Tuesday, June 30, 2009

Letter from Ignatieff on Income Trusts

Date: Mon, 29 Jun 2009 12:17:30 -0400
From: Office of Michael Ignatieff

Dear Mr. Campbell:

On behalf of Michael Ignatieff, we would like to acknowledge receipt of your email
regarding income trusts.

Like you the Liberal Opposition was outraged when the Conservative government broke
its campaign promise to never tax income trusts. This was a reversal that cost
thousands of Canadians, many of them seniors, billions of dollars in accumulated
wealth they were counting on as retirement income.

Since then, we have continued to call on the government for answers, giving the Prime
Minister and his Minister of Finance, Jim Flaherty, ample opportunity to explain
their actions. Liberals have tried to expose the truth about the income trust
betrayal through questions in the House of Commons and Senate, through Access to
Information Requests, the Finance Committee and a request to the Auditor General. To
date, the government has failed to deliver a satisfactory response to any of the
important questions
Canadians are asking, including proof of the so-called “tax leakage” they claimed
their decision was meant to address.

In the House and Senate, the Liberal Opposition will continue to challenge the
government and secure the information necessary, not only to seek explanations for
the government’s actions, but to help a new Liberal government craft a policy
response that best serves all Canadians in these challenging economic times.

Most recently the Liberal Finance Critic tabled a Question on the Order Paper that
asks the government to revise their calculations due to the numerous trust takeovers
since 31 October, 2006. We are eager to see the government’s response.

Thank you for taking the time to write to the Leader of the Opposition. For more
information on Michael and the Liberal Party, please visit http://www.liberal.ca.


The Office of Michael Ignatieff, M.P.
Leader of the Opposition
Leader of the Liberal Party of Canada

Monday, June 29, 2009

Elder Abuse....at the hands of Harper

Brent – I don’t know if you have seen the commercial on TV lately about Elder Abuse. It’s where a lady is giving a young man some money, and then he reaches in and takes all of it. The liberals should make an ad on Elder Abuse, and show Flaherty or Harper reaching into the walnut and taking out $38 Billion Dollars from seniors across the country. It makes me mad every time I see that ad and think how Flaherty and Harper have abused Elders just so they can get political contributions from the large insurance corporations.

In my own case, I used to put RRSP money into London Life, or one of such like rip offs. Then I discovered Income trusts. When the financial planner calls from London Life to see me every February, I say “why should I put money in with you, when it will only return 7% if I can invest in and income trust and get 15%? He hasn’t got a nickel from me the last 2 years. I just don’t know what I am going to do after 2010. Superior Propane has already converted to a Corp, and are still paying 15%. Extendacare exe.un I think is treated differently because it has a stake in US nursing homes, and it still pays around 15%. I detest these bums that have made so much uncertainty and Ignatieff has had Harper by the short and curlies twice in the last few months, and he still does not force Harper to repeal his income trust policy. What a joke.

Mike G.


I find that $3 million ad campaign to be as offensive and infuriating as you do, since it is completely disingenuous.....as if to suggest that the Harper government cares about seniors! Plus the ad is completely done in reverse, as the abuses are taking place in total daylight with the observer secreted away inside their home peering out from the Venetian blinds.

Come to think of it, this is more accurate than I realize it, as the theft of trust investors took place in complete daylight and hidden from the broader public by the press (hidden behind the Venetian blinds). Just couldn’t get Canada’s “brave” journalist to report on this massive rip off of Canadian seniors with any sense of honesty, morality or sense of professional duty. I think Iran is looking for more reporters, just like them.

Meanwhile we have the self-interested workers at the Globe and Mail striking over.....of all things......reductions to their pensions!


Thursday, June 25, 2009

True Colours: Manley takes helm of Canadian Council of Chief Executives

By Paul Vieira, Financial Post
June 25, 2009

OTTAWA — Former deputy prime minister John Manley will take over as the chief lobbyist for Canada's blue-chip chief executives, starting in January of next year.

Manley was named Thursday as the incoming CEO of the Canadian Council of Chief Executives, succeeding long-time head Thomas d'Aquino who is leaving after nearly two decades on the job.

Manley will officially join CCCE on Oct. 19 as president-designate in order to ensure a smooth transition, according to a statement from the organization.

"(Manley's) outstanding record of leadership in the public and private sectors, his passion for public policy, his stature as statesman at home and abroad and his well-deserved reputation for integrity make him a perfect fit as our Council's next leader," said Gordon Nixon, Royal Bank of Canada's CEO and the CEO council's chairman of the board. "The council's board of Directors is delighted that he has agreed to take on this extraordinary challenge."

For his part, d'Aquino said he "warmly" welcomed Manley's hiring, adding: "I am confident that under his leadership, and with the continued support of our members and of our highly capable and loyal staff, the council's future will be marked by excellence and innovation."

Manley held a number of senior cabinet posts in the Liberal government led by former prime minister Jean Chretien, including deputy prime minister, finance minister, foreign affairs minister and industry minister.

He has served on the corporate boards at Nortel Networks Corp., Canadian Imperial Bank of Commerce, Canadian Pacific Railway Ltd. and CAE Inc. He is currently senior counsel at the law firm McCarthy Tetrault.
© Copyright (c) Canwest News Service

Tuesday, June 23, 2009

Ottawa was an active contributor to this outcome: Investors may pay stiff price for Manulife's pride

An obvious and wholly intended purpose of Flaherty's income trust policy was to make Canadians saving for retirement become more captive to the wares of Canada's large LifeCos. Captive like sheep, to he herded and fleeced.

As such, Flaherty's idiot trust policy diverted investment AWAY from investment in Canada's real economy and INTO investments in synthetic products whose sole purpose is to generate fees for the life insurance industry. Look what happens when the imperative to drive earnings causes these life companies to take on unhedged risks, in the process.

A totally predictable outcome.....and completely lost on Canada's inept and incompetent Finance Minister and the Neanderthals working in the Department of Finance, including that Boy Wonder from Wall Street, Mark Carney. I wonder if AIG was ever a client of Mark's? Lehmann Brothers? Bear Stearns?

Investors may pay stiff price for Manulife's pride

Jun 23, 2009
James Daw
Toronto Star

The Book of Proverbs warns that "pride goes before destruction, a haughty spirit before a fall," but who knew what to expect from Manulife Financial?

Who recognized the trouble such a big, proud company could get its investors into by refusing to hedge or otherwise insure the capital and income guarantees it was providing to legions of stock and bond market investors in Canada, the United States and Japan.

The tentative conclusion reached by some leading class-action lawyers and investigators at the Ontario Securities Commission is that not enough of Manulife's stockholders knew ahead of time.

After coasting above the rest of the financial sector for much of last year, Manulife's stock price was slashed in half in the final quarter. It had to draw down a $3 billion loan.

Analysts started asking about its hedging practices and whether it needed to raise more capital.

Then came billion-dollar losses in its latest two financial quarters.

While the index of financial service stocks is now roughly back where it was a year ago, Manulife's stock is still down about 40 per cent.

Now the company has revealed the Ontario Securities Commission is questioning whether it provided investors with adequate disclosure but has yet to decide whether to take enforcement action.

Siskind, Cromarty, Ivey & Dowler LLP of London, Ont., has announced it is investigating a potential class-action lawsuit on behalf of investors who bought shares between Jan. 26, 2004 and March 26, 2009, when Manulife released its year-end results.

Manulife is not saying much at this point, except that it believes that its disclosure satisfied applicable requirements. Spokesman David Paterson declined yesterday to point to where and how the company warned of the potential risk for investors.

Clearly, various experts were well aware that Manulife was taking on considerable risk as its sales of so-called guaranteed living benefits or variable annuities soared over the past few years.

While consulting to Manulife, Moshe Milevsky, of York University's Schulich School of Business, began urging financial advisers, starting in 2007, to ask how companies were hedging those guarantees.

"I am simply arguing that the living benefits arms race is leading to promises and guarantees that might become difficult to keep," Milevsky wrote for Researchmag .com.

Brent Fullard, a lobbyist against changes in taxation of income trusts, raised such questions [in early 2007] as: "Whose credit risk are your investors exposed to? Yours or somebody else's? Where is this disclosed in your advertising? How do you provide your Income Plus investors with ongoing reporting of this shifting risk aspect of your product over time?"

But one of the earliest to warn insurers they should be properly hedging the risk of a stock market crash, or a 10-year period of low or negative returns, was Mary Hardy, a Waterloo professor of actuarial science.

The author of the 2003 instructional text for actuaries, Investment Guarantees, says her research pointed to the need for hedging but Manulife was openly opposed to the idea and argued publicly about why she and a fellow researcher were wrong.

"There is nothing you can throw at a hedging plan that makes it more risky than not hedging," Hardy insists.

Manulife relied instead on having enough of its own capital – or more properly, its investors' capital – to back its promises.

Hardy says that approach is not without cost, and waiting to put hedges in place while stock markets are falling, is even more expensive.

Siskind lawyer Dimitri Lascaris says it's not enough that experts knew the risk Manulife faced: "Disclosure of public corporations is not intended to be something only elite investors can understand."


Monday, June 22, 2009

Manulife faces possible class action lawsuit, concerning matters I first raised over two years ago

Today we learn that Manulife is facing the possibility of a billion dollar class action lawsuit from its shareholders, according to the Financial Post.

In the recent past, Manulife has gone to great lengths to position itself as a paragon of all things great, corporately speaking. It is anything but. Meanwhile the much vaunted corporate model has taken a credibility beating of its own.

The real world stress test of the last nine months have proven Manulife to be anything but a paragon of corporate virtue, and make it a perfect case study for Roger Martin’s theory that the global financial meltdown was brought about through improper compensation schemes for corporate managers that reward them for taking too many risks and taking the wrong risks. He is calling for the abolishment of stock options. Personally I wouldn’t go that far, however I am calling for the abolishment of the favorable tax treatment of employee stock options gains. Arbitrarily taxing these gains at half the rate of employment income is something is grossly unfair to all taxpayers and is rewarding the very behaviour that brought about the global financial meltdown and the multitude of taxpayer bailouts caused by it (like ABCP).

The global financial meltdown exposed the weaknesses of Manulife’s business model, that saw the company’s stock lose 75% of its value and require major infusions of capital to bolster its capital adequacy. Now we have the OSC launching an investigation of Manulife stating that the company failed to provide adequate disclosure on these matters that caused Manulife’s fall from grace, namely the issuance by Manulife of products like Income Plus and other variable rate annuities that it failed to hedge, and according to the OSC, that Manulife failed to disclose these inherent risks in its public disclosure documents.

It is good that the OSC is looking at this and the the head of OSFI recently made cautionary comments to the industry about this product line, however that’s not what’s needed here. The regulators can only regulate in the context of the legislation that they regulate. The life insurance industry has infected their main line business with the risks taken these types of new activities.....that Warren Buffett calls “crazy”. What would he say about those insurers like Manulife that didn’t even bother to hedge?

This is an issue that should be pursued by the lawmakers in Ottawa and new rules should be written and enforced to avoid these new systemic risks from new lines of business entering the main line business of life insurers, which is life insurance and not writing naked put options on the stock market, which is what maby of these products are the equivalent of, prompting Professor Kin Lo of the Sauder School of Business to observe:

"Insurance is about protecting people from risk and what we have seen is the insurance industry going out and seeking risk."

I was raising these very issues over two years ago, when the CEO of Manulife was before Parliament on February 1, 2007 giving testimony and calling for the abolishment of income trusts, and which incidentally would serve to bolster the sales of variable rate annuities by life insurers like Manulife. Unlike the MPs on the Finance Committee, my focus was on what these statements meant for Manulife rather than income trusts, and the risks that these products would bring to Manulife. On that date, I wrote an email entitled Questions for Mr Manulife, that read:

“What is the capacity of the Canadian banking system to provide you with swap arrangements that enable Manulife to offload the risk associated with this [type of variable rate annuity] product? Is this a profitable line of business for the banks? Whose credit risk are your investors exposed to? Yours or somebody else’s? Where is this disclosed in your advertising? How do you provide your Income Plus investors with on-going reporting of this shifting risk aspect of your product over time?”

These matters are now the subject of the OSC investigation that was announced on Friday and which we learn today may become the subject of a class action lawsuit

Meanwhile on the question of capital adequacy, the CEO of Manulife gave testimony on February 1 at the Public Hearings , where he was making a big deal about the great virtues of the corporate model versus the income trust model and the need to retain capital and have access to capital. On that day, I responded by asking the question at the time of “Are you saying that your capital adequacy ratios are insufficient and need to be raised to better protect your policyholders” and blogged the following question on May 4, 2007, and facetiously asked “ Are you saying that Manulife needs to increase its Tier 1 and Tier 2 capital adequacy?

I was more accurate in this suspicion than I had expected, as the answer to that pertinent question became self evident over time, and Manulife’s capital proved to be inadequate for these risks that were being assumed by Manulife, and which were not being adequately disclosed to shareholders, according the OSC. Meanwhile these are questions I was asking over two years ago. Where were the regulators then? Where was Ottawa then?

The better question however, is where is Ottawa now?

Saturday, June 20, 2009

Ottawa's culture of secrecy: Hey, 4 out of 308 ain't bad?

In today's Toronto Star we learn about a culture of secrecy in Otttawa about spending by MPs that shatters any doubt about the self serving nature of our paid elected representatives.

How would you ever expect a politician holding and practising such values to care a wit about revealing the truth behind 18 pages of blacked out documents that caused Canadians to lose $35 billion, when these very same people are going to absurd lengths to hide their own spending of taxpayers’ money. This is wholly unacceptable, and yet standard operating procedure in self-serving Ottawa. Two word description: Public disgrace

Our MPs' spending secrets

Marlene Jennings, the MP for Notre-Dame-de-Grâce—Lachine, was one of only four parliamentarians who agreed to release her expense records.

How MP expenses are the most closely guarded secret on Parliament Hill.

Canada's 308 members of Parliament claim almost $128 million a year in personal and office expenses – spending that's risen 42% since 2000. But when the Star asked where the money was going, almost everyone refused to talk
Jun 20, 2009 04:30 AM

Allan Woods
Toronto Star
June 20, 2009

OTTAWA – Eleven dollars and 45 cents for computer mouse pads, telephone equipment worth $13, a $15 rug and a $10,203 bill to move an MP's Parliament Hill office 37 steps, from one side of a stairwell to the other.

That is about all that's known of the almost $128 million in expenses claimed by federal politicians in the last fiscal year.

The rest of it – the mundane, the understandable and the exorbitant – may never be revealed thanks to a culture of secrecy on Parliament Hill that appears to have bled across partisan lines.

Twenty cabinet ministers and backbenchers resigned or will retire in Britain after a newspaper was handed a computer disc containing expense claims on everything from a moat-cleaning service to the rental of a dirty movie. A heavily censored version of all British MPs' expenses for the past three years was released on a parliamentary website this week and Scotland Yard launched a criminal investigation into some claims yesterday.

The House of Representatives in Washington now plans to post members' expenses online each quarter, and similar pre-emptive plans are developing in New Zealand.

But nothing of that sort is likely to bring more transparency to Ottawa. In Canada, you can see how much of your money your MP has spent – an annual tally comes out each fall – but you have no right to learn how they spent it.

Of the 37 MPs contacted in the past several weeks, just four agreed to disclose the detailed information on specific expenses requested by the Toronto Star. A vast number simply ignored the appeal.

Then scripted responses began streaming in from politicians of all parties in the House of Commons.

"I would remind you that for expenses to be approved, receipts need to be submitted to the House of Commons," said Zachary Healy, a Conservative party spokesman. "Receipts have been provided for all expenses, and they have been disclosed according to the rules currently in place," said Karl Bélanger, the senior press secretary to NDP Leader Jack Layton.

"If an expense does not meet the guidelines ... it is refused," said an aide to Liberal MP Glen Pearson.

Even the Bloc Québécois, which said weeks ago that it had no fear of opening its expense claims for a look-see by the auditor general, dismissed requests for assistance and transparency.

"Alors bonne chance," said Karyne Duplessis Piché, media relations officer for the Bloc caucus.

A secretive and powerful committee of eight MPs – four each from the government and the opposition – keeps watch over their colleagues' bills.

The Board of Internal Economy meets every few weeks behind closed doors to decide how a portion of taxpayers' money is spent running the House of Commons and compensating elected officials.

On March 9, they agreed to cover the legal expenses for six lawsuits brought against MPs for defamation, libel and employment disputes. They approved an out-of-court settlement to clear up another case involving an unnamed politician. The only public record of the payout is two lines in an obscure summary of the meeting.

The board won't say who's being sued, what prompted the lawsuit or how much the legal defences are costing taxpayers.

"At some point here there has to be some capacity to treat members in some confidence," said board spokesman Mauril Bélanger, the Liberal MP for Ottawa-Vanier. "These are such matters."

It's much the same for expenses, though there is a list of rules to separate the legitimate claims from the frivolous. There are also audits and all-party oversight of the money.

Bélanger even appeared to take offence at suggestions the expense system was something less than fully transparent.

"Are you suggesting there are scandals in the House of Commons?" the veteran MP asked. "I'm suggesting there aren't any ... I would argue, sir, that the level of scrutiny that is currently applied ensures that things that may have happened elsewhere are not happening here."

Don Boudria, a Liberal MP from 1984 to 2006 who also sat on the board, said federal politicians need discretion to manage staff salaries, office rentals and other purchases that make representing a constituency "like a miniature business."

But the checks and balances on MPs' expenses make Canada "a model that could be emulated in other countries," he added.

For now, Canadians have to trust that this is true. If someone objected to a decision made by the board, or even the secrecy surrounding how those decisions are made, there's not much they can do about it. The board has the final say on all of these matters – the judge, jury and court of appeal.

"They always say that the board meets in secret. Well, the boards of directors of most corporations meet privately also," said John Reynolds, a former Conservative MP who sat on the board for six years before he left politics ahead of the 2006 federal election.

"You can't run corporations that have public board meetings and the public attending your board meeting because you're talking about staff, you're talking about people."

Here's how the MPs' spending breaks down:

All expenses for the country's 308 MPs totalled $127,850,218 for the year ended March 31, 2008. That represents a jump of almost 42 per cent since the 2000-01 fiscal year, when 301 MPs spent $90,174,779.

The claims cover a politician's riding office, where there is an allotted amount that MPs can bill for expenses, staff, travel, advertising and building rental.

A second grouping of expenses covers goods and services provided by the Commons for an MP's Parliament Hill office, including telephone, printing, office supplies and a $5,000 fund for furniture and equipment improvement.

The different budget allotments are strictly administered, meaning MPs cannot use money set aside for travel between Ottawa and their constituency to buy fancy suits, Boudria said.

"You can't do that even if you didn't travel all year ... You'd send it in and it would be sent back."

The Star sought a detailed list of the $707,135 in expenses for services provided by the House of Commons labelled in annual disclosure statements as "Other."

That category provides MPs the widest latitude in spending and provides the greatest variance on spending.

In the 2007-08 fiscal year, the amounts billed ranged from $2 for Bloc Leader Gilles Duceppe, to $2,418 for Brampton Liberal MP Ruby Dhalla, to $17,910 for Helena Guergis, the Tory from Simcoe-Grey, to $314,542 for Winnipeg Conservative Steven Fletcher, who is paraplegic.

A few days after a reporter first placed telephone calls to a number of politicians, Liberal MPs alerted their whip, the person who makes sure all party members are operating in unison. The whip, Cape Breton MP Rodger Cuzner, promptly called the Star seeking more details about the request.

Cuzner said the rules surrounding expenses are one of the first things newly elected members are taught upon arrival in Ottawa.

To prove there are checks in place, he admitted that several of his own past expense claims have been denied or deemed improper.

Bélanger also said he had an advertising expense rejected because he had not included his constituency contact information in the publication. And as recently as March 26, the board rejected the claims of an MP who tried to expense child-care bills, according to a summary of the meeting.

Cuzner insisted that Liberals have nothing to hide, but added: "My reservation would be for individual MPs making their claims public when not everyone's is public."

He promised to "give it some thought" and try to find a way to help, but he never called back.

Only four MPs, all Liberals – Peter Milliken from Kingston, who is the Commons Speaker and the chair of the Board of Internal Economy, Jim Karygiannis, who represents the Toronto riding of Scarborough-Agincourt, former Liberal leader Stéphane Dion and Marlene Jennings from Montreal – agreed to release a breakdown of their expenses.

Milliken claimed the mouse pads and rental of an office water cooler at a cost of $176. Karygiannis billed for a $13 telephone cord. Dion claimed a $15 carpet during his brief stint as party leader.

Jennings was billed $3,404.30 by the House of Commons to physically move her Ottawa office 37 steps down the hall into an office vacated by former Toronto Liberal MP Bill Graham in early 2008. It cost $5,662.33 to paint the office and upholster two sofas, $836.44 for office repairs and $299.99 in information technology charges.

All the work was performed by government staff and the used furniture in her office was provided by the House of Commons, which automatically gives each item a monetary value, Jennings said.

The possible reasons MPs weren't more forthcoming are quite simple, according to a number of current and former officials.

First, there's no rule demanding that they do so. The bylaws state that only an MP or the board can authorize such a disclosure.

It's also nobody's business, said Reynolds, who retired from elected office in 2006 and now works in Vancouver as a strategic consultant with the Lang Michener law firm.

Making individual expense claims public, something already required of cabinet ministers and senior bureaucrats, only feeds a scandal-obsessed media, he said.

"I don't think it's important that somebody knows what somebody eats for their supper. It then becomes a story. So-and-so eats a steak and somebody else lives on a hamburger. ... There are people who like that stuff and that's why the National Enquirer sells so well."

But as with most bodies that conduct themselves far from public scrutiny, Bélanger said the board could decide at any time to shine more light on the hidden millions. Problems coming to light or scandals such as the one that continues to unfold in Britain could speed up that process. But then again, maybe not.

"Things have evolved over the past. I can't see why they wouldn't necessarily evolve over the future as well," Bélanger said.

"In what shape and at what rate? I can't predict that, but I can see things changing."

BNN: Copyright infringement, or a case of expunging the public record on Harper's income trust fraud?

This is absurd. BNN thinks that statements made on their public airwaves by Canada’s Minister of Finance and Opposition Party Finance Critic are subject to copyright protection? What a joke.....of a network.

Dear YouTube Member:

This is to notify you that we have removed or disabled access to the following material as a result of a third-party notification by Business News Network claiming that this material is infringing Copyright:

Flaherty explains why he won't change rules on Income Trusts:

John McCallum explains Liberal position on Income Trusts: http://www.youtube.com/watch?v=KATbsnjLVEA

Income Trust Tax Apologist: Gwyn Morgan / Part 1: http://www.youtube.com/watch?v=y4OupPiNwPE

Income Trust Tax Apologist: Gwyn Morgan / Part 2: http://www.youtube.com/watch?v=oZ-jO9q-DBc

The environment has now turned quite good for Private Equity: http://www.youtube.com/watch?v=UY6SKEVy7T0

Western Canadian speaks on Income Trusts and Stephen Harper: http://www.youtube.com/watch?v=F5eWedDfxok

Harper Decision hurts Alberta Royalty Trusts
: http://www.youtube.com/watch?v=jtnkhkzqD6U

Friday, June 19, 2009

Income Plus. Disclosure Minus. Flaherty's favoured corp, favoured investment product gets enforcement notice

Manulife gets enforcement notice

Tara Perkins
Globe and Mail Update,
Friday, Jun. 19, 2009 06:25PM EDT

Manulife Financial Corp. (MFC-T23.250.200.87%) says it has received an enforcement notice from regulators who believe the company failed to make proper disclosures concerning certain exposures.

The insurer also said that its chief financial officer is retiring.

In a news release issued late on Friday, Manulife said that staff of the Ontario Securities Commission sent it a notice this week relating to the information it disclosed about its variable annuity and segregated funds business before March of this year.

Manulife says it believes that its disclosure met all of the requirements, but the preliminary conclusion of OSC staff is that the company failed to meet its continuous disclosure obligations related to its stock market exposure.

The market exposure stems from the company's large variable annuity and segregated funds business. The products are like private pension plans for individual investors. Manulife takes a customer's money, invests it, and promises payments down the road. When markets drop, it must build up capital and reserves to protect against any shortfall in the amount it has promised to pay customers in the future.

The company will now have the opportunity to respond to the OSC's notice before the regulator's staff decides whether to start proceedings. Manulife said it intends to co-operate with the OSC.

In a separate statement that the company characterized as unrelated, Manulife said that chief financial officer Peter Rubenovitch is retiring after 14 years, and will be replaced by Michael Bell, who has been the chief financial officer of Cigna Corp. (CI-N25.241.586.68%) for the past six years.

Ottawa sees to it that Canadians forfeit more of their rights and freedoms.

Today’s Ottawa Citizen: MPs recommend random roadside breath tests

A parliamentary committee has recommended that police officers be given the power to conduct random roadside breath tests on drivers, a change that would remove the legal requirement for officers to have a "reasonable" suspicion that drivers are drunk.

Today’s Toronto Star: Will police get easier access to emails?

Canada's police and security forces would get greater access to the Internet and wireless telecommunications records of millions of Canadians under a bill tabled yesterday by the federal Conservatives.

Perhaps Professor Cohen should look into how Canadian "journalists" promulgated Harper's blatant lie about tax leakage

And we aren't just talking about the dutiful slaves to Harper known as Senator Mike Duffy.

We are talking about the dutiful slaves to Harper known as Eric Reguly, Terry Corcoran, Jeffrey Simpson, Margaret Wente, Andy Willis, Bob Hepburn, David Olive. etc. etc., all of whom at some point have seen value in helping to promulgate Harper's gross lie that income trust cause tax leakage or have gone out of their way to keep this central lie from reaching the public's eye and achieve any level of public awareness.

For that failure and act of commission, they are doing a gross disservice to their profession, if you can consider such wide spread unprofessionalism to even qualify as a profession. The list of sycophants in the media on this issue of income trusts goes on and on and reads like a telephone directory for Pravda.

Lone journalists of integrity and professionalism like Diane Francis and William Stanbury can't do it on their own. The absence of professionalism and integrity by the media on the income trust issue is very troubling and portends very negative consequences for democracy in Canada, because of the important role played my the media in holding our politicians to account. A role the Canadians media have failed miserably to achieve, as they have allowed themselves to become enjoined in the Harper government's nefarious end game on income trusts.

If only we could vote journalists out of their jobs, rather than having their masters appoint them to the unelected Senate for a job "well" done and where they will never be held to account. The ultimate reward for the ultimate sell out.

The tale of the Dion tape

By Andrew Cohen,
The Ottawa Citizen June 16, 2009

On Oct. 9, 2008, five days before last autumn's general election, Stéph-ane Dion appeared on CTV Atlantic. It was late in the campaign and polls suggested that the Liberals were gaining on the Conservatives.

That evening, an edited version of the appearance was rebroadcast and discussed by Mike Duffy and commentators on his national show. For CTV, the interview was damaging. For Dion, it was devastating. For the campaign it was, quite possibly, decisive.

In the interview, which was recorded live to tape, anchor Steve Murphy asked Dion this question: "If you were prime minister now, what would you have done about the economy and this crisis that Mr. Harper has not done?"

Dion, who was not in the studio with Murphy, did not understand the long question. He asked Murphy to repeat it. Murphy agreed. The question was still unclear to Dion. Murphy repeated it, twice. Eventually, the interview ran for 12 minutes.

CTV Atlantic aired the entire broadcast that evening, which meant the false starts as well as the interview. It brought many complaints.

Later, Duffy opened his show promising a discussion of "Stéphane Dion's struggle with the English language ... (which) is going to be one you will be talking about for days." His show aired the false starts but not the interview. More complaints.

In response, the Canadian Broadcast Standards Council conducted a review. The council is a self-regulatory body comprising more than 720 Canadian radio and television stations. It administers the industry's broadcast code of conduct.

Its two reports, which were released recently and largely ignored by the media, criticized CTV for breaching the code, a finding CTV strenuously rejected. That was revealing.

But what's more revealing is what this little saga tells us about how things are done in this country. It's about politics, ethics and maybe ambition, too.

On CTV Atlantic, the council concluded that Murphy asked a question that was "confusing, and not only to a person whose first language is other than English." It said that Murphy mixed tenses (past and present) and moods (subjunctive and indicative). In other words, Dion was justifiably puzzled.

In light of the badly worded question, which Murphy could have clarified, the panel called the restarts "a courtesy" to Dion. It also said that repeating questions isn't unusual in broadcasting and particularly justified here, given Murphy's convoluted question.

Moreover, because Murphy never refused Dion's requests to restart the interview, Dion had reason to believe that the embarrassing footage wouldn't be used.

On Duffy's broadcast, the council's judgment was harsher. It called his performance unfair and unbalanced. It said that Duffy misrepresented the views of one of his guests, Liberal MP Geoff Reagan. In the end, Duffy breached the industry's code of ethics.

Is all this a grammarian's revenge, Miss Thistlebottom in full flight? A silly parsing of sentences? A regulator's punctilious dressing down on decorum? Does it really matter how Dion was treated by CTV, particularly by Mike Duffy?

Actually, yes, particularly in a country where the RCMP might well have determined the outcome of the 2006 election, when it announced an investigation, in mid-campaign, into allegations of irregularities on the part of finance minister Ralph Goodale. It caused a sensation. The Liberals lost that election; no charges materialized.

Last October, the polls suggest the Liberal party's ascent stalled after the interview. While we cannot say if Dion's momentum would have brought his party victory, it isn't impossible.

In other words, CTV may have thrown the election to the Conservatives. In running the embarrassing outtakes, it reinforced an image of Dion as incomprehensible and indecisive.

It was a gift to the Conservatives, who had been portraying a weak Dion in relentless attack ads before and during the campaign. Harper quickly exploited Dion's unhappy outing.

The council, which has done fine, judicious work here, doesn't speculate on the impact of Dion's appearance. Many Canadians had already decided that Dion was a lousy campaigner who should never have been leader. At the same time, many knew that he was a decent, honest and intelligent politician who was crucified by the Conservatives and abetted, unwittingly or not, by the media, and particularly CTV.

The story doesn't end there. It actually gets worse. In December, Harper appointed Mike Duffy to the Senate. He sits as a Conservative, not an Independent.

Duffy is now the fiercest of partisans in the Red Chamber. He appears at party fundraisers. Pamela Wallin, a former journalist who was appointed as a Conservative at the same time, shows no such fervour.

Was Duffy's appointment a reward? We won't know. Duffy is an amiable guy who has had a distinguished career in broadcasting in which he asked tough questions of all politicians. But he also wanted to go to the Senate, and now he's there.

Don't think that things of this sort don't happen in Canada.

Andrew Cohen is a professor of journalism and international affairs at Carleton University

in Ottawa. E-mail: andrewzcohen@yahoo.ca
© Copyright (c) The Ottawa Citizen

Wednesday, June 17, 2009

If only Terry Corcoran were journalist enough to expose Harper's hoax of tax leakage as "Decision-based evidence making"

Decision-based evidence making

Terence Corcoran, Financial Post Published: Wednesday, June 17, 2009

The Obama administration yesterday released its blockbuster global-warming propaganda document, Global Climate Change Impacts on the United States. It's a doozy, filled with colour graphics, maps and dramatic pictures. The message: We're all going to climate hell. Action needed now.

$7 million is an "outrage", while $300 million gets swept under the carpet?

MP's focused on $7 million paid to CPP execs, and ignore $300 million lost by CPP on trust tax

Yesterday witnessed a classic case of Ottawa being penny wise and pound foolish and holding others guilty while their own policy and gross professional misconduct gets swept under the carpet. The CPP lost $300 million due to the income trust tax. A tax that was premised on “tax leakage”, the proof of which has never been forthcoming. This was a direct consequence of a policy supported by the very NDP who are up in arms about a measly (by comparison) $7 million in compensation to CPP execs. Who is the greater guilty party? CPP execs or Ottawa MPs? Which is the bigger outrage? Paying $7 million in accordance with an employment contrcat or losing $300 million based on the policy lie called tax leakage?

Claw back pension exec's bonuses: MPs

All-party support for opposition-day NDP motion

Toronto Sun

OTTAWA -- MPs told the federal government to claw back $7 million in bonus payments to top Canada Pension Plan executives yesterday.

The NDP motion -- which passed with all-party-support -- aims to recoup millions in performance bonuses to top executives at the CPP Investment Board and ban any future payouts.


"It's obscene," NDP pension critic Wayne Marston said. "They lost $24 billion and they wiped out the last four years of contributions in that loss. How can you justify any kind of a bonus to people who have failed?"

Despite losing $23.7 billion last year, four top executives saw their base salaries jump from $1.47 million in total to $9.3 million in total, the 2008-09 CPP annual report says.

The CPP Investment Board is a Crown corporation responsible for investing billions of dollars in CPP contributions to fund government pensions.

The NDP motion also calls on the federal government to establish a self-financing pension insurance program, and demands the feds ensure workers' pension funds go to the front of any creditors' line if a company files bankruptcy proceedings.

"We insure our cars, we insure our homes and we have deposit insurance on our savings, why can't we have a system that insures our pension plans?" Marston asked.

"Right now if a company collapses, you could lose your pension," Marston said.

"All of a sudden, your fixed income is gone and there is nothing you can do about it."


Paula Klein knows how that feels. She was laid off by Nortel last December. Tomorrow, she hopes to come face to face with Nortel Networks' chief executive officer Mike Zafirovski before the House of Commons finance committee.

Klein says Nortel has paid out $45 million in bonuses to executives while it claims it can't afford to pay severance to its laid-off employees

Sunday, June 14, 2009

It is wrong to say that Harper’s reputation is “tattered”

For Tom Flanagan to say that Harper’s reputation is tattered for reasons such as his income trust betrayal, is incorrect, since Harper never had a reputation to begin with. That’s because Harper has never been in a meaningful decision making role in his life, in which outcomes could be measured against promises, or results measured against dogma. Reputations are earned, not merely assumed or appropriated.

The most that Harper ever had going for him was a “chimera” and not a reputation. Anyone can go around as an Opposition Leader or member of some fringe party like the Reform Party or Alliance Party and make all sorts of promises and constant criticisms of government, but actually running a government is quite a different thing indeed. In this respect, Stephen Harper was grossly unsuited to become Canada’s Prime Minister as he had never run a thing in his life or ever held a meaningful job in the private sector. Furthermore, we were to learn that Stephen Harper is devoid of scruples.

What we have observed about the person called Stephen Harper in the role of Prime Minister is his effortlessness at saying one thing and doing the exact opposite. That is Harper’s singular reputation. A reputation of Lie Conceal Fabricate, as CAITI proclaimed in billboards and bus shelter ads across the nation.

In that respect, Harper’s reputation is completely in tact. His chimera on the other hand, is completely in tatters. But then, we (income trust investors) were the first to bring that to your attention and were the first group of Canadians to take on this Stephen Harper clown and began the process of tattering his chimera reputation.

In that respect think of us as true patriots.

PM's former mentor says repute 'tattered'

By Don Martin,
Calgary Herald
June 13, 2009

It's too harsh to qualify as constructive criticism, even if the author was still Prime Minister Stephen Harper's mentor and academic adviser.

The words are too deadly to be considered friendly fire, even if the writer was still running the Conservative's election war room.

And, if Tom Flanagan was still serving as Harper's chief of staff, his new assessment of the PM's postelection debacle would probably hand him the pink slip from a boss who takes bad news badly.

The University of Calgary political scientist served in all of these roles to this prime minister, yet he's come to the startling conclusion his star student and political protege is battered, tattered and almost beyond repair as a going-forward force in federal politics.

If this glum assessment was written by any columnist in the land, it would be vilified by party faithful as the predictable rantings of a Liberal-loving mainstream media.

But it's penned by an insightful Calgarian once described by former Reform party insider Rick Anderson as an "intellectual, philosophical soulmate" to a Stephen Harper he had nursed back onto the federal stage and nurtured along as the great right-wing hope to Canadian conservatives.

As such, his words deliver a painful punch. Flanagan's appraisal is part of an updated conclusion to his two-year-old Harper's Team insider's account of the Conservative leader's rise to power, a friendly account reportedly vetted by the PMO prior to its original publication.

The way Flanagan sees it now, Harper is adrift in a vacuum of policy and principle, conniving to retain power while hemorrhaging respect as a flawed political strategist. Harper's greatest gaffe was inserting the elimination of public financing for political parties into last fall's economic update-- "his single worst mistake, not just as prime minister but in his career as a party leader," Flanagan writes.

He had perfected the art of keeping political opponents squabbling among themselves, but that move united all three parties under a common survival strategy that gave the Conservatives a near-death experience at the hands of the short-lived coalition.

It dealt a mortal blow to Harper's vaulted reputation as a brilliant tactician.

"Before the fall fiasco he wasn't exactly loved by the public, but he was widely respected by political observers as a competent manager and a shrewd strategist. But after his misadventure with the political subsidy issue, many are saying that his strategic sense has been overrated. This is a dangerous development for if you are not to be loved, you must at least be respected."

What's worse, Flanagan lists the reasons the once-principled leader has "tattered" his credibility by embracing corporate subsidies, violating his own fixed election date law, diving into deficit and breaking election promises on income trust taxation and equalization calculations.

"Taken together, along with other less publicized reversals, they have created a widespread impression that Harper stands for nothing in particular except winning and keeping power. This is a major loss for a political leader who was once seen as a man of conviction."

Well, ouch. But all is not lost, Flanagan sighs. If Harper gets back to his base with moderate Conservative policies, ending the partisan trickery and reaching out to opponents, he could still rewrite the premature obituaries.

Of course, the fundamental flaw in Flanagan's salvage strategy is that his old protege surrounds himself with yes-prime-minister types who tell the boss only what he wants to hear. He's certain to turn a deaf ear to Flanagan, believing that the solution to having friends like these is to find new friends.

But Harper's survival demands a colossal shakeup of his government's senior staff, bringing fearless professionalism and fresh perspectives to a productive minority reign riding out tough economic times. If they can deliver that, getting the government re-elected will take care of itself.

© Copyright (c) The Calgary Herald

Saturday, June 13, 2009

Harper’s credibility is getting tattered. You heard it here first.

Steven Chase writes in today’s Globe

“Tom Flanagan also warns that Mr. Harper's credibility is “getting tattered” after a string of reversals on policies – from income trusts to fixed election dates to equalization, creating a “widespread impression that [he] stands for nothing in particular, except winning and keeping power” in Ottawa.”

Couldn’t have said it better myself, except however to point out that Harper’s tax leakage argument is a total fraud, cooked up my Mark Carney and Jim Flaherty as the false basis on which to rationalize the income trust policy reversal/betrayal. Did breaking the fixed election date promise or breaking the equalization promise destroy $35 billion of retirement savings or destroy people’s quality of living and dignity during retirement? Didn’t think so, which is why the income trust issue will never go away until the policy reflects the truth that income trusts do not cause tax leakage and have enormous benefits to confer upon Canada and for the betterment of all Canadians. (If you think otherwise, then your understanding of income trusts and their far reaching policy ramifications is superficial at best).

Friday, June 12, 2009

Reckless misinformation that results when the PMO relies on creative columnists like Terry Corcoran for their “facts”

I guess this is in inevitable when you have kids in charge of the CONs communications:

AECL a $30B `sinkhole,' Harper spokesman says

June 12, 2009

OTTAWA–Prime Minister Stephen Harper's chief spokesman, Kory Teneycke says Atomic Energy of Canada Ltd., is a "dysfunctional," $30 billion "sinkhole" that will not get any more funding for a new research reactor.

Teneycke later backed away from his earlier comments, saying he "spoke in haste and in error" and should've limited remarks to the MAPLES and not AECL as a whole.

Gee! I wonder where Kory boy got that incorrect information from?

The barriers to Isotopia

Terence Corcoran, Financial Post
Thursday, June 11, 2009

Money has never solved AECL's problems, and never will. The present value of all federal cash thrown at AECL over the decades exceeds $30-billion.

NDP use their Opposition Day to advance the issue of pensions

Dr. Mike Popovich commented on the CAITI blog the following:

Yesterday in the HoC I watched the debate on pension reform that was a move by the New Democrats to ensure a stable income for retirees that would enable them to have some quality of life in their remaining years.

The NDP do realize that CPP , if you qualify , Old Age Security & Supplements are not enough.

Bravo for them.

Just one more thing they need to do & that is revisit the Income trust matter.

This made in Canada product was in fact giving many seniors the quality of life that this party espouses to & it was heartlessly snatched-away because of a lack of knowledge & a rush to judgement.

Will the NDP be brave enough to take another look & do what is right??

Will it be the NDP who will leave the Liberals with egg on their face.

Just maybe & if they do , then good for them.

Dr Mike Popovich

Stephen Harper condemning Sri Lanka, is the pot calling the kettle black

Stephen Harper is trying to politically cash in on Sri Lanka’s denying Bob Rae entry to their country in which Sri Lanka say Bob Rae was a “security threat”, which is truly an absurd argument by the Sri Lankins.

Meanwhile “security threat” was the VERY ARGUMENT that Stephen Harper himself used to “justify” ( if you can call it that?) why his government was unwilling to provide any proof of its policy allegation that income trusts cause tax leakage, and a policy move by Harper that caused Canadians investors to lose $35 billion, after Harper had deluded these people into thinking he would never do such a thing.

Who is more absurd? The Sri Lankins saying that Bob Rae is a “security threat” or Stephen Harper saying that releasing his proof of tax leakage is a “security threat”? This in nothing more that Harper, the Tin Pot dictator calling the Sri Lankan’s kettle, black

Today’s Toronto Star:

Prime Minister Stephen Harper's officials called the decision to bar Rae "unacceptable" and absurd. It is that, and more. It also follows an incident in which a Colombo mob vandalized Canada's high commission office while police stood by.

No Kory Teneycke. Harper's trust tax is a $35 billion sinkhole, That will soon cost all taxpayers $7.5 billion a year

AECL a $30B `sinkhole,' Harper spokesman says

But nuclear expert calls decision not to finance new research reactor `horribly short-sighted'
Jun 12, 2009 04:30 AM
Toronto Star
Bruce Cheadle
The Canadian Press

OTTAWA–Prime Minister Stephen Harper's chief spokesman says Atomic Energy of Canada Ltd., is a "dysfunctional," $30 billion "sinkhole" that will not get any more funding for a new research reactor.

The new, tough tone from the Conservatives comes as a respected nuclear physicist criticizes what he calls a "horribly short-sighted" government decision that effectively pulls the plug on a half-century of multi-faceted Canadian research at AECL's Chalk River laboratories.

Harper said this week Canada will get out of the medical isotope business when AECL's 52-year-old National Research Universal reactor gives up the ghost, likely by 2016.

The decision has implications far beyond isotope production, physicist Dominic Ryan of McGill University's Centre for the Physics of Materials told The Canadian Press.

Not only has the NRU provided the research base for Canada's nuclear energy industry, it's been a workhorse for neutron-beam research on such non-nuclear applications as analyzing booster rocket welds on the ill-fated Challenger space shuttle and certifying steel safe for bridge-building.

"Other nations are investing in research reactors," Ryan, the president of Canadian Institute for Neutron Scattering, said yesterday.

"And we're just talking about closing the darn things down – the only one we've got. ... It really is annoying."

The institute, which represents more than 400 scientists who use neutron beam research, proposes replicating the NRU with an updated version. But Kory Teneycke, Harper's communication director, made it emphatically clear Ottawa has no interest in such a project.

"The government has put $30 billion into AECL over its history and it's been one of the largest sinkholes of government money probably in the history of the government of Canada," Teneycke said.

"So I don't think describing it as an unmitigated success is accurate."

He added there's been "well-founded, sharp criticism of the history of AECL. ... I don't think we're going out on a limb to say it has been a fairly dysfunctional place."

Last year, the Tories cancelled two AECL medical isotope reactors at Chalk River, called MAPLES, after they went hundred of millions over budget and still failed to pass inspections. The MAPLES were never designed as multi-purpose research replacements for the NRU.

"We are not going to make further investments into the MAPLE – which is the research reactor project at AECL," said Teneycke.

As for another government-built research reactor, that too was shot down. "I don't think anyone is looking at giving a couple of billion dollars more to AECL at this point for a new project," said Teneycke.

"What we're focused on is trying to restructure AECL right now."

Teneycke later backed away from his earlier comments, saying he "spoke in haste and in error" and should've limited remarks to the MAPLES and not AECL as a whole.

Thursday, June 11, 2009

Tax breaks key to Canadian retirement plans: poll

Click on image to enlarge

Today we learn that half of Canadians polled think that tax breaks are key to Canadian retirement plans. Meanwhile we have Stephen Harper killing the most popular retirement savings investment vehicle that emerged in Canada, namely income trusts, by DOUBLE taxing them at combined rates equal to 62%.

Why is the SECOND tax at the rate of 31.5% required?

Simply because Harper’s BOGUS tax leakage analysis disregards the FIRST 38% average rate of taxation that Canadians pay on the (as it happens) 38% of income trusts held in RRSPs. To disregard these taxes serves to completely defile the purpose and intent of why RRSPs were created. Canadians don’t need tax breaks to achieve their retirement goals, they simply require the incompetent Harper government and crooks in the Departmnent of Finance to acknowledge the TAXES that they DO PAY on their RRSPs.

Can I make the point any clearer or more obvious about the GROSS INJUSTICE of the income trust tax that that?

Meanwhile Pension Funds are able to exempt themselves from the 31.5% income trust tax. Why are the Liberals not making these points to Canadians about Harper’s retirement savings rip off?

Tax breaks key to Canadian retirement plans: poll
'Era of greater personal responsibility' has arrived

By Shannon Proudfoot,
Canwest News Service
June 11, 2009

Almost half of Canadians think the best way the government can support aging people planning for their retirement is to give them tax breaks and to allow them to look after themselves.

HSBC Insurance, the company behind the Future of Retirement report released Wednesday, declares that an "era of greater personal responsibility" has arrived.

"They realize there's nobody around offering a hand," says Susan Eng, vice-president of advocacy for CARP, a group representing older Canadians. "Some people are going to throw themselves in front of a streetcar, but most people in our generation are saying, 'OK, we're going to have to do something about that'."

The survey included 15,000 respondents aged 30 to 70 from 15 countries, including Canada, the U.S., Britain, France and China.

Forty-eight per cent of Canadians said the best way for the government to support financing an aging population is to encourage more private savings through tax relief on savings. That was significantly higher than the 31 per cent of international respondents who endorsed the idea.

Financial experts say possibly the only silver lining to the recession is that it's spooked people into paying attention to their non-existent retirement plans, building up savings and watching credit.

Robert Abboud, a certified financial planner in Ottawa, recently has noticed his clients being much more interested in knowing their rates of return and in coming in for regular reviews. He's even seeing the children of clients coming in to draw up a financial plan as soon as they land their first full-time job, he says -- which is exactly what financial planners recommend, but most people don't bother to do.

"If there is that mind-shift where people will start taking responsibility for retirement, it could be the best thing that ever would have come of the recession," he says.

Taylor Train, chief operating officer of Advocis, the Financial Advisors Association of Canada, says he's been warning about boomers' lack of retirement planning for a decade. He believes the downturn will turn around as quickly as it came on, but says people have realized the Canada Pension Plan isn't enough to rely on and they have to develop some financial literacy.

"It's really interesting how long it takes for the public to realize it's on the cusp of the abyss," he says.

Eng at CARP says the downturn has had a profoundly destabilizing effect, pushing even people in their 30s and 40s to contemplate their retirement finances.

Months of grim news reports have acquainted ordinary people with the intricate details of "so-called gold-plated pension plans" and the fact that "too big to fail" companies, such as the automakers are more than capable of doing so, she says.

"People start saying, 'Hold on a minute, I don't even have a pension plan'," she says. "And the people who do have a few dollars saved have watched it disappear."

Doug Mitchell, 61, took charge of his own retirement savings in 1991 when he left an oil company to start his own consulting business, withdrew his pension funds in a lump sum and put it in a Locked-In Retirement Account (LIRA). He's deeply frustrated that his money is now subject to restrictions to which a typical pension isn't, because he retired before turning 65, but he and his wife managed to make their "dream of Freedom 55" a reality a few years ago.

The Toronto-area couple has travelled through Europe, wintered in Florida and has visited a grandson in Calgary, but Mitchell says the downturn has still squeezed their well-laid-out financial plans.

"You go to school for 20 or 25 years to get an education to work hard and earn money and save money," he says. "You work hard for 30 or 35 years, and I want to spend the next 30 years spending it."

© Copyright (c) The Ottawa Citizen

Terry Corcoran on open manholes, losing $30 billion and the the Uzbekistan Securities Commission

I have no time for people with double standards. That puts Terry Corcoran near the top of my list of people for whom i have no time, and even less respect. In today’s article (below), Terry is taking a shot at Lisa Raitt and her taped claim that “money” is the simple solution to Canada’s isotope crisis.

This "only money" argument gives Terry Corcoran license to bemoan the fact that (apparently) Ottawa has pumped $30 billion into AECL and taxpayers have received virtually no disclosure from Ottawa on AECL’s finances, which Terry argues is in keeping with the disclosure standards of Uzbekistan Securities Commission.

He also wants taxpayers to get upset over pumping $30 billion into AECL over several decades with little to show for it?

Why do Terry Corcoran’s statements of today only serve to highlight the hypocrisy of his blind support for the income trust tax, whose central premise of tax leakage was “proven” by 18 pages of blacked out documents that even the Uzbekistan Securities Commission would find unacceptable? And somehow 2.5 million Canadians losing $35 billion into an open manhole is something to be glossed over, but all taxpayers losing $30 billion (apparently) is an outrage. How do you spell “double standard”?

The barriers to Isotopia

Terence Corcoran,
Financial Post
Thursday, June 11, 2009

Of all the things Natural Resources Minister Lisa Raitt had to say in her accidentally taped conversation with an aide, the most alarming may well have been her analysis of Atomic Energy of Canada Limited's isotope fiasco. "You know what solves this problem?" asked Ms. Raitt, rhetorically on the brink of educating her aide in the ways of federal politics. "Money. And if it's just about money, we'll figure it out." The aide, being only 26 years old, would not know that Ms. Raitt was about to step into the biggest open manhole in Ottawa, the AECL money pit.

Money has never solved AECL's problems, and never will. The present value of all federal cash thrown at AECL over the decades exceeds $30-billion. As for AECL's isotope operation, numbers are hard to find thanks to opaque federal reporting standards. The Uzbekistan Securities Commission wouldn't approve AECL's annual reports. It would appear, though, that AECL's isotope business, the crown jewel of Canada's non-energy nuclear industry, is a giant money loser, with Ottawa subsidizing isotopes that are used by medical service providers in the United States and elsewhere.

Wednesday, June 10, 2009

Head of OSFI agrees with me. Insurance companies need to be constrained. Where is Parliament on this?

Most Canadians don’t realize it, but Canada’s Life Insurance Companies just lived through their own “AIG Moment” over the last nine months, during which Canada’s LifeCos exposed the structural weakness in their balance sheets caused by their issuance of unhedged and imperfectly hedged liabilities, arising form their recent foray into synthetic retirement savings products.

This expansion into synthetic savings products was why the life insurance industry was so keen and active in their efforts to kill income trusts as a formidable competitor for Canadians’ retirement savings dollars. Flaherty complied, and is so doing added fuel to the fire by, and incredibly saw value in killing “real” investments in Canada’s economy, and favouring the issuance of synthetic investments for retirement savings, which it turns out were not being properly hedged by Canada’s life insurers.

Talk about a shallow approach to policy making, with zero regard for the unintended consequences of his mindless actions and the dynamic nature of the issue he was dealing with. I am reminded of children playing with matches?

In today’s Financial Post (below) the Head of OFSI is making cautionary comments that align with those that I have been making for the past six months on the unbridled and unwise activities of Canada’s life insurers.

What is Ottawa doing to constrain and regulate these types of activities by Canada’s life insurance industry in the future, apart from (i) lessening the rules to make it easier for them to comply with their inadequate capital positions ( which only contributes to the problem and is the modern day equivalent of waiving GM’s requirement to keep its pension obligations adequately funded. And we know how well that worked out in the end?) or by (ii) offering taxpayer subsidize borrowing facilities for these “bad offenders” in the form of the recently announced “Canadian Life Insurers Assurance Facility” , which simply means taxpayers are subsidizing the shareholders of life insurance companies.

Both of these measure simply mean that Ottawa is permitting Canada’s life insurers to carry on with their bad practices that are described by Warren Buffett as being “crazy”, in reference to variable rate annuities and whose warnings ahould be heeded and acted upon by Canada’s lawmakers (MPs), along with this cautionary comment from Kin Lo, a professor at the Sauder School of Business,

"Insurance is about protecting people from risk and what we have seen is the insurance industry going out and seeking risk," he said.

"It is in the nature of insurance that these companies should be fairly conservative in how they go about their business. What we saw in the last few years is insurers getting away from conservatism," he added.

Financial firms need historians: OSFI head

By John Greenwood,
Financial Post
June 9, 2009
Julie Dickson, the head of Canada's banking and insurance watchdog, on Wednesday advised financial institutions to hire financial historians so they don't repeat the mistakes they have made in the current credit crunch.

In the dark days of last fall when the financial system seemed on the verge of failure, many industry insiders insisted the situation was unprecedented and that no-one could have foreseen it.

But they were mistaken, Ms Dickson said in a speech to life insurance industry executives in Toronto. The same events have happened before, she said.

"Stock markets have plummeted, banking systems have collapsed and you do not need to go back as far as 1929 to see this," Ms Dickson said.

Ms. Dickson, the Superintendent of Financial Institutions, said chief risk officers at banks and insurance companies "should think about" about hiring a financial historian as a way to broaden their awareness of the potential challenges they face.

By taking into account what has happened in past decades, players will be better able to anticipate consequences of current business decisions.

One area of particular concern is the segregated fund businesses of many life insurance companies, she said.

During the equity market collapse last year, companies had to scramble into damage control mode as liabilities soared, forcing them to put aside more capital.

Indeed, after lobbying by the industry, OSFI last year changed the rules on capital requirements to make it easier for players to comply.

"Many life insurance companies misunderstood the risk associated with segregated fund guarantees," she said.

With life insurance, players can mitigate the risk of losses by simply selling more policies, but with segregated funds the opposite is true, since more sales only bring more exposure to the same risk.

Ms. Dickson said insurance companies should consider slowing the growth of their segregated fund businesses.
© Copyright (c) National Post

Tuesday, June 9, 2009

Harper's Oxymoron Tax Fairness Plan, as supported by the NDP

How can a tax measure that only benefits 12% of seniors, but leaves the other 88% out in the cold be considered a Tax Fairness Plan? How can alleging tax leakage without PROVING tax leakage, such that it causes the loss of $35 billion of Canadians’ pension savings be considered a Tax Fairness Plan?

Mr. Paul Szabo (Mississauga South, Lib.)
: Mr. Speaker, the Prime Minister broke his promise never to tax income trusts and imposed a 31.5% punitive tax.

He wiped out over $25 billion of retirement savings of over 2 million Canadians, particularly seniors.

He argued that the pension income splitting would offset the loss, but the facts show otherwise.

In 2007, the benefit to seniors was only $163 million. As well, only 30% of seniors have qualifying pensions. If we eliminate those who have no partners or who are at the lowest tax bracket or whose partner is in the same tax bracket, then only 12% of seniors actually benefit.

The Conservatives took money from seniors with no pensions and gave a fraction of that money to high-income-earning seniors who have a partner with little income.

It is time for the government to be honest with seniors. It should admit its devastating mistake, apologize for misleading seniors and repeal the punitive 31.5% tax on income trusts.

Review of Jack Mintz’ Estimates of the Tax Revenue Losses Attributed to Income Trusts

By W.T. Stanbury, Professor Emeritus, University of B.C.
June 9, 2009


The purpose of this paper is to examine carefully the papers by Prof. Jack Mintz (formerly of the University of Toronto, now at the University of Calgary) in which he made estimates of the tax revenues lost due to the income trust form of business organization compared to the standard business corporation. I do this largely because Mintz’ estimates in 2004 and 2006 appear to have been influential in shaping the federal government’s policies toward income trusts. Certainly his 2006 estimate was much cited by the Minister of Finance as justification for the 31.5% tax on income trusts announced on October 31, 2006. As I will make clear, Mintz’ estimates are flawed and some of the flaws are serious indeed.

The paper is organized as follows. Section 2 briefly explains why the estimation of revenue losses due to income trusts (if any) is a difficult task. Section 3 provides a critique of Aggarwal and Mintz estimate of the revenue losses said to be attributable to income trusts in 2004. Section 4 examines Mintz’ revised estimates of revenue losses for 2006,including those claimed due to the proposed conversion of BCE Inc. and Telus Corp. to income trusts.. Section 5 presents my conclusions. The references follow.


The calculation of the effect on tax revenues of two different forms of business organization is technically difficult. It requires deep knowledge of a complex (and dynamic) system.

First, one needs to assemble large amounts of data—see HLB Decision Economics (2004) which was able to do this without calling on the Department of of Finance. (see footnote 2)

Second, the results are sensitive to the assumptions (uncertainty). It is essential to examine the effects on the revenue loss of different assumptions. (HLB Decision Economics, 2004, was exemplary in this regard.)

Third, the estimated losses should be based on the effective (not nominal) rate for the corporate income tax. It varies considerably by sector. There was a big difference between the overall average rate used by Aggarwal and Mintz (2004) and HLB Decision Economics (2004), for example.

Fourth, the analysis needs to differentiate between at least three kinds of unitholders for tax purposes. For example, foreigners pay only 15% on the income from income trusts, while Canadians holding units outside an RRSP must pay the full marginal personal income tax rate—often over 40%. There are other problems which I omit for reasons of space.

In addition, there are conceptual roadblocks to understanding the problem of the different revenue stream for two different forms of business organization. Initially, one is inclined to accept the “tax leakage” argument because income trusts—which function essentially like a corporation-- pay no tax at source in contrast to business corporations. A careful policy analysis, however, indicates that with the inclusion of deferred taxes, the net difference in tax revenues at the federal level was far less than claimed by the Minister of Finance or by Prof. Mintz in his two studies. Indeed, as noted below, there may have been no leakage at all if it was properly measured.

3. Aggarwal and Mintz Study, 2004

In September 2004 , Lalit Aggarwal and Jack Mintz, published, “Income Trusts and Shareholder Taxation: Getting It Right,” in the Canadian Tax Journal, Vol. 52(3), May 2004, pp.792-818. I now describe the key points that need to appreciate about this paper.

First, the main focus of the paper was on “whether income trust arrangements that have exploited the non-neutral treatment of equity and other financial flows create specific economic distortions that undermine the efficiency of capital markets in Canada” (Aggarwal and Mintz, 2004, p.794). The much cited estimates of so-called “tax leakage” were only part of the paper, although they are the focus of my comments. Aggarwal and Mintz(2004,p.801) emphasized that “ numerous complexities are inherent in estimating the integrated tax impact of income trusts; the HLB [Decision Economics,2004]study emphasizes that estimates are highly uncertain and difficult to make.”

Second, the Aggarwal and Mintz (hereafter A&M) estimate of revenue losses is for both federal and provincial governments and for 2004. Neither of these facts are stated in any of the tables, nor in the conclusion. One gleans these crucial facts from the abstract at the start of the paper. The fact that the A&M estimate is for BOTH levels of government is never mentioned by any one who uses their estimate of tax revenue losses said to be attributable to income trusts. They attribute the losses solely to the federal government ---and that includes the Minister of Finance and his officials when they testified before the Commons Finance Committee on January 28, 2007. The significance of this point came two years later when Mintz (2006a, p. 690) stated: “Overall, the tax revenue loss to government is not large compared with current annual federal and provincial revenues of almost $500 billion.” Thus he is making it clear that his estimate is for both levels of government!

Third, A&M argue that deferred tax revenues related to income trusts ought to be included in the estimate of the tax consequences of income trusts. “An analysis of the tax revenue impact of income trusts must extend beyond the evident reduction of the corporate tax base. There is a commensurate increase in the personal income tax base because trusts distribute pre-tax cash flow as more highly taxed interest rather than as dividends or capital gains to unitholders. These distributions are taxable at personal marginal income tax rates that are substantially higher than the otherwise applicable corporate tax rates” (Aggarwal and Mintz, 2004, p. 802).
This point is ignored by the proponents of the A&M estimate of revenue losses. The inclusion of deferred taxes was NOT the position of the Department of Finance which Dennis Bruce points out is a based on a short- term, annual budget perspective, and not that of a broader and longer-term policy analysis---see HLB Decision Economics (2004).

Fourth, A&M make a serious error in the calculation of deferred taxes. They state: “As long as tax rates do not vary over time and the income trust’s risk-adjusted returns are no different from returns on alternative investments, the present value of taxes owing on registered savings plans is zero, implying that the income is equivalently exempt. We assume this to be the case when we empirically assess the tax implications of income trust arrangements” (Aggarwal and Mintz, 2004, p 799).
The effect of A&M’s assumptions is to assign a value of zero to the present value of deferred taxes. The authors cause confusion when they do not record this amount in their summary table and when they do not discuss the point when summing- up their results.

But a key assumption here is almost certainly wrong. The growth in the value of assets within RRSPs (and other tax deferral accounts) will almost certainly exceed the appropriate discount rate. That means that the present value of deferred taxes is positive. Dennis Bruce’s analysis shows that the inclusion of these deferred taxes make a huge differences in the estimate of the tax consequences of income trusts (HLB Decision Economics, 2004).

Fifth, A&M’s best guess estimate of “tax leakage” due to income trusts at $ 400 million to $600 million for 2004 for federal and provincial governments combined. The authors properly do a sensitivity analysis. They show that the estimate is very sensitive to the assumptions about the vale of certain data, notably the effective rate of the corporate income tax. A&M use a much higher effective rate than does HLB Decision Economics (2004). The effect of that choice is to increase A&M’s estimate of the revenue losses. The uncertainty is important as Aggarwal and Mintz (2004,p811) indicate in their conclusions: “Although we have arrived at an estimate of $400 million to $600 million in tax benefits associated with income trust structures, we believe that there is a wider range of possible numbers.”

Sixth, A&M mis-state a very important result of Bruce’s study. A&M (2004, p.801) state that Bruce estimates the revenue loss for 2003 at $213 million if deferred taxes are ignored, and $150 million if they are included. Table 8 in Bruce’s study (HLB Decision Economics, 2004), however, indicates that for 2003, the revenue loss for the federal and provincial governments is $154 million ignoring deferred taxes and plus $72 million if deferred taxes are included. That means income trusts did not create net revenue losses of the federal government in 2003 (or 2002 or 2004) - they had a net positive effect on revenues when referred taxes are taken into account, as they should be. Thus A&M made a serious error in describing contrary results by another researcher.

Seventh, A&M do not separate the tax consequences for federal as opposed to provincial governments. That is most unfortunate, because their estimate of the revenue loss is usually attributed solely to the federal government. Bruce failed to do this as well in HLB Decision Economics (2004). This was to result in much confusion in the subsequent debates because the Department of Finance much-cited estimates of revenue loss were only for the federal government.


Introduction: In October 2006, Prof. Mintz published a new estimate for tax revenues losses for federal and provincial governments for 2006 in the Canadian Tax Journal (Mintz 2006a). In that piece he also extended that estimate to assume that Telus and BCE converted to income trusts as they had announced they would in September and October 2006, respectively. The editor stated that, “The article was written on the eve of the government’s decision to discourage conversions of incorporated businesses to income trusts, announced on October 31, 2006.”

Mintz (2006b) published an op ed. in the Globe and Mail on October 18, 2006 summarizing Mintz (2006a). The day before, Mintz was interviewed by a reporter for the Globe and Mail in an article published on October 17, 2006. A few weeks later, Mintz (2006c) published another summary of Mintz (2006a).

Mintz (2006a): Here are my comments on this article. First, Mintz emphasizes the growth in the income trust market since 2004: “(EBITDA) of income trusts are estimated to be $18.7 billion by September 2006, based on growth in income trust issuances. Payments to third parties are estimated to be $3.1 billion, and to unitholders, $11.9 billion. With the Telus and BCE conversions, EBITDA are estimated to be $29.1 billion; third-party payments, $4.8 billion; and payments to unitholders, $18.5 billion.” Thus he estimated that the planned conversion of the two telephone companies would increase trust EBITDA by 55.6%.

Second, Mintz states that the estimate for federal plus provincial revenue losses in 2004 was $500 million. In Aggarwal and Mintz (2004) the “best guess estimate” was put at $400 million to $600 million.

Third, Mintz (2006a) estimated the federal plus provincial tax revenues losses for 2006 (but excluding the effects of announced plans of Telus Corp and BCE Inc. to convert to trusts made on September 11 and October 11, 2006, respectively) to be $700 million.

Fourth, when he discusses the differential tax treatment of three types of trust unit holders, he notes that 39% of the value of units are held by Canadians in RRSPs and other tax deferral accounts. He then indicates that the gross revenue losses in this category “could be offset by an annualized revenue gain arising from a higher yield on trust investments and larger pension and RRSP withdrawals.” Notice the tentative nature of this very important statement by use of the word “could”. In fact, Mintz did this in his calculations of the net revenue losses. Later, Mintz (2006a) states: “if it is assumed that a higher yield on units of income trusts provides greater retirement income in the future for investors, additional personal tax revenues, on an annualized basis, would be $200 million for current trust conversions, resulting in a net loss of $500 million annually” for this category of unitholders. However, he does not state what discount rate he used for this calculation. This suggests that Mintz took the present value of personal income taxes applied to withdrawals from tax deferred accounts into his calculation of net revenue losses. But the point is not clear.

In the view of a former Finance official, “Mintz failed miserably to address this crucial issue,” i.e. deferred taxes (Fortin, 2009). (For a more detailed discussion, see Fortin, 2006.) Yet Mintz was critical of the Department of Finance’s failure to include deferred income taxes in its estimate of “tax leakage.” In an e-mail to Brent Fullard, the president of CAITI, on November 28, 2006, Mintz said: “I do want to point out that there is a serious flaw in some analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero.” Most interesting—because I could not find anything in print by Mintz to this effect. Yet Mintz evidently made a considerable effort to get his negative views about income trusts into the public domain.

Fifth, it appears, however, that Mintz (2006a) had changed the way he deals with the deferred personal income taxes on units in RRSPs. Recall that in Aggarwal and Mintz (2004), the assumptions for these deferred taxes resulted in a present value of zero. Now, they amount is $200 million per year annualized. Quite a difference. Yet, there is no discussion of this important change in methodology and /or assumptions. Why? Surely, this point should be made clear to one’s academic and professional colleagues.

Sixth, Mintz (2006a) states that the combined federal and provincial tax revenue losses in 2006 – if both Telus and BCE become income trusts as planned —would be $1.1 billion. This estimate is hugely overstated as the superior work of Dennis Bruce (2007) makes clear. Both Telus and BCE stated that they expected to pay little or no corporate income taxes for the next several years. That means that if the two companies converted, the revenue loss would be much smaller than Mintz suggests. Apparently, he applied the average effective rate of corporate income tax for his previous set of companies to the two huge additions to his data base. Given their size, and the availability of company-specific data, these two corporations merited being handled by examining their specific situations. If he had done so, he would have reported a vastly lower estimate for revenue losses because the two corporations expected to pay little or nothing in corporate income taxes. The inclusion of BCE and Telus would have lowered the average a great deal. Professor Yves Fortin, on behalf of CAIF, estimated in December 2006 that “it might well be that no tax leakage would be found if such a study was done properly” (Globe and Mail, December 19, 2006). Dennis Bruce made essentially the same point based on extensive research—see below.

Seventh, Mintz said that in his estimates that “federal and provincial corporate taxes are estimated to be 9.7 percent of EBITDA, taking into account corporate tax changes and provincial capital taxes.” Note that this is lower than the figure of 14.7% used in Aggarwal and Mintz (2004, p. 801). Mintz (2006a) provided no explanation, but it may reflect the reductions made in the federal corporate income tax between 2004 and 2006.

Eighth, Mintz (2006a) does not provide a breakdown between federal and provincial tax revenue losses. This distinction was lost on the Minister of Finance who later repeatedly claimed that with the expected conversion of Telus and BCE, the federal government would have suffered “tax leakage” of $1.1 billion in 2006. Finance Minister Flaherty was careless with these numbers—and always on the side of exaggerating the revenue losses. I could find no published comments by Mintz correcting the Minister.

Ninth, Mintz (2006a, p.690), very usefully put the claimed tax revenue losses into perspective as follows: “Overall, the tax revenue loss to government is not large compared with current annual federal and provincial revenues of almost $500 billion. However, as the income trust sector grows, it will be important to evaluate whether this tax cut [the claimed $1.1 billion] is more efficient than other growth-oriented policies…” PricewaterhouseCoopers (2006, pp. 22-23) pointed out that Canada was running a budgetary surplus and – more important – it appeared to have a “structural surplus.”

Fortin (2009) noted that Mintz (2006a) failed to properly address the important difference between nominal tax rates and the actual or effective rates; that Mintz repeated the error in the Consultation Paper by ignoring the fact that income trust distributions are based on cash flow rather than profits and that the taxes later collected from unitholders is on a higher amount of income. Further, Fortin (2009) noted that Mintz (and Finance) ignored the fact that the Government of Canada had moved from cash to full accrual accounting in the Budget of February 2003. Thus deferred taxes do not adversely affect the budget position, but they may affect its cash position.

Mintz (2006b): The Globe and Mail op ed. by Mintz added a new piece of data not contained in Mintz (2006a), namely that about $726 million of the $1.1 billion in tax revenue losses in 2006 would be lost by Ottawa, the rest by the provinces. Note that this was less than two weeks before the new tax on income trust was announced.
To put the estimates of revenues losses into perspective, Mintz (2006b) noted that the market capitalization of Canadian income trusts was $210 billion or 11% of the total capitalization of the Toronto Stock Exchange at the time. Further, he noted that Ottawa and the provinces annually collect $50 billion in corporate income taxes.
Mintz(2006b) said the previous Liberal government’s reduction in the effective tax rates on dividends (which affected only taxable Canadian investors) with which the provinces followed suit – removed any tax advantages for Canadians holding trust units outside pension plans, RRSPs or RRIFs. Taxable Canadian investors hold 39% of income trust units. The income taxes they pay makes up for any losses in corporate income taxes. But still Mintz made no reference to deferred personal income tax revenues as an offset to corporate income tax losses in estimating federal revenue losses. Yet, as noted above, Mintz privately criticized Finance for failing to include deferred taxes in its estimate of tax leakage.


Mintz’ much-quoted estimate of tax revenue losses for 2006 assuming that both Telus and BCE converted to income trusts ($1.1 billion) was highly questionable for two reasons. First, that figure was for both federal and provincial governments. Mintz (2006b) stated that his estimate for the federal government was $726 million (compared to Finance’s estimate of $500 million). Second, even that figure was grossly over-estimated because—as noted above-- both BCE and Telus had said publicly that they expected to pay little or no cash taxes over the next few years. Given their size, and the availability of data, an individual calculation should have been used for each company.
Perhaps the best summary response to Mintz’ (2006a) is the testimony of Dennis Bruce before the House of Commons Finance Committee on February 1, 2007. Based on his much superior methodology, Bruce (2007a) told the Committee that the Department of Finance (whose estimate for 2006 was smaller than Mintz’) was “sharply overstating the tax leakage.” He said, “based on our overall analysis, we conclude the following: federal tax leakage for income trusts for 2006 was $164 million, not the almost $0.5 billion [$500 million] stated by the department; and ongoing tax leakage for income trusts post-2010, after taking into account the legislated tax changes, is approximately $32 million a year, about 5% of the department's estimate.”

Note that in a memo dated September 21,2006, Bruce concluded that when deferred taxes and the latest changes in corporate income taxes are taken into account, ”more taxes will be received (on a present value basis) from income trust conversions than would have been received under the corporate form” (HRD/HLB Decision Economics (2006b).
After the Minister of Finance announced further reductions in the corporate income tax in October 2007, Dennis Bruce (2007b) pointed out that had the reductions come a year earlier, they “would have all but eliminated the perceived tax leakage issue without the punitive distribution tax on income trusts.”

It appears that with respect to the estimation of the federal revenue losses claimed to be attributable to income trusts, a sort of Gresham’s Law prevailed. The notably flawed estimates of Jack Mintz were far more influential in the Department of Finance in 2006, and in the newspapers, compared to the professionally far better ones by Dennis Bruce of HDR/HLB Decision Economics. This may have contributed to the public policy train wreck that was the high tax on income trusts (Stanbury, 2008). Of course, there is still the possibility that the “tax leakage” argument was merely a diversion to conceal the real motivation for the tax.


1. HDR, a leading architectural-engineering-consulting firm, acquired HLB Decision Economics Inc. in March 2005. On published studies after that point relating to income trusts, HLB conducted business as HDR|HLB Decision Economics, Inc.

2. HLB Decision Economics collaborated with the Department of Finance in the summer of 2005 to come up with core set of assumptions and data that both could use in future studies.Finance used that data in coming up with the estimates reported in the Consultation Paper of September 2005. Bruce states that HRD/HLB used the data (with one adjustment) to publish its November 2005 report.The difference in the estimates of revenue losses was due to (i) deferred taxes and (ii) an update to the assumptions by HDR?HLB to fix a reporting error.He notes that it was a collaborative effort to come up with the assumptions for preparing estimates of revenue losses, but his firm’s work wasdone for industry as input to the public consultation process established by Finance Minister Goodale (e-mail to author,June 10,2009).

Note that the paper is labeled as being in the May 2004 issue of the Journal, but it was not available until September. It is common for academic journals to come out later than the date stated on the cover. An earlier version was Aggarwal and Mintz (2003).

3. See the Department of Finance’s “Consultation Paper” of September 8,2005 which describes its methodology and provides an estimate of $300 million for federal tax revenue losses for 2004.

4. More precisely, Bruce refers to “governments” throughout his study (HLB Decision Economics, 2004). Given the types of taxes under review, local governments would not be included.

5. The Department of Finance produced an estimate of $300 million for 2004 (released on September 8, 2005) and $500 million for 2006 (in the “Backgrounder” published on October 31, 2006). While the former study cited HLB Decision Economics (2004), the latter one did not, but cited Mintz’ work instead. Yet, Finance’s estimate for 2004 was based very largely on HLB’s methodology—except for the matter of deferred taxes which Finance refused to include. Further, Finance’s estimate for 2006 also relied on the basic methodology devised by HLB Decision Economics (2004).

6. I note that Mintz (2006a) did not provide the rich detail that was provided in the HLB Decision Economics (2004) or HDR/HLB Decision Economics (2005).

7. In addition, 39% are held by what he calls taxable Canadians, and 22% are held by foreigners. Each of the three categories is subject to different taxes and/or different tax rates. There is no question that there was true tax leakage in the case of foreigners’ holding trust units. They paid only 15% on the distributions they received—far less than Canadians. See Fortin (2006).

8. A close observer of the income trust tax, who insisted on anonymity, said: “Mintz came to change his views on such leakage---but he did so only at gatherings of tax specialists. He has never published anything revising what he said.”

9. The company sources on cash taxes that would have been available to Mintz in September 2006 when he was doing his paper were the following: Telus: the last update for “annual guidance” was August 4, 2006 BCE’s latest formal guidance for 2006 prior to October 2006 was dated August 1, 2006 in the “Management Discussion and Analyses” associated with the second quarter financial statements.


Aggarwal, Lalit and Jack Mintz (2003) “Income Trusts and Shareholder Taxation: Getting It Right” (Working Paper presented at a Capital Markets Institute Conference, University of Toronto, September 2003).
Aggarwal, Lalit and Jack Mintz (2004) “Income Trusts and Shareholder Taxation: Getting It Right,” Canadian Tax Journal, Vol. 52(3), May, pp. 792-818.
Bruce, Dennis (2007a) Testimony Before the House of Commons Finance Committee, February 1,2007 (summarized in a news release the next day by HDR/HLB Decision Economics Inc.)
Bruce, Dennis (2007b) “Trusts Redux: Tax Policy for Halloween,” (unpublished op ed., October 31, 2007; available on the Canadian Association of Income Trust Investors website).
Fortin, Yves (2006) “TAXATION OF INCOME TRUSTS: IS IT WORTH THE COST AND THE TURMOIL?” (Unpublished paper, November 2006; this paper was posted on the websites of the Canadian Association of Income Funds (CAIF) in Toronto and the Coalition of Energy Trusts in Calgary. It was also distributed at the hearings of the House Committee on Finance on February 1, 2007).
Fortin, Yves (2009) E-mails to the author, June 1, 2009.
HLB Decision Economics (2004) “Risk Analysis of Tax Revenue Implications of Income Trusts,” (March 11, 2004) Appendix in HLB Decision Economics Inc., “Tax Revenue Impacts of Pension Fund Investments in Business Trusts,” (Study for the Pension Investment Association of Canada, April 14, 2004).
HDR/HLB Decision Economics Inc (2005) “Tax Revenue Implications of Income Trusts,” Report Commissioned by the Canadian Association of Income Funds, November 23, 2005.
HDR/HLB Decision Economics Inc (2006a) “Income Trusts and the National Economy,” Report commissioned by the Canadian Association of Income Trusts, April 2006.
HDR/HLB Decision Economics (2006b) “Chronology of Income Trust Tax Leakage Estimates, September 21, 2006 (Memo prepared for Canadian Association of Income Funds).
Mintz, Jack (2006a) “Policy Forum: Income Trust Conversions – Estimated Federal and Provincial Revenue Effects,” Canadian Tax Journal, Vol. 54(3), pp. 685-690.
Mintz, Jack (2006b) “Income Trust Conversions: Estimated Federal and Provincial Revenue Effects,” Globe and Mail, October 18, 2006.
PricewaterhouseCoopers (2006) “Income Trust Report” (Toronto, December 11, 2006). [www.pwc.com/ca/eng/ins_sol/publications/itr_1206.pdf], 46 pp.
Stanbury, W.T. (2008) “Leadership? Here’s Ten Reasons Why the Tax on Income Trusts Was a Public Policy ‘Train Wreck,’” The Hill Times, Sept.22, 2008, p12.