Tuesday, May 12, 2009

Mr. Folgers wants Flaherty to "level the playing field" between tea and coffee?

Mr. Folgers and Mr. Coffee (read: Paul Desmarais Jr., Dominic D”Alessandro, Michael Sabia, Murray Edwards Gwyn Morgan, Rick George et al ) don’t like the fact that so many people prefer drinking tea as opposed to coffee.

For heir own nefarious. monopolistic and selfish reasons, they claim that people’s innate preference for tea over coffee has created an unlevel playing field and think that the government should do something about that. Specifically, Harper and Flaherty should use Canada’s tax code as the means to bring about this desired change in consumer behaviour by arbitrarily eliminating choice in the marketplace by taxing tea at 31.5%. Pension funds will be exempt from this onerous new tax, provided they don’t drink their tea in public. They will also be able to acquire existing inventories of tea at reduced prices following the tea tax announcement

To achieve this anti-competition end and to secure a monopoly end result for Mr. Folgers and Mr. Coffee the argument is manufactured by Mark Carney and widely touted in the press by former Finance Department official Jack Mintz that tea consumption versus coffee consumption causes tax leakage. It helps that Jack Mintz is closely aligned with the coffee industry as he sits on the Boards of Directors of Coffee companies and advises US private equity firms, keen on exploiting the opportunities that such capricious tax measure can result in for them. No proof is every given to support these spurious tax leakage claims, designed to eliminate tea and create a monopoly for coffee consumption.

This tax on tea is accepted by most everybody despite the fact that the tax leakage argument is a complete falsehood and a hoax and despite the fact that the American Revolution was started by something known as the Boston Tea Party and the American Colonists objections to a British tax on tea. This tax was more well motivated than Flaherty’s tax on income trusts, in that it intent was simply to raise more tax revenue, as opposed to force more coffee consumption.

The idea that a tax measure can be used to “level the playing field” between corporations is as absurd as it would be in leveling the playing field between tea and coffee. The difference between income trusts and corporations in terms of how they are valued in the capital marketplace is NOT a matter of their respective tax treatments, but something INTRINSIC to their respective structures. Like tea and coffee, the difference between income trusts and corporations and why a given business is more highly valued by the market as an income trust than as a corporation, is simply a matter of taste. Investors in today’s market value income trusts more highly for the simple fact that they like the discipline of monthly payout of excess earnings and they like the discipline of only permitting trusts to engage in acquisitions that are “accretive” to monthly distributions , and turn a $0.15 per month distribution into something more than $0.15, as occurs often with corporations, as occurred with Power buying Putnam Investments, and writing off a billion of that non-accretive acquisition , two short years later.

What business is it of government, be it Conservative or Liberal to impose arbitrary measures on the marketplace to “level the playing field “ between income trusts and corporations? This is simply represents government taking sides in what is otherwise a dynamic and all-knowing marketplace. Doing so, is simply the act of being duped by either the coffee growers or tea wholesalers to take out their competition, in order to lessen consumers’ choices of beverage.

We as consumers won’t stand for it, especially when the arguments used to get us to swallow this tax measure are all patent falsehoods, like tax leakage, and especially when it was abundantly obvious form the outset that these trust that were arbitrarily devalued by the government would be acquired by others through means that would cause REAL tax leakage.

I leave you with these thoughts:

"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

Concerning Harper and Flaherty’s belief that voters are gullible enough to accept their argument about tax leakage based on zero evidence and asking voters to IGNOE all the takeovers that this policy has caused along with REAL tax leakage, and how the global financial meltdown brought into sharp focus all that is wrong with their income trust policy:

“Many a slip between the cup and the lip “

1 comment:

Dr Mike said...

Maybe it is high time the Official Opposition got off it`s collective butt & opposed this tax ruling.

Or maybe that hand in the wallet works both ways, both Conservative & Liberal.

Just one good man or woman in the HoC is all that it takes---someone with the cojones to stand up to corporate pressure & take one for the little guy.

We are waiting.

Dr Mike