Tuesday, November 24, 2009

The Globe’s Eric Reguly fell for Flaherty's same trick

In my previous posting entitled Flaherty pulled the same trick, I describe how Flaherty arranged to testify before Parliament on the matter of income trusts ahead of all the other witnesses and before all the facts were on the table. This is a deliberate tactic now being used by David Mulroney in the matter of the Afghan detainee torture investigation: Provide pre-emptive testimony to gain the higher ground and seize the public record.

Guess what? It often works with the gullible and malleable Canadian media.

Just look at the story that Eric Reguly of the Globe published in the immediate aftermath of Flaherty’s testimony on January 1, 2007 entitled: “Trust lobby had no hope against Flaherty”.

For heaven’s sake, this piece was printed in the Globe's February 1, 2007 paper and held itself out as being the definitive account of the Public Hearings on Income Trusts.

One problem with that however is the fact that there were 2 days of hearings, January 30 AND February 1. Eric Reguly was off writing stories and reaching premature conclusions before all the testimony had been provided. What kind of yellow journalism is that? Or is it merely the journalism of someone easily manipulated? Probably both. The most damning testimony was about to be delivered by the person who knows as much if not more about tax leakage than Flaherty himself or any person in the Department of Finance, namely Dennis Bruce of HLB Decision Economics . Think of Dennis Bruce as the Richard Colvin of tax leakage. And yet, here we have Eric Reguly filing his premature account of the two day public hearings as if they had ended, when they clearly had not, and before the star witness had even testified

Talk about a rush to judgment. Trust lobby had no hope against Flaherty? Yes, especially with people like Eric Reguly and the Globe so compliantly in Flaherty’s control.

And how do you suppose Eric Reguly’s premature piece ended? His piece ended with the following advice concerning the opponents to Flaherty’s trust policy: “They should be ignored”.

Well isn’t that nice? Advice from the Globe and Mail that the other side of a “debated” should be ignored, published the very day before they were about to testify before Parliament? You’d almost think the Globe had an agenda on this policy, which clearly they do. What’s the next piece of advice we can expect from Eric Reguly and the Globe? That books should be burned? Or just people’s life savings?

Eric Reguly would soon experience his fall from grace.....or should I say fall from pomposity and presumptuousness?

The real world (the one not occupied by Eric Reguly) soon outted the false conclusions reached by Eric Reguly and Flaherty’s so far successful efforts to manipulate the media, because it wasn’t a short two months later when the deluge of takeovers of trusts began to occur ( as predicted by many, but dismissed by Reguly) that Eric Reguly had the temerity to conclude that “these takeovers are a disaster for Canada’s Finance Minister, Jim Flaherty”.

Gee, what an epiphany.

It’s too bad that Eric Reguly didn’t have the balls to actually write about that “disaster” in the Globe rather than merely musing about it on the seldom watched BNN. But to do so would refute all of Eric’s previous vapid musings on income trusts. Refuting one’s own vapid musings of the past would take a degree of professional integrity that evidently is completely lacking in Eric Reguly and the Globe’s grossly biased news coverage of the Income Trust tax.

Had Eric Reguly not rushed to judgment on the Public Hearings on Income Trusts and IF he had stuck around to hear all the testimony, he could have avoided himself a lot of embarrassment and have actually performed his professional duties as a journalist. Instead he chose to be a mouth piece for the government and make conclusions that were favorable to the government before all the testimony had been delivered. Eric Reguly sought to be pre-emptive of people’s testimony before Parliament. What a thug of democracy. Why did Eric Reguly not write about this testimony that was presented in day 2 of the hearings by Dennis Brice and others, as it would have avoided him the professional embarrassment of a few months later, to wit damning testimony like this. Or would that be balanced and objective reporting, something not tolerated in the Globe and Mail?

Independent economists discredit govt tax leakage claims

OTTAWA, Feb. 1, 2007 /CNW Telbec/ - In remarks delivered to the House of Commons Finance Committee Thursday, Dennis Bruce, Vice President of HLB Decision Economics Inc., provided data and supporting documentation to discredit the Department of Finance's tax leakage claims.

"The department is sharply overstating tax leakage," said Mr. Bruce, who added that there would be minimal costs associated with a 10 year phase-in of the new tax on income trust distribution payments.

HLB Decision Economics, an Ottawa-based independent consulting firm that provides analytical consulting services to industry and governments worldwide, has been working on behalf of the income trust sector to develop a comparative analysis of taxes generated under the income trust structure versus the corporate structure.

Mr. Bruce told committee members that his firm worked with the Department of Finance as it prepared the federal government's 2005 consultation paper on the tax effects of income trusts. Specifically, HLB was asked by the department to develop a common methodology and assumptions for deriving tax leakage estimates.

Mr. Bruce said that HLB and the Finance Department achieved consensus on the methodology with one exception - they disagreed on whether to include deferred taxes. Deferred taxes are derived from distributions, capital gains, and dividends received in tax exempt accounts. While they are not immediately taxable, they are taxable upon withdrawal from such accounts.

"The discussions that you are hearing about deferred taxes reflect confusion about budgeting convention versus policy analysis," said Mr. Bruce. "While federal budgeting is done on a current basis, federal policy analysis is done on a life-cycle basis. Accounting for the life-cycle effects of tax changes, namely deferred taxes, is appropriate in the consideration of tax policy."

Mr. Bruce went on to outline the factors that resulted in the differences between HLB's tax leakage estimates and the tax leakage figures put forward by Finance Minister Jim Flaherty. These factors include:

1) The Department's assumed effective corporate tax rate for energy
trusts fails to reflect the reductions in the tax rates for resource
corporations from 2004 through 2006, from 27.12% to 24.12%. This
results in an overstatement of tax leakage of $84 million;

2) The Department's figure for income trust units held in tax exempt
accounts is overstated. Derived from data from surveys, Statistics
Canada, interviews and Scotia Capital Markets data, the percentage of
units held in tax exempt accounts is 31 percent, less than the
Department's 38 percent estimate. This results in an overstatement of
tax leakage of $125 million;

3) The value of deferred taxes is excluded from the Department of Finance
analysis. This results in an overstatement of tax leakage of
$80 million; and,

4) The Finance Department's atypical inclusion of the impact of limited
partnerships, which reduces the tax leakage to $45 million.

5) The impact of future legislated tax changes post 2010 has not been
accounted for. Doing so reduces the ongoing federal tax leakage after
2010 by $232 million.

Mr. Bruce stressed that the discrepancies between HLB and the Finance Department led his firm to conclude that the Finance Department is "sharply overstating tax leakage."

Specifically, HLB concluded that:

- Federal tax leakage for 2006 was $164 million, not the
half billion dollars stated by the Department; and,

- Ongoing tax leakage, post 2010, after taking into account legislated
tax changes, is $32 million per year, about five percent of the
Department's figures.

For further information: Dennis Bruce, Vice President, HDR - HLB Decision Economics Inc. (613) 234-0080; Cell: (709) 632-1708

1 comment:

Dr Mike said...

Jim Flaherty , Stephen Harper & the rest of the Conservative gov`t -- pffffffft

Eric Reguly & most of the more than lazy MSM (that includes you Terry C) -- pffffffft

Why does no one from these two outfits ever mention the poor old investor in all of this--he was the one who got screwed royally--he was the only outright & obvious loser.

I guess if you hide the victim well enough , then who is the wiser.

Isn`t that right Mr Afghan guy off the street looking at the live end of jumper cables in the Kandahar Hilton.

Dr Mike