday, May 9, 2009
Calgary Herald: Critic says taxing trusts will cost feds billions
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15 comments:
Twelve zeroes in one billion is
a lot and we're talking about billions
upon billions upon billions.
Meanwhile, Harper and Flaherty
want to charge interest for someone
who files their income tax a day late & owes $55.
This pair inspired the slogan,
"Minds are terrible things to waste."
Carswell
Scott Saxberg;insightful to see him published in the Con heartland.
Another step in revealing the "Greatest Fraud ever perpetuated on the Canadian Citizen in History.
Enough of these steps and the Western conservative voters will finally twig on to who there MP really is,and who Harper really is.
Cocopah
maybe it is time again to send out e-mails to the politicians to remind them what kind of idiotic idea it was to implement this tax........
Jonatrust
And all you hear are the Torie M.P.s saying the Libs are going to raise taxes. Which is another out and out lie. One thing you can be sure of is if this Harper government stays in power much longer there,ll be no doubt our taxes will be raised substantially to pay for their fraudulent ways and sheer incompetency.
Hornby Island
Twelve zeroes in one billion is
a lot and we're talking about billions
upon billions upon billions.
True Carswell, but Zeros also look like Donuts - and I'm sure that's all Tubby can think of .... more donuts
Dollars to donuts, that's Lardo think
Sunstone
It is becoming increasingly obvious to me that Flaherty knows that the trust tax will gut the tax base in Canada, but if you read Harper's actual neo-liberal agenda for Canada, it is all about gutting the tax base, cutting social programs and the federal government and increasing foreign ownership in Canada by multi-national corporations. This is all brought forward with a neo-conservative secrecy and overseen by Tom Flanagan.
Flaherty can't be so friggin' stupid that he didn't really know that he would lose tax revenue, instead, the guy is the biggest lying thief to ever run Canada's finances and he is a social conservative with an agenda to remake Canada under the 6000 year old model.
GL
Are the Canadian people idiots or have they just been snowed under by a gov`t that does not care & which is excellent at spin.
I prefer to think it is the latter & not a combination of the two.
I go around daily talking with anyone who will listen but it still comes down to the fact that almost each & everyone of these people will believe the gov`t before they will believe me.
If people would just think about it for a minute , they would realize that the gov`t is self-serving & not there at the pleasure of the people.
This trust tax is probably the most egregious piece of legislation ever written as it is sucking thr life-blood out of the financial markets & out of the tax base at the same time.
It just boggles the mind that nothing has been done to date by the politicians to at least look into the tax.
Dr Mike
As an Albertan, what really pisses me off is that the Canadian nitwits who work in the oil industry and/or provincial and federal governments cannot, or do not want to, see that Harper and Flaherty have imposed double-taxation on Canadian ownership and given tax freedom to foreign ownership.
As bad as the cat fight between Trudeau and Lougheed was, the one thing that Pierre and Peter agreed on was Canadian ownership is good even for Albertans (who just happen to be Canadian, eh?)
Why it has taken the Calgary Herald two and a half years to figure this out? Maybe there's some kinda IQ reducer in the waters of the Bow and Elbow. The old reporters never drank that stuff and they were pretty smart, eh?
Louis Mix
My letter to Dan Healing
Hello Dan
Just wanted to say thank you for your article yesterday on the implications of taxing trusts, finally some people are starting to get it. What you need now are new headlines stating:
Flaherty's Tax Fairness Plan, Fraud of the Century.
or
Trusts Don't Cause Tax Leakage, Flaherty Does!
or
The Flaherty's Way - Double Tax and Double Cross
Anyway, you get the jest.
The problem boils down to this.Your average Canadian is a puckhead.I know because my brother are one.My mother getting up at 4 in the morning to get him to the arena so that a whole generation of otherwise thinking beings could become puckheads.
Now it's OK to be a puckhead if you have a benign society and government as Canada was in the past.However if you get a thieving lying crew such as harp and flat then pattern identification and discriminatory and reasoning powers are required.Otherwise you are going to wind up dead,sick and broke in reverse order.
Harper to introduce a massive new tax that REDUCES overall tax revenue
You might want to add reduces pesonal wealth-reduces revenues
Reduces personal income - reduces revenues
Reduces spending - reduces revenues
reduces interest in the public markets - reduces revenues
reduces investment in Canada - reduces revenues
Supports Corporate Canada - improves CONS chances of finding sweet jobs after political life is over.
Factsrbest
"This pair inspired the slogan, "Minds are terrible things to waste."
They also inspired the movie, "Dumb and Dumber"..
Fransman
"Politics is the art of looking for trouble, finding it whether it exists or not, diagnosing it incorrectly, and applying the wrong remedy". ~Ernest Benn
"We'd all like to vote for the best man, but he's never a candidate". ~Frank McKinney "Kin" Hubbard
"That Jim Flaherty , he really pisses me off".~Dr Mike
Mary Popovich
As a non-senior citizen Income Trust investor I will take what little I can get, in terms of decent, accurate publicity on this issue. I can say that, as a number of my energy trusts are now corporations. My statements and Investor mailings can illustrate this guy's points really well.
Nice to see someone else in the media besides Diane Francis who are trying to do what they can to educate Canadians.
I do see this article as very encouraging for the cause. Hopefully there is more where that came from.
Wow. Is the fog finally lifting from the valley of the Bow River and the light of truth beginning to shine?
The story yet to be reported about the whole Harper-Flaherty Income Trust fiasco is that the CON party has still not figured out that by attacking their own political base, they have kissed off forming a majority Government forever. And with that, all their ideological goals of remaking Canada into what they’ve been dreaming of since Trudeau left office.
Or at least until another generation of gullible voters believe the lies about how the CON’s are grass roots based and will represent the voters interests against those of the eastern establishment.
Energy trusts were created in 1986 as a means for the Alberta-Saskatchewn-BC resource based sector to gain back access to capital that was lost during the nefarious NEP. So where were all those ex Reform, now newly minted Tories in those days before and after the Halloween massacre? If one of those hypocritical pricks had stood up to whoring Harper and rebelled against this attack on the best interests of their own constituents, Harper, D’lessandro and Demarais would have backed down. Even after Flaherty carved out the REITS, not one of those western CON MP’s had the balls of either Danny William's or Bill Casey to actually do what they had been preaching since the days of Mulroney’s GST ram through.
The Halloween massacre was the turning point for the Harpass Conservatives. Within the next year, and out of power the soul searching will begin for what went wrong.
Will they finally get it? Probably not, they never do. Ideology trumps all.
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