Monday, May 25, 2009

Jim Leech, C D Howe, hypocrites extraordinaire, don’t speak for 75% of Canadians

Today we have the ultra hypocrites known as Jim Leech and C D Howe weighing in on a Globe Editorial (of all papers!) entitled “Pensions for the pensionless”.

Jim Leech and the C D Howe institute are two of the last who are morally qualified to speak on the matter of the 75% of Canadians who are without workplace pensions and what Jim Leech now admits will “create a broader economic drag, as a growing portion of the population becomes unable to contribute meaningfully to growth.”

Well, the 75% of Canadians without pensions had already figured out a prudent way to provide income during retirement, and that was through investments in businesses that apid out their excess earnings by way of an income trust. That was until Flaherty came along to destroy that option for retirement, and double taxed income trusts at the rate of 62%, and into oblivion.

Both Jim Leech and the C D Howe applauded Jim Flaherty’s income trust tax. Why? Because in the case of Jim Leech this policy provided the pension funds with a material advantage in the ownership of income trusts by pension plans versus RRSPs. Pension plans like Teachers’ were handed the opportunity to opportunistically and predatorily acquire these devalued trusts and own them privately and NOT PAY the 31.5% tax. That’s precisely why the PSP bought Thunder Energy Trust and OMERs bought Golf Town Income Trust and Teranet Income Trust, etc. etc.

Meanwhile the C D Howe merely represents the interests of the corporate managers who fund the C D Howe and who want to preserve the abuses that are inherent in the corporate model versus the non-abuses that are inherent in the income trust model.

The inherent abuses that are inherent in the corporate model that are not present in the income trust model are why the marketplace assigns a premium value to a business under a trust versus a corporation. End of story. This created a pressure to convert, which meant goodbye to big personal pay checks for the managers. Hence the managers went to Ottawa to sabotage this alternative for their owners. Well done C D Howe. Meanwhile Jim Leech of Teachers, under Goodale was screaming bloody murder when the pension plans were going to be discriminated against, but are the first one’s to applaud the execution when the average Canadian via their RRSP is the one to be discriminate against.

As such, both Jim Leech and C D Howe have disqualified themselves from commenting on this matter, as both have proved themselves to be the enemy of the 75% of Canadians without pensions. Meanwhile the market had already evolved in a way that addressed this fundamental need for retirement income on behalf of the 75% of Canadians without pensions. That EVOLUTIONARY response was the emergence of the income trust model that took cash flows from businesses and dispensed them to individuals on a monthly basis, and these people happily paid taxes at average rates of 38%, resulting in far more tax collection by Ottawa, which is why the Steve Chase story ran in the Globe on October 29, 2006 entitled: “Tax cash floods in, leaving experts at a loss” and due to the timing of this article, explains why “There's a mystery bedevilling the Finance Department: Canadians are sending far more personal income tax revenue to Ottawa than expected -- and nobody knows exactly why. “

The reason why no one could explain the surge in taxes, which happened to come from the ownership of income trusts, was because the fix was already in. The 75% of Canadians without pensions were about to get royally screwed. An event that was applauded by these two hypocrites extraordinaire: Jim Leech and C D Howe. Neither of whom speak for the 75% of Canadians without pensions. Neither of whom have any sense of fairness when it comes to public policy that was designed to screw the very people they are now feigning concern for, and who they summarily led to the gallows, a few short two and half years ago.

Pensions for the pensionless
Globe and Mail,
May. 25, 2009


Dr Mike said...

Typical isn`t it!!

Those who have the juice have the ear of the gov`t--push a button or two & the brass ring belongs to them.

To the rest of us goes the Meow Mix.

Dr Mike Popovich

PS---When will the people of Canada wise-up to the fact that these politicians could not care less about individual citizens when it comes to financial matters.

Power Corp & Manulife control what happens in this country as they always have & probably always will

The rest of us can go eat worms & die as long as pay , pay & pay some more.

Anonymous said...

Over 70% of Canadians do not belong to defined benefit pension funds. Neverheless when you read the press you have the impression that the governments sole focus is about addressing the problems of the defined benefit pension funds. There is a lot of concern expressed about retirement savings of pensionless people, i.e., the great majority of Canadians. Much is said about them but nothing is done to help them, On the contrary they are seen at best as a milk cow by the governments and as people who can be mistreated as we saw with the ITs. Why is this?

As usual the answer lies in politics. The pension funds are well organized and financed and carry a lot of weight with the governments and large corporations. They controlled billions and billions of dollars and are connected with powerful unions like Teachers" in Ontario and OMERS. Look at how the GM pensioneers are pampered at the expense of the taxpayers compared the the IT investors whose retirement savings have been decimated. Pension funds are even feared by politicians. The main reason given to me by John McCallum to continue the double taxation of dividends in RRSP/RRIF is that pension funds would ask for the same. Read: "I don't want to pick a fight with pension funds"! On the other side we have a mass of totally non-organised individuals who try (in most cases unsuccessfully) to save for retirement. They have no mass as they are atomistic and they carry no political weight. Individuals feel totally powerless and unable to mount serious pressure on the politicians. They cannot fight with their bare fists. While their problems are well known they are ignored by politicians. Brent has been trying very hard to organize the IT investors but so far we have had no real tangible results with the politicians. The Liberals paid some attention but I suspect that their interest had more to do with being in opposition than about the fate of IT investors. The vast majority of IT investors are individuals who count for nothing in the eyes of the government. The Income Fund Associations were no match for the big corporations like Manulife and Power Corp and the big pension funds that sided with Harper.


Robert Bertuzzi said...

What this country lacks is leaders with Character. If Jim Leech and the leaders of C.D. Howe apologize for what they did wouldn't that be a wonderful display of character?