Explanation required please

JANE TABER CLARIFICATION/APOLOGY:

On 5/1/09 8:29 PM, "Taber, Jane" wrote:

So sorry

--------------------------
Sent from my BlackBerry Wireless Handheld


Jane: Very good of you to say you are “so sorry” , as I caught wind of this comment contained your article in the Globe from a posting on the Toronto Star website. I really could not believe what I was reading with my own eyes, so I naturally went back to read the source (your article) from which the person had been quoting to confirm whether it was accurate or not. I read your piece and left with the interpretation that these were, indeed the word and thoughts attributed to Michael Ignatieff , when in fact you are now confirming they are Tom Flanagan’s. Never could their be two different ends to the academic and political spectrum than Micahel Ignatieff and Tom Flanagan. I was not alone in my misinterpretation of your article. Therefore out of sense of fair play and good journalism and the reputation of Michael Ignatieff. I would strongly encourage you to correct this widespread misunderstanding that exists amongst your readers that Flanagan and NOT Ignatieff is of the moral standing that: “As an academic, he said, "you just build up a habit of trying to give honest answers to questions. ... Then once you get into politics your task is mostly to conceal the truth. The truth becomes a gaffe”

Thank you and knowing you will do the right thing, given that reputations are essential to whom we are.

Or as Michael Ignatieff himself has written...”“We need words to keep us human”. An essential aspect of which requires that they be the actual “words” of the “human” in question.

Brent Fullard







CORRECTION:

I think you have misread the quotation. The Globe is quoting Tom Flanagan about Ignatieff, not what Ignatieff is saying there.

It is poorly written but read it again after reading the prior paragraphs and I think you'll see.

"So far, however, Mr. Flanagan said, Mr. Ignatieff is improving and has made few missteps, with the exception of recent musings on raising taxes to pay down the deficit.

The problem lies in Mr. Ignatieff's years as a university professor. As an academic, he said, "you just build up a habit of trying to give honest answers to questions. ... Then once you get into politics your task is mostly to conceal the truth. The truth becomes a gaffe."Flanagan is the gift that keeps on giving... to the Liberals. First he tells us that 'yeah, there is a hidden agenda' then he tells us that 'Harper's budget is bad but it is necessary for him to keep his job', he had the helpful comment that we are not any longer a "constitutional democracy but an electoral democracy" in trying to pretzel around the Constitution to say that the coalition was un-Constitutional.

And now he reveals the inner modus operendi of the Harper government.






Today’s Globe: The problem lies in Mr. Ignatieff's years as a university professor. As an academic, he said, "you just build up a habit of trying to give honest answers to questions. ... Then once you get into politics your task is mostly to conceal the truth. The truth becomes a gaffe."

What became of Ignatieff’s “Canadians deserve the truth”. That is beginning to sound more like the incomplete thought that it is.

This is very disconcerting to hear, especially given that I have been totally perplexed as to why the Liberals are NOT exposing Flaherty’s TOTAL LIE about tax leakage or HIGHLIGHTING the fact that $100 billion in takeovers have been triggered by this policy causing the loss of over $1 billion in ANNUAL TAX LOSSES, a number that will grow to $7.5 billion, unless we can find some PAID ELECTED POLITICIAN who thinks their job is something other than “ mostly to conceal the truth.”

Just exactly who does the Liberal Party stand for in the income trust fraud: Taxpayers or Bay Street?

Explanation required please

$3.8 billion Chrysler investment 'not ideal,' Harper says

Stephen Harper must be hoping we all have short memories, because this was HIS IDEA for the auto industry a short two years ago, This doesn’t sound too “ideal” either:

Harper’s 'Green levy' hurts Big Three

STEVEN CHASE AND GREG KEENAN
Globe and Mail
May 30, 2007

OTTAWA, TORONTO — The Harper government's "green levy" tax on less fuel-efficient vehicles threatens investment in Canada's auto sector, a major lobby group warned federal lawmakers yesterday.

The Canadian Vehicle Manufacturers Association also cautioned that Ottawa's scheme to subsidize more fuel-efficient cars is distorting the market, sending more than two-thirds of the cash to Toyota Canada Inc. buyers, half of which will reach purchasers of a single model, the Yaris.

Ottawa expects to extract $110-million annually by a levy slapped on purchases of so-called gas guzzlers - about $55-million of which will come from autos sold by the Big Three U.S.-based auto makers.

"At a time when facilities are being closed in many regions of the world because of global overcapacity - including some in Canada - capital is no longer fixed and can be moved globally and every dollar on the bottom line is being counted," Mark Nantais, CVMA president, told the House of Commons finance committee.

"A $55-million tax is one more obstacle to explain as one develops its business case for new investment in Canadian operations," he told MPs sitting on the committee.

He warned that Ottawa's surprise 2007 budget move to dole out subsidies and penalties for purchases of various cars based on fuel efficiency is a historic intervention in the auto market.

"This measure constitutes, in my mind, the single most significant intrusion into - and disruption of the functioning of - the competitive automotive marketplace," Mr. Nantais said.

His group represents the Canadian arms of the Big Three U.S.-based auto makers: DaimlerChrysler Canada Inc., Ford Motor Co. of Canada Ltd. and General Motors of Canada Ltd., all of which have also spoken out publicly against Ottawa's auto "feebate" scheme.

In addition to lobbying Ottawa directly, Mr. Nantais made a presentation earlier this week in Oshawa, Ont., home of General Motors, where he urged Oshawa City Council to push the federal government to eliminate the feebate program immediately.

Conservative Finance Minister Jim Flaherty shrugged off concerns about his budget's subsidy scheme, saying it's inevitable some car makers will be upset if fewer of their models qualify for rebates than they would prefer.

"There's some line-drawing inevitably that happens there, and some companies are more happy than other companies about the line-drawing and they're talking about that with Transport Canada which is responsible for the line-drawing."

Mr. Flaherty suggested, however, that the fuel-efficiency cut-off point for the subsidy could be revised in the future.

"That can change over time," Mr. Flaherty said.

Feebates also penalize some technologies being developed in Canada and used in Canadian-made vehicles, Mr. Nantais said, pointing to so-called cylinder deactivation, which involves some cylinders of an eight-cylinder or six-cylinder engine shutting off when a vehicle is cruising, which reduces fuel consumption.

The levies from the scheme will cost Chrysler, Ford and GM $67-million while providing $47-million to Toyota Canada Inc., he added.

The Toyota Yaris consumes 6.4 litres of gas for every 100 kilometres it travels, which means it qualifies for a $1,000 rebate by falling below the line of 6.5 litres per 100 kilometres.

Honda Canada Inc. has already acted on its own by offering $1,000 rebates to buyers of its Fit subcompact, which competes against the Yaris, but uses 6.6 litres of gasoline to travel 100 kilometres. It misses the cut-off for the rebate by one-tenth of a litre

PGA penalizes Tiger Woods

In the interest of leveling the playing field of golf and to assist other players to win more tournaments, trophies, prize money and lucrative sponsorships and endorsements, the PGA announced today its new Arbitrary Golf Fairness Plan, in which Tiger Woods will be assessed with a 5 stroke penalty on all future PGA sponsored events.

The five stroke penalty assessed to Mr. Woods was determined by a review of his past performances in tournaments over the last five years in which he won by 5.2 strokes relative to the average of the top ten finishing players of each tournament.

This measure was the result of extensive lobbying of the PGA by other lesser players as well as the major providers of endorsements who found that there weren’t enough good players to go around and for whom the good players, like Tiger Woods, were becoming far too expensive to secure for product endorsements.

The measure was brought into effect by Jim Flaherty, formerly the Finance Minister of Canada, and a special advisor to the PGA.

In announcing this new program, Mr. Flaherty justified it by stating:

“You have to either leave it alone or fix it,” Mr. Flaherty shrugged Wednesday. “We were going to see too many players in the country not win tournaments. That's a clear and present danger to fairness in the PGA. I thought we had to act arbitrarily and capriciously."

Canada's Politicized & Paranoid Investment Board (CPPIB)

Below is the first of three incoming emails/phone calls I received from the Canada Politicized & Paranoid Investment Board (CPPIB). Each one escalated to someone higher in the apparatchik at the CPPIB

Why did the CPPIB attempt to stifle CAITI's right of free speech over CPP's income trust losses? So they lost a ton of money from Flaherty’s idiot income trust move. Big deal, what’s a measly $300 million anyway?

I am sure Flaherty did something, maybe in the way of bonuses or something to shut these guys up and have them ultimately play the “heavy” with CAITI......to no avail.

Or maybe Flaherty employed that concept, the term for which I learned from Elizabeth May....job blackmail?

I subsequently learned that the CPPIB was totally paranoid about these trust losses coming to light at the time of the one year anniversary of the great halloween Betrayal. Note the date when they first contacted me:

From: "Pedrosa, Manuel"
Date: October 30, 2007
To: contact@caiti.info
Subject: Re: CPP has lost $158 million

Good Afternoon,

I would like to speak to someone about your scrolling marquee on your Web site that declares that the Canada Pension Plan has lost $158 billion as a result of Haper’s broken promises.

The only contact information on you Web site is this e-mail address.

Regards,

Manuel

------------------------------------------
Manuel Pedrosa
Specialist, Communications
Communications and Stakeholder Relations
CPP Investment Board
One Queen Street East
Suite 2600
Toronto, ON M5C 2W5

Tom Caldwell speaks on trusts, and Harper's lack thereof

Brent:

Just listened to Tom Caldwell talking with Pat Bolland on BNN about buying back Canada's industry.

A very good interview! Tom touched on trusts as well and the dishonesty of our Government.

Just in case you missed it.

Dick.

Happy birthday Stephen!

How do you plan to celebrate the big 5-0......raiding seniors’ nest eggs?....pin the double tax on the donkey’s RRSP?.....snuff out $35 billion of Canadians’ life savings?.....carve out the pension fund turkey's? ....lie about tax leakage?

All the best birthday boy. Here are some media greetings just for you:

Today’s Gazette: Harper's in deep, deep trouble:

Today’s Calgary Herald: Harper turns 50 with nowhere to go but down

Today’s CFRB: Happy Birthday Stephen! Will you be staying?

My letter to the politicized CPPIB of November 2, 2006

Even before this $11 million bonus flap, Flaherty had ALREADY POLITICIZED the CPP

From: brent.fullard@rogers.com>
Date: Thu, 2 Nov 2006
To: csr@cppib.ca
Subject: CPPIB Supports taxation of Income Trusts?

Based on comments attributed to CPPIB Spokesperson, Ian Dale, I understand that the CPPIB came out yesterday in favour of the new tax to be levied on Income Trusts.

I find it highly unusual that the CPPIB would make such a statement on such a highly politically charged issue particularly when it directly contradicts the position previously taken by other prominent Canadian Pension Funds, namely Teachers. Would the fact that CPPIB answers to Ottawa have anything to do with it, whereas Teachers answers to its pension beneficiaries?

As I analyze it, there only exists two scenarios, either CPPIB presently has an investment in Income Trusts or it does not.

In the first scenario, why is CPPIB shooting itself in the foot by taking such a position, given that over the long term these new rules will result in a permanent impairment in value of some 30% of CPPIB's investment, whilst killing the viability and sustainability of this important asset class ( at least important to some Canadians...namely those seeking stable and consistent income for retirement.)

As perplexing as the first scenario may be, in some respects the second scenario is the most troubling as it calls into question the independence of the CPPIB from the elected officials in Ottawa. If CPPIB has no "skin in the game" why is it supporting these moves when it most negatively affects the income of retired Canadians. After all, I thought that's the business CPPIB was also in.

I look forward to your response.

Brent Fullard
Toronto

Obama announces forced government merger of Chrysler with Fiat..by fiat

Obama announces forced government merger of Chrysler with Fiat..by fiat:

Fiat, Chrysler deal signed: newspaper website
Thu Apr 30, 2009 11:37am BST


MILAN (Reuters) - Italy's Fiat (FIA.MI: Quote, Profile, Research) and U.S. car maker Chrysler LLC CBS.UL have signed their anticipated partnership deal, Corriere della Sera newspaper said on its website www.corriere.it on Thursday.

"Fiat-Chrysler, deal done. The signature is there," the website said.

Chrysler has been set a deadline of May 1 by the U.S. government to secure the survival deal.

(Reporting by Jo Winterbottom)

Congratulations to Caldwell Securities, who are against “The Sellout of Corporate Canada”

Click on image to enlarge.

To: tcaldwell@caldwellsecurities.com
cc: Bay Street, Fleet Street, Ottawa

When it rains, it pours.

For all of you who may not have seen today’s ad by Caldwell Securities, I refer you to the back cover of today’s Globe and Mail’s main section, regarding “The Sellout of Corporate Canada”

I applaud Caldwell Securities for speaking on this issue in such a clear and public manner. As the President of CAITI (caiti.info) I share these same concerns as evidenced by our advocacy over the last 2.5 years and as evidenced by full page ads of our own such as the one attached that ran in the Toronto Star and Calgary Herald entitled Jim Flaherty’s Great Canadian Giveaway Sale as well as the ABC’s of BCE, to name but two such CAITI advocacy ads, both of which can be clicked on for your viewing pleasure, and total dismay in terms of public policy of the Stephen Harper government, by edict and concealment as opposed to by public consultation and empirical transparency and accountability.

I think the income trust giveaway sale was actually a phony “scratch and dent sale” in which the obvious parties were going to benefit from the “tax arbitrage” handed to them under the false arguments of “tax leakage” and “ponzi schemes”. Are Canadians really that gullible and passive to accept patent nonsense as the substitute for empirical evidence?

Surely those who manage other people’s life savings aren’t so passive and gullible. I am most pleased to see that Caldwell Securities is NOT passive on the obvious takeover of Canada by foreign interests and the role played by the obvious disparities in our tax code, many created by this government itself, such as the income trust tax, the restrictions on the growth of income trusts if publicly held by Canadians and the elimination of withholding tax on leveraged buyout loans, whose only purpose is to strip pretax earnings out of Canada. Stephen Harper has turnd Canada into a cleptocracy, from what previously was a democracy with, generally, the interests of all Canadians in mind, rather than the privileged few.

Interesting that Caldwell, like CAITI, is speaking from the perspective of INVESTORS and not CAPITAL USERS. Meanwhile the capital users are represented in Ottawa by whom? You got it.....self interested Corporate Managers with groovy titles like CEO and Director, the very people who got Ottawa to sabotage the only vehicle that gave Canadian companies a natural immunity from foreign takeover. Even Ottawa knew that to be the case, before they let Jim Flaherty and his Somali pirates have their way with Canada’s tax code that saw income trusts double taxed in RRSPs but not in the hands of others. This was premeditated piracy and has turned Canada into a cleptocracy if it is allowed to stand. See Steven Chase article entitled “ “Trust tax linked to private equity buyouts” on June 13, 2007.

Ottawa has to STOP taking advice from self serving corporate managers who profess to speak on behalf of the business owners who pay their salaries and lucrative bonuses and stock option and stop pretending to speak about what’s best for the country.
That reminds me of the expression of “What’s good for General Motors, is good for the United States”. Look where that mentality got the United States.....not to mention GM.

When I was the Executive Managing Director of Equity Capital Markets at BMO Capital a group of my colleagues made a huge pitch to Power Corporation to show them ways in which they could employ the trust model to their benefit. Usually after the monumental work that goes into such a pitche, you receive a lot of feedback. In that instance, the only feedback that was provided by the CEO of Power Financial was “Income trusts are bad for Canada”.

Well speak for yourself. What’s bad for Canada is Directors and CEOs who go to Ottawa to sabotage the very thing that they know their owners want, as reported by the Globe on November 2, 2006:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico.”

That’s Stephen Harper’s idea of public consultation...squeaky wheels with special access.

These corporate managers are very narrowly focused and are generally driven by greed. Since when did a corporate manager not like a foreign takeover of the company he managed? Really? So of course the advice that corporate managers lay on Ottawa, such as the advice of Michael Sabia or Dominic D’Alessandro or Paul Desmarais Jr, or Rick George of Suncor, on income trusts will be TOTALLY SELF SERVING. Even failed takeovers get rewarded under this corporate regime as witnessed by the $21 million “consolation prize” handed to Michael Sabia. These people motives of greed and vaiity, and often failed attempts at “empire building” are obvious, but what’s not obvious is the answer to the question:

Why are politicians such Pollyanna pansies? Are they too naive and inexperienced in the ways of Bay Street or too vain not to realize they are being gamed? Please wake up and start listening to the CAPITAL PROVIDERS who are the VOTING TAXPAYERS after all, as a group we OWN these COMPANIES that these corporate managers, cum saboteurs of tax policy, profess to represent.

In the Caldwell ad, the point is made: “Current worldwide economic challenges now present great opportunities for Canada....Government policies and taxation regimes should also be re-examined with this goal in mind...The investment merits of thinking bigger are clear.”

I have no idea where Caldwell Securities is coming from on tax policy, however my point has BEEN CLEAR and CONSISTENT from the OUTSET and supported by EMPIRICAL EVIDENCE and FACTS....Prove the income trust case...or drop the tax, as thoughtfully REITERATED by Diane Francis on the weekend and as highlighted as a concern with yesterday’s takeover of Eveready by US Clean Harbors Inc. for all the reasons described in the Department of Finance memo reported on by Steve Chase (above) and enunciated here:

Income trust fiasco should be reversed

Why the income trust issue REFUSES to go away...

No income, no trust

Why not take aim at the government?

Anonymous said...

Goodale brought income trusts up in the House today. Others did earlier this week. Why not take aim at the government?

CAITI said...

Why not take aim at the government?

For the simple fact that the Liberals are FAILING to prosecute this issue PROPERLY and are simply "dancing" around the issue.

The Liberals have had 2 and half years to message this issue properly and completely FAILED to deal with it properly in the 2008 election.

They are the Official OPPOSITION aren’t they?

Raising the issue in the House is INSUFFICIENT unless the Liberals tell Canadians that tax leakage is a LIE.

Or do you suppose in "Taking aim at the government, we will get them to admit that TAX LEAKAGE IS A LIE, after all, the tax leakage lie is only the SOLE BASIS on which this fraudulent policy was SOLD to Canadians and was the SOLE BASIS on how Harper got away with breaking his SOLEMN ELECTION PROMISE.

Meanwhile CAITI has been taking aim at the government with hundreds of BULLSEYE shots to the core of this policy.......meanwhile the LIBERALS KEEP MISSING THE TARGET COMPLETELY with their lams spitballs and paper clips questions that I almost think are intended to miss and inflict no har, insofar as this policy is concerned?

VERY disconcerting.

I look forward to being proven wrong.

Brent Fullard

Jim Flaherty's Great Canadian "tax leakage" Giveaway Sale

MacLeans’ Aaron Wherry writes about Question Period yesterday:

“Back came Goodale, surely ready for this: “Mr. Speaker, two and a half million Canadians remember that he said the same thing about income trusts.” The Liberal side stood to cheer.”

Meanwhile yesterday it is also reported, in the real world, that: Eveready Inc. (TSX:EIS). Energy signed a definitive C$464 million cash and stock deal to be acquired by US Clean Harbors Inc. (NYSE:CLH), North America's biggest provider of environmental and hazardous waste management services.

On December 31, 2008 Eveready Inc. converted from a growth oriented income fund into a growth oriented, dividend paying corporation, and thereby is still vulnerable to foreign takeover, making the takeovers from the trust tax policy total $100 billion and causing $1 billion in Annual tax loss revenue per year, or twice the amount that Flaherty alleged income trust were causing. If nothing is dome, this tax loss will increase to $7.5 billion a year, the equivalent of a 1.5% GST increase to be incurred by ALL TAXPAYERS across the country.

With all due respect Mr. Goodale, this issue is not about the 2.5 million Canadians, it is about ALL CANADIANS and whether Canada is a true democracy or not and whether Parliament passed legislation that is in the interest of ALL CANADIANS or whether it is passed to serve the narrow interests of a handful of corporate managers who did an end run around their shareholders to SABOTAGE an alternative that they didn’t like, but which they knew their shareholders wanted, so they went to Ottawa to put the fix in and Ottawa complied with this fraud of a policy that was premised on the lie about tax leakage.

These series of full page CAITI newspaper ads is what this issue is REALLY about. This tax policy madness has to stop NOW:

Lie Conceal Fabricate....click here

Mr. Flaherty: Your tax leakage analysis is fraudulent....click here

Jim Flaherty’s Great Canadian giveaway sale..... see above, or click here

Why is Jack Layton selling out Canada’s resources.....click here

If Flaherty’s right, then 91% of Canadians must be wrong......click here

Stephen Harper’s insidious attack on Democracy.....click here

And ONLY “least” importantly, this issue is about:

I don’t want to be a burden to my children.....click here

Why can Diane Francis of the Financial Post (click here) get this right on April 25, 2009, and the Members of Parliament and the Liberals. NDP and Bloc CAN NOT? Whose bed are they sleeping in?

See also this April 7, 2009 article in Sun Newspapers across the country: No income, no trust

See also Hill Times major exposé of April 20, 2009: Why the inccome trust issue REFUSES to go away

Why can't Mark Carney answer a simple straight up fact based question?

Here we have a video in which Thomas Mulcair, Deputy Leader of the NDP and his Party’s Finance Critic asking Mark Carney whether the income trust tax achieved its intended purpose of addressing the “notion” (Thomas Mulcair’s word) that income trusts were causing a tax revenue loss, in light of the many takeovers of Canadian trusts by foreigners, such as the takeover of Prime West Energy Trust by middle eastern oil company?

Why can’t Mark Carney give a straight answer? This is not rocket science. What is he trying to hide, if not the same thing he was trying to hide with his 18 blacked out pages of so-called “proof”.

Meanwhile Deloitte (see below) has already answered the question that Mark Carney is EVADING in this video with Mulcair, in their study entitled: Income trust buyouts: Lots of activity little Tax revenue

Also view the Youtube tape (see below) of the Globe’s Eric Reguly on BNN stating that these trust takeover and the associated tax losses they produce are a “disaster” on the part of Jim Flaherty.

How long before we declare Flaherty’s “experiment” a FAILURE? The NDP can be heroes if they EXPOSE the TAX LEAKAGE LIE. So too the Liberals and the Bloc. Come on folks, what’s the hang up? Canadians aren’t sheeple.....or do you think we are?

MULCAIR VIDEO: Click here

DELOITTE STUDY:Click here

ERIC REGULY: Click here

LATEST TAKEOVER AND LOSS OF TAXES: Click here

Mr Goodale: The tax leakage pandemic goes on UNABATED. Action required NOW

The Liberals have to get their head out of the sand on this income trust matter, as their INACTION and lack of ADVOCACY on the trust file and in exposing HARPERS GROSS LIE OF TAX LEAKAGE is contributing to tax leakage by allowing these trusts to be ACQUIRED BY FOREIGNERS such as this takeover announced TONIGHT. FAILURE TO act in OPPOSITION to this loss of taxes from these takeovers means the LIBERAL PARTY IS BEING REMISS and becomes COMPLICIT in these TAX LOSSES. Your action and advocacy is required NOW:

Eveready Inc. (TSX:EIS). Energy. Up on 5,370,941 shares on news it signed a definitive C$464 million cash and stock deal to be acquired by Clean Harbors Inc. (NYSE:CLH), North America's biggest provider of environmental and hazardous waste management services.

On December 31, 2008 Eveready Inc. converted from a growth oriented income fund into a growth oriented, dividend paying corporation.

Who is more credible: Jack Mintz or the NDP's Finance Critic?

Letter from Denise Savoie:

“Dear constituent: I have spoken with Judy Wasylycia-Leis, our party’s Finance Critic, she is confident that the government’s estimates of future tax leakage are accurate.”?

From: Jack Mintz
To: brent.fullard@rogers.com
Date: Tue, 28 Nov 2006

I do want to point out that there is a serious flaw in some [tax leakage] analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero

If CPPIB claims to NOT be political, why did David Denison stiff arm me on this?

CNW Newswire: Attention News Editors:

Liberal Candidate for Whitby-Oshawa seeks information on the losses sustained by the Canada Pension Plan, as a result of Jim Flaherty's income trust betrayal

TORONTO, Sept. 11 /CNW/ - Today Liberal Candidate for Whitby-Oshawa,
Brent Fullard delivered a letter (below) to the CEO of the CPPIB seeking detailed
information on the losses sustained by the Canada Pension Plan, and therefore
all Canadians, as result of Jim Flaherty's income trust betrayal.

September 11, 2008

Canada Pension Plan Investment Board
One Queen Street East
Suite 2600, P.O. Box 101
Toronto, Ontario M5C 2W5
Canada

Dear Mr. Denison, President & CEO:

Re: The losses sustained by the Canada Pension Plan by Jim Flaherty’s Income Trust Tax

I am writing to you as the federal Liberal Candidate in the upcoming election for the riding of Whitby-Oshawa, the riding of Canada’s Minister of Finance, Jim Flaherty which as you know will be taking place on October 14, 2008.

It is important to voters in “Whitby-Oshawa” that their representative in Ottawa is acting in a responsible and prudent manner at all times. The same is true for all Canadians insofar as their Finance Minister is concerned. This inquiry concerns Mr Flaherty’s policy to tax an aribitrailiy selected subset flow through investment vehicles but not others, such as his law firm tax flow through vehicle Flaherty Dow Elliott & McCarthy, which pays no taxes.

In order to accurately inform Canadians of one of the many ways in which Mr. Flaherty’s policy to tax publicly traded income trusts, (and not all other firms of trusts, including REITs) negatively affects all Canadians, I am requesting from you detailed information on the “mark to market” impact of this tax on the public income trust portfolio holdings of the Canada Pension Plan.

I cite the following from your website:

“While the CPP Investment Board operates at arm’s length from governments, we are subject to very rigorous accountability requirements. Accountability is deeply ingrained in the CPP Investment Board's legislation, governance and in the policies and practices of the board, officers and employees.”

It is in this regard that I am writing to you, as Canadians are in need of accountability on the issue of the taxation of public income trusts and the impact it has had on their retirement assets within the Canada Pension Plan.

Unfortunately the level of portfolio disclosure afforded Canadians concerning the income trust holdings of the Canada Pension Plan and the timing of the tax announcement (October 31s, 2006) means that there is insufficient public information to make this calculation with absolute precision, due to timing differences and limited disclosure.

However a close approximation of the loss sustained by the Canada Pension Plan can be made, as follows.

On October 29, 2007 , the CPP income trust holdings (excluding REITs) held by CPP on March 31, 2007 had declined in value by $173,346,000 if those holdings had remained in place from the announcement date (October 31, 2006) onward.

On September 8, 2008 , the CPP income trust holdings (excluding REITs) held by CPP on March 31, 2007 had declined in value by $206,935,000 if those holdings had remained in place from the announcement date (October 31, 2006) onward.

We seek more detailed disclosure from you on the holdings of public income trusts by the Canada Pension Plan on October 31, 2006 and various points in time, specifically two weeks, six months, twelve months and eighteen months after the announcement as well as presently, in order to ascertain the absolute level of loss experienced by all Canadians and to demonstrate the fact that the loss incurred at the outset has been sustained over time, as is concluded from our analysis and as corroborated by the sustained loss in the broader income trust index.

In the event that the various investment positions held in the CPP have been sold at points during these various periods of time, please perform a “run down” analysis in which it is assumed that the monies received from the sale of public income trusts were not reinvested, but remained as cash at the time of sale to the end of the time period in question.

We request this information from you on a timely basis in order that your findings can be fully disseminated to the voting public. well in advance of the October 14, 2008 election date on this important policy matter affecting the retirement security of all Canadians, both inside and outside the CPP.

If you have any questions please call me at 647 505 2224 (cell)

Thank you in advance,

Yours truly


Brent Fullard
Liberal Candidate for Whitby–Oshawa
Campaign Headquarters
1540 Dundas St E.
Whitby ON
L1N 2K7

Hey! CPPIB already allowed ITSELF to be politicized !!!

Here we have the Globe reporting that the CPPIB is at risk of being “politicized”, if MP’s roll back some of the bonuses paid to CPPIB executives. This ignore the fact that the CPPIIB already allowed itself to be politicized by Ottawa/Flaherty on their reaction to Flaherty’s income trust tax, which the CPPIB came out an spoke in favor of. Perhaps those favourable statements by the CPPIB on November 1, 2006 are tied to very these rich private sector type bonus schemes at CPPIB?

Why would the CPPIB have spoken in favour of the income trust tax, if it caused them to lose $300 million from their IT holdings? Why would I have received 3 incoming calls from ever more senior people from the CPPIB to remove the statement that scrolled across the “news ticker” of the caiti.info site that made note of the losses by CPP from Harper/Flaherty’s income trusts tax?

If that ain’t political then I don’t know what is? They have allowed themselves TO BE POLITICAL. Therefore Andy Willis’ arguments are AGAIN, the obverse of reality.

See: Canada Pension Plan Investment Board: Dabbling in cover-ups at the behest of Harper/Flaherty


Politics threaten CPP Investment Board integrity
Andrew Willis
Globe and Mail
April 29, 2009

Canada runs a pension plan that's the envy of the world, crowned by a well-funded, professionally staffed, independent fund manager in the CPP Investment Board.

The integrity of that fund manager is in danger.

The problem is money – bonus money. CPPIB recruited top executives on the strength of two promises: They could make their own investment decisions, free from political interference, and their compensation would be comparable to peers in the private sector. On the basis of those guarantees, professionals left lucrative private sector jobs to run the country's retirements savings.

There is now pressure to break that second promise.

Grandstanding Liberal, NDP and Bloc members of Parliament grilled CPPIB executives yesterday over the bonus payments they will likely receive, despite expected losses at the fund this year. The $109-billion CPPIB fund was down 13.7 per cent or $13.8-billion in the first nine months of the year ended March 31, 2009.

The strongly-worded advice from a few MPs was to turn down long term bonus payments.

Bad idea, on every level.

The populist posturing from MPs could derail a very good thing for the Canadian people.

First, the CPPIB board worked long and hard to set up a compensation system that is largely focused on long-term performance – a big chunk of paycheques reflect the fund's results over four years. That encourages the long-term investment thinking a pension fund demands – managers have no incentive to swing for the fences to make short-term targets.

Second, the comp structure was set out in employment contracts. Companies don't tear up these contracts with employees without suffering grave consequences. Sticking with the swinging-for-the-fences analogy, a big league slugger with big-time guaranteed money still gets paid, even if the team doesn't win the World Series.

Compensation is a matter to be decided by the CPPIB's board, not by an MP in Ottawa.

And what seems lost on the MPs, who have their own gold-plated pension plan, is that CPPIB is likely going to outperform benchmarks. Yes, they will have lost money last year. Welcome to the club. But the team likely lost less than peers, or their performance standards.

If CPPIB executives are forced to turn down bonus payments, despite meeting performance goals, the best people on this team should quit, and some will quit. The fund's ability to recruit will be destroyed. That would be an enormous setback for Canada.

Why is it MPs can't step back from Parliament's partisan poison, and recognize that CPPIB fund managers did a decent job in a lousy market? Is everything in Ottawa about scoring points?

If you're wondering, here's how compensation broke for CPPIB chief executive officer David Denison in 2008: $475,000 salary, $1.2-million annual bonus, $1.9-million LTIP.

Reach for the flops....Ottawa edition

This comment “It is very difficult to predict the next crisis,” Mr. Carney said Tuesday during testimony to the House of Commons Finance Committee. “One should never assume that because it hasn't happened that it won't happen.” April 28, 2009

Ranks with this comment: “My own belief is that if we were going to have some kind of of crash or recession, we probably would have had it by now” Stephen Harper, September 15, 2008

Or this inane and incriminating comment: “I guess if we were incompetent, we wouldn’t admit to it” Brian Ernewein, Department of Finance, at the Public Hearings on Income Trusts, when challenged about the Department’s bogus tax leakage claims February 1, 2007

Only the intellectually corrupt want to change the channel from "tax leakage"

Hello Diane,

Thank you for the article on income trusts. It is one of the few cogent pieces in the press these days not revelling in the froth of panic and disaster.

I wonder how this government can justify throwing billions of taxpayer money at companies who can't make products customers want while squashing a productive income trustsegment of our economy based on a false premise of "tax leakage".

Regards,
Harry Truderung
private citizen

Talk about intellectually corrupt, here's TD Bank's take on things

This letter from Ed Clark’s office, below, is a very conniving little number.

In it, TD Bank is arguing that their customer, David Marshall should like the trust tax because it brought greater certainty, ignoring completely that the greater certainty that Harper had brought to David Marshall was an era to be forgotten. Huh? Sort of like, like it because you don’t like it. This letter obviously was “lawyered” before it went out.

Notice what is IMPLICIT about the known falsehood on the part of TD Bank on the matter of tax leakage, in the use of the words “plan is based on the assertion that the federal treasury has lost millions in tax revenue.”

Then in the next sentence, the “alleged” tax leakage takes on the form of “likely greater tax loss”? What an intellectually corrupt train of thought!

That pretty much confirms that TD Bank knew that tax leakage was a policy hoax. Remember Ed Clark was also the architect of the NEP. The NEP was intended to increase Canadian ownership of our energy sector, whereas the TFP has had the exact opposite having seen Prime West go to Abu Dhabi Energy and TransAlta Power go to Li Ka Shing. The rest of Canada’s 20% oil and gas sector in trusts is sure to go the same way.

Meanwhile all trusts need to be preserved, provided they don’t cause tax leakage, which Ed Clark is IMPLICITLY saying they don’t. Too bad that TD Bank never invested in a retail distribution network, and therefore was no where in the underwriting of income trust new issues. Is that a valid reason for people, like TD Bank customer David Marshall, to lose $35 billion an be deprived of investment CHOICE?

Dear Mr. Marshall,

Thank you for your recent email addressed to Mr. Ed Clark regarding the
Federal Government’s income trusts proposal and the Tax Fairness Plan.
I understand your concern about the changes affecting income trust
investments, as this is an issue that has been raised by others as well.

As you already know, the Minister of Finance’s plan is based on the
assertion that the federal treasury has lost millions in tax revenue,
and the belief that the growing popularity of income trusts would likely
result in greater future losses of tax revenue to the federal treasury.
As I’m sure you are aware, the Government of Canada began a review of
the income trust sector in September, 2005, leading to a great deal of
uncertainty on this issue. TDBFG considers the fact that there is now a
greater measure of certainty in the marketplace on this issue as being
positive.

I would like to thank you for taking the time to share your perspective
with us.

Sincerely,

Sarah Kendall
Manager, Executive Response Team

Thanks to Harper, Mike Beath is now living beneath the poverty line

What a fraud for a policy that falsely claimed it would “strengthen Canada’s social security for pensioners and seniors”.....how did it ever intend to do that, pray tell?

Diane Francis:

Thank You. I am one of the converted in any case, but thank you from the bottom of my heart. Thanks to Stevie, my wife and I are presently living below the poverty line for one reason only: We believed him when he said that "We will not touch Income Trusts". Yes the market crash also helped, but we were there prior to it.

I do have one Question for you: What reasons are there for not having more reporters probing this obvious cover-up?

Thanks Again,

Mike Beath

Our modern-day excuse for a democracy....

......CTVGlobeMedia and Torstar propagating patent lies about tax leakage.

Something rotten in the state of Canada?
LAWRENCE MARTIN
Globe and Mail
April 28, 2009


In Elizabeth May's just-published book, Losing Confidence, she talks about how we suffer from collective amnesia. Quoting Jane Jacobs, the Green Party Leader says we seem to readjust rapidly without noticing all that has been lost.


Such is the case, says Ms. May, in respect to the pillars of our parliamentary democracy. They continue to rot, but we're sort of used to it by now. The media report the latest degradation and move on. A new year comes. Last season's abuses are behind us, allowed to stand.


Ms. May isn't about to let us forget. In her well-written book, she witheringly takes stock. She charts the total stranglehold the prime minister has on power - worse, she says, than ever before. She charts how freedom of the press has become the right of a few all-powerful owners - worse than ever before. She charts how our state police have become politicized and untrustworthy - worse than ever before.

"If Canadians," she writes, "heard about a country where a handful of people controlled all the news media, where the state police could deliberately interfere in an election ... where the prime minister enjoyed excessive power, we would justly picture a Third World nation that languishes behind modern democracies."


Ms. May describes last December's prorogation of Parliament as "breathtakingly anti-democratic." Never had a PM sought to end a session of Parliament within days of its opening. "Never in the history of modern parliamentary democracy anywhere in the world had a prime minister sought to shut down the government to avoid losing a confidence vote."

By way of a big-stretch comparison, she goes all the way back to England's Charles I. He, too, shut down Parliament when he found its restrictions unpleasing. In his case, it resulted in civil war and his execution.


In Canada, the drama was over in a couple of weeks. We've moved on, Ms. May says, the result being yet another precedent in place for the malfunctioning of democracy. What the PM got away with boggles her mind. How could he say Stéphane Dion did not have the right to take office without an election when it would have been perfectly legal and perfectly constitutional in a minority Parliament?


How about his near apoplexy over a coalition government? Here she cites Stephen Harper's own letter of 2004 to the Governor-General saying she should know that he and the opposition parties, separatists included, were prepared to work together as an alternative should the Liberal Parliament be dissolved. But, despite this, Mr. Harper was able to turn, "with his usual accomplices in the media," the idea of a coalition government supported by democratically elected Bloc Québécois members into some sort of monstrous power grab that outraged the Canadian public.


To hear Ms. May tell it, Canadians were hornswoggled. The advent of imperial prime ministerial rule began, she notes, under Pierre Trudeau and, under Mr. Harper, has reached its nadir.


It's not just this anti-democratic trend that has the Green Lady stirred. She weighs in on several others, not the least of which is the concentration of media power. Very few are prepared to talk about this issue. Certainly the media aren't. But Ms. May lets loose.


She revisits previous commissions on mass media that decried the trend toward too much power in the hands of too few media owners. The 1981 Kent commission said the situation had become deplorable. But if it were deplorable then, Ms. May makes the case that it's even worse now, with media monopolies crowding out independent voices. The public again is badly served. Governments won't move on the problem because the corporate media owners "tend to be the friends and power base of the parties most often in power."

Ms. May, who stays away from her environmental causes in this book, trashes NDP Leader Jack Layton for selling his soul to political expediency while he unjustifiably gave a free ride to the Liberals.


But the important thing is what she has to say about the system. Ms. May doesn't break new ground in this book. But she has pulled together the many distressing strands, enabling readers not just to see the trees but the whole ugly forest that is our modern-day excuse for a democracy.

Ignatieff's "Canadians deserve the truth" versus Harper's "Canadians must trust".

I have written extensively in the past how Stephen Harper’s letter of justification for his income trust tax double-crossing double-taxing betrayal was centered around the phrase used in his form email response of “Canadians must trust”. What an absurd proposition to ask of the electorate vis-à-vis their paid elected representatives, at the best of times, but how much more insanely absurd coming from someone who just broke his promise?

No doubt, the same line of reasoning was used by Rev. Jimmy Jones a as he fed Kool-aid to his masses with the chant of Canadians must trust. See here

Harper’s doctrine of “Canadians must trust” is why we have 18 pages of blacked out documents to support the loss of $35 billion of Canadians’ life savings and the justification for losing investment CHOICE.

Meanwhile, in a parallel universe we have the Auditor General saying; “Parliamentarians need objective fact-based information on how well the government raises its funds (taxes)”, and yet still no proof of tax leakage?

We also have the Finance Committee in a parallel universe writing as their number one recommendation that: “It is imperative that a democratic government be as transparent as possible when levying a new tax so that it can be held to account by its citizens. The Committee, therefore, recommends that the federal government release the data and methodology it used to estimate the amount of federal tax revenue loss caused by the income trust sector.” and yet this measure was passed by the Liberal controlled Senate and still no proof of tax leakage?

And finally we have the new Liberal Leader Michael Ignatieff saying that Harper’s income trust policy was an act of “VANDALISM” and that it was based on a “FALLACIOUS” analysis. All that is well and good, however it has to actually manifest itself in tangible terms, for Michael Ignatieff to announce his leadership by stating that “Canadians deserve the truth”?

It is becoming increasingly difficult to reconcile that rhetoric with the fact that Canadians have received NOTHING in the way of truth about alleged tax leakage and for us to observe on a daily basis the Liberals doing nothing about getting the truth about tax leakage. We need results. Only from results can we achieve inspiration. Words are useless, without clear action and conviction of purpose, otherwise this is just another exercise in Harper’s “Canadians must trust”.

To which my response was contained in my April 7, 2009 Op Ed in Sun newspapers across the country...........No income, no trust

Manulife and Power Corp.: Hoisted on their own petard

It is a well reported and documented fact that the “main movers” behind Harper’s income trust tax were the life insurance companies, Manulife and Power Financial (owner of Great West Life, and London Life).

So too was BCE, but that will be the subject of a separate analysis.

These life insurance firms had two distinct motives to kill trusts. What isn’t as well known is how their lobbying to kill income trusts served to hoist these two supposed "masters of the universe” (at least in politicians’ minds) on their own petard, but first let’s understand their motives:

(1) A given business formed as a Trust commands a higher value in the market for two reasons (and neither related to taxes proper):

(a) the requirement that it pay out 95% of its excess earnings to its owners, in order to preserves its trust status

(b) by convention, income trusts are not permitted by their owners to make non-accretive acquisitions, ie acquisitions that do not serve to increase distributions, by virtue of being uneconomic

(2) For these two reasons ALONE, there is a value “bump” to be had by converting to a trust. This creates pressure on management to effect such a conversion, which means a different lifestyle for management, one in which they have to work for a living and actually contribute incremental economic value added. Not a pretty picture for people who used to make “Hail Mary” acquisitions in the hopes they will work, or to accumulate excess earnings to fund large stock buybacks that trigger artificial stock price gains, into which stock options can be exercised and sold. For example, under a trust, Power Corporation would not have been permitted by its owners to have acquired Putnam in 2006, since it was a non-accretive acquisition.

Power hoisted on its own petard: March 11, 2009: POWER CORP. WRITEOFFS “The main components of other items in 2008 were the write-down by Power Corporation of intangibles assets and goodwill relating to the acquisition of Putnam in 2007 ($983 million)”

(3) The LifeCos were having a tough time competing with the new kid on the block, namely the formidable income trust market, when it came to their own retirement investment products like life annuities and the like. Life annuities provide a modestly higher yield than a GIC, however when you die, there is no residual value to leave your children as an inheritance. Income trusts were higher yielding and their principal was not life dependent. Manulife wanted to get into the new area of variable annuities and did so, during the very week following Flaherty’s trust drive by shooting with a new product called Income Plus......that embodied market risk that Manulfe CEO Dominic D’Alessandro decided he was smarter than the market, and in order to drive higher earning (and higher stock option gains), he decided NOT TO HEDGE those risks. Throughout that whole time D’Alessandro was exercising his stock options.

Manulife hoisted on its own petard: March 7, 2009: INSURERS PLUMMET TO EARTH, Financial Post: Kin Lo, a professor at the Sauder School of Business, said Canada's top insurance companies had strayed from responsible business practices."Insurance is about protecting people from risk and what we have seen is the insurance industry going out and seeking risk," he said . As a result Manulife stock dropped by 70%.

CONCLUSION AND POLICY LESSON FOR OTTAWA: Here we have the two main proponents of the income trust tax., Paul Desmarais Jr. and Dominic D’Alessandro lobbying Ottawa to kill their competition, the effects of which are all negative including on themselves. This is a microcosm of the entire global financial meltdown, which can be explained by two things:

(1) People and organizations having the freedom to go “places” where they shouldn’t by virtue of lax regulations, and

(2) People and organizations being motivated to go “places” where they shouldn’t by virtue of their compensation arrangements

Power bought Putnam, a non-accretive acquisition because their shareholders had no say in the acquisition, and presumably the executives though they would be handsomely rewarded though stock options and the like. Two years later Putnam was written down by $1 billion. Manulife began selling life annuities that brought market risk to its balance sheet, but because it was never disclosed, then no one was the wiser when its CEO decided not to hedge these risks, for the sole purpose of inflating earnings. His stock options motivated this kind of gambling mentality and all throughout he was exercising them for gains. Two years later, Manulife’s value was tanked by this very act.

So why is Ottawa taking guidance from these people in the first place and not consulting with all Canadians and all market participants in a completely open and transparent way? This can not be permitted to occur again, since as Michael Ignatieff says:

"Successful countries knock down the barriers -- of red tape, regulation, and monopoly -- that divide citizens, confer unfair advantages or prevent people from working together"

Enough already with the unfair advantages being bestowed on the Power Corp’s and Manulife’s of this country

Ottawa has been completely GAMED by the managers of businesses that the capital providers own, in order to shut down a model that the owners prefer (ie income trusts) in order to permit the model that managers prefer (corporation), to persist and to be abused. What is wrong with this picture? Meanwhile the false tax leakage argument was the justification-at-large on which these narrow self interests were allowed to be achieved and falsely perpetrated on Canadians.

Is Ottawa up to the task to expose what is actually at play here namely a battle over who controls a company. The managers who lobby Ottawa, or the true owners who are being ignored and never consulted?

This is why tax Leakage MUST be exposed, otherwise Canadian democracy has been completely high acked by this crowd and owners are now taking instructions from the paid help, as was revealed in this Globe article of November 2, 2006:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

Jim's developing quite the little reputation?

Today’s Globe article on new credit card rules starts off with the line “He's the Finance Minister who suffocated the income trust sector and unleashed a deficit-inducing spending plan, but Jim Flaherty's most prominent legacy might turn out to be "the Flaherty box."

This is very insightful, since we have Michael Ignatieff referring to Flaherty/Harper’s income trust tax as being an act of “vandalism” that was premised on “fallacious” analysis and now we have the Globe likening it to infanticide?

These two descriptions are more like it, since Flaherty’s act of double taxing income trusts based on the falsehood of tax leakage IS an act of VANDALISM in destroying $35 billion of Canadians’ savings and was the act of INFANTICIDE by killing an investment choice that was essential to Canadians saving for retirement income and which represented the future of Canadian capital markets and a unique competitive advantage for all......except a corrupt and conniving few.

Hmmm......The Tax Suffocation Plan?.......I thought the purpose was to level the playing field, rather than level income trusts?


New credit-card rules coming
TARA PERKINS AND KEVIN CARMICHAEL
Globe and Mail
April 28, 2009


He's the Finance Minister who suffocated the income trust sector and unleashed a deficit-inducing spending plan, but Jim Flaherty's most prominent legacy might turn out to be "the Flaherty box."


He is expected to unveil new regulations governing credit cards next week, as governments ramp up efforts to clamp down on the industry in the wake of the economic crisis. Key elements will be the imposition of a minimum 21-day grace period, and a requirement for large-font disclosures about interest rates that are being likened by some to the warning boxes on cigarette packages, according to sources.

Ignatieff’s words of wisdom, inscribed at the Whitby Public Library

During the last election, in which I ran as the Liberal candidate against the incompetent and deceitful Jim Flaherty, a number of senior Liberals graciously offered to come out and campaign with me. Michael Ignatieff was the first to come and was followed by Bob Rae, Carolyn Bennett, Scott Brison and John McCallum. Rather than campaigning door to door, I thought a more effective use of Michael Ignatieff’s time would be if we held a press conference to re-announce the Liberals commitment of $1 billion to the Advanced Manufacturing Prosperity Plan (AMP) that had been announced in February 2008, but which didn’t have much profile during the election itself.

It was under the AMP that I had been successful in securing from the Liberal leadership a commitment to match the automotive commitments that had been opportunistically announced by Harper in the days leading up to the election, in the ridings of Windsor (Ford Essex engine plant). St. Catharines (GM Transmission Plant) and Oshawa (GM Car Assembly, where I myself had worked upon first graduating from university). Michael Ignatieff announced that the Liberals would do likewise and unlike the Harper CONservatives, we were actually good for our word, when making such commitments that affect people's lives.

The press conference was very well attended by both local and national media, and I had the opportunity to introduce Michael Ignatieff after first being introduced myself by Liberal MP Mark Holland. My introduction was completely ad-libbed and ended with me saying words to the effect of : “it is my privilege to introduce you to a person who is not only a man of words, but also a man of his word....Michael Ignatieff”

This is all a very long winded way of saying that I truly believe in that today, that Michael Ignatieff is a man of his word.

After the event had finished, a small group of us headed off to the beautiful new Whitby Public Library where I told Michael we had a small surprise for him there, as I wanted to show him something that he was completely unaware of and which predated his entering public life. Handsomely inscribed in the glass transom over the inner doorway to the Library appears the following (see attached):

“We need words to keep us human” Michael Ignatieff (1947 - )

How could Michael not have been impressed, which he clearly was. Here was this beautiful edifice to learning and to books that had been recently built in Whitby and his words had been selected by the Librarian’s board to welcome all visitors to the Library with Michael’s statement on the importance of words in keeping us human.

Just as we need words to keep us human, so too do we need numbers to keep us honest. This has been my personal pursuit since the afternoon of November 1, 2006 after making but ONE phone call to a former colleague of mine at BMO Capital Markets and asking the question: “What ever became of the study on tax leakage that was commissioned last year during the Goodale round? Did it ever get published? What did it show?”.

To my amazement and initial disbelief, he told me that it did get published and that it showed that income trusts do not cause tax leakage. I was not inclined to believe him and so asked him to courier it to me, whereupon I received it on the afternoon of November 1, 2006. Upon reading the report entitled: ”The tax revenue implications of income trusts”, I learned that the authors (HLB Decision Economics) had worked collaboratively with the Department of Finance to create the tax leakage model. They agreed on everything, data, assumptions, methodology etc. etc., but differed on only one key thing.....the treatment of the taxes collected by Ottawa on the 38% of income trusts held in RRSPs. HLB gave value to these taxes, whereas Finance assigned ZERO value. This one difference between HLB and Finance was the SOLE SOURCE of Flaherty’s and Harper’s allegations of tax leakage and the sole argument for why they broke their solemn promise to “never raid seniors nest eggs by taxing income trusts.”

Rather than flying off half cocked with this enormous revelation, I then tracked down the lead author of the study, Dennis Bruce, who I spoke with the next day and confirmed that my interpretation was correct, in that Finance assigns zero value to this certain stream of tax payments. This is so fundamentally wrong on so many levels including the most fundamental precepts of finance. However you don’t even have to know anything about finance to conclude that this is fundamentally wrong, when you stop and ask yoursel what does an RRSP actually confer on taxpayers apart from the ability to defer taxes on monies contributed to them? Nothing. That is the sum total of what an RRSP is, the ability to defer taxes on monies that have been set aside to save for retirement. That is the entire social purpose of an RRSP, to encourage Canadians to save for retirement by setting aside a limited amount of their earnings and defer the payment of taxes on those limited amount of earnings.

To create tax policy that deny this policy intention of RRSPs, is to render RRSPs invalid. Furthermore, in the act of not acknowledging the taxes collected by Ottawa from RRSPs, the government then turns around and taxes them a second time at the whopping 31.5%, such that income trust distributions get double taxed at rates as high as 62%. This is both an absurdity and a deliberate attempt to kill income trusts for a bunch of nefarious reasons advanced by the managers of businesses whi don;t want to follow the direction provided to them by their true owners, the shareholders. Meanwhile Flaherty then gave the pension funds a distinct advantage over RRSPs with respect to income trusts, as they can own these very same trusts privately and NOT pay the 31.5% tax/ This is grossly discriminatory and completely contradicts why RRSPs came into existence in the first place.

Therefore, we need the tax leakage numbers to keep us honest and to keep all of Ottawa honest and to restore true tax fairness and to make Parliament function like a democracy and not the cleptocracy that this bespoke policy represents, and for whom the real beneficiaries had been pre-ordained from the outset.

We also need to heed these other wise words of wisdom of Michael Ignatieff’s that I will close with. I hope the point being made here is obvious to all of you as it pertains to this income trust rip off, when Michael states:

"Successful countries knock down the barriers -- of red tape, regulation, and monopoly -- that divide citizens, confer unfair advantages or prevent people from working together" Michael Ignatieff

Please Michael, stop this absurdity of a policy, and pursue the truth about tax leakage. We need numbers to keep us honest, otherwise we are conferring unfair advantages on certain people to the detriment of others, in which case we have no hope of being a successful country, free of barriers, free of red tape, regulation and most of all, free of Manulife and Power Financial’s intended monopoly over our investment savings.

Please give them and their corporate ilk the royal boot, and give Canadians the truth that you say that Canadians so richly deserve.

We accept no substitutes for the truth, in either time, substance or commitment. This is a huge opportunity for you to define yourself and free yourself from the corporate shackles of past governments. The global financial meltdown provides you with the opportunity to define these self interested corporate managers for who they truly are......hangers on and opportunists seeking to exploit others for their nefarious ends.

We need numbers to keep government honest.

Mark Carnage

David Sweet, MP

There is no question that the income trust model may not have been appropriate for all businesses or sectors. Unfortunately the problem was addressed with a sledge hammer approach without any grandfathering provisions that could have saved the equity market carnage that was inflicted on unsuspecting Canadians relying on existing trusts for retirement. Harper has been caught in a lie because there was no grandfathering provision or selective thinking with regard to industries where the trust model makes sense such as the energy sector.

No one objects to proactive thinking in government to protect revenue flow but this decision appears to have backfired as the takeovers continue and future revenue flows disappear anyway. As for USA, there are sectors that continue as MLPs and some of these guys are the ones scooping up some of our good energy operations. So the Americans used some selectivity and we did not in curtailing the expansion of these structures across other industries.

David, the arguments about tax burden and fairness have never held up from the perspective of experts outside the government ranks and so we continue to beg to differ on this one. There is a fine line between acting clearly and decisively and acting impulsively without adequate information. It would have been better for our Government and for Canadians to have put a moratorium on new trust issues until adequate consultation with the private sector was done.

There is no way Flaherty should have recommended the move without wider inputs. This is where he broke with good process built over decades and lost the trust of those in the know outside the Government. Those who were left out of the process can only view the move as an exercise of arrogance, almost as big as when Harper poked Dion in the eye last Winter and almost lost control of the Government to a highly undesirable coalition.

I appreciate your time taken to respond to my concern, however, the points of the response are the same party line arguments that we have been hearing ever since the faux pas was made. I’m disappointed that there is no interest to address this matter from my constituency and I believe that with time the true impact of what was done will be even more negative than it is already showing and will be the legacy o f Steven Harper, Jim Flaherty and the Conservatives. Good leadership means admitting when mistakes are made and taking corrective action. Denial is not.

Again, David, thank you for responding

Regards

Xxxxxxx Xxxxxx, CA

Diane: "It's too bad the people in government aren’t as intelligent as you."

Diane – your article in the National Post concerning income trusts was excellent, and hit the nail on the head.  As a person that is currently semi-retired, I rely heavily on the income generated from my income trusts but am not spending anything right now until I see what is going to happen at the end of 2010.  If all of the other retirees have the same attitude as me, no wonder money isn’t flowing.  I have stopped putting money into the markets, no point in putting any in as the only stocks that were any good were those that were trusts and paid an income.  Dividend income isn’t any good as they pay such a small percentage.  A good income trust with a 10 to 20 percent return can be lived on, but dividend income can not. 

Currently I pay a lot of money into income tax because of my trust income, but that income is eroding, one of my trusts switched to a corporation, I now only get π of the income from that company than what I used to, and consequently I will pay less income tax next year than last, and that only hurts the government coffers.  I will wait to see what happens, and if Mr. Harper does not reverse his position on trusts, then I will start investing in the US equivalent as I need to maintain my income level.

During the election campaign, I watched Mr. Harper discuss how distressed his mother was over the losses in the stock market and how it was affecting her income.  Later, when being interviewed on TV from Washington at an economic conference he stated that he did not like to interfere with the free market system, and he would protect the most vulnerable, the seniors.  He has interfered with the free market system with his income trust decision, and he has definitely hurt the most vulnerable.  He has protected nobody but the large pension and insurance corporations. 

With my income the way it currently is, I would most likely lose most of my pension income as it will be clawed back.  If the income trust tax does come to pass, not only will the government get a lot less tax from me, but I will also be collecting my full pension and income supplement which costs the government a lot more money.  My standard of living will dramatically drop.  Mr. Harper’s mother, and myself really want to thank Mr. Flaherty and Mrs. Harper’s Son for tampering with the income trusts.

In December, Mr. Flaherty and Mr. Harper reversed their decision on the mini-budget they were proposing, after the 3 muskateers ganged up on him, Mr. Harper indicating that he had made a mistake, he had miss calculated the ramifications it would have.  He was humble enough to recognize a mistake and try to take measures to correct it in January, 2009.  I urge him to recognize the mistake he made in tampering with income trusts, reverse his decision, and help me and millions of other Canadians get the value of their income trust shares back as well as retain our monthly distributions so we can continue to pay our share of income taxes and support the government.

As a side point, one of the guests on BNN indicated that he was investing in Hydro Brazil, in order to replace the income he would lose in 2011 when the income trust change happens.  Personally I will be taking a lot of money and investing it outside Canada as will many others due to the decision to tamper with income trusts, and with all of this money flowing out of the country, this is definitely hurting the economy. 

Thanks again for your wonderful article, it is too bad the people in government weren’t as intelligent as you.

  
Mike G

Will the Liberals be able to get Harper to confess there is no (WMD) tax leakage?

Dear Ms. Francis;
 
As a long time subscriber and fan of your column I want to thank you for your weekend article on the income trust issue. You presented it very concisely and to the point. Surely even the mad Irishman can see the upside to canceling his horrendous error.
 
The positive benefits for all concerned it too hard to ignore. Even Harper can surely see that he would scoop the Liberals and at the same time garner back the votes he lost. Even George Bush finally admitted there were no WMD's in Iraq. The positive reaction in the markets would be beneficial to all investors/brokerages/banks/pension funds etc- the list goes on and on.
 
As you know the Liberals are having a convention this weekend in Vancouver. Maybe some effort could be brought to Iggy to take a stand on this issue- very publicly. I believe he should raise the issue in Question Period. I think many seniors who were staunch  big "C" conservatives are still waiting to see what the Liberal's actually DO on this issue. So far I think Mr. McCallum has been too quiet and he is the one who should be raising it again.
 
Anyways enough ranting- thanks again.
 
Regards,
 
Rod Archibald

Excerpt from Garth Turner's book, Sheeple

This was probably what Harper told his trained Con seals when the Tax Fraudulent Plan, to turn Canada into a cleptocracy, was first announced to caucus:

“There will be impacts in some of your ridings. They will affect people, and you may be tempted to talk about them. But don’t. Anyone who has anything to say about this will soon find out they have a very short political career.”

—Harper, announcing program spending cuts during a caucus meeting

I guess Murray Leith is a loser....quite literally

Brent:

there is a much bigger picture here , most people who own it's do so for the income , i compared my fund with aic advantage from july 01 to march 09 with $100,000 initial investment, we issued the fund at $10 in july 01 current unit price is $11.70 and has paid over $8 in income , with distributions added back, march value over $190,000 the aic advantage fund march 09 value $61,000, folks in equity funds that need income are encouraged to do a systematic withdrawal program by their advisors, redeeming a set amount every month .,the example of the chart i will re send to you is sending the Dynamic client $1000 per month , what would the aic fund be worth had a $1000 swip started in july 01 , i would argue it has been depleted to 0 , Murray Leith simply does not get it .

Look at the other comparisons in the chart , it will blow your mind.

Possible swine flu pandemic?

Before this swine flu pandemic had even broken as a story in the news, I happened to analogize Flaherty’s untreated income trust tax that has caused ongoing tax leakage to a “financial pandemic” Click here

Now that the swine flu pandemic has occurred, I see this matter in an entirely new light. There is very little any politician can do to protect Canadians against such a swine flu outbreak, that the “health officials” couldn’t and wouldn’t do on their own.

Meanwhile, the reverse is true of Flaherty’s tax leakage “financial pandemic”, in which there is no incentive whatsoever for the “finance officials” to admit their error, since as Brian Ernewein testified at the Public Hearings: “If we were incompetent, we wouldn’t admit to it.”

So here we have a case where politicians are quick to act on matters they have no control over, and sit on their hands and do nothing on the matters over which they have sole control. When is Parliament going to expose the lie about tax leakage?

Which Opposition Leader will perform the important function of Obama’s Empirical President ( as he seeks to be known as) to Harper’s Imperial Prime Minister, or have the corporations co-opted our politicians into a collective code of silence that would be counter to these executive’s NARROW SELF INTERESTS?

This is becoming the inescapable conclusion. I hope to be proven wrong.

It's about the democracy, stupid

Until the Opposition parties expose Harper’s blatant lie about tax leakage, Canada will not be a democracy but rather a cleptocracy, We haven’t forgotten how this garbage policy was “sold” in the first place or the corporate elite who hoisted these losses on us and who helped corrupt our democracy in the process by end running their shareholder owners and went squawking to corrupt politicians and bureaucrats in Ottawa to bring about that result. Never has Canada’s democracy been abrogated like this before. We won’t stand for it:

This from on Diane Francis' blog

BlueGreen:

All good points, especially the one about the Department of Finance being creative about "tax leakage".

So creative in fact, that they manufactured this fraudulent falsehood about so-called tax leakage, out of thin air:

caiti-online-media.blogspot.com/.../to-finance-minister-flaherty-your-tax.html

Like Tom, neither Canada's Politicians nor Media should live in fear of reprisal

Tom said (on Diane Francis' blog)

"I may be a lone voice in this blog but that’s of no significance. What's far more significant is that the voters have spoken on the trust issue in the last election when a specific policy reversal was on the table."

Correction Tom, irrespective of whether you are the lone voice on this blog, you are clearly the lone idiot in this country who believes that a policy that was premised on the TOTAL FALSEHOOD of tax leakage should be allowed to stand, when that very policy itself is causing tax leakage.

You and Stephen Harper are like Typhoid Mary who brought typhoid to every home in which she worked, only to kill off each successive family, except in your case and that of Stephen Harper, his lies and incompetence are causing tax leakage, where none previously existed?

Smart? No, Brain dead dumb, like all of your blind faith and ridiculous arguments enumerated above.

Like Diane Francis has said from the very outset: "Prove the case or drop the tax".

That's why you were born with a brain....to use it supposedly. This isn't communist Russia after all, you are free to exercise your brain without fear of reprisal.

Your full name wouldn't be Tom Flanagan would it? Terry Corcoran? Jack Mintz? Paul Desmarais? Dominic D'Alessandro. Rev. Jimmy Jones?

Controversial income trust just issue won't go away

The Hill Times, April 27th, 2009
LETTERS

Controversial income trust just issue won't go away

Re: "Why this pesky income trust issue refuses to go away..." (The Hill Times, April 20, p. 17).

I'd like to take a moment to thank The Hill Times for allowing Brent Fullard, citizen journalist extraordinaire, the opportunity to express his views on behalf of income trust investors and all Canadian taxpayers, who have been adversely affected by Prime Minister Stephen Harper's inane and self-immolating trust policy.

Yes, these are the same investors who have been forgotten by the government in their rush for expediency in their desire to remove income trusts from investment portfolios everywhere. Without Mr. Fullard's tireless efforts and deep inside knowledge of the Canadian capital markets, this issue would have been buried by the "new" Conservative party back on Oct. 31, 2006.

Michael Popovich
Rodney, Ont.


• Thank you for publishing Brent Fullard's piece on the income trust fiasco. I know there are a couple of million people who were hurt, some devastated, by this and for some reason the media have pretty much stayed away from it. I really hope that you and some other courageous media people will try to figure out what happened.

Yes, Mr. Harper gets full blame. If he hadn't promised to protect Canadian seniors and leave income trusts alone we would have kept clipping bonds and, although our retirement would have been hard, it was possible. Now? I can't believe we were stupid enough to believe him.

They still refuse to disclose why they did it and we're left wondering what kind of shenanigans they're up to. I sure hope you will try to get to the bottom of it.

Neal Fisher
Winnipeg, Man.


• I want to thank you for publishing Brent Fullard's article about the income trust issue. This is an important issue for many of Canada's seniors and other investors.

For seniors, they are an important way to generate income to live on. The vast majority of Canadians do not have government pensions and must rely on themselves.

We must not forget the despicable actions of our government to go unchallenged.

When Finance Minister Jim Flaherty announced his tax on income trusts all his reasons for doing it could have been proven false by any reporter in the land.

Why are public servant pension plans allowed to continue while ordinary Canadians cannot? Why must ordinary Canadian pensioners pay double taxes on income from trusts?

There are many ways to assure tax fairness but taking from one group and giving to a much smaller privileged group is not the way.

Rick Drysdale
Sidney, B.C.


• We need to keep this subject current and make Prime Minister Stephen Harper and Finance Minister Jim Flaherty know that this decision of taxing income trusts as corporations is ludicrous. Our senior income has drastically been affected by the arbitrary way in which it was mandated. They can change this and let us make them more accountable.

Gail Clark
Burlington, Ont.

Is the Liberal’s onProbation.ca for real, or merely an email harvesting exercise?

It was over a month ago that Michael Ignatieff and John McCallum announced the launch of their onProbation.ca website. It was described this way in a press release of March 23, 2009:

“As Mr. McCallum explained, the website is expected to grow and develop as Canadians share their stories, contribute their ideas and research for the site, and as new economic information comes to light.”

This does not appear to be happening, as the site contains a section entitled “Ask the PM a question”. Here people are free to post the question that they would like put to Stephen Harper, and others can vote on that question and add their comments.

To participate in this process, one has to sign up and relinquish one’s email address.

At present the number one, number five and number seven questions are questions about income trusts.

These three questions have a combined number of 108 comments, the overwhelming majority of which are Canadians demanding the truth about tax leakage and calling upon the Liberals to expose this fraud. Their frustration is becoming palpable. And for good reason, since this lie has been perpetuated in the press and in the House of Commons for 2.5 years. Is Canada a democracy or is it a cleptocracy?

If the politicians don’t ask these questions for the people of Canada, who will? Bernard Madoff?

Here is a representative question, that ostensibly the Liberals may get around to “Ask the PM”?:

“Its time for the Government of Stephen Harper to come clean on the Income Trust Tax issue. Liars should be turfed out. Leadership is about honesty and integrity.” E. Francis Pinto

Or this one:

“It is clear that Harper and Flaherty were acting on false assumptions when they set off the 2006 Halloween Massacre. the Income Trust model is a valid business structure. It is legitimate and investor-friendly. It is time for the Liberal Party to clearly state its support for this business model. Step up and do the right thing for seniors and retirees. SHOW SOME REAL LEADERSHIP FOR A CHANGE!” William Barrowclough

One has to wonder if this site is for real or simply a tool to gather people’s emails and to canvass them for contributions. I guess we will find out next week, since these requests on the onProbation.ca website are going unheeded in terms of the questions that are being asked of Harper by the Liberals in the House of Commons.

When a party sets up a website that invites people to vote on what question they most wish to ask the Prime Minister, it is assumed that there will be some follow through. To date there has been none from the Liberals.

I suggest the Liberal leadership visit the site and acquaint themselves with the views that they themselves have solicited, or shut it down. False hope is worse than no hope at all.

Meanwhile here is the number one question, as voted on by Canadians, and as originally posted by Eric Shultz about four weeks ago:

Review the Tax Fairness Plan and the tax on income trusts

The Tax Fairness Plan (which is anything but) includes a 31.5% tax on Income Trusts that has never been properly justified (the argument of tax leakage was never substantiated and independent analysis shows there is none).

The Prime Minister needs to come clean on Income Trust taxation and ultimately repeal the tax.

The Income Trust investment vehicle is available under many forms but in this form it was most accessible and beneficial to average Canadians (other forms, such as Flow Through Entities, are more complicated to participate in - although the Finance Minister himself benefits from his partnership in an FTE).

In the previous election Stephen Harper berated the Liberals for "raiding senior's next eggs" by taxing income trusts (after public consultation) and yet no sooner was he in office that he imposed without consultation a punishing tax on income trusts.

I call upon the Prime Minister to repeal the income trust tax and review the entire Tax Fairness Plan.

Is Deborah Yedlin also now covering UFO sightings for the Calgary Herald?

Bruce:

That's a pretty pathetic and professionally remiss comment you got back from Deborah Yedlin in response to the email of mine you forwarded to her entitled: " Harper lies on tax leakage must be exposed NOW, otherwise this is not a democracy, but rather a cleptocracy".

What kind of response is: " PLEASE TAKE ME OFF YOUR DISTRIBUTION LIST. YOUR EMAILS ARE CLOGGING MY MAILBOX"

More insight can be gleaned from the response she gave to your fellow Calgarian, Clint, when she said:"Clearly you are all on a campaign - emailing the journalist community the same article over and over again and clogging our mailboxes. Please tell your group to stop..."

I have no idea what she means by "group" or "campaign" except to suggest that she obviously has little time for the readers of the Calgary Herald and has even less regard for reporting the falsehood that tax leakage represents.

I am sorry to say that Deborah Yedlin is not exhibiting the journalistic stature of a Diane Francis, who speaks the truth, reports the truth and lets the chips fall where they may. I thought Westerners viewed themselves as freedom loving champions of all things true and honest, and meanwhile Deborah Yedlin is allowing herself to be scooped by that "Easterner" Diane Francis on an issue that profoundly affects the oil patch, which presumably is Deborah Yedlin's beat.

Keep in mind, this trust tax divides the oil parch into the 20% that are in the form of trusts (and who pay the disproportionate bulk of all the Oil Patch’s taxes) and the 80% who are not. Obviously, Deborah Yedlin has allowed herself to be influenced by the 80%, and to the detriment of the 20%, and unlike Diane Francis has no interest in reporting the TRUTH, for fear that the chips WILL fall where they may. Or so Deborah’s brush off would certainly suggest?

The 80% who benefit are the ones who are positioned to exploit and act in a predatory manner to extract the economic gains that have been handed to them by Stephen Harper's tax arbitrage. Deborah Yedlin worked in corporate finance at Burns Fry, so she should know what a tax arbitrage is. This tax arbitrage is the thing that allowed Abu Dhabi to acquire Prime West Energy on the cheap, and allowed Li Ka Shing to buy TransAlta Power on the cheap. The lack of proof for tax leakage, that came to justify (?) this policy of tax arbitrage has served to corrupt our democracy and these buyers like Abu Dhabi and Li Ka Shing are simply picking up their winnings in Canada's new Cleptocracy under Stephen Harper. Joe blow investor is being raped and pillaged by middle eastern oild sheiks and Hong Kong billionaires, and ALL Canadians will pick up the tab, by losing $7.5 billion in annual tax revenue.

And to think, Deborah Yedlin has no time for such a story and you are clogging her email box. I think her synapses are clogged as well perhaps? Or maybe Deborah Yedln is in cahoots with this whole income trust tax that allows the big fish to acquire the little fish in the oil patch.....on the cheap. You might want to check and see if Deborah Yedlin has any affiliation, directly or through her husband, who I believe is a banker in the oil patch with the likes of majors such as Suncor, whose CEO Rick George had this insightful admission to make, when visiting with US investors in New York. Funny, that you never hear him saying this in Canada, at least outside of the Boardroom of Suncor or the Canadian Council of Chief Executives, whose various senior members put Harper up to his fraudulent trust tax that was “sold” to Canadians on the basis of the fraud known as tax leakage:

"We will be looking at acquisitions," George said, "Because of changes in the income trust model in Canada, finally after a decade of being unable to compete for assets ... we can look at purchases of natural gas properties." September 5, 2007

Or perhaps there are two Deborah Yedlins covering the oil patch in Calgary?

If so, what happened to this one who reported on the truth and wasn't prepared to accept the bogus and totally debunked conspiracy theory known as tax leakage for granted?

Maybe she moved to Roswell to cover UFO sightings for the Calgary Herald after her insights and pursuit of the truth about tax leakage was too hot to handle for the grossly conflicted Globe and Mail, now known as the facile and vapid Globe and Mail:

Taking the trust case to the Hill
Globe and Mail
January 24, 2007

DEBORAH YEDLIN

CALGARY -- There's no question that energy trusts have had an ugly time of it the past few months. The fourth quarter of 2006 was looking soft enough before Finance Minister Jim Flaherty gave it a roundhouse punch that sent the sector into the ropes.

Today, almost three months since he announced trusts would be taxed like corporations, virtually eliminating their appeal for investors, things have only gotten worse.

Since the beginning of the year, oil prices have fallen and the S&P/TSX energy trust index has lost almost 5 per cent, and last week, the inevitable happened: Energy trusts began slashing distributions. So far, the list of those trusts has six names, but as fourth-quarter numbers start to roll out, it's only going to get longer.

The only good news in the mess is that parliamentary hearings will be held, allowing trusts to present their case against the government's argument for making the changes.

As trusts began to prepare for their appearance before the finance committee, a few folks in Calgary recently requested the federal government's study on which the trust tax decision was based. It was hoped the document would shed some light on the numbers used and conclusions reached.

But when it arrived, the recipients were very disappointed to find the numbers blanked out. The seven pages that did contain information came from a statistical summary of income and business trusts supplied by CIBC World Markets.

Needless to say, this has provoked cries of foul through the trust sector.

"We have shown them everything and all we get is an incomplete document," said one industry player who is looking forward to getting the trusts' case, complete with numbers, in the public eye.

No matter the sector, says Gordon Tait, a managing director with BMO Nesbitt Burns, the issue is about ensuring a level playing field for all corporations.

He points out that the legislation is going to affect publicly traded trusts, but not those that are privately held. We could see a repeat of the late 1980s when leveraged buyouts taking companies private ruled the corporate world.

In the case of the oil patch, the combination of fat private equity funds, low interest rates, softened commodity prices and dropping market valuations is making the possibility of energy trusts becoming privately held very real.

If this is what happens, the small retail investor is unlikely to have the ability to participate directly.

Another issue that will be hotly debated during the hearings is the notion of tax leakage -- that because of the trust structure, companies aren't paying their fair share of taxes and the government is missing out on revenue.

One of the key problems in the government's analysis, says Brent Fullard, who is heading up the recently formed Canadian Association of Income Trust Investors, is that it does not account for the taxes paid when investors pull trust payouts out of their retirement investment accounts -- which is where about one-third of the units reside.

"When those numbers are factored in, there is no leakage," he says.

The reality is there isn't a company -- trust or not, in the energy sector or a manufacturing entity -- that pays the statutory corporate rate because there are lawyers and tax accountants to make sure a company takes advantage of every possible deduction.

An analysis completed by Mr. Tait shows clearly that energy companies that converted to trusts generated more in taxes than they did as corporations. In his example, five intermediate-sized energy companies paid $26-million in taxes before conversion; after becoming trusts, the unitholders paid out $135-million to the government.

While the holding of parliamentary hearings is encouraging because those affected will finally have an opportunity to be heard in a public forum and challenge the government's analysis, the question remains whether it will be enough for Ottawa to moderate its stance and consider not only a longer time horizon for the tax implementation but also a measure of differentiation among the various industries represented. Much depends, it seems, on the document with the missing numbers.

dyedlin@globeandmail.com

Maybe next time Harper is in New York City for a photo op?

Dear Ms. Francis,

I am an investment manager in New York City. Since 2003, I have had significant investment positions in client accounts and my own personal account in the Canadian Energy Trusts.

I want to thank and commend you for the outstanding work you have done----effectively alone among mainstream Canadian journalists-----in relentlessly bringing to the fore the facts and truths about the Conservative government's planned destruction of Income Trusts. Your article in today's Financial Post is the latest example of that outstanding work. The article touches all the bases. It summarizes perfectly: 1) all the critical issues regarding the Income Trust Issue; 2) the bogus, fraudulent reasons put forth by the Conservatives to " defend " this utterly indefensible legislation ; 3) the terrible consequences suffered by countless individual Canadians as well as the damage inflicted upon the Canadian economy----- and it even offers the Harper government a graceful, face-saving way out.

Going forward, I urge you, in the strongest terms, to keep up the superb work you have done so that a critical political mass can be built up to overturn this legislation, which is so enormously damaging on both a personal and national level..

Sincerely,

Robert Siegel
Cabot Capital Group, Ltd.
110 Wall Street, 11th Floor
New York, N.Y. 10005
212-709-9257

Enough already with Canada as a third world cleptocracy.

Here is a posting from Investor's Village CANROY's board:

Great article from Diane Frances
But we won't make progress on the issue unless the press, Diane inclusive,
will start focusing on the profiteers, the leeches who blackmailed Harper into breaking his promise.
When is that going to happen?
We need to show the public how the Demarais', D'Alessandro and the rest of this sinister gang benefited from the thievery.

Or maybe it would just be cleaner for all concerned, if one of the three Opposition Leaders were to expose Harper’s lie about leakage.

This is what Barack Obama would do, as his first act of office was to sign an executive order that makes disclosure of things akin to Harper’s Tax Leakage analysis, an obligation of his administration. Here in Canada, it seems everyone wants to keep us in the dark. Obama also said he wanted to be known as the “Empirical President”, not to be confused with Imperial, which would better describe Harper. By Empirical President , Obama means that he will base EVERY DECISION he makes with as much factual information as is available and is possible. This income trust tax policy was hoisted on Canadians based on the manufacture fraid called tax leakage. It is a total crock and the obverse of empirical. It is a charlatan's charade. We aren’t going to permit it to go down. The proper functioning of democracy is at stake. OUR democracy as entrusted to you, our PAID ELECTED Members of Parliament

Why are the Opposition Leaders sitting on their hands on this
fraud? We salivate for the kind of leadership that Obama represents. Who will be OUR Empirical Opposition Leader? Waiting is not an option, for waiting only served those who are part of the cleptocracy that is clearly going on here, as identified above. Which Opposition Leader will speak truth to Power.....as in:

Globe and Mail:
November 2, 2006

High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.

Only to be clumsily denied by Dominic D'Alessandro is this patently false attempt at "cover up" (February 1, 2007) in testimony in Parliament before the Finance Committee:

“The notion and the implication that somehow the government on this [income trust tax] file is responding to initiatives that originated with corporations is not based on reality.”

Like I said, enough already with Canada as a third world cleptocracy.

Flaherty the corrupt moron, presaged the meltdown

To: Brent Fullard

The remaining income trusts are down $90,566,874,000 from their close on October 31, 2006. 

That's $90.566 billion with a "b".

Spreadsheet available as always.

Les Parsneau (lpars111@gmail.com)

Corrupt you ask?

The moron part is self explanatory.

Flaherty's $50,000 challenge for charity

Flaherty's $50,000 challenge
Barry Critchley,
Financial Post
August 21, 2008

Brent Fullard was an investment banker for about 20 years, a career that included stops at Merrill Lynch, First Marathon and BMO Capital Markets, before retiring in 2003 with a plan to pursue capital markets' ideas that were constrained by the conflicts inherent in a bank-owned dealer.

But retirement for Fullard has been anything but a fade into the sunset. Indeed, he has been busier than ever in pursuing investor advocacy and capital markets opportunities. "It has been remarkably fulfilling and I remain confident that success will be achieved," Fullard says.

The first opportunity occurred in Halloween, 2006, when the Conservative government brought down the hammer on income trusts by decreeing that from 2011, they would start paying taxes. The move, completely contrary to what the Tories said during the election campaign, spurred Fullard into action: He helped form the Canadian Association for Income Trust Investors (CAITI), which mounted a campaign to restore the security of choice for many Canadian investors, particularly seniors who liked the monthly flow of income.

But Fullard, along with CAITI, focused their attention on tax leakage, the ostensible reason for the government's decision. The two commissioned studies that broadly concluded that while there was minimal tax leakage, it was way, way lower relative to the $35-billion "cost" of the government's decision. And Fullard's mood was not improved when Ottawa produced its studies, which showed 18 redacted pages and exposed some fundamental flaws in its methodology.

"If they had shown that there was tax leakage, then a valid reason for their actions would have been created. But that wasn't the facts," he said.

Then along came the BCE privatization. Through Catalyst Asset Management, Fullard met with BCE's directors and developed a proposal whereby BCE shares would be converted to a stapled security. What irked Fullard was not BCE's rejection, but rather that it chose not to make mention of it in all its public disclosures. In Fullard's view, that was a breach of BCE's bid circular disclosure requirements. Concerned that Catalyst's plan wasn't mentioned, Fullard took to the court, first in an appeal court in Quebec and later the Supreme Court.

Now comes word that Fullard is hoping to embark on his next challenge, a debate with Jim Flaherty, the federal Finance Minister, on supposed tax leakage associated with income trusts. In this way, Fullard is responding to a comment attributed to a Flaherty spokesperson in April, 2008, as quoted in the Hill Times: "I don't think Jim's losing any sleep over it. As a matter of fact, I'm sure of it. I'm sure he'd love to go a couple of rounds with these [CAITI] guys in a debate situation."

Fullard's challenge was also inspired by the upcoming debate between Seymour Schulich, one of the country's legendary owner investors and John McCallum, the federal Liberal finance critic, on the question of a carbon tax. Proceeds from the Sept. 10 event will go to McCallum's riding association.

But Fullard's challenge comes with a twist: He will put up $50,000, payable to his favourite charity. Given the Minister's "current crusade on financial literacy," Fullard believes a suitable charitable cause would be a scholarship for business education. "By doing this we could help repair the damage caused by the Minister's statement that Ontario is the last place to invest."

Can journalists read a spreadsheet? Do politicians ACTUALLY believe in democracy? Or do they both just fake it?

Diane
 
Thank you for continuing to print the truth about income trusts.  Where are your colleagues?  Why are you the only one who documents how much this terrible decision has cost Canadian taxpayers in general and we income trust holders specifically?

How difficult is it to explain and/or understand that income trusts do not pay taxes, income trust unitholders pay the taxes.  As you are well aware income trust unitholders pay taxes at a much higher rate than corporations do in this country. 
 
BMO Capital Markets did a business trust tax study in Jan 2007 (file attached) showing how much more taxes were being paid by unitholders versus the businesses before they converted to the trust model.  Why can't your colleagues just read the study and tell the truth about the data?
 
Why can't your colleagues just read a spreadsheet (file attached) that shows we have lost the annual taxes on $1.316 billion in distributions?  This is a result of those income trusts that were taken out by non-taxable entities (pension plans, foreign companies etc.).  At a 38% tax rate that is $500,000,000 in annual taxes that are now gone forever.  That is "true" tax leakage and not the "fudged" numbers that the Finance Department created to show tax leakage if they did not tax the trusts.
 
Diane, thank you for continuing to point out the obvious, to tell the truth, bring back the trust model!
 
Les Parsneau
Collingwood, ON

Report of the Standing Committee on Finance

February 2007
39th PARLIAMENT, 1st SESSION

RECOMMENDATION 1

It is imperative that a democratic government be as transparent as possible when levying a new tax so that it can be held to account by its citizens. The Committee, therefore, recommends that the federal government release the data and methodology it used to estimate the amount of federal tax revenue loss caused by the income trust sector.

Diane Francis on Rescind. Restore. Rejuvenate.

Still time for Harper to fix trusts mistake

Diane Francis,
Financial Post
April 25, 2009

It's been two and a half years, and a Great Recession, since the income trust tax of 31.5% was announced by Finance Minister Jim Flaherty and the Prime Minister.

At the time, I said: Prove the case that trusts should be shut down with this tax because they are a tax drain, or drop the tax.

Today we know that the tax, to start in 2010, has not prevented leakage but has caused it as income trust values collapsed by $35-billion. Foreigners bought nearly $100-billion worth of trusts with large bank loans. The interest on these loans is written off against profits, allowing them to duck taxes altogether.

This has been, and will be, a drain to taxpayers of billions and was predictable.

It's been a huge mistake, so what should be done? Scrap the tax immediately to correct the situation as well as to help the country get through this economic collapse. In fact, I believe income trusts are a superior model to other corporate structures for many companies.

-The income trust is more accountable because up to 95% of profits flow through to unitholders, preventing inept managements and boards from indulging in excessive bonuses, stock options and stupid takeovers.

-Income trusts are also superior because they provide Canadian corporations (big or small) with a capital advantage, thus enhancing the possibility they will survive and thrive later on.

-Income trusts provide a superior investment vehicle for investors, both retail and institutional, big and small, which has been missing since they were attacked.

Scrapping the tax is also a form of stimulus, which is badly needed as a result of the market meltdown worldwide, because it will:

-Stimulate the stock markets by bringing investors back into the fold by not sandbagging the popular and profitable income trust sector.

-Restore the integrity of investment rules in Canada that were applied retroactively to attack income trusts.

-Restore the Prime Minister's reputation, which was sullied after he broke his promise in 2006 to leave income trusts alone. Demonstrate a flexibility and wisdom that he realizes being correct outweighs defensiveness or merely being tied to consistency.

-Remove the advantage foreigners have enjoyed by picking off the income trusts, which lost $35-billion in value after the tax was announced.

-Reverse the Harper/Flaherty income trust tax leakage problem caused by leveraged buyouts of trusts.

-Provide or restore an important investment vehicle for 75% of Canadian seniors and investors who do not have a company or public-sector pension.

-Eliminate over-reliance on derivative or synthetic type products that were billed as "retirement safe" or equities paying dividends but that have been clobbered more than the existing income trusts.

-Level the playing field with U. S. trusts (called MLPs and REITs) by letting Canadian real estate and energy trusts continue under the old rules.

As anyone who understands business realizes, the Tories made a mistake with their income trust taxation and there's no time like the present emergency to correct the situation to help Canadian companies and investors.

dfrancis@nationalpost.com - Diane Francis blogs at financialpost.com/dianefrancis

Flaherty's corporate tax cuts contribute to $9.0 billion revenue loss

Flaherty's income trust tax was premised on the false belief that income trust cause tax leakage as couched in the terms of “ensuring that taxes are not unfairly shifted onto the shoulders of Canadian taxpayers, especially Canadian families,”

So what’s about this gem: "corporate taxes fell by $9-billion, or 25 per cent, reflecting weaker profits and the impact of tax cuts" from the article below?

Ottawa's corporate tax take falls by $2.5-billion
Drop of 44% a sign of how the recession has hammered business profits; Ottawa clings to surplus

JULIAN BELTRAME
The Canadian Press
April 24, 2009

OTTAWA — The Finance Department says corporate tax payments to Ottawa fell by $2.5-billion in February — or 44 per cent lower than last year — in a graphic indication of how the recession has hit business profits. Despite the decline in corporate taxes, the federal government managed to hold onto a small surplus position heading into the final month of the fiscal year, which ended in March. Revenues from personal income taxes paid by Canadians in February were up $30-million from February 2008, despite a $400-million haircut from lower rates that went into effect Jan. 1. Through the first 11 months of the 2008-09 fiscal year, Ottawa was $1.3-billion into the black after posting a $823-million surplus for February.

That's well down from the $12.6-billion surplus it enjoyed after the 11 months from April 2007 to February 2008. But the fact that the government was in surplus at all, with one month's accounting remaining in the fiscal year, is a mild surprise given the severe downturn in the economy that began last October. In the January budget, Finance Minister Jim Flaherty forecast the government would experience the first deficit in a dozen years with a $1.1-billion surplus for the 2008-09 year. The numbers will start looking ugly going forward, however. The budget projects the current fiscal year that began April 1 will bring a $33.7-billion deficit, which many analysts now predict will be even worse.

Although it does not impact the fiscal position, the department also reported a $81.4-billion financial requirement largely as a result of its decision to purchase insured mortgage pools from the chartered banks to ease credit conditions. Over the first 11 months of the fiscal year, personal tax payments to the government remained strong, rising $3.9 per cent, or $3.9-billion. But corporate taxes fell by $9-billion, or 25 per cent, reflecting weaker profits and the impact of tax cuts. Another key change to the government's position was the impact of the cut to the GST from six per cent to five. Government receipts from the sales tax are down $4.2-billion so far into the fiscal year, or 15 per cent.

Did Flaherty outsource his job to Dominic D'Alessandro, CEO of Manulie?

Is this the manner in which Flaherty ceded control of the Department of Finance to Bay Street centric and LifeCo centric command and control?

Dominic D’Alessandro’s patently false testimony that he gave in Parliament, on February 1, 2007, of:

“The notion and the implication that somehow the government on this [income trust tax] file is responding to initiatives that originated with corporations is not based on reality.”

Hmmm? How believable is that? I guess in the same way that Flaherty’s alleged tax leakage claim is not based on reality, but rather based on fraud.

I am Woodward. Who is my Bernstein?

Thanks for exposing the truth time and time again Brent!

I have to give Amanda credit last night at least asking Jim about reversing it back. It never ceases to amaze me though that it would be very nice for Kevin O'Leary to talk to him.

He would NOT get off so easy. It is terrible when the owners of these large papers can print what they want and get away with it, even when it isn't the truth.

It's like when Jack Nicholson said to Tom Cruise that "You can't handle the truth". Jim and Steve can't seem to handle it either.

Doug Boraas

Doug:

That passing comment does nothing to absolve Amanda in my mind.

Amanda is a decent honest person and is coming to see the light of Flaherty’s gross deception and lies. Amanda Lang can easily raise her journalistic stature, by simply calling upon the grossly incompetent and deceitful Jim Flaherty to "Prove the case or drop the tax.".........as in PROVE with numbers that stand the scrutiny of third party peer review and FULL PUBLIC ACCOUNTABILITY and TRANSPARENCY.

I am Woodward.

Apart from Diane Francis.....WHO IS MY BERNSTEIN?.......step right up and be a journalistic hero in the eyes of 33 million Canadians. Tell your commercially self-interested owners and the bozos who run them (BCE, Teachers’, Torstar and Woodbridge) to jump off a cliff of their own making......we aren’t going over the one they falsely created for us in January 2011

Brent

Jim Flaherty is the Typhoid Mary of tax leakage

Typhoid Mary was a scullery maid who was infected with typhoid during the turn of the century, in New York City. She was a rare case, in that she carried typhoid, but didn’t exhibit its conditions or suffer from its ravaging effects.

Everywhere Typhoid Mary was employed to work, she left behind a family ravaged by typhoid, until she was forced to move on to a new family of her employment.....only to cycle her illness to a new group of unsuspecting people.

This is analogous to Jim Flaherty, who falsely claimed that income trusts cause tax leakage, a phony claim that served the interests of Canada’s large life insurance companies and the owners of Canada’s narrowly held and grossly commercially corrupted news media organizations. These people were far too self interested and intellectually vapid to realize that their patently phony ruse would actually LEAD to tax leakage.

Although widely predicted by others such as myself, little did they acknowledge or even care about what would ensue in the way of takeovers, as this YouTube reveals as these two reporters fall all over each other arguing which of the two was more wrong than the other in their lame predictions:

Click here

This despite my having written to the Editor of the Globe and Mail’s Report on Business, John Stackhouse, this highly well informed and prescient observation on November 8, 2006:

“What does this have to do with Income Trusts? Based on the observations I made above, is it not possible that Finance, if not guilty of "sexing up" the data, is at least participating in "massaging" the data to assist in making the case that happens to resonate with the average Canadians' intuition , notwithstanding the fundamentally flawed analytical framework and notwithstanding the negative economic repercussions it will induce?

There are a hole host of secondary considerations/repercussions that arise from such a change in tax policy, some of which I attempted to address in my letter, such as limiting the investment choices of Canadians as they face the difficult task of providing for their retirement and the potential "hollowing out" effect of Canadian business, just to name the ones I am most concerned about.”

Meanwhile here is what Jim Flaherty, the Typhoid Mary, of tax leakage has wreaked on unsuspecting Canadians as he cycles through Ottawa after “killing off” his previous employer, while the Treasurer of Ontario and selling off 407 and Bruce Nuclear to foreigners in an unsuccessful attempt to bury a $6 billion deficit, that he subsequently attempted to deny:

Jim Flaherty’s false diagnosis of tax leakage has caused harm to all taxpayers in Canada. Even the copy editor of the London Free Press gets that brain dead obvious point. For when the copy editor of the London Free Press was asked to do the layout for my piece that also ran in Sun newspapers across the country on April 7, 2009, this is the part that he/she felt was deserving of bold highlighting and special large font type (see attached):

“The trust takeovers to date by foreigners have caused Ottawa and all taxpayers to lose more than $1 billion in annual tax revenue, a number that will soon climb to $7.5 billion. And for what?”

This lose of taxes is the EQUIVALENT OF A 1.5% INCREASE IN THE GST. It will be borne by all taxpayers.

Flaherty's actions have caused a tax leakage A TYPHOID MARY PANDEMIC of tax leakage. What an incompetent and intellectually corrupt evil doer, causing a $7.5 billion ANNUAL TAX LEAKAGE PANDEMIC and not having the Moral Compass to admit it or reverse it.....ditto for these two “reporters” in this video:

Click here

Like Typhoid Mary, these reporters along with Jim Flaherty need to be shipped off and put in quarantine, where they can stop inflicting us with their nonsense quack medicine and bogus snake oil arguments, as we attempt to recover from the ravages of the very Typhoid that THEY have inflicted, not just on Taxpayers but the proud institution of journalism that they have corrupted with their complete absence of either FACTS or LOGIC.......or common sense and decency to admit when they are wrong and acknowledge that they never were right to begin with.

Mr. Igntieff (sic); Hopefully you will read this

Mr. Igntieff; Hopefully you will read this- and others like it- and not summarily dismiss the idea of revisiting the income trust issue. Mr. Flaherty said yesterday he has no intention of reopening the income trust problem he created.

You should take this opportunity to poke the bear in his den- he has many reasons not to want to face the thousands of voters whom he mislead when he pulled his Halloween massacre. 

Bringing this issue to the public forum would garner you and your party votes you will need come election time. Reversing and/or significantly the income trust legislation would  pay many dividends in this current economic crisis. Oil and gas trusts in particular would benefit and might even bring in some western Canada voters over to the Liberals for a change. It would also bring in a flood of IPO's and many M&A's. Plus the stock market would benefit as the sideline money would come out of hibernation. And seniors would be able to rest easy as their cash flows would be once again be reasonably safe through 2011. Please give it serious consideration. 
 
 I am sure you all know of or have heard of Mr. Brent Fullard and his CAITI organization. I am forwarding his latest article which was published  April 20 I believe in the Hill Times. Many of you are quite likely tired of hearing about this issue but I would ask you take one more look at it and ask yourselves- was this a fair tax to impose on one sector?  Do not oil and gas trusts- particularly in this $50. oil price- deserve special treatment. i.e. grandfathering?

Does the public not  deserve to be privy to the finance departments full explanation, relative to the "huge" tax loss fearmongering, as requested by CAITI? Surely any of you cannot believe double taxing seniors RRSP's is a fair and equal method of taxation? Do you believe for one minute that if the government declared that pension indexing would be abolished for all public servants that it would be passed? Maybe you could bring the issue back to the public and government eye for one more go- not for the " Gipper" but for the seniors in this country.
 
 Regards,
 
 xxx xxx
Port Moody/BC

John Manley shares Gary Goodyear’s views on evolution

CON MP Gary Goodyear is of the school of thought known as creationism, which believes man was created by God, rather than being the current iteration of millions of years of evolution and the survival of the fittest, or as I learned in a class on Evolutionary Biology at the University of Toronto where the phenotype that is best able to cope with the environmental stresses, becomes the most favoured genotype as embedded in the next generation.

At its core, evolution is a design process in which “design” success is rewarded and design “failure” is punished. There is nothing premeditated about it, as randomness has as important role to play, as selection itself.

Evolution has its own parallels in the man made world, such as the economy at large and capital markets in particular. Survival of the fittest is essential to maintaining and moving forward Canada’s economy in ways and through means that increase its fitness and survivability. Essential to the process, however is the diversity accross species as well as diversity within species. The income trust tax is an arbitrary and falsely premised means to kill the diversity that is essential to any economy that hopes to grow and be vibrant and to compete and to be “complete”.

It is in this respect that John Manley does not believe in evolution or the concepts that underlie insofar as Canada’s economy is concerned, for he is CLEARLY of the view that the various competing “phenotypes” like income trusts should be arbitrarily restricted through some form of government edict and that only one form of “genotype”, namely corporations, be permitted to make it the next generation, when he stated:

"I don't think you can run an economy where you have different kinds of business vehicles that are taxed totally differently."

I guess John Manley thinks he is God?

This is utter nonsense, and grossly hypocritical given that John Manley works for McCarthy Tetrualt, which is nothing more than “different kinds of business vehicles that are taxed totally differently.", since as a limited partnership McCarthy Tereauly pays zero in taxes and will continue to pay zero in taxes even after the trust tax that he is speaking in favour of will see Canadian’s RRSP’s double taxed at rates of up to 62% and meanwhile pension funds will reserve the right to own income trusts and not pay the 31.5% tax despite the fact that these income trusts held by them are “different kinds of business vehicles that are taxed totally differently."

Some argument John Manley. Hard to believe that you are the product of millions of years of evolution yourself, or maybe you are the product of the strange Canadian culture in which it is something other than cream that rises to the top......much in the manner by which Michael Sabia got the job at the Caisse. The old boys network is the antithesis of evolution....more like devolution.

Meanwhile, John Manley must also believe in creationism, since the only policy justification upon which this income trust tax was “sold” to the public as valid and just in the breaking of Harper’s solemn promise not to raid seniors nest eggs to the tune of $35 billion or to remove essential investment choices, whose only purpose was to that steer more retirement money into the hands of some of McCarthy Tetrault’s best clients, was on the basis that “income trusts cause tax leakage”.

So where’s the proof? There is none? In fact tax leakage has been disproved by everyone under the sun, including HLB Decision Economics, RBC, BMO, PwC, Deloitte and the Department of Finance itself.....which is why they only issued their “proof” in the form of 18 pages of blacked out documents.

So here we have a policy that goes against the very nature of “diversity of choice is good” and forces a$35 billion loss on seniors for a whole host of nefarious reasons and corporate greed and personal gain, and the best that that John Manley can come up with is ZERO proof and some lame, after the fact policy justification, that wasn’t even enunciated in the Ways and Means motion and attempts to retrofit with this line of BS:

"I don't think you can run an economy where you have different kinds of business vehicles that are taxed totally differently."

Go back in your cave, as you aren’t ready for prime time yet, you have at least another million years to spend in the easy bake oven before your arguments are worthy of public consumption.

Jim Flaherty: Professor Clueless

No plans, or no clue?

Canada says no plans for September fiscal update
Thu Apr 23, 2009 5:42pm EDT

OTTAWA, April 23 (Reuters) - The Canadian government has no plans to introduce its fiscal update in September or to pump additional stimulus into the economy, Finance Minister Jim Flaherty said on Thursday.

Asked about a news report that Ottawa was contemplating such moves, Flaherty told CTV: "There are no plans to do either of those things." (Reporting by David Ljunggren; Editing by Jeffrey Hodgson)


© Thomson Reuters 2009 All rights reserved

Don Martin’s cover-up becoming worse than the crime

Flaherty has been gamed by the life insurance industry and others into believing that income trusts cause tax leakage. Meanwhile unbeknownst to Jim Flaherty, Tax leakage was disproven during the Ralph Goodale Consultative Round. By calling for Public Consultation, Ralph Goodale is a saint in my opinion, for his actions led to this pivotal revelation that income trusts do not cause tax leakage.

Therefore Jim Flaherty has misdiagnosed the situation and prescribed the wrong treatment. Canada’s 2.5 million income trust investors, a vast number of whom are seniors of finite means are soon faced with amputation of their life support system. This misdiagnoses, of tax leakage, has gone on now for 2.5 years and this misdiagnoses is being falsely and ACTIVELY propped up by new organizations with a financial axe to grind, namely the entire CTVGlobeMedia empire. Toronto Star, and other media assets held and controlled by Tortstar, as well as newspapers controlled by the Power Financial/Desmarais family and the assets controlled by the Asper family.

Meanwhile other newspaper and media chains are awakening to Jim Flaherty’s false diagnosis and the malpractice it has caused. These newspapers, such as SUN Media and the Hill Times and a host of other INDEPENDENT papers are practicing HONEST and PROFESSIONAL news reporting that is driven by a SCIENTIFIC and ETHICAL regard for the facts. Other newspapers are not practicing ethical journalism, and their silence or active promulgation of these known falsehoods concerning tax leakage, means that they are as guilty of this malpractice, as are those who committed because they are guilty by virtue of commission or through omission.

Their duty to the public is to report the truth and to expose the misdiagnoses of the Government of Canada. This duty to the public, pertains to not just the 2.5 million Canadians directly affected but to ALL CANADIAN TAXPAYERS, because the misdiagnoses itself, has lead to the very symptoms, namely tax leakage. Tax leakage is a diagnosis that the life insurance industry would love for us all to be DUPED into believing, as would the managers of other corporations who do not wishing to give up a model that they have been so successful at gaming through a plethora of ways, principally through executive stock options, that the government taxes at HALF the rate of income. If there is any tax leakage going on here, the tax treatment of income from employment from executive stock options in the hands of some the most highly compensated people in Canada, is it.

Meanwhile Jim Flaherty’s false diagnosis has caused harm to all taxpayers in Canada. Even the copy editor of the London Free Press gets that brain dead obvious point. For when the copy editor of the London Free Press was asked to do the layout for my piece that also ran in Sun newspapers across the country on April 7, 2009, this is the part that he/she felt was deserving of bold highlighting and special large font type (see attached):

“The trust takeovers to date by foreigners have caused Ottawa and all taxpayers to lose more than $1 billion in annual tax revenue, a number that will soon climb to $7.5 billion. And for what?”

This lose of taxes is the EQUIVALENT OF A 1.5% INCREASE IN THE GST. It will be borne by all taxpayers.

Flaherty's actions have casued a tax leakage PANDEMIC. What an incompetent and intellectually corrupt evil doer, causing a $7.5 billion ANNUAL TAX LEAKAGE PANDEMIC.

Given this, I have brought this matter to the attention of the senior most people at the College of Physicians and Surgeons, namely the leadership of the Liberal Party of Canada. This pandemic needs to be stopped NOW and not at a time of optimal political convenience for them. This is because the Liberal Party has already been given one election cycle to deal with this matter, namely the 2008 election, and they failed to do so.

All Canadians need to be brought out from the DARK AGES and out from the world of QUACK MEDICINE.

Michael Ignatieff says that “Canadians deserve the truth”. Yes, and in the age of Barack Obama and the internet, that means “Canadians deserve the truth NOW” and not at a time of optimal benefit to them, since failure on the part of the Liberals to properly diagnose this disease, will simple mean that we are treating a bunch of BLATANTLY FALSE symptoms with Stephen Harper’s quack medicine, prescribe to him by CANADA”S LIFE INSURANCE industry and a bunch of disrepectful and deceitful managers who did an end run around their TRUE OWNERS, and thereby corrupted Canada as a democracy in the process.

I quote from the vapid and facile Globe and Mail, who in a moment of sheer joy and celebration, let their yellow journalism down for a moment to reveal (on November 2, 2006) that:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

Meanwhile I find it quite ironic that one of the journalist who I have fought to become an honest journalist by covering the income trust story, as opposed to COVERING UP the income trust story, has an article today entitled:

“Don Martin: RCMP's Dziekanski cover-up becoming worse than the crime:

I think if I were the copy editor at the London Free Press, I would run that story under the title of

“RCMP': Don Martin’s cover-up becoming worse than the crime”

Despite my numerous attempts, Don Martin has refused to cover this income trust cover up story and actually expressed glee when he wrote “Jim Flaherty seems to have finally put the income trust flip-flop behind him.”

That was on December 31, 2007......nice try Don Martin.....or shall I say nice attempt at cover up Don Martin and the rest of Canada’s sycophant media shills. Don Martin was also the person who REFUSED to provide me with his copy of Harper’s 20 page manual on how to obstruct Parliament and render it less democratic and more dysfunctional, at the time when Harper had reneged on his fixed election date promise by citing that Canada’s Parliament was dysfunctional. Don Martin refused to provide me with his copy of that highly significant document. For my persistence in getting the truth from Don Martin, I became the target of his slander in a gratuitous piece he wrote entitled “Don Martin: Will someone save me from Brent Fullard?” During the election no less and obviously desigbed to lessen my chances against the intellectually corrupt and grossly incompetent Jim Flaherty.

Again if I were the copy editor of the London Free Press, I would run that story under the title:

“Will someone, save Canadians from the FALSE journalism and lies being told to Canadians about tax leakage, thereby preventing All Canadians from losing $7.5 billion in ANNUAL TAX LEAKAGE, and losing large swaths of our economy to foreign owners who are loading these companies up with debt as the means to gain financial leverage and pay no taxes? Will the Liberal party act in their role as the College of Physicians and Surgeon and expose Flaherty’s medical malpractice, or is their greater allegiance with the Life Insurance companies, like Manulife and Power Financial, who benefit from the perpetration of this fraud an the fog of war, associated with Canadians not knowing what is known”?

I may have to revoke Ralph Goodale’s sainthood that I bestowed upon him, since what is the point of me being the ONLY Canadians to know that income trusts DO NOT cause tax leakage, when every other Tom Dick and Harry is actively being kept in the dark? That’s is exactly the same form of quack medicine, which is being practiced by Stephen Harper himself and hardly deserving of sainthood?

My simple role is as the agent of TRUTH. The truth is certain to emerge, since truth is relentless. Truth doth pander to no man.

Canadians DO deserve the truth, as Michael Ignatieff says.........yes, but now. There is no such concept as the optimal time to know the truth. The truth demands to be told and known by all. Otherwise we simply are witnessing a cover-up that has overtaken our democracy. Michael Ignatieff is ablsolutely right when he says that the income trust tax was an “act of vandalism” and that its premises are “fallacious”.

Please join me as the agent of truth, and tell all Canadians about this fallaciously premised act of vandalism. We have learned the difficult and disappointing lesson, that the Don Martin’s of this world don’t have the balls and/or brains to do so. Do we want Canada to be run by sycophants or Leaders and governed by the truth or patent falsehoods? Does your banl give you two bank balances at the end of the months or one? Does your credit card company send you a statement or 18 pages of blacked out documents to prove what you have paid versus what you owe.

Wake up sheeple. This is our country. Don’t take no for an answer. What will be the next trick to be pulled on you, and shoved down your throats by the media shills at the behest of the corporations that own them?

Flaherty’s guilt is the equivalent of medical malpractice, meanwhile he has caused a financial pandemic

Flaherty has been gamed by the life insurance industry and others into believing that income trusts cause tax leakage. Meanwhile unbeknownst to Jim Flaherty, Tax leakage was disproven during the Ralph Goodale Consultative Round. By calling for Public Consultation, Ralph Goodale is a saint in my opinion, for his actions led to this pivotal revelation that income trusts do not cause tax leakage.

Therefore Jim Flaherty has misdiagnosed the situation and prescribed the wrong treatment. Canada’s 2.5 million income trust investors, a vast number of whom are seniors of finite means are soon faced with amputation of their life support system. This misdiagnoses, of tax leakage, has gone on now for 2.5 years and this misdiagnoses is being falsely and ACTIVELY propped up by news organizations with a financial axe to grind, namely the entire CTVGlobeMedia empire. Toronto Star, and other media assets held and controlled by Tortstar, as well as newspapers controlled by the Power Financial/Desmarais family and the assets controlled by the Asper family.

Meanwhile other newspaper and media chains are awakening to Jim Flaherty’s false diagnosis and the malpractice it has caused. These newspapers, such as SUN Media and the Hill Times and a host of other INDEPENDENT papers are practicing HONEST and PROFESSIONAL news reporting that is driven by a SCIENTIFIC and ETHICAL regard for the facts. Other newspapers are not practicing ethical journalism, and their silence or active promulgation of these known falsehoods concerning tax leakage, means that they are as guilty of this malpractice, as are those who committed because they are guilty by virtue of commission or through omission.

Their DUTY to the public is to report the TRUTH and to expose the misdiagnoses of the Government of Canada. This duty to the public, pertains to not just the 2.5 million Canadians directly affected but to ALL CANADIAN TAXPAYERS, because the misdiagnoses itself, has lead to the very symptoms, namely tax leakage. Tax leakage is a diagnosis that the life insurance industry would love for us all to be DUPED into believing, as would the managers of other corporations who do not wishing to give up a model that they have been so successful at gaming through a plethora of ways, principally through executive stock options, that the government taxes at HALF the rate of income. If there is any tax leakage going on here, the tax treatment of income from employment from executive stock options in the hands of some the most highly compensated people in Canada, is it.

Meanwhile Jim Flaherty’s false diagnosis has caused harm to all taxpayers in Canada. Even the copy editor of the London Free Press gets that brain dead obvious point. For when the copy editor of the London Free Press was asked to do the layout for my piece that also ran in Sun newspapers across the country on April 7, 2009, this is the part that he/she felt was deserving of bold highlighting and special large font type (see attached):

“The trust takeovers to date by foreigners have caused Ottawa and all taxpayers to lose more than $1 billion in annual tax revenue, a number that will soon climb to $7.5 billion. And for what?”

This lose of taxes is the EQUIVALENT OF A 1.5% INCREASE IN THE GST. It will be borne by all taxpayers.

Flaherty's actions have casued a tax leakage PANDEMIC. What an incompetent and intellectually corrupt evil doer, causing a $7.5 billion ANNUAL TAX LEAKAGE PANDEMIC.

Given this, I have brought this matter to the attention of the senior most people at the College of Physicians and Surgeons, namely the leadership of the Liberal Party of Canada. This pandemic needs to be stopped NOW and not at a time of optimal political convenience for them. This is because the Liberal Party has already been given one election cycle to deal with this matter, namely the 2008 election, and they failed to do so.

All Canadians need to be brought out from the DARK AGES and out from the world of QUACK MEDICINE.

Michael Ignatieff says that “Canadians deserve the truth”. Yes, and in the age of Barack Obama and the internet, that means “Canadians deserve the truth NOW” and not at a time of optimal benefit to them, since failure on the part of the Liberals to properly diagnose this disease, will simple mean that we are treating a bunch of BLATANTLY FALSE symptoms with Stephen Harper’s quack medicine, prescribe to him by CANADA”S LIFE INSURANCE industry and a bunch of disrepectful and deceitful managers who did an end run around their TRUE OWNERS, and thereby corrupted Canada as a democracy in the process.

I quote from the vapid and facile Globe and Mail, who in a moment of sheer joy and celebration, let their yellow journalism down for a moment to reveal (on November 2, 2006) that:

“High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

Meanwhile I find it quite ironic that one of the journalist who I have fought to become an honest journalist by covering the income trust story, as opposed to COVERING UP the income trust story, has an article today entitled:

“Don Martin: RCMP's Dziekanski cover-up becoming worse than the crime:

I think if I were the copy editor at the London Free Press, I would run that story under the title of

“RCMP': Don Martin’s cover-up becoming worse than the crime”

Despite my numerous attempts, Don Martin has refused to cover this income trust cover up story and actually expressed glee when he wrote “Jim Flaherty seems to have finally put the income trust flip-flop behind him.”

That was on December 31, 2007......nice try Don Martin.....or shall I say nice attempt at cover up Don Martin and the rest of Canada’s sycophant media shills. Don Martin was also the person who REFUSED to provide me with his copy of Harper’s 20 page manual on how to obstruct Parliament and render it less democratic and more dysfunctional, at the time when Harper had reneged on his fixed election date promise by citing that Canada’s Parliament was dysfunctional. Don Martin refused to provide me with his copy of that highly significant document. For my persistence in getting the truth from Don Martin, I became the target of his slander in a gratuitous piece he wrote entitled “Don Martin: Will someone save me from Brent Fullard?” During the election no less and obviously desigbed to lessen my chances against the intellectually corrupt and grossly incompetent Jim Flaherty.

Again if I were the copy editor of the London Free Press, I would run that story under the title:

“Will someone, save Canadians from the FALSE journalism and lies being told to Canadians about tax leakage, thereby preventing All Canadians from losing $7.5 billion in ANNUAL TAX LEAKAGE, and losing large swaths of our economy to foreign owners who are loading these companies up with debt as the means to gain financial leverage and pay no taxes? Will the Liberal party act in their role as the College of Physicians and Surgeon and expose Flaherty’s medical malpractice, or is their greater allegiance with the Life Insurance companies, like Manulife and Power Financial, who benefit from the perpetration of this fraud an the fog of war, associated with Canadians not knowing what is known”?

I may have to revoke Ralph Goodale’s sainthood that I bestowed upon him, since what is the point of me being the ONLY Canadians to know that income trusts DO NOT cause tax leakage, when every other Tom Dick and Harry is actively being kept in the dark? That’s is exactly the same form of quack medicine, which is being practiced by Stephen Harper himself and hardly deserving of sainthood?

My simple role is as the agent of TRUTH. The truth is certain to emerge, since truth is relentless. Truth doth pander to no man.

Canadians DO deserve the truth, as Michael Ignatieff says.........yes, but now. There is no such concept as the optimal time to know the truth. The truth demands to be told and known by all. Otherwise we simply are witnessing a cover-up that has overtaken our democracy. Michael Ignatieff is ablsolutely right when he says that the income trust tax was an “act of vandalism” and that its premises are “fallacious”.

Please join me as the agent of truth, and tell all Canadians about this fallaciously premised act of vandalism. We have learned the difficult and disappointing lesson, that the Don Martin’s of this world don’t have the balls and/or brains to do so. Do we want Canada to be run by sycophants or Leaders and governed by the truth or patent falsehoods? Does your banl give you two bank balances at the end of the months or one? Does your credit card company send you a statement or 18 pages of blacked out documents to prove what you have paid versus what you owe.

Wake up sheeple. This is our country. Don’t take no for an answer. What will be the next trick to be pulled on you, and shoved down your throats by the media shills at the behest of the corporations that own them?

Ralph Goodale's question in today's QP

Liberal MP Carolyn Bennett was kind enough to send me the question that Ralph Goodale asked today in QP that incorporated a reference to income trusts (see below), for which I thank her.

With the best interests of the Liberal party and all Canadians in mind, allow me to use this as an example of what I and many others feel is lacking in the manner by which the income trust issue is being raised and used by the Liberal Party.

First of all, the reference to income trusts is in the context of a list of past grievances that the question suggests can be “bartered” to gain better EI benefits. The implicit message to 2.5 million aggrieved income trust investors is that they are water under the bridge. Not a comforting thought.

Second of all, the question makes reference to the fact that the Conservatives raised income taxes. If this is in regards to moving the lowest personal tax rate from 15% to 15.5% in Budget 2006, then this is somewhat disingenuous, as the Conservatives subsequently reversed that move, so the net effect was that the Conservatives DID NOT raise taxes. Therefore that issue, truly is water under the bridge. If the Liberals wish to paint the Conservatives with the brush that they have raised taxes in a way that affects ALL CANADIANS, then the better and more valid argument would be to PLEASE make the point that I have been asking the Liberals to make, which draws from my article in this weeks’ Hill Times, that states:

“Meanwhile, all the remaining trusts are vulnerable to the same outcome, which would multiply by seven-fold Flaherty’s incompetence and his already $1 billion loss of ANNUAL taxes. He shoots, he scores.”

As such, the trust tax has caused a massive wave of foreign takeovers of trusts made vulnerable by Harper’s policy. This wave of takeovers has only temporarily abated and will resume with a vengeance once credit is restored to the financial markets to enable more LBOs of devalued trusts. This will lead to the loss of $7.5 billion in ANNUAL TAX REVENUE, borne by ALL CANADIANS, which is the equivalent of a 1.5% GST increase......and unless the Liberals are prepared to tell Canadians, then Harper will get away with it.

All taxpayers are losing $7.5 billion in ANNUAL TAX revenue for the privilege (???) of having Canadian investors displaced by new foreign owners. Huh? This is dynamite and it is real, in the way in which attempting to portray Harper as a tax raiser on personal income taxes, is not. This is how the trust tax needs to be “prosecuted”. That is all that we ask. Please do so, for the benefit of all, especially Canadian taxpayers and the Liberal Party.

Third. You will notice in Harper’s answer that he cites “pension income splitting for seniors” as an offset to his income trust tax. What utter nonsense, since the people who have pensions are the ones least in need of income trusts. Plus pension income splitting for seniors ONLY BENEFITS 13% of seniors. Woopdeedo! This is Harper’s idea of tax fairness? Again read my article on page 17 of the Hill Times. As for the calculation of the 13% who benefit from pension income splitting, please see: http://caiti-online.blogspot.com/2009/04/what-harpers-income-splitting-for.html


Hon. Ralph Goodale (Wascana, Lib.): Mr. Speaker, Canadians will remember this Prime Minister's egregious record. First, these Conservatives increased personal income taxes by nearly a billion dollars. Then they slapped a 31.5% Conservative tax on retirement savings and income trusts. Then they sunk the nation into deficit during boom times so that there was nothing left when the recession hit and killed 300,000 full time jobs.
Could the Conservatives at least agree to fix the EI system to be a little more generous to its victims or would that make the system too lucrative?

And the PM’s response...

Right Hon. Stephen Harper (Prime Minister, CPC): First, Mr. Speaker, to be clear, this government has cut personal income taxes in every single budget it has brought forward.
In spite of the opposition of the Liberal Party, this government has cut taxes for our retirees, including income splitting for our pensioners, and in spite of the fact that the Liberal party opposed it.
This government was running surpluses when times were good so we can afford to intervene in times like these.
Let me tell the House this. No matter how many distortions of fact the Liberal Party tries, no one is going to buy their plan to raise taxes.

How big of a global financial meltdown is required before the Liberals expose Flaherty's lie about tax leakage?

That is the question?

I, for one, am beginning to wonder?

In the US, public officials who propagate known lies are summarily fired, here they become Finance Minister or work for the Globe

Napolitano Draws Resignation Calls After Gaffes on Veterans, Canada

FOXNews.com
Thursday, April 23, 2009

The outrage continues to build over a report from Homeland Security Secretary Janet Napolitano's department that warned of the danger of right-wing "extremists," and she raised eyebrows again this week when she suggested that the Sept. 11 hijackers entered the United States through Canada.

Homeland Security Secretary Janet Napolitano is under fire for what critics see as a string of gaffes, with a small but vocal group of conservatives calling for her to step down.

The outrage continues to build over a report from her department that warned of the danger of right-wing "extremists," and singled out returning war veterans as susceptible to recruitment.

Napolitano expressed regret for the reference to veterans -- but she raised eyebrows again this week when she suggested that the Sept. 11 hijackers entered the United States through Canada, even though the 9/11 Commission determined they came to the United States from overseas.

Time to tell Jim Stanford of the CAW what you think about his Ford Edsel views on Income Trusts

stanford@caw.ca

My Income Trusts
by Jim Stanford, Economist, Canadian Auto Workers
July 9, 2003

The Globe and Mail recently published an investigative series on income trusts (June 23-28) that shone some badly-needed sunlight onto the dealings of the hottest, but most dubious, segment of Canada's financial industry. Income trusts are now worth $55 billion, and that value could soon double. They account for all of the action - and all the commissions - down on Bay Street these days. Indeed, last year, almost 90 percent of all the IPOs launched on the Toronto Stock Exchange were for income trusts.

Yet the moniker "income trust" is a gruesome misnomer, for these instruments neither guarantee income (many investors think they are just like bonds, but they are wrong) nor inspire trust. They exist for one reason, and one reason alone: to exploit an odd loophole in Canada's tax structure which allows trusts to avoid paying the corporate income tax.

Clever wheelers and dealers are now finding all kinds of ways to bundle existing businesses into trusts, allowing investors to reap a higher return - and generating plum commissions for themselves in the process. The community of trusts reads like a Who's Who of the mundane side of Canada's economy: shopping malls, dockyards, fast food outlets, mattress-makers, propane tankers. But there's nothing mundane about the lucrative financial action the trust boom has inspired. The latest hot prospect: an income trust for - get this - the Yellow Pages, which could fetch up to $1 billion when it closes later this month.

All this is outrageous stuff, but it gets worse. More recent innovations include investment trusts which invest solely in other stocks and bonds, thus allowing purely financial speculators to take advantage of the trust tax loophole. Cross-border income trusts are another new breed, through which foreign investors can establish a trust in Canada, which in turn reinvests in businesses or properties back in the host country. This allows foreign investors to exploit the Canadian tax loophole, even on assets that aren't located in Canada. The only requirement is that the foreign investors lure in enough Canadian partners to qualify as a tax-exempt Canadian trust.

Management fees for income trusts are typically both secretive and exorbitant. The latest trend features unitholders paying outrageous up-front sums to Bay Street insiders to "internalize" overpriced management contracts, revealing a lucrative and audacious corruption more fitting of Ceaucescu's Romania than modern Canada.

Most of all, the whole craze gives the lie to Bay Street's long-standing claim to be the "handmaiden" of growth and innovation in our economy. In theory, those well-paid money managers are matching innovative, growing companies with the capital they need to finance their growth. This claim is vastly overstated at the best of times, but completely incredible in the case of income trusts.

Mundane, existing businesses are simply being given a new packaging, exploiting a tax loophole and generating business for a commission-starved brokerage set longing for a bull market in just about anything. And the whole point of the trusts is precisely to pay out as much cash as possible to investors - not to reinvest it in "growth" or "innovation."

Income trusts have facilitated the avoidance of hundreds of millions, perhaps billions, of dollars in corporate taxes. But is there a single redeeming feature of this financial practice from an economic or social perspective? Will my next Yellow Pages directory somehow be more efficient or readable thanks to all this expensive financial intermediation?

Sure, I can sit back and take potshots at this latest manifestation of the frenetic but useless hyperactivity of Bay Street. Or I can jump right in and join the party. I once tried to launch my own IPO - Jim.com (see http://www.caw.ca/news/factsfromthefringe/issue17.asp) - at the height of the dot-com craze. It failed miserably. Let's see if I have any more luck with this latest fad:

Jim's Waterheater Fund. This fund will be modeled on the Consumers' Waterheater Fund. I currently pay ten bucks a month to the gas company for my existing waterheater. Forget that action: I'll start my own income trust, and pay myself tax-free for all those nice hot showers I take.

Jim's Cottage Dock Trust. This one's modeled after the trust that runs the Halifax dockyards. I'll charge big bucks for every cruise ship or cargo carrier that ties up at my lakeside dock, then distribute all the resulting income to my unitholders. No dockings, no distributions. But in any event I will carefully manage the whole process from my favourite reclining chair, right out there on the pier - for a suitable management fee, of course.

Jim's Cholesterol-Reduction Income Trust: The A&W royalty fund pays distributions based on the sale of Papa Burgers and related sundries. But my doctor says I have to stop eating fast food. So for every Papa Burger combo I don't eat, I will pay $4.99 into the fund. Distributions will be tied to my quarterly cholesterol readings.

Jim's Place REIT: Sure, Bay Street already makes good money from my real estate the old-fashioned way: off my mortgage. But why stop there? I'll re-bundle my circa-1870 home in Toronto's hot Roncesvalles district as a "heritage landmark trust." The trust's management (that's me) will collect a suitably secretive portfolio of management fees, based on indicators like the length of the grass in the back yard and the state of the paint job.

I'm offering 100,000 units in each trust for a nice round $10 apiece. Buy into three and I'll give you the fourth for free. The units will be hot-sellers, so buy early and buy often. Because sooner or later some enterprising and determined federal politician - a former finance minister, perhaps? - is going to close this loophole and consign the whole shell game to the historical oblivion it richly deserves. So we might as well get while the getting's good.

A version of this article appeared in the Globe and Mail. Read the prospectus carefully before investing in my income trusts - or any other.

Mark Carney would never have acted in Goldman Sach’s best interests and not Canadians when it came to his fraudulent tax leakage, would he?

Stress Test Scores ‘C’ If Name Ends in ‘itigroup’:
Commentary by Mark Gilbert

April 23 (Bloomberg) -- Tomorrow, the U.S. authorities are scheduled to disclose the methodology for the stress tests that will gauge the creditworthiness of the 19 largest U.S. banks. Below are a few examples of the kinds of searching, penetrating questions the Treasury Department should ask. Some sections have point scores. Others will be judged more subjectively.

(1) Award your institution five points for every ex-Goldman Sachs Group Inc. manager on your board. Double that tally if former Federal Reserve Chairman Alan Greenspan ever took part in a private conference call for your favorite clients. Lose all points if the head of your executive compensation committee has a worse golf handicap than your chief executive officer.

(2) This week, an anonymously sourced blog entry said the government’s stress test would show that 16 of the 19 banks in the study are technically insolvent, with none of the 16 able to survive a disruption of their cash flow or additional defaults on their loans. On hearing this, your first reaction was:

(a) Please, please, please let me be in the threesome. I’ve worked like a dog selling assets and raising capital.

(b) Please, please, please let me be in the 16. I’m tired and I’d like to spend more time with my money.

(c) Only 16? Surely some mistake . . .

(3) Your accounts are audited by:

(a) Pricewaterhouse Coopers LLP.

(b) Ernst & Young LLP.

(c) Deloitte & Touche LLP.

(d) Moe, Larry and Curly in Rockland County, New York.

(4) A mob gathers at the doors of your institution. Your instinctive reaction is that:

(a) Barbarian rioters, led by Naomi Klein, are at the gates demanding the end of capitalism.

(b) Your customers have finally lost patience with counting their losses and are demanding your head on a plate.

(c) All those derivatives specialists you fired last month have finally found their collective spines and want to reclaim the portion of your previous bonuses that their spreadsheet- shuffling was responsible for generating.

(5) Gather your board members around the executive table, and make them bare their wrists. Lose 2 points for every wristwatch with a retail price of more than $5,000. Lose 50 points for any board member who owns the Breitling Emergency model that claims to summon the international rescue services at the push of a button. Lose 100 points if he has ever accidentally pressed the button and had to pay for the helicopter.

(6) Gain 10 points if you, the current CEO, have been asked to be or already are:

(a) a member of the U.S. Treasury.

(b) an employee of the Federal Reserve.

(c) Bo’s pooper-scooper.

(7) Your current company vehicle is:

(a) a Cessna Citation X jet.

(b) a Maybach limousine.

(c) a Toyota Prius

(d) a Segway scooter.

(e) a rusty bicycle.

(8) Which best describes your ability to sell bonds on the international capital markets without the benefit of a U.S. government guarantee?

(a) Bill Gross backs up the truck and says “fill ‘er up.”

(b) Bill Gross laughs so hard that he snorts coffee out of his nose and down the front of his shirt.

(9) Timothy Geithner says the “vast majority” of the nation’s banks have more capital than they need. Your response is:

(a) Which nation is he talking about? ‘Cos it certainly isn’t the U.S. of A.

(b) What is he smoking and where can I get some?

(c) You laugh so hard you snort coffee out of your nose.

(10) Your institution is positioned to remain solvent in a world economy resembling that of:

(a) the past decade.

(b) Japan.

(c) Cuba.

(d) Zimbabwe.

(11) Lose 10 points if your CEO plays bridge. Lose another 10 points if he’s up to tournament standard.

(12) Lose five points for each of the following:

(a) The words “never sleeps” feature in your slogan.

(b) There’s an umbrella in your logo.

(c) The name of your institution begins with “C” and ends with “itigroup.”

(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the reporter on this story: Mark Gilbert in London at magilbert@bloomberg.net
Last Updated: April 22, 2009 19:00 EDT

North Bay Nugget scoops the Mop and Pail

Greetings Ms. Malloy.

It is refreshing to see this issue getting the media attention it truly deserves.

As a financial planning professional , I have witnessed first hand the devastating effect this broken promise has wreaked upon many of my clients financial well-being . Given the fact that a vast majority of all Canadian citizens do not have “gold-plated” defined benefit pension plans, this ill-conceived legislation serves to exacerbate their retirement income plight not to mention the fact that Canadian ownership of many of our natural resources slips away via foreign takeovers.

I continually remind my clients each & every time we meet that when it comes to income trusts, the Harper Conservative government broke its promise of “never “ taxing them.

Congratulations to the Hill Times as well as the North Bay Nugget /Osprey Media Publishing for printing Mr. Fullard’s excellent articles. Keep up the good work on behalf of the many Canadians who need their voices heard.

To Mr. Flaherty & Prime Minister Harper, you have the power to right the wrong you have grievously inflicted upon the majority of Canadians.

You know your tax leakage logic is both flawed & fraudulent , so do the right thing by reversing your malefic legislation.

Sincerely,

David M Butti BA
Financial Advisor

Insurance Consultant

Manitoba Post.com: Mark Carney : Snake Oil Salesman

Mark Carney : Snake Oil Salesman
By Jim Cotton
ManitobaPost.com

Oh, the crap is about to hit the fan. Today , the Bank of Canada outlined some of it's plans to boost the economy , and it is very alarming for anyone who knows anything about economics. First, rest of article here

ManitobaPost.com: Mark Carney : Snake Oil Salesman

Mark Carney : Snake Oil Salesman
By Jim Cotton

Oh, the crap is about to hit the fan. Today , the Bank of Canada outlined some of it's plans to boost the economy , and it is very alarming for anyone who knows anything about economics. First, rest of article here

Tony Clement, facile and vapid, like the Globe and Mail

Dear Mr Bxxxxx

Thank you for your email concerning income trusts. As you know this policy decision was endorsed by the previous Parliament. I and the Government were re-elected in the meantime.

As your MP, I will certainly pass along your concerns to the Minister of Finance. I will also keep your views in mind, as well as those of my other constituents, in any future discussions at Cabinet or Caucus.

Best wishes,

Tony Clement, MP.

Flaherty lied.....pensions died

[C A I T I - O N L I N E]

Anonymous has left a new comment on your post "Ignatieff in QP today confronts Harper on his income trust vandalism":

Totally agree ... there needs to be way more attention paid to this issue. Iggy needs to be yelling about this on a much more regular basis, if that's what it takes to get that tax repealed and the CONs out of office.

Here is a good tag line for this mess:

Flaherty lied,
Pensions died.

Michael Ignatieff and OUR scaling the ramparts of BNN’s fortress journalism

"Successful countries knock down the barriers -- of red tape, regulation, and monopoly -- that divide citizens, confer unfair advantages or prevent people from working together" Michael Ignatieff

Unfair advantages indeed!!!.....as practiced by Canada’s virtual monopoly media and their penchant for fortress journalism run intellectually amok.

Fortress journalism is a term used to describe an approach to journalism that is resolute by virtue of being intellectually honest and rigorous, as opposed to being impenetrable by virtue of being facile and vapid, as practiced by BNN and the entire CTVGlobeMedia “empire” on the subject of income trusts and as chronicled through the hundreds of email correspondence I have accumulated in my conversations with members of that media entity since November 1, 2006.

Foolishly thinking that I and others would simply go away, we have used the power newly vested in us by the internet to overcome the bricks and mortar media. The power of our truths will prevail over the gross commercial self interests of Canada’s monopoly media, of that I can assure you. Success will be sweet and to the betterment of all Canadians who believe that 2 plus 2 equals 4, rather than 3, as imposed on Canadians by the corrupt and ill-motivated Mark Carney and falsely propagated by the press.

Yes Jim Travers, you included. Since the knowledge of a crime that goes unreported is a form of commission.

Most of the facile and vapid journalism that goes on at BNN on the income trust issue, is propagated over the public airwaves that are presently being completely wasted, while in the hands of BNN. Occasionally, the bright lights at BNN will put their income trust editorial nonsense into print, such as this exercise in complete nonsense by BNN Host Michael Kane., entitled “Trust yourself?”, which is something that any viewer of BNN must be constantly reminded to do, lest they succumb to the droning nonsense.

The Bubble News Network also practices fortress journalism, as they provide virtually no means for rebuttal from the viewing public, unless you consider this to be your idea of free speech “We may print your comment and reserve the right to edit.”

As such I have provided some of the commentary on Michael Kane’s “piece”, that BNN thought unworthy of sharing with the public, in order that an alternative view can be expressed from outside the moat, as we hurl known facts and the occasional well deserved insult at this type of vapid and facile journalism, found elsewhere in the CTVGlobeMedia empire on any subject, like income trusts, that is near and dear to its owners hearts/wallets or that might actually affect the outcome of the “world’s largest ever leverage buyout.....that wasn’t”

This comment from Ian pretty much sums thing up about BNN: “It was said in 2006 that Flaherty knees jerk reacted and did not do his homework. Here we are 27 months later and you still have not done yours. That sir is inexcusable for a member of the media.”or Les who asked “Michael do you just make this stuff up? Do you do any research at all?” or IR who summed things up with: “A three word summation of your composition, in my opinion, is What utter tripe!!”

These informed viewers complete comments follow Michael Kane’s tripe, presented to you here in full mindless technicolor propaganda and his idea of a “nightmare” scenario. Namely a world that that is intellectually honest and factually rigorous???

Trust yourself?
Posted by Michael Kane on February 3, 2009
BNN

I recently asked viewers to send in blog topic ideas and one citizen of Business News Nation said he wanted to know my opinion on income trusts.

That got me thinking about the so-called Halloween Surprise – Oct. 31, 2006 – when federal Finance Minister Jim Flaherty revealed a stunning reversal of government policy by announcing income trusts would be taxed just like ordinary corporations.

Until that point, investors had been pouring money into trusts, which were expected to receive special tax treatment and distribute most of their earnings to unitholders.

But what frightened the government was the prospect of some huge Canadian corporations – huge tax-paying corporations – converting to trust status to avoid paying those taxes. It was the intent of BCE Incorporated to convert into an income trust, an event that would have been a disaster for the government. BCE pays enormous corporate taxes and Ottawa did not want to lose that revenue stream.

OK, that's the history.

Here's what I wonder: suppose the government had not reversed its policy. Suppose it had yielded to the cries of investors who felt they'd been duped. Suppose the government had decided to be fair and stick to a policy that would have seen the loss of billions in tax revenues.

Then the global banking community freezes and shatters.

We all hear the gnashing of teeth over Ottawa's plans to run a deficit, a necessary situation for us now. But imagine the jackpot we'd be in if Canada's largest tax-paying companies had been allowed to avoid most of those taxes.

The hole would be much deeper… the muskeg much stickier.

A lot of people lost a lot of money when the income trust sector sold off following Oct. 31, 2006, and the way it happened is regrettable.

But, without the Halloween Surprise back then, we could very well be living a nightmare now.

Comment from a Bay Street analyst:

Huh? Are you kidding with this Brent? This can’t be for real! When exactly did BCE ever pay huge cash taxes? Doesn’t anyone know how to read a set of financial statements (Hint: look at the tax notes!). Then shortly after the gov’t kiboshed the trust conversion, BCE announced that due to “restructuring of its subsidiaries” it would not be cash taxable until at least 2010. And that was when they were making some money. How much in cash taxes is BCE going to pay to the government this year? How much Canadian tax revenue would have been collected under the foreign-financed LBO structure? (Hint: none) Honestly, where do they find these people to come up with this stuff? Can you get away with not actually taking a University-level business/tax/finance course or program and still become a “business” commentator in Canada. Don’t they have even minimum requirements for educational proficiency? It’s kind of pathetic…

Comment from retired former senior Department of Finance official, Yves Fortin of Ottawa:

I am truly astounded that Michael Kane [of BNN] would write such a comment. His facts are wrong. Bell Canada was not going to pay any material amount of income tax in forthcoming years. Bell said so in a press communique issued in mid-December 2006 shortly after the Flaherty announcement. Telus made a similar announcement.

Second, the vast majority of corporations do not pay the statutory corporate income tax rate. Their effective tax rates are often a fraction of the statutory rate. This is particularly true of corporations operating in the resource sectors. In the Canadian Income Tax Act there is about 140 pages of measures by which corporations can reduce their taxes. In the 2008 annual report I just receive from the Bank of Montreal it is written on page 143 that the effective tax rate of the bank was 7.9% in 2007 and minus (yes MINUS) 3.6% in 2008. They will get a tax refund.

Third, Mr Kane should know that while income trusts don't pay tax themselves their unit holders pay tax on distributions received in non-tax deferred accounts at rates that typically exceed the (diminishing) corporate statutory rate. These individual taxpayers pay on average 38% of their income in tax (federal and provincial) and up to 46% for those in the highest maginal tax bracket. Put briefly, the government collects more taxes from such investors receiving trust distributions that it would if trusts were to convert to corporations.

Fourth, as regards tax-deferred accounts such as RRSP and RRIF. These are tax-deferred account and not tax-exempt accounts as they are frequently referred to falsely. It is wrong to refer to these accounts as being tax-exempt since they are not. The Income Tax Act is very clear in this respect. All taxes are paid when the money held in these accounts is withdrawn. Moreover, holders of these accounts are arbitrarily denied the dividend tax credit and are consequently fully doubled taxed on all dividends received in their accounts. This is most unfair but the Minister of Finance never talks about that. People who will be holding income trust units in their RRSP/RRIF after 2011 will be doubled taxed very heavily and most unfairly : once when the trusts will be forced to pay the STATUTORY tax rate and then again at 38% or 46% for a total tax rate of over 60% in many cases. What Mr. Flaherty has done is to extend the grossly unfair double taxation of dividends to trusts distributions. As it becomes totally non-profitable to hold income trust units in RRSP/RRIF the amount of taxes collected by the government from these accounts will fall substantially as these investors will be forced to invest in low yield intruments, have much lower investment income, and pay much less tax.

Fifth, income trusts that have been acquired in leveraged buyouts since the Flaherty announcement pay virtually no income tax in Canada. All interest payments to foreign investors and equity funds flow out of Canada tax free, thanks to the elimination of the withholding tax on such payments by Mr. Flaherty. Moreover, when trusts revert to corporate model they will most likely pay very little tax as their effective tax rates will often be very low especially in the case of the oil and gas trusts. It is interesting to note that corporations operating in the oil patch and their shareholders were typically paying much less income tax than after they converted to the income trust model.

In conclusion, contrary to what Mr Kane opines the demise of the income trust will result in a significant loss of tax revenue for the government.

Yves L. Fortin

Comment from Bruce Benson Calgary

Michael Kane

Wow, you have shown just how inept you really are. And you call yourself a financial journalist or reporter. What a laugh. I have never read so much dribble with the exception being from Flaherty & Harper. Where is your proof? You have not done one iota of investigative journalism. All you did was spread the same lies as Harper & Flaherty. You need to be taken to the back wood shed and then your red ass fired from BNN. You truly did BNN a disservice, your ignorance and laziness is beyond reason. In fact you are not alone. BNN is so biased I am surprised they are still in business. BNN and it's staff are producing an inferior product and will go the way of the Globe and Mail, right into bankruptcy. Smarten up, what a disgraceful bit of journalism. I see others have enlightened you with the truth and the facts. It's time for you to drop your infantile mindset and do some responsible journalism for a change. I can't take anymore more of the crap. What you produced was totally untrue.


Comment from Investor Retaliations

Mr. Kane:

A three word summation of your composition, in my opinion, is What utter tripe!!

That you would continue to espouse the CON party line, carefully avoiding even a hint of factual relevance in your dissertation is bewildering and perplexing to anyone with even the most rudimentary of investigative skills.
I will attempt, as have many others I'm certain, to enlighten you with certain facts and realities, though you may want to continue oblivious in your vacuous postulating regarding income trusts as an investment vehicle.

1- Your statement: "But what frightened the government was the prospect of some huge Canadian corporations – huge tax-paying corporations – converting to trust status to avoid paying those taxes. It was the intent of BCE Incorporated to convert into an income trust, an event that would have been a disaster for the government. BCE pays enormous corporate taxes and Ottawa did not want to lose that revenue stream."

Certain terms you've used are unclear, undefined and merely designed to inflame and sow worry among the uninformed; the FACTS are that BCE, due to extensive tax writeoffs, have paid, and continue to pay minimal corporate taxes, the amount that would have been paid by investors in BCE as an income trust, by estimate would been TRIPLE that generated by BCE as a corp.
Are you aware of the actual amounts paid by BCE as a corporation and if so, why were those amounts not included for comparison? They are a matter of public record, after all.

2- Your statement: "Here's what I wonder: suppose the government had not reversed its policy. Suppose it had yielded to the cries of investors who felt they'd been duped. Suppose the government had decided to be fair and stick to a policy that would have seen the loss of billions in tax revenues."

Pardon? Proof of assumption? Merely accepting and parroting what the government stated without ANY calculations in evidence is no proof of anything, ergo, your statement is, at the least, misleading, at worst, a lie.
A situation of tax leakage is a numbers related situation, this is a determinable, formula based calculation with minimal variances and unknowns; to state as fact that which is unsubstantiated by NUMBERS and FACTS is, quite simply, wishful thinking; when used to defend a fallacious position, it becomes a LIE.

3- Your statement: "We all hear the gnashing of teeth over Ottawa's plans to run a deficit, a necessary situation for us now. But imagine the jackpot we'd be in if Canada's largest tax-paying companies had been allowed to avoid most of those taxes.

The hole would be much deeper… the muskeg much stickier."

MORE nonsense!!! You seem to conveniently avoid the FACT that as a conversion to an income trust would cause investors in said trust to PAY TAXES!!! Is this getting through to you? In fact, said investors would pay MORE taxes that the corporation ever would. This too is substantiated by numerical calculations, not whimsical musings.
Naturally, as an unintended consequence of the TFP, the unit prices of various trusts has been reduced to the point where foreign (PWI) and private takeovers HAS resulted in the reduction of taxes paid by the IT sector.

Frankly, take a read of Dianne Francis' FACTUAL blog entries on this subject... educate yourself on the subject matter prior to publicly embarrassing yourself in the future by waxing eloquent on material with which you are so obviously poorly informed.
You do nothing to dissuade the astute investor from the perception of BNN as financial reporting 'lightweights', incapable or unwilling to present facts as such without accompanying misinformation.

Sincerely,

Comment from Jerrthebear

You must be looking for a appointment to the Senate. I suppose you feel better that private equity, pension funds and foreign investors can own Income Trusts and pay no taxes. Perhaps it's all right for Flaherty's own pension fund can own IT's but I can't. Perhaps you don't realize that I pay taxes on my distributions. Perhaps you don't realize that Law firms operate under the same principles. Profits are divided up before taxes paid. You've got your head in the sand. Harper encouraged us seniors to invest in these units so we could, and I quote, "seniors need the income from Trusts to pay for groceries, utilities and health care, we will never tax them". Perhaps you don't understand the billions of taxes lost by Harper's lies about tax leakage. Perhaps you think it is better for the Arabs and Chinese to own our resources. Perhaps you have no freakin idea what you are talking about.

Good luck with the SENATE APPOINTMENT. I really do think you want to be another pig at the trough. My viewing of BNN and anything associated with it is now finished. OINK OINK


Comment from Ian

Mr. Kane…

I’m not sure whether I should be more annoyed with Flaherty’s betrayal with his unfounded attack on Income Trusts or with your inability to dig the facts on the issue.

There have been numerous industry reports refuting the ‘tax leakage’ myth that Flaherty propagated yet the Flaherty could only produce 18 blacked out pages. Have you considered why Flaherty can’t produce any proof? Have you considered that he Lied to us and to you? As a reporter I would expect the least you could do is a bit of investigative journalism before spouting off in support of an ill thought and badly implemented tax policy. Don’t you think the government should be accountable for important tax legislation, particularly when it has such profound impacts?

Have you considered why the new tax only applies to publicly traded Income Trusts and gives a pass to private pension plans? Is that Tax Fairness? Why are the 30% of Canadians with private pensions exempted while the 70% that fend for themselves are clobbered with a tax of 31.5%?

You state “ But imagine the jackpot we'd be in if Canada's largest tax-paying companies had been allowed to avoid most of those taxes.” Have you looked into how much tax Bell and Telus actually paid? Have you considered that unit holders pay tax on trust distributions at their marginal rate, much higher than the average corporate tax rate of 7% (from Stats Canada)? Do you see a flaw in your statement?

You state “The hole would be much deeper… the muskeg much stickier.” Can you please provide some numbers and analysis to back up this claim?

You also state “A lot of people lost a lot of money when the income trust sector sold off following Oct. 31, 2006, and the way it happened is regrettable.” If it is truly regrettable then why has there been no movement from the government to mitigate the damages? Flaherty did not bother to look at options for implementation or ways to minimize damage. In the recent budget not even an attempt to extend the deadline.

And finally you state “But, without the Halloween Surprise back then, we could very well be living a nightmare now.” Well Michael, you are partially right. We are living a nightmare now. Income Trust investors have been living that nightmare since the Halloween betrayal and you along with the rest of the country are just beginning to feel our pain.

Have you considered that asking these companies to convert in this period of economic recession will just hurt them more? Have you considered the number of capital losses that will be triggered by the conversions and what that will mean to government revenues? I for one am recovering all the capital gains taxes I paid over the last three years…I doubt I am alone.

It was said in 2006 that Flaherty knees jerk reacted and did not do his homework. Here we are 27 months later and you still have not done yours. That sir is inexcusable for a member of the media.


Comment from Les from Collingwood

Michael do you just make this stuff up? Do you do any research at all?

Respectfully
Les Parsneau

"BCE pays enormous corporate taxes and Ottawa did not want to lose that revenue stream."

This is false, the reverse is true, BCE would have paid $2.6 billion more as an income trust than as a corporation.

The back to back announcement of conversions into income trusts by Telus (on September 5, 2006) and BCE (in October 2006) provided an excellent backdrop for Mr. Flaherty to shut down income trusts. The Finance Minister told Canadians that the conversions of Telus and BCE from the corporate model to the income trust model would threaten the very foundation of Canada's tax collection. When it was correctly pointed out at the time that neither Telus nor BCE had paid any corporate taxes for some time, we were assured by our Finance Minister that both of these companies were on the very verge of becoming taxable and these imminent taxes would be "lost". That was early November 2006. No less than six weeks later, we learn from a BCE press release that BCE was able to reconfigure their corporate structure such that they wouldn't pay any taxes whatsoever for 4 full years. Not long thereafter, Telus revealed that it wouldn't pay taxes for 2 full years. Given theses corporations adeptness at sheltering themselves from taxes so quickly, who is to say 4 years won't become 10 years and 2 years won't become 5? It's clear that our Finance Minister hasn't pursued this question. Leaving this conjecture aside, it is very revealing to calculate the actual amount of tax that was foregone by Ottawa as a result of Flaherty's standing in the way of BCE's and Telus's conversion into income trusts.

This is a very simple analysis to conduct. As you can see below, Ottawa would have collected $2.7 billion more in taxes from BCE over the next four years as an Income Trusts (relative to zero as the corporation it will remain) and $1.1 billion more in taxes from Telus over the next two years as an Income Trusts (relative to zero as the corporation it will remain) for a total loss in taxes of $3.8 billion.

------------------------------------------------------------------------

BCE Ownership:
15% foreign
35% Canadian tax deferred
50% Canadian taxable
Tax Rates:
38% blended tax on income as per Department of Finance Consultation Study dated Sept 28, 2005
19% blended tax on dividends
Distributions on 900 mm shares outstanding Trust distribution rate:
$2.55 per unit
Corporate dividend rate:
$1.46 per share

------------------------------------------------------------------------

Federal Taxes (including deferred taxes paid on retirement accounts):
BCE as an Income Trust:
$793 million per year federal tax
BCE as a Corporation:
$240 million per year federal tax
Foregone Federal taxes:
$553 million per year
Foregone Taxes over BCE's 4 year corporate tax holiday:
$2.2 billion
Foregone Capital Gain on Conversion to Trust:
$428 million (based on $5.00/share gain)
Total Foregone BCE Taxes:
$2.6 billion

------------------------------------------------------------------------

Ignatieff in QP today confronts Harper on his income trust "vandalism"

“Mr. Speaker, this is the Prime Minister who spent us into the red in the good times. It is the Prime Minister who slapped a 31.5 per cent tax on income trusts. This is the Prime Minister who is going to leave us with the biggest deficit in Canadian history, and he is giving me a lecture on economics?” Ignatieff yelled indignantly, sticking a thumb out and motioning to himself.

Independent economists expose Harper's FRAUD

Independent economists discredit govt tax leakage claims

OTTAWA, Feb. 1 /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.

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

Mark Carney: Wonder Boy or Wonder Bread?

Mark Carney would have made a great Governor of the Bank of Canada back in the fifties, when every stay at home mom thought that the most nutritious meal was a peanut butter sandwich made with Wonder Bread.

Today we don’t consume such pulp, and nor should we when it comes to the qualifications required to become Governor of the Bank of Canada or the ethical standards that are required.

What Mark Carney may possess in academic qualifications is more than rendered useless, by virtue of his complete lack of ethics? Who in their right mind would ever attempt to defraud 2.5 million Canadians of $35 billion of their retirement savings in an act of vandalism ( Michael Ignatieff’s term ) based on something as fallacious (Michael Ignatieff’s term) as Mark Carney’s bogus tax leakage analysis?

How can Mark Carney conceivably justify leaving out the taxes paid on the 38% of income trusts held in RRSP’s, when doing so makes the difference between “tax leakage” and “tax neutral”?

For a guy who spent 13 years working for Goldman Sachs, this can only mean he learned nothing about how to discount future cash flows or to monetize the same via any number of financial instruments and global financial markets.

Failing use of those garden variety financial techniques, is Mark not familiar with the concept of “in-substance defeasance” in which these future tax streams from taxes collected annually from withdrawals on Canadian’s accumulated $500 billion in RRSPs could be used to defease the interest payments on Canada’s, uniquely symmetrical, $500 billion of outstanding debt?

If not, please have Mark give me a call, as I do give tutorials and I can teach him all about the rudmentary concepts of “assets equal liabilities” and “discounted cash flow.” or about how Canada adopted accrual accounting about 6 years ago at the insistence of the Auditor General.

Meanwhile, Mark Carney was not even the choice of the Bank of Canada’s Board of Directors. Paul Jenkins was. Flaherty overruled the Board to install his “guy” as the quid pro quo for Carney’s deceitful handling of the income trust fraud.

Even people like L. Ian MacDonald are having a tough time praising Mark Carney or explain just how this guy who failed to make partner at Goldman Sachs and was “downsized” from Goldman’s Toronto office, in this attempt to explain the Boy Wonder’s quick ascension to higher offices of deceit and incompetence:

“And here's the thing. There has never been a more important time to have a guy with Carney's investment banking credentials at the head of the central bank. And it's almost an accident that he's there.

When he came home to join the public service as associate deputy at Finance in 2005, he quickly became a favourite of Flaherty's when the Conservatives took office in 2006. It was no secret that Flaherty wanted to make him deputy minister, but Carney's path was blocked by Kevin Lynch, the clerk of the Privy Council, himself a former deputy at Finance, who preferred to keep Rob Wright in that role. As deputy ministers are appointed by the prime minister, through his own department, the PCO, that was considered Lynch's call.

As a result, Carney ended up at the Bank of Canada instead. It's not clear whether this is fate, destiny, or dumb luck, but as it turned out, it's very much for the best.”

Just shows you how little L .Ian MacDonald knows about finance or the lies that Mark Carney told ALL Canadians to the ultimate intended betterment of some of Goldman Sach’s best clients..........like........well, by now, you all know who I am talking about.

Just look who thought they had the most to gain by killing income trusts (and then subsequently not disclosing formal offers made to their Board on Stapled Security Recapitalizations) or certain Life Companies, the names of which should now be firmly etched in your minds and need to be taught a real good lesson in honesty and democracy.

Shouldn't CTVGlobeMedia be co-recipients of this award, as it pertains to Harper's trust fraud?

Canadian Association of Journalists Code of Silence Award
Deadline for nominations - May 15
 
 
OTTAWA (April 22, 2009) – Has a government department dodged your calls, denied your access to information requests and given you the epic run-around?  Nominate it for a prestigious national award!
 
The Canadian Association of Journalists is now accepting nominations for its ninth annual Code of Silence Award, which recognizes the most secretive government department or agency in Canada.
 
"From the tiniest town council right up to the Prime Minister's office, governments consistently show contempt for the public’s right to know," said CAJ President Mary Agnes Welch. "They use every loophole and delay tactic to conceal information that ought to be public. Some do this so well they deserve a big, fancy award."
 
Last year, the hands-down winner of the Code of Silence Award was Prime Minister Stephen Harper and his office. The PMO was cited for muzzling civil servants and cabinet ministers, blackballing reporters who pose tough questions and building a huge apparatus designed to staunch the flow of information.
 
Previous winners include former Alberta Premier Ralph Klein's Conservative government for hoarding public documents on the misuse of a government plane until after the 2004 provincial election and Health Canada for denying any meaningful access to a database of prescription drugs that could harm or even kill Canadians.
 
The Code of Silence Award is handed out annually at the Can’s gala award ceremonies which take place during the association's annual conferences. This year, the conference is being held May 22-24 in Vancouver.
 
Nominees for the 2009 award can include municipal, provincial and federal government departments as well as public agencies that work in the public interest with public money.
Nominations can be submitted by e-mail: canadianjour@magma.ca  (write "Code of Silence" in subject line)
 
Nominations close May 15, 2009
 
The Canadian Association of Journalists is a professional organization with more than 1,300 members across Canada. The Can’s primary role is to provide public-interest advocacy and quality professional development for its members.
 
For more information, visit www.caj.ca or call:
Mary Agnes Welch, CAJ President, Work: (204) 697-7590 or
Cell: (204) 470-8862;
John Dickins, CAJ Executive Director, Cell: (613) 868-5442

Does BNN’s Kevin O’Leary have an embedded conflict of interest?

In it’s feigned attempt at providing so-called “balanced” journalism on the far reaching income trust matter, Kevin O’Leary acts as the token advocate on behalf of income trust investors on BNN (Bubble News Network). I say token, because Kevin’s advocacy hasn’t advanced much in the last 2 .5 years and he exhibits as much interest into getting into the heart of Jim Flaherty’s fraudulent tax leakage matter, as Mark Carney does. Meanwhile Amanda Lang is the ever present naysayer on income trusts and all things wonderful Jim Flaherty and Mark Carney on income trusts (for all intents and purposes, in the minds of knowledgeable viewers).

So in the interest of the integrity of the financial press (I think I am the only person worried about such a thing these days?), I have to ask the question about whether Kevin O’Leary has an embedded conflict of interest based on what I learned from his full page ad at the back of the Globe’s (sister company of BNN) April 18, 2009 Report on Business that features a head shot of Kevin O’Leary and the following, mail before midnight tonight, scheme:

O’Leary Funds

O’Leary Canadian Income Opportunities Fund

Exchange Option (exchangeable until April 24, 2009)

If you own securities of any of the following issuers, you are invited to exchange those securities for Units of O’Leary Canadian Income Opportunities.

Income Trusts:

Whereupon it lists 96 income trust issuers from Advantage Energy Income Fund to Zargon Energy Trust.


DOES THIS NOT REPRESENT A CONFLICT OF INTEREST???...............of course it does, but what would I know I only spent 25 years on Bay Street most recently as the Executive Managing Director of Equity Capital Markets at a bank owned dealer where I spent my entire career worrying about the integrity of the Canadian capital markets, which is probably why I got into so many differences of opinion with other “Bay Streeters” when I sat on the IDA’s Corporate Finance Committee and other industry committees

Tick-tock, tick-tock.

Time to write the Canwest obituary, something like this:

Earth to the Aspers:
Don't blame Ottawa for your Alliance Atlantis LBO investing blunders
It's only a real loss if you go bankrupt

By: Jonathan Chevreau, Financial Post
April 23, 2009 (reprint from November 25, 2006)

A month after the Halloween Massacre, income trusts continue to be a bone of contention for Boomers on the cusp of retirement. My e-mail inbox hasn't received such an onslaught of plaintive communiques since, well, the Liberals tried to tax trusts a year ago.

These appeals are being sent to any journalist remotely sympathetic to the cause. And much of the lobbying comes from those with a sharp axe to grind.

One camp is the industry itself and the army of lawyers and financiers feasting on it. Another is retail investors who made too large a bet, perhaps aggravated by margin debt. They're understandably desperate to persuade Ottawa to change its mind, in the hope they can recoup their personal losses.

One senior wrote: "I have lost over 45% of my margin account, because I was using borrowed money on top of the equity in the account."

Earth to this senior: That's appalling but did your financial advisor approve this idea or worse, initiate it? Did they warn you income trusts are equities, not bonds? Did they inform you Canada accounts for just 3% of the world's capital markets and that small- and mid-caps trusts are a small and risky slice of this tiny market? With the end of the 30% foreign-content limit, there's no reason for RRSPs or RRIFs to be so unbalanced.

A third camp is from those with a vested interest in getting the Tories booted from office. Presumably, they are card-carrying Liberals or members of other parties.

Had they been in power once corporate giants such as BCE and Telus decided to convert to trusts, they would have taken the same action.

When the Liberals retreated from their attempt to tax trusts a year ago, comparable losses were recouped and trust investors had a golden opportunity to retreat to a more prudent allocation. But, emboldened by what some viewed as the Tories' "promise" not to touch the sector, some plunged greedily back in again. Their faith in the Tory assurance reminds me of the "Greenspan put," whereby stock-market punters counted on the U.S. Fed to bail out the market by lowering interest rates anytime stocks faltered.

Now, those stubbornly overweight in trusts seek to punish the Tories for having the guts to implement the Liberals' own idea and fix a problem created on their watch.

The telltale line from the politically motivated is the cry "they promised" or "they lied."

"You promised!" may work with children pleading with parents but it's unlikely to sway professional politicians. As for lying, it's sad but regrettably true that prevarication is an occupational hazard for those who attain political office.

Circumstances change. The Tories were ill-advised to promise not to touch trusts in the first place, but what could they do once BCE decided to convert? Wait until all five big banks followed suit?

A structure once limited to small- and mid-cap energy trusts and obscure niches like cold storage suddenly threatened to engulf all of corporate Canada. We were becoming Income Trust Nation, while Australia and the United States and had long since moved to shut down similar arrangements.

More moderate observers agree the tidal wave of new conversions had to stop but feel the exemption for existing trusts should run beyond 2011 to 2017. That's reasonable and worth considering, as are some other suggestions for fine tuning the transition. See, for example, mad-as-hell.ca, a Web site for income trust investors to vent.

Generally, with pension splitting and now income splitting in the wings, what we've lost on the swings we've gained on the roundabouts.

I disclose here that I voted Tory last time and will do so again. My spouse and I also own income trusts through index funds. On paper, we've lost enough to sympathize with those whose nest eggs are temporarily depleted. However, like anyone with well-diversified portfolios, we have seen compensating gains in our dividend-paying stocks. Meanwhile, the trusts may yet come back. Remember -- it's only a real loss if you sell.

The manufactured rage is disproportionate to the alleged offence. It's time to let it be.

Unlike Politicians, Doctors of Ophthalmology don't have pensions

The Liberal Party, and its Finance Critic John McCallum, are failing ALL Canadians by not messaging the income trust issue properly. I have said this repeatedly for 20 months. This is why you are gaining no traction on this issue or in depicting Harper as incompetent and grossly deceitful. What is your hang-up?

This Doctor of Ophthalmology gets it.......why can’t you?

Dear XXX,

I am attaching a recent letter published in the Hill Times, written by Brent Fullard. This letter thoroughly exposes the arrogance and thoughtlessness of the Harper government in passing the income trust tax law which takes effect in 2011. Even before becoming active the law has caused considerable loss to Canada, as nation; and too its citizens, particularly senior citizens, who have counted on income trusts to help provide for their financial needs in their later years. This issue has been glossed over in recent months and I’m sure the Harper Government hopes that the objections to the law have been put under the bed, forever.

But the issue remains smoldering in our hearts and we concerned citizens of Canada would like some help from our responsible media to fight and arouse support for the repeal of this ugly, harmful piece of legislation. My purpose in writing you, is to ask for the assistance of my Newspaper, the XXX, to be the social critic it has been, in the past. Please help us fight for social justice and accountable government in this country. Otherwise we will lose it. As it is said, the price of freedom is constant vigilance.

Thank you XXX. I am hopeful that we can have your active involvement and support.

Dr. XXX, OD
XXX
XXX

Does Carney really know what he's doing?

The Globe reports:s “For months, the person who should know the most about the health of Canada's economy and its prognosis has been badly out of step. Both estimates were wildly out of sync with those of private forecasters and other economy evaluators.”

Jack Mintz reports: “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”

The US had as their Treasury Secretary the former CEO of Goldman Sachs, meanwhile Canada has as its Governor of the Bank of Canada some novice who was downsized from Goldman Sachs before he even made partner? He has demonstrated a lack of ethics in how he conducted himself on the trust file. Why do we have to tolerate such conduct and incompetence?

Oh, to live the carefree life of an unaccountable bureaucrat making $429,600 a year, plus free on-the-job training.

Central bank darkens view of recession
By BRIAN MILNER and HEATHER SCOFFIELD

From Wednesday's Globe and Mail

April 21, 2009 at 9:47 PM EDT

TORONTO and OTTAWA — For months, the person who should know the most about the health of Canada's economy and its prognosis has been badly out of step.

Now, in a sharp public reversal, Bank of Canada Governor Mark Carney has cast aside his earlier view of a quick recession and accepted what other economy watchers have been saying for months: The situation on the ground is much worse than anticipated, and it could be many months before we see any kind of a turnaround.

“The global recession has intensified and become more synchronous since the bank's January monetary policy report update, with weaker than expected activity in all major economies,” the bank explained in a statement. “While more aggressive monetary and fiscal policy actions are under way across the G20, measures to stabilize the global financial system have taken longer than expected to enact.”

The question left hanging: How did Mr. Carney and his advisers come to their previous forecast in the first place?

The answer appears to lie in the bank's sophisticated computer models, which produced expectations that unprecedented interest rate cuts and a massive injection of fiscal stimulus would spark the conditions for a strong recovery.

“At that time, the bank was still clinging to the hope that that easing would have the typical economic response,” said Avery Shenfeld, chief economist with CIBC World Markets. “But there are reasons to believe that the global economy is not going to respond to the medicine as well as it has in the past.”

On Tuesday, the central bank cut its key overnight lending target in half to a record-low 0.25 per cent and is vowing to keep it there for more than a year, if necessary. It now predicts that the national economy will shrink by 3 per cent this year, to be followed by a tepid recovery of 2.5 per cent in 2010.

Yet as recently as January, Mr. Carney surprised the market with a bullish prediction that the economy would contract by as little as 1.2 per cent this year, before rebounding strongly with growth of 3.8 per cent in 2010.

Both estimates were wildly out of sync with those of private forecasters and other economy evaluators. The International Monetary Fund last month predicted both a steeper decline and slower recovery.

“The [central] bank is well aware that things are not turning out as they had forecast,” said Jayson Myers, president of Canadian Manufacturers and Exporters.

The Bank of Canada has a lot of influence on business confidence, particularly when companies are so skittish these days and hungry for information, said Tina Kremmidas, chief economist at the Canadian Chamber of Commerce. So when the central bank changes direction, “it does matter.” The bank has gained high credibility in the past 25 years of successfully targeting inflation, so its views will reverberate widely, she said. The downward revisions are likely to shake business confidence further and cause firms to rethink investment and hiring.

At the small end of the business scale, many operators pay close attention to the signals the central bank sends, although they don't usually adopt the bank's forecast wholesale, said Ted Mallett, vice-president of research at the Canadian Federation of Independent Business. To that end, Tuesday's statement from the bank was encouraging, because it signals that interest rates will stay in the basement for a long time. “It's an interesting approach and a strong signal that they want to keep the cost of money at a favourable rate,” he said. “That helps business decision making. What they're trying to do is create some certainty here.”

Other economists believe that while Bank of Canada's outlook is influential, it is not as powerful as it once was.

Peter Hall, chief economist at Export Development Canada, argued that companies researching their marketplace have so much information available to them these days – much of it available for free on the Internet – that the central bank's view is just one of many that they will consider.

“There's a deluge of information out there,” Mr. Hall said.

EDC's customers – Canadian businesses involved in exporting – are well aware that all forecasters are revising frequently these days, and have reacted by building large amounts of risk into their own company outlook, Mr. Hall said.

Nevertheless, businesses and consumers can ill-afford to have a central bank out of step with reality by, for instance, making monetary conditions tighter than they ought to be.

“There's no light at the end of the tunnel, as far as construction goes,” said Steve Ross, general manager of Cherubini Metal Works in Dartmouth, a steel fabricator that has laid off close to a sixth of its work force of 300 and will soon face further cuts if orders don't pick up in the next few months. “We just don't know where the bottom is.”

What did you expect from someone who couldn't make partner at Goldman Sachs

.....accurate forecasts?

......honest tax leakage?

Surprised by depth of slump, central bank pegs rate at 0.25%
Central bank says recession will be deeper and last longer than thought

KEVIN CARMICHAEL

Globe and Mail Update

April 21, 2009 at 11:16 AM EDT

OTTAWA — The Bank of Canada cut its benchmark lending rate to the lowest possible, and promised to leave it there for as long as a year in order to fight a recession that is deeper and will last longer than previously thought.

The central bank on Tuesday dropped its key overnight target a quarter-percentage point to 0.25 per cent, which is “the effective lower bound” because anything deeper would disrupt short-term money markets, policy makers said in a statement.

In January, Bank of Canada Governor Mark Carney was counting on multibillion-dollar stimulus programs pledged by governments in the Group of 20 major economies to reverse the effects of the financial crisis by the third quarter of this year. Those policies are taking longer roll out than policy makers anticipated, a delay that's exacerbating the downturn.

“The global recession has intensified and become more synchronous since the bank's January Monetary Policy Report Update with weaker-than-expected activity in all major economies,” the statement said. “While more aggressive monetary and fiscal policy actions are under way across the G20, measures to stabilize the global financial system have taken longer than expected to enact.”

The central bank now predicts that Canada's gross domestic product will shrink by 3 per cent in 2009, compared with a January estimate for a 1.2-per-cent contraction.

The Bank of Canada also abandoned its relatively optimistic estimate that the economy would rebound to expand 3.8 per cent in 2010. The recovery will be far more muted, with an expansion of 2.5 per cent in 2010, the central bank said.

Mr. Carney and his chief advisers on the governing council are trying to restore confidence amid Canada's first recession since 1992. Employers have shed more than 270,000 jobs since the country fell into a recession in the fourth quarter, a period during which factories produced at only 75 per cent of their capacities, the lowest rate on record.

As troubling for the policy makers is an inflation rate that they said Tuesday will crater to an annual rate of negative 0.8 per cent in the third quarter.

The Bank of Canada is mandated by law to keep inflation advancing at a rate of about 2 per cent a year. That target won't be reached until the third quarter of 2011, the central bank said.

“Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target,” the statement said.

That commitment is unusual for Canada's central bank, which typically is more circumspect in order to retain a degree of command over investors.

With the target rate at a bottom, Mr. Carney is being forced to pull back the curtain so investors better understand the trajectory of monetary policy.

By pledging to keep the benchmark rate low for a long time, policy makers are telling investors that they can safely price mortgage rates, corporate debt and other credit assets based on the 0.25 per cent target.

Without that certainty, investors might have been reluctant to lower longer rates.

“The Bank of Canada doesn't guarantee that it won't raise rates for a year, but its implicit message is that it sees that risk as very low given current economic slack,” Avery Shenfeld, a senior economist at the CIBC World Markets, said in a note to clients.

Many analysts said before Tuesday's release that they thought Mr. Carney would leave the overnight target unchanged to avoid the technical headaches of adjusting a rate that was already so close to zero.

The overnight target is the rate at which the Bank of Canada encourages financial institutions to lend to each other at the end of the day when they settle their accounts.

Ultimately, commercial lenders who need either a short-term loan or a place to park excess funds at the end of the day can turn to the central bank. To encourage private institutions to balance these funds themselves, they charge 0.25 per cent more than the target on loans, and pay 0.25 per cent below the target on deposits.

Tuesday's decision makes the target and the deposit rate one and the same.

The Bank of Canada left the deposit rate unchanged at 0.25 per cent because a rate of zero would have made lending in short-term money markets unprofitable.

Roll over journalism as practiced by the Globe

Check the date......why even have journalists at this rate?

Date: Tue, 21 Nov 2006
To: Brent Fullard

Hi,

Thanks for this. The CAIF team was in to see us last week.

To paraphrase Maggie Thatcher, we also met with Flaherty, and the gentleman is not for turning.

The government isn't going to change. & judging from my e-mails and work by analysts such as your former partner Diane Urquhardt, there's a lot of retired folks who are not loving trusts these days.

cheers, andy

The Globe has been evading the truth from day one

November 7, 2006

Dear Mr. Fullard

Ira [Gluskin] forwarded your piece [ Income Trusts - Tax Leakage or Tax Neutral?] to me. It's interesting, but I think most of your points have actually been well covered in our pages. And as for the "tax leakage" calculations, it depends greatly on assumptions -- but there is a reasonable range of forecasts that we have, I believe, published.

That said, I am copying your piece to my deputy editor Cathryn Motherwell, who oversees -- among many other things -- our new online trusts page. She may want to post it there.

Thanks again, and regards

John Stackhouse
Editor, Report on Business


This was my reply:

Dear Mr. Stackhouse:

Thank you for your prompt reply.

Let me start off by saying that I am not an advocate of tax leakage policies. I am, however, a strong advocate of public policies being founded on fact-based analysis and public input.

This whole income trust issue turns on the question of tax leakage.

I rely exclusively on the ROB and to a lesser extent ROB TV for my Canadian business news, and yes the ROB has published a range of "reasonable"(your term) estimates. The key issue is what constitutes "reasonable".

By reasonable I assume that you mean that these estimates are based on sound methodological frameworks and are performed on a rigorous basis. I am only aware of two studies that meet this latter test....the study performed by the Department of Finance and the work undertaken by HDR/HLB Decision Economics.

These two studies do however differ fundamentally as to their methodological framework, in that the Department of Finance (incredulously) chooses to ignore the tax it receives on the distributions paid on no less than 31% of all outstanding income trusts. i.e those trusts held in RRSPs/Pension plans. As I stated in my earlier letter, the $390 billion that Canadians have saved in RRSPs as their retirement nest eggs is nothing more than a nest egg for the government, as all monies withdrawn from RRSPs are taxed, and yet Finance ignores it.

This difference in analytical approach is not some esoteric concept that is above Canadian's heads, afterall, if this were a divorce court, the judge would chastise the Department of Finance for attempting to conceal communal assets for its personal gain.

The issue of tax leakage turns on this very central point.

Unlike the Liberal Government, who under Ralph Goodale, began a formal process of public input, that was abandoned mid way through the process in the Liberal's haste to prepare for last years election (following a non -confidence vote), the Conservatives after campaigning on a pro-income trust platform, reversed their course 180 degrees and did not see fit to at least finish the consultative process that the Liberals began.

Rather than discussing this issue in a fact based way with public input, it is being dealt with through a process of political expediency. No doubt the average Canadian intuitively thinks trusts are "tax dodge" designed to avoid paying corporate taxes at the statutory rates of 21% for non-resource companies and 25% for resource companies.

Do you not think that the average Canadian would be surprised to learn that (according to Statistics Canada), corporations on average pay only 6.2% of earnings in taxes? Are Canadians aware that two-thirds of trust distributions are interest which is taxed at the full personal income tax rates, in contrast to the 72% of corporate income which is taxed at half the personal tax rates. Would Canadians be surprised to learn that even if they were to accept the Department of Finance's flawed analytical methodology, that the "tax leakage" numbers they are promulgating in the public, have only a 9% chance of occurring and that there is a 91% chance that they will actually be materially less?

Perhaps you are aware of the "Downing Street Memo Affair" in the UK where Tony Blair's government was accused of "sexing up" (not my term) the intelligence reports to justify the ill-fated invasion of IRAQ? This revelation uncovered by the British press severely diminished Tony Blair's standing, and is widely attributed as being the reason he will not seek another term.

What does this have to do with Income Trusts? Based on the observations I made above, is it not possible that Finance, if not guilty of "sexing up" the data, is at least participating in "massaging" the data to assist in making the case that happens to resonate with the average Canadians' intuition , notwithstanding the fundamentally flawed analytical framework and notwithstanding the negative economic repercussions it will induce?

There are a hole host of secondary considerations/repercussions that arise from such a change in tax policy, some of which I attempted to address in my letter, such as limiting the investment choices of Canadians as they face the difficult task of providing for their retirement and the potential "hollowing out" effect of Canadian business, just to name the ones I am most concerned about.

Unlike our elected politicians, all of whom have Government indexed pension plans (actually, three in the Flaherty household), most Canadians have no such pension plan and many of those that are privileged to have company pension plans need to concern themselves with a serious level of under funding which from time to time Ottawa voices concern about.

There is a very perplexing circularity of injustice in what is going on here. By virtue of the fact that so many Canadians do not participate in a formal pension plan, they have to participate in the difficult task of making their own investment choices...meanwhile Income Trusts emerged as a prudent and sought after investment alternative that many Canadians have chosen for inclusion in their RRSPs as they plan for retirement, and now we have the Government taking this very investment choice away from Canadians because the Governments analysis that supports the notion of tax leakage ignores the taxes on the very place where most Canadians hold these securities, namely their RRSPs. Circular logic or circular injustice?

Very little of this has been reported on in the ROB. All of my observations are fact-based. Given that the Government has not seen fit to provide a formal process of public input on this important economic issue, the press becomes the only means for doing so.

Thank you

Brent Fullard

Total Editorial hypocrisy from the National Post

My message to the National Posts’ Editors:

This is total hypocrisy coming from the Editorial Board of the National Post, who blindly supported the double taxation of RRSPs and special carve outs for pension plans under Flaherty's "Tax Fraudulent Plan".

So tell me, you have finally awoken to the reality that an investment vehicle is required that deals with the very dilemma that you now belatedly acknowledge of “The safest investments offer the lowest returns”? Meanwhile Trust Investors were more than happy to pay taxes on these businesses’ earnings at the rate of 38%, therefore the rest of your concern of “are taxed at the highest rate” is a non-operative concern and a figment of your imagination.......just like the tax leakage hoax propagated by people like Terry Corcoran and Jonathan Chevreau who was too busy flailing around “blaming the victim” than he was understanding one iota about which he wrote?

Canada's savings shell game

National Post
April 21, 2009


One of the fastest growing clubs in Canada is the one made up of workers who suddenly have discovered their retirement hopes are in peril. Their plight underlines the need for the federal and provincial governments to reassess punitive tax laws, and stop penalizing Canadians who seek to save a portion of their income for their retirement years.

On Friday, thousands of employees and pensioners at AbitibiBowater became the newest members of the club, as the giant newsprint company sought bankruptcy protection. They joined a throng that includes disillusioned workers at Nortel, Air Canada and the Big Three U. S. automakers, all wondering what, if anything, will be left of their pensions when the dust of the recession clears. Their situation resembles that of a homeowner who spends years scrupulously paying off a mortgage-- and then has his home repossessed anyway.

Added to the unhappy situation is the government's attitude toward savings.

On the surface, Canadians would seem to have plenty of tools encouraging them to save money. Up to $21,000 a year can be contributed to a registered retirement savings plan and protected from income taxation. This year, Ottawa added tax-free savings accounts to the mix, in which another $5,000 a year can be stashed.

The situation isn't all it appears, though. Canadians with company pensions promising a fixed return are prevented from contributing more than a small amount to RRSPs, on the assumption their company plan provides all the security they need. The catch -- as we are learning with each new bankruptcy -- is that private sector plans aren't guaranteed. If the company gets into trouble, the promised benefits suddenly disappear.

Anyone is free to invest their after-tax income outside of RRSPs, of course, but Ottawa's prejudice against saving intrudes again. The safest investments offer the lowest returns and are taxed at the highest rate, so that after inflation there is often little if any return. Anyone seeking to make even a modest profit is driven to take higher risks, yet even the most conservative of Canadian stocks -- the ones meant for "widows and orphans," as it were--are vulnerable to the broad market declines that come along every few years.

The upshot is that tens of thousands of Canadians find themselves in a no-win situation. They can't contribute to private-sector pensions with any guarantee of collecting in the end. They're prevented from contributing more than a minimal amount to RRSPs. Safe after-tax investments are heavily taxed, and riskier investments are hostage to forces beyond anyone's control.

Those pensioners left in the lurch at Abitibi, Nortel and similarly troubled companies will be more likely to turn to government support programs, adding to costs at a time when provincial and federal governments are spending more than they bring in. Quebec already has offered $100-million to help out Abitibi, while Ontario has confessed that a program meant to safeguard pension payments doesn't have nearly enough money in it to cover all the demands.

Ottawa's attitude is a mystery. Why penalize those who seek to provide for themselves rather depend on government? A lot is changing in Ottawa due to the economic crisis, and tax policy on savings should be near the top of the list.

The Harper Doctrine: "Canadians must trust"

Below is a reprise of an blog article that I wrote in December, 2007, entitled "Canadians must trust".

I believe the significance of the point I was making in this piece perhaps resonates with an awful lot more Canadians today, than it did at the time when I wrote it. How could it not, since Harper's "trust factor" has taken a beating, and for good reason!

What with the revelations about Harper's phony fixed election promise, his triple E senate malarkey, his attempted bribery of Cadman, claiming that the incriminating Zytaruk tape (which caught Harper admitting to the criminal attempt to bribe a sitting MP) was doctored when it wasn't, his deceitful assurances that all was well with Canada's economy and his economic update that was more focused on waging war with political adversaries, the rights of civil servants to strike and pay equity for women, while in completer denial about the economy, it's hard to imagine that there actually are Canadians left out there who would be willing to invest any of their "trust" in Stephen Harper?

And yet that was what he was asking income trusts investors to do in the letter referred to in this piece.....after he promised he wouldn't raid their nest eggs......after he nuked $35 billion of their savings.....after he took away an essential investment choice away from them, and after he refused to provide them with one iota of evidence to support his bogus tax leakage claim, whose only purpose was the provide the pretense for breaking his promise to these 2.5 million Canadians, who took him at his word. Canadians must trust? Yeah right:

December 23, 2007
Harper's new religious order: Canadians must trust

During this festive holiday season, many people take the time to reflect on their family and faith. So it is only appropriate to reflect on the brand of religion that is being proselytized by Stephen Harper. It’s called faith based government. Faith based government allows its practitioners to be free of any of the daily worries of accountability or transparency. Mere assertions of “tax loopholes” and other spiritual symbols are taken utterly for granted. There can be no questioning harbored in this religion. Utmost faith and trust is required, lest we expose the truth for the ugly blasphemy that it most assuredly is.

Here was my personal spiritual call to order from Stephen Harper, that I along with hundreds of thousands of Canadians devastated by the income trust would have received, once the PMO got their messaging just right, three and half weeks after the fact.

In reading the letter, reflect on what Harper means in his use of the term "Canadians must trust". It can only have one of three definitions:

(1) I have demonstrated to you that I am a trustworthy person and that my deeds match my rhetoric, and having earned your trust, I ask that "Canadians must trust"

(2) I am taking your inherent faith in government for granted, so I will exploit that reservoir of good will and ask that: "Canadians must trust".

(3) I am the guy in charge here, and not you the voters. I and commanding you, as if by edict or by religion, that "Canadians must trust".

Well, one thing's for sure. It most certainly is not (1), and both (2) and (3) are complete non starters. But you decide for yourself:

--------------------

Date: Fri, 24 Nov 2006
To: Brent Fullard
Subject: Office of the Prime Minister

Dear Mr. Fullard:

Thank you for your e-mail message regarding the government's decision on income trusts. I am pleased to have this opportunity to respond.

I understand your disappointment with this decision. We recognize that Canadian investors, including many pensioners and seniors, have made important investments over the years and benefit from the current income trust structure. However, Canadians must trust that their government is watching out for them and is upholding the values that define us, like fairness. They expect us to fix problems, right injustices and close loopholes.

--------------------


Evidently this brand of faith based religion holds it to be more sacrosanct to right injustices and close loopholes than to provide any documentary evidence whatsoever about alleged tax leakage and keeping their solemn election promises.

Meanwhile, do you suppose the following fine upstanding citizens were more concerned about slaying the mythical dragon called tax leakage, or feathering their own stock option nests? I believe you will find that many of these unnamed folks are, in fact, the high priests of Harper’s faith based religious order, called influence for sale or rent. Democracy for the highest bidder. Accountability and Lobbyist Registry Acts be damned.

After all, we have a country to sell.


Income-trust crackdown: The inside story
Globe and Mail
November 2, 2006

High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.

How Mark Carney made Canada captive to his Goldman Sachs

Please take a moment to ponder the many and varied policy implications and issues revealed in this email that I received yesterday. How many policy issue train wrecks in the making can you spot in this very succinct and condemning comment. I can spot at least seven:

Brent,

I'm on way to New York tomorrow for meetings with US investors (much more frequent since the SIFT rules drove RRSP money away from the trusts).

Keep pushing. Income trusts are tax efficient vehicles that are perfect for RRSPs. Unbelievable that politicians would legislate against the made in Canada income trusts and then support the fast money ideas like ABCP, derivatives and hyper leverage. Mind boggling, and they wonder why their tax revenue has shrunk so dramatically. Maybe they need to cut and paste those 18 pages back in and have a good look.

Take care,

Dear Globe: Where has investigative reporting gone?

To: Phillip Crawley, Publisher
CC: Andy Willis, Rob Carrick, Derek Decloet, Lawrence Martin. John Stackhouse, Edward Greenspon,

Sir,

I subscribed to your newspaper for 40 years. I had faith in your pronouncements. I didn't always agree with your editorial policies, but I respected the thought and effort which went into crafting them. Clearly, I had been naive.

Then came the 2006 Harper reversal on the income trust issue: the Halloween Debacle! I saw your reports, and waited in vain for your critical investigation. There was nothing beyond a casual reprinting of government press releases. $35 billion in savings evaporated (most held by retirees) and you looked the other way. Worse, your paper reprinted the government press releases, abetting the crime. My trust was shattered.

Your paper's mindless parroting of the lies about the need to destroy income trusts mouthed by our Finance Minister and Prime Minister back in 2006 caused me to terminate a 4-decade-long relationship. I could not in good conscience accept any of your opinions when I knew how little thought had gone into your acceptance of Harper's reversal on the income trust issue. If you could swallow that thin gruel, how could I trust any of your pronouncements? You had been exposed as a mere pawn; no longer a player.

For decades I had been proud to read The Globe. In the days when it was respected as the unofficial opposition to the Trudeau, Mulroney, and Chretien administrations you held them to account when the Official Opposition was too weak and fragmented. What value is there in a newspaper which mindlessly spews out the daily lies of the people in power? Since when does the 4th estate serve as lap dog to the PMO? What use do you serve if you don't question the tales the government tries to put over on the gullible and unsuspecting public? You become just a slave to the spin doctors and arm of the propaganda machine. If you aren't insulted by this, you are no longer worthy of consultation.

Too bad that you haven't have the interest to expose the lies which allowed the government to get away with this trust-tax travesty. Too bad that you took the easy way out. Not only did you not question their policy, you swallowed their bait eagerly. Printing their lies made you a party to the government's deceit. All governments lie. Real newspapers expose them. "Rags" reprint the daily press releases. How the mighty have fallen!

Recently The Sun had the insight to print a guest editorial from an income trust supporter. The Hill Times has printed another expose of the duplicity of the Harper Gov't in the income trust debacle. When is The Globe going to shrug off its corporate chains and actually take a serious look at the income trust CON-job foisted upon us by the Harper-Flaherty-Carney clique? When is The Globe going to become a newspaper again?

For your edification, I copy below the article from the latest number of The Hill Times. Read it, and try to remember when your "rag" had the backbone to print the truth. Halcyon Days, eh? Sadly, long gone.

William Barrowclough,
130 Roper Drive,
Peterborough, Ont.
705-745-4858

The facile and vapid Globe and Mail

Steven Chase is the only honest and professional journalist I know who works at the Globe and Mail. Showing true initiative, Steven has unearthered some very interesting facts about what makes Jim Flaherty’s Tax Fraudulent Plan , so grossly unfair and inherently self destructive for Canada. Unfortunately for us, Steven is a news gatherer, as opposed to an opinion provider. It is the opinion providers at the Globe and Mail who give the publication its reputation as being facile and vapid. The opinion writers at the Globe prefer to remain oblivious to the many powerful nuggets of truth that Steven Chase has uncovered or that have become obvious from the world around us and which are impossible to reconcile with the views expressed by the Globe and Mail on income trusts.

The views expressed by the Globe and Mail on the matter of income trusts are devoid of any factual underpinnings, which is what makes these views, facile and vapid. On other occasions the opinions expressed by the Globe and Mail make use of outright falsehoods and misleading statements, such as Andy Willis’ attempt at slamming the Liberal’s trust policy in an article entitled “Liberals reopen income trust wound” that ends with the erroneous and highly misleading statement that:

“The Liberals are also going to have trouble defending a trust regime that shifts the tax burden of corporations on to individuals.”

This statement is either (1) grossly misleading, or (2) factual incorrect, as their are only two possible explanations to what Andy was saying. If by “shifting”, Andy was referring to “tax leakage”, then his statement is false, since tax leakage has long been discredited as being a government conspiracy hoax. Andy should know that.

If by “individuals”, Andy was referring to Canadian taxpayers at large, then that too is factually incorrect, since this would require “tax leakage” to be a reality, which it is not. Failing that interpretation of “individual”, Andy could only have been referring to “individual” investors, (i.e. the people who actually own the income trust in question, who are gladly paying taxes at the average rate of 38%) then that is quite a different thing, and leads to quite a different conclusion and a policy outcome that no-one, including the individual investors themselves would object to.

As such. Andy was engaged in a practice of either fostering known falsehoods (tax leakage) or he was conflating two concepts into one, with the (intended?) effect of misleading his readers, who would be easily confused by such a technique, in common practice at the Globe and Mail and in use throughout its sister organizations

Occasionally the opinion writers at the facile and vapid Globe and Mail, will provide us insight into how they “think”, such as these comments by Eric Reguly in the piece entitled “Trust lobbyists, that's enough of your fury”. This piece was written on December 1, 2006, one short month after Flaherty’s drive-by trust tax announcement. At that point in time, no information whatsoever had been forthcoming from the government about their central premise alleging tax leakage and Eric Reguly seemed hell bent on shutting down any discussion on this far reaching policy for fear it be reversed. This despite the fact that I, as a citizen journalsit, had uncovered in one short email discussion with Jack Mintz (the person most often quoted by the Globe in promulgating falsehoods about the government’s alleged tax leakage matter) that what Mintz was saying in public was completely contradictory to what he was admitting to me in private, which was:

“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”. (November 28, 2006)

The Globe wasn’t just engaged in a rush to judgment, they were engaged in a rush to execution. They simply wanted us to roll over and play dumb. We would have no part in such an exercise of intellectual capitulation, especially to a group of journalists who have zero formal business education or real world business experience to draw from. Our only recourse was to employ the internet and emails to rebut the nonsense being printed by the Globe, as the comments on the Globe’s website are highly moderated, and I have yet to succeed in getting any pf my comments posted by the Globe in my last 10 (?) attempts to do so. That was a decision that would backfire for the Globe, since we simply took our commentary to a higher level that was free of the Globe’s editing. Their strict control on the news had been superceded by technology. Sorry guys, you lose. The internet won.

To make their point and impose this irrational trust policy onto Canadians, the Globe thought inciting physical violence would be their answer, and Eric Reguly wrote: “Someone should encase income trust lobbyists in concrete and fling them off a bridge into deep water. On second thought, forget it; even that wouldn't stop the misguided creatures. Houdini-like, they would somehow break free and call for Jim Flaherty's head the moment their lips broke the surface. They are unstoppable and insatiable”

The sentences that followed are however the most revealing, which read: “Still, the trusts lobbyists are lusting for blood, as if it's their god-given right to determine tax policy. They should be ignored.”

When did “trust-lobbyists” ever hold the position that it is their “god-given right to determine tax policy”? This only becomes an issue in Eric’s mind because he is fronting for people, namely the various owners of the Globe who think it is “THEIR god-given right to determine tax policy.” Failing that, Eric must be of the view that it is HIS “god-given right to determine tax policy”?

Either way, that isn’t going to be the case, as I insist and maintain that the CAPITAL PROVIDERS are deserving of input on how CAPITAL USERS will make use of the resource that is being provided to them. Unless, of course, they are going to forced to so so with more of Eric’s plan for physical violence. Maybe the CAPITAL PROVIDERS will be required, at gun point, to fund the needs of the CAPITAL USERS, in Eric Reguly’s central command capital marketplace? I know that BCE, Teachers’, Torstar and Woodbridge would just love that, and each for their own unique and obvious reasons.

And to the extent that ONE party gets to make the decision on this matter, it would be the capital provider and not the capital user. Capital providers should not be forced, through government intervention, to provide capital on terms dictated by the capital users, and most certainly not the terms dictated by Eric Reguly of the Globe and Mail, on behalf of whomever he claims to speak for and on behalf of.

So as not to be unfair to the Globe and Mail and condemn them as being a vapid and facile news organization, without giving them a second chance, now that I have been able to get two honest news organizations, namely the Hill Times and Sun Media, to print the definitive counterpoint to the Globe’s spurious claims and opinions of the past, perhaps some bright light at the Globe and Mail, would like to rebut my Hill Times article, and this time please try to incorporate at least one or two facts to corroborate your “world view”.

Otherwise, I can only conclude that we should follow Eric Reguly’s advice, insofar as the Globe itself is concerned, which is to engage in something that is one step shy of “book burning” and which is the very definition of ignorance, which is “They should be ignored”. Sorry guys. This is the bed you have made for yourselves. Remember, at some point you have to wake up?

Harper math: Seniors' losses, fuel Suncor's gains

Suncor hunting for natural gas properties - CEO
September 5, 2007
Reuters
By Scott Haggett

CALGARY, Alberta, Sept 5 (Reuters) - Suncor Energy Inc (SU.TO: Quote, Profile, Research), Canada's No. 2 oil sands producer, is hunting for new natural gas properties after changes to Canada's income trust rules made acquisitions affordable for the first time in a decade, the company's chief executive said on Wednesday.

Suncor CEO Rick George said at a New York investment conference that the company is returning to the acquisition market after an absence of more than 10 years, seeking to boost gas production as it ramps up output from its oil sands operations.

"We will be looking at acquisitions," George said, "Because of changes in the income trust model in Canada, finally after a decade of being unable to compete for assets ... we can look at purchases of natural gas properties."

Because they weren't subject to corporate taxes, income trusts had been able to outbid more conventional companies for oil and gas assets. However the Canadian government removed that advantage last year and by 2011 existing trusts will be fully taxable.

Suncor has already made one purchase this year, paying C$160 million ($152 million) for natural gas properties in northeastern British Columbia.

The company wants to boost its natural gas production as it ramps up production at its Fort McMurray, Alberta, oil sands operations to 350,000 barrels a day next year from an average output of about 260,000 bpd this year.

Natural gas is used to produce steam that's pumped into the ground to liquefy the oil sands' tarry bitumen in thermal operations and is also a key ingredient in upgrading bitumen into synthetic crude oil.

Suncor expects to produce 200 million to 205 million cubic feet of gas a day this year and expects to boost that by 3 to 5 percent in 2008.

Suncor is the second Canadian producer at the Lehman Brothers-sponsored conference looking to buy natural gas properties. EnCana Corp (ECA.TO: Quote, Profile, Research) CEO Randy Eresman also said on Wednesday his firm was looking to acquire gas assets in Western Canada

Why the income trust issue REFUSES to go away...

Why the income trust issue REFUSES to go away...
Canadians refuse to accept a policy whose premises are all false, whose passage is inherently undemocratic.
Hill Times
April 20, 2009

WHITBY, ONT.—Ironically, Stephen Harper’s Halloween betrayal has also come to haunt him and his own government. Harper’s “trust” issue, refuses to go away, for the simple fact that Canadians refuse to accept a policy whose premises are all false, whose passage is inherently undemocratic, whose outcome is the polar opposite of its stated goals, whose measures are grossly unfair and whose consequences are negative.

False premises

On Halloween 2006, Jim Flaherty acted precipitously and without public consultation, seemingly oblivious to the fact that his assumption of “income trusts cause “tax leakage,” was disproved a year earlier. During Ralph Goodale’s public consultations, HLB Decision Economics (HLB) was tasked to work with the Department of Finance, whereupon HLB published: “The tax revenue implications of income trusts.” This report, available to Flaherty prior to his Halloween haunt, reveals that tax leakage can only be construed, if the taxes from the 38 per cent of trusts held within RRSPs are arbitrarily excluded, which defies rational thinking. Proper inclusion of these taxes, results in the inescapable conclusion that income trusts do not cause tax leakage.

Jack Mintz confirmed Flaherty’s gross error, by stating: “There is a serious flaw on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero.” PwC, BMO, RBC, have backed up HLB’s conclusion of no tax leakage. Meanwhile, Jim Flaherty has provided zero proof of his tax leakage claim. Let’s cut to the chase. “Tax leakage” is a canard. A known falsehood, whose purpose is to provide faux justification for Harper’s policy reversal, made at the behest of Canada’s life companies and corporate managers who sought to destroy an outcome (income trusts) that was adverse to their narrow personal self-interests.

Flaherty’s messaging of “levelling the playing field,” actually meant removing the opposing team from the field, in order that the status quo (corporations) could be coddled/perpetuated and competing investment choices eliminated. However,
that outcome is detrimental to Canada’s competitiveness, our capital markets, investors/seniors seeking business investment income, and all Canadian taxpayers.

Undemocratic

Without proof, this tax is undemocratic. The report of the Public Hearings on Income Trusts, implored: “It is imperative that a democratic government be as transparent as possible when levying a new tax so that it can be held to account by its citizens. The Finance Committee, therefore, recommends that the federal government release the data and methodology it used to estimate the amount of federal tax revenue loss caused by the income trust sector.”

The Auditor General professes that Parliamentarians need objective fact-based information on how well the government raises its funds (taxes).” So where is the “information” for Parliamentarians that substantiates “tax leakage” and fulfills accountability? Does Jack Layton know?

Achieved opposite goals

As we predicted, the trust tax triggered a wave of trust takeovers, via structures which eliminate tax collection on these businesses’ earnings, which under the trust structure, are fully taxed. Accounting firm Deloitte, published a study of these takeovers, the title of which reveals their findings: “Lots of takeovers, little tax revenue.”

As we also predicted, many takeovers were by pension funds, like Public Sector Pension (PSP) acquiring Thunder Energy Trust at a significantly reduced price due to Flaherty’s punitive tax. Jim Flaherty’s policy is such that upon taking this trust private, PSP is magially exempted from the 31.5 per cent tax, whereas RRSPs are not. How can such a tax scheme be considered either fair or effective? Flaherty’s policy-borne-of-panic, has induced some $100-billion in related takeovers, causing all taxpayers to lose over $1-billion in annual tax revenue. Entities like Abu Dhabi Energy acquired Prime West Energy Trust via an LBO and pay zero taxes, displacing Canadians paying taxes at average rates of 38 per cent. and foreign investors, paying the full 15 per cent withholding tax.

BCE’s announced conversion to a trust would have seen Ottawa collect $790-million more per year in taxes, than the LBO junk bond basket case that it nearly became, and $550-million more than the corporation that BCE remains today. Ditto, for Telus.

Therefore, in the misguided belief that his policy would remedy tax leakage, a condition that never existed in the first place, Jim Flaherty has now created tax leakage. Can an outcome be further from its intended goal than that? It’s like Jim Flaherty scored the winning goal, but against his own team?

Meanwhile, all the remaining trusts are vulnerable to the same outcome, which would multiply by seven-fold Flaherty’s incompetence and his already $1-billion loss of annual taxes. He shoots, he scores.

Unfair measures

If this tax can be avoided by the mere act of taking a trust private, then what purpose does it serve? Given this giant loophole, what will have been achieved? How do these measures profess to deal with any of Flaherty’s alleged problems concerning trusts? Such inherent contradictions defy rational logic.

These contradictions are further compounded, since only pension plans can exploit Flaherty’s loophole, whereas the average Canadian via their RRSP can not, thereby placing RRSPs at a disadvantage to pension plans, being completely counter to why RRSPs exist.

Combine this inequitable treatment of RRSPs vis-à-vis pensions, with the fact that 75 per cent of Canadians do not have pensions, and one readily concludes that Flaherty’s trust policy represents the ushering in of a two tiered pension system in Canada, that confers benefits on those with pensions, to the exclusion of those without.

This is patently unfair and discriminatory, and again, serves to invalidate the entire policy, especially one masquerading as a “Tax Fairness Plan.”

This inequity is compounded yet further, upon realizing that pension plans are using this “tax arbitrage” to acquire, on a predatory basis, trusts like Thunder Energy that have been significantly devalued within RRSPs and elsewhere, as a sole result of Flaherty’s tax. Is this Flaherty’s underhanded way of dealing with “under-funded” pensions, by expropriating wealth from RRSPs into pension plans, including the very pension, whose plan members concocted this scheme, like Mark Carney, at the time a plan member of the PSP? This is an unconscionable act [of self dealing] for Finance Department bureaucrats to derive financial gain, that is not only being denied of others, but which is derived from others?

Adding further insult to injury, Flaherty also introduced pension income splitting for seniors alongside his 31.5 per cent tax, to assist in “selling” the trust policy. Again, this measure only benefits the 25 per cent subset of Canadians with pensions, adding a further dimension to Flaherty’s stealth introduction of a two-tiered Canadian pension system.

Negative consequences

This policy’s negative consequences could fill a book. Instead I refer you to the Liberals’ website, onProbation.ca and the “Ask the PM a question” section, where the No. 1 question that Canadians have for Harper, is for him to justify this policy or repeal it. [There you can also read the many insightful comments from voters who, over 2.5 years, have grown in their understanding of the fraud and injustice this policy represents.]

Meanwhile Jim Flaherty’s responsibilities as minister of Finance remain as fundamentally unfulfilled today as from the outset, given his failure to either “prove the case or drop the tax.”

Continued failure to do so will simply prolong the agony for its enablers, the Conservative and NDP parties, since this issue will only go away once Flaherty’s falsehoods have been extinguished by the truth, or the election of a Liberal government, whose stated policy is to repeal this tax and replace it with a 10 per cent tax, refundable to all Canadians. This position was confirmed to me by Liberal Leader Michael Ignatieff, in response to an email I sent him, asking: “What is the Liberal policy position in response to the March 29, 2009 Maclean’s article entitled, ‘Retiring into the unknown’?”

And to think, there are still members of the Conservatives and NDP caucuses asking, plaintively: “Why does this trust issue refuse to go away?”

By: Brent Fullard

Brent Fullard is President of the Canadian Association of Income Trust Investors/Taxpayers
news@hilltimes.com
The Hill Times

Gomery blasts Harper's secrecy

By THE CANADIAN PRESS

REGINA -- A retired Quebec judge who oversaw an inquiry into the federal sponsorship scandal said Friday that unnecessary delays or outright denials of requests under the Access to Information Act are creating a lack of transparency in government.

John Gomery, speaking to a Canadian Bar Association luncheon in Regina, said this type of transparency is crucial to the Canadian public, to democracy and to society at large.

"It's a danger to open government and to our democratic institutions, frankly. A public that isn't informed is a public which isn't able to vote intelligently," he said.

Improving the flow of government information through such requests is not really on the radar of most politicians, he said.

"The whole subject has a low priority in the minds of too many politicians and definitely access to information is regarded as a pain in the neck to bureaucrats."


He said he hoped that Canadians would pressure the federal government into improving the flow of information to the public.

Gomery has been critical of Stephen Harper's Conservative government in the past.

Last year, he said it had largely ignored the 19 recommendations he made in his report on the Liberal government sponsorship scandal.

At the time, he also voiced concerns about the growing concentration of power in the Prime Minister's Office and warned MPs about what he saw as a troubling trend.

"I suggest that this trend is a danger to Canadian democracy and leaves the door wide open to the kind of political interference in the day-to-day administration of government programs that led to what is commonly called the sponsorship scandal," Gomery said in an interview in March 2008.

Our self-confessing, self-manufactured and now self-defeating Loser PM

What with the revelations contained on the Zytaruk tape and with Harper’s attacks on the Bloc (and separatists and sovereigntists at the time of his self manufactured Coalition threat), we now learn that Harper has managed to cut his Quebec support in half , which I guess now makes Stevie Wonder the Self-confessing Self-defeating Self-manufactured Loser Prime Minister of Canada.

And to think, the equally loser press tried to depict him as a “brilliant tactician and strategist”, at thevery time when we already knew he was an lying, hack economist with a big ego and no ethics, circa his income trust scam of October 31, 2006:

Harper has managed to cut his Quebec support in half
That's quite an accomplishment only six months after the election
BY L. IAN MACDONALD,
THE GAZETTE
APRIL 19, 2009 9:46 AM

80% of Canadians worse off, since Harper cut the GST

OTTAWA, April 15 /CNW Telbec/ - The Public Service Alliance of Canada is thrilled with the results of a new study proving that public services make a significant contribution to Canadians' standard of living - worth at least 50 per cent of their income.

The study, released today by the Canadian Centre for Policy Alternatives, thoroughly debunks the notion that tax cuts put money in people's pockets. In fact, authors Hugh Mackenzie and Richard Shillington prove that tax cuts actually take money away from most workers and would be better spent by investing in public services for Canadians.

"Quality public services improve Canadians' lives in so many immeasurable ways. But this new study demonstrates the fact that middle-income Canadian families benefit from public services that are worth about $41,000 per year - or 63 per cent of their income," says John Gordon, PSAC's National President.

"Even households earning $80,000 to $90,000 per year enjoy public services that represent half of their income. There is no doubt that the services that PSAC members provide improve the quality of Canadians' lives and communities," says Gordon.

PSAC represents more than 160,000 members across Canada, including 130,000 federal public sector workers. In uncertain economic times, Canadians look to PSAC members, who are on the front lines, helping people access Employment Insurance and making sure that seniors receive their pension cheques.

The study, titled Canada's Quiet Bargain: The Benefits of Public Spending, shows that 80 per cent of Canadians are worse off since the Harper government cut the GST and 75 per cent would be better off if their provincial government had invested in public services instead of tax cuts.

"The Conservative government missed the opportunity to make real changes to the Employment Insurance system and to invest in social infrastructure such as universal child care as part of the 2009 federal budget," says Gordon. "Stephen Harper chose ideologically-minded tax cuts over public spending. And this study proves that we would all be much better off if the federal government had provided real support to Canadians by investing in quality public services."

To read the study, Canada's Quiet Bargain: The Benefits of Public Spending, visit policyalternatives.ca.

For further information: or to book interviews: Ariel Troster, PSAC Communications, (613) 292-8363 (cell), (613) 560-4273

WHAT? Harper's 'income splitting for seniors' ONLY benefits 13% of seniors!

Subject: Re: Income Splitting for Seniors: Who actually benefits?

Brent,

How many will actually benefit from Flaherty's discriminatory pension income splitting scheme?

1. Of the 30% of seniors who receive a pension I would say may as many as one quarter are widows/widowers, single, divorced, separated. That brings down the number of eligible seniors to 22.5%.

2. Of the 22.5% who are eligible as many as 25% may have spouses who have significant income of their own and who may be in a tax bracket not too different from the spouse receiving the eligible pension income. In their case there will be little or no tax reduction resulting from pension income splitting. We are down to 16.7% of seniors receiving a pension.

3. Many of the remaining seniors receiving a pension but who had low paying jobs are in the lowest tax brackets and pension income splitting with a spouse/partner receiving OAS will not mean very much if anything.

4. All factors taken into consideration pension income splitting may not be of any useful benefit to more than maybe 12-14% of seniors.

5. Of those the ones who will benefit the most are seniors with fat pensions and stay at home spouses/partners. A retired federal judge or a retired deputy minister with a pension of over $100,000. with a stay at home spouse with no significant income will benefit handsomely. They will even be able to reduce or eliminate the clawback of OAS.
Question: What will be the real cost of this discriminatory scheme be for the government. ANSWER: Most likely a fraction of the big numbers Flaherty will announce in his budget.

Yves Fortin

Meanwhile. Look at how that “bought-off” supposed seniors advocacy seniors group, CARP, spun this:

Pension Income Splitting is the Cinderella Tax Story for Seniors

Collingwood Enterprise-Bulletin (ON) Fri 12 Jan 2007

Senior citizens concerned about losing income trusts as a low-tax investment vehicle can rest a little easier with the federal government proposal to allow income splitting. There is no shortage of eligible seniors: according to Statistics Canada there are more than 3.2 million people over 60 who are living common-law or legally married. Blah Blah Blah goes CARP...having been completely spun by the spin




BIO: Mr. Fortin started his career at the Department of Foreign Affairs and then joined the Department of Finance where he became a senior international finance official. He served as Economic Counselor at the Canadian Mission to the European Union in Brussels, and as senior economist at the Asian Development Bank in Manila, the Philippines. Mr. Fortin was Executive Secretary of the IMF/World Bank Committee of Governors on Development, and later a member of the Executive Board of the Inter- American Development Bank in Washington D.C. He has also served as Permanent
Representative of the European Bank for Reconstruction and Development in Poland, where he was involved in privatization programs and the financing of the emerging
private sector.

Coincidence or blatant CON coercion?

Margaret Lefebvre Appointed to the National Research Council of Canada

OTTAWA, November 2, 2006 — The Honourable Maxime Bernier, Minister of Industry and Minister responsible for the National Research Council of Canada (NRC), today appointed Ms. Margaret Lefebvre as a member of the Council.

"Ms. Lefebvre's experience and knowledge in science and research will bring rich and diverse contributions to the Council as it continues to further its work," said Minister Bernier.

Margaret Lefebvre has had the opportunity to serve on several boards, including the working group to create a national science organization, the Council of Canadian Academies. Ms. Lefebvre is currently the Executive Director of the Canadian Association of Income Funds.

Recognized globally for research and innovation, the NRC is a leader in the development of an innovative, knowledge-based economy for Canada through science and technology.

For more information, please contact:

Isabelle Fontaine
Office of the Honourable Maxime Bernier
Minister of Industry
613-995-9001

Mr. Richard Bourgeois-Doyle
Acting Director, Corporate Governance
National Research Council of Canada
613-993-1906

Dominic D’Alessandro on the road to Damascus

Today we learn that Dominic D’Alessandro, the CEO of Manulife, is attempting to make amends with his shareholders over his 2009 compensation payments. Forget about Manulife’s shareholders, when will Dominic make amends with all Canadians?

In the greater scheme of things who really cares whether Dominic D’Alessandro has or thinks he will make amends with Manulife’s shareholders by placing at risk some of his $12.6 million in compensation that he received as a windfall for five months of work in 2009, at a time when Manulife’s stock had tanked by 70%. This change in compensation is being motivated by the comment of: “I decided to take control of the situation myself, because it's my reputation that's at issue here, nobody else's”, said Dominic D’Alessandro.

Well if he’s worried about his reputation being at stake, then he has a much larger body of people to concern himself with , than Manulife shareholders, however many of them there might be, How about the 70% of Canadians who are without pensions for whom he played a key role in DEPRIVING THEM of an essential investment vehicle. An investment vehicle that gave them DIRECT INVESTMENT in the Canadian economy and that flowed taxes into Ottawa like never before. See October 27, 2006 Globe article by Steven Chase entitled “Tax cash floods in, leaving experts at a loss”. Instead Dominic D’Alessandro’s Machiavellian view of the economy was driven by all things Dominic-centric and all things Manulife-centric and meant taking away investment choices from Canadians in order to make them MORE CAPTIVE to the wares of Manulife. Instead of direct investments in Canada’s economy and a booming new issues market on the TSX, where income trusts were 50% of the new issue business, we had Manulife launching Income Plus the very week of Flaherty’s surprise income trust announcement. I wonder how much of a surprise it was to Manulife?

Manulife’s Dominic D’Alessandro would probably not have found himself in the position of having to make amends with Manulife shareholders had it not, IRONICALLY, have been for Income Plus. Dominic’s ill-fated decision to NOT HEDGE the risks associated with Income Plus turned it into a Liability Plus, and was the main cause of Manulife’s stock tanking by 70%. Of course these Manulife shareholders should be upset with a Board, that ostensibly represents shareholders ,who arbitrarily hands $12.6 million in discretionary pay to someone who made the pivotal decision to take on undisclosed risks that saw their investments drop by 70%. This is a quantum measure worse than the CEO of GM traveling to Washington for a government bailout by way of the company’s private jet. I guess Washington lawmakers know a thing or two about corporate governance and public opinion than the Board of Directors of Manulife.

As for making amends with ALL CANADIANS on his role and the role of other MANAGERS of Canadian corporations behind the scenes, that led up to Stephen Harper’s fateful betrayal of ALL TAXPAYERS on the income trusts betraya, I think the place for Dominic D’Alessandro to start, on his road to Damascus, is for him to begin by recanting the absurd and patently false testimony that he gave in Parliament, on February 1, 2007, of:

“The notion and the implication that somehow the government on this [income trust tax] file is responding to initiatives that originated with corporations is not based on reality.”

Which we know to be false because it was reported at the time of the income trust Halloween massacre in the Globe on November 1, 2006, that :

““High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure. Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.”

Dominic D’Alessandro and Paul Desmarais Jr, are both CEO’s of Life Companies and both serve on the Board of the Canadian Council of Chief Executives as Vice-Chairman of that self interest group of lofty business managers. How could he not have known, while at the same time he professes to speak to Parliament on behalf of what the government was doing and the activities of ALL corporations and not simply the conduct of Manulife.

Time for him to make amends to ALL CANADIANS if Dominic’s goal is to “take control of the situation myself, because it's my reputation that's at issue here, nobody else's”. In the greater scheme of things, Manulife shareholders mean nothing, and nor does Dominic’s tinkering with his compensation.