Monday, January 11, 2010

Questions for Stephen Harper on today’s BNN Squeeze Play

No less that 7 of the top 10 questions that viewers of the CBC want to ask Stephen Harper on are on the question of income trusts.

That's a FACT.

Let’s see whether the issue even gets dealt with on BNN, such as anyone at BNN asking Stephen Harper for proof of tax leakage which is the sole premise on which this punitive and regressive policy was sold to Canadians. Here are some questions for BNN to ask of Stephen Harper:

Prime Minister Stephen Harper: Where is your government’s policy proof of tax leakage from income trusts, a policy that caused Canadians to lose $35 billion of their hard earned retirement savings, on a permanent basis? What proof did you provide to jack Layton whose support for the income trust tax was pivotal? Did he receive any more proof than any other MP or Canadians at large? Did he ask for any proof, beyond what was provided to all Canadians?

Why does your government totally ignore the deferred taxes paid on things like income trusts within RRSPs when the deferral of taxes in RRSPs is the sole reason that RRSPs were created in the first place, and the Auditor General of Canada requires the Government to employ Accrual Accounting methodology? Does this not undermine the very nature of RRSPs? Please reconcile your response to that question, with the fact that your government created the TFSP, which allows investors to avoid the payment of taxes on all future investment gains within TFSA? Which vehicle, RRSP or TFSA will generate more taxes for Revenue Canada in each and every year going fprward? Please reconcile that answer to your answers to the first four parts of this question.

How credible was it for the CEO of Manulife to have gone before a Parliamentary Committee and testify that it would not be “based on reality” for anyone to think that corporations like Manulife etc, were not the ones who lobbied your government for the income trust tax? If corporations did not lobby, then who exactly did lobby for it? Hank Paulson of the US Treasury and former Chairman of Goldman Sachs? Whose “reality” do you think Canadians find to be more credible?

What is your estimate for the annual tax revenue loss from the takeovers of artificially devalued (courtesy of you) income trusts by foreigners, like the takeover of Prime West Energy Trust by state-owned Abu Dhabi Energy, the takeover of TransAlta Power Income Trust by Hong Kong billionaire LI Ka Shing, the takeover of Harvest Energy Trust by state-owned Korean National Oil, along with the other 45 takeovers of trusts?

In killiing income trusts your government is killing the ability for avearge Canadians to make direct investments in the Canadian economy employing a means that is most aligned with their risk/reward tolerances. In so doing, you have made these Canadians more captive to the investment wares of the life insurance industry who put you up to this scam policy of yours to tax income trusts. Groups like Manulife and Power Corporation , etc. Meanwhile these companies were only offering Candians the opportuinty to invest in derivative and synthetic products like life annuities and variable rate annuities. As risky and uncertain and opaque as these products are, some like Manulife went so far as to NOT EVEN hedge the bets that they had made in issuing these products. Products like Income Plus, that Manulife launched in the days immediately within your Halloween Massacre surprise. From a policy perspective, does it not concern you that your policies (which are based on lies) are serving to direct Canadians’ retirement savings out of direct investment in the Canadian economy and into a bunch of synthetic investment junk food, and that this synthetic investment junk food may be creating a a “too big to fails” systemic resih within life onsuarce companies, as people like Warren Buffet and the head of Canada’s OSFI have warned?

Are you saying that you are smarter than Warren Buffet? Follow up: if so, please explain to our viewers what a variable rate annuity is, and what the risks and benefits are, and whether you are recommending that Canadians invest in them.

Why did you exempt the pension finds from your draconian 31.5% tax, such that when the civil servants of Canada’s own PSP (Public Sector Pension Plan) acquires Thunder Energy Trust and preserve it as a trust, they will pay ZERO tax, whereas avearge Canadians saving for retirement, will pay the 31.5% tax?

Diitto for all the other pension funds who are scooping up all these artificially devalued income trusts, as OMER, Caisse, PSP and all the others are doing, by exploiting the tax arbitrage loophole that you created?

Is this your idea of “leveling the playing field”?

Is this your idea of a “Tax Fairness Plan”.

Do you know the meaning of the term “tax arbitrage”. Follow up: Please explain it to our viewers and give examples of how it benefits all Canadians?

CAITI estimates that the trust takeovers to date have caused the permanents loss of over $1 billion in lost revenue to Revenue Canada, a number that could potentially reach $7.5 billion by the end of this year, when your arbitrarily determined deadline comes into effect. Where are you going to come up with this lost tax revenue? New taxes? Program Spending? Deficit Spending? All of the above.

You are the architect of Ontario’s HST. Why do corporations who pay fees on Bay Street like underwriting fees, exempt from HST on these Bay Street professional service, when the investing public is not, and who will now experience lower pension savings return on investments, in light of your HST which applies to them as savers, but not to corporations as borrowers?

With respect to income splitting for seniors, why did you design this benefit in a way that precludes involvement by over 86% of seniors? Why are 14% of seniors being subsidized by all Canadians, whereas the 86% are not?

Again, is this your idea of ““leveling the playing field”?

Again, is this your idea of a “Tax Fairness Plan”?

Why did your government use taxpayers money to effect the bailout of ABCP, whose demise was solely of its own creation, and yet your income trust tax that caused Canadians to lose $35 billion of their savings, is being allowed to proceed with ZERO proof of your policy actions, apart from a lot of empty dogmatic rhetoric?

You say that your government is seeking input from Canadians. If so, why has your government not responded to the proposal of May 6, 2009 by CAITI to solve your income trust policy blunder in a way that will generate massive new annual tax revenue to the government? This proposal was sent to you over a year ago, and reads as follows:

My proposal to Jim Flaherty would generate $2.3 billion in ANNUAL tax revenue to fund EI etc.
Wednesday, May 6, 2009

Today I proposed a solution to Jim Flaherty’s income trust policy blunder by creating a new savings vehicle that would be situated between the existing RRSP and TFSP retirement savings vehicles and maximize tax revenue for Ottawa. This new saving vehicle would be the place where income trusts currently held in RRSPs would be moved to and the taxes paid on the distributions would be taxable in the year earned as opposed to deferred, as explained here

This would be a win-win-win solution for both government and the 75% of Canadians without pensions and would stimulate the economy in a multitude of ways.. It would generate a huge new stream of taxes and protect these Canadian businesses from foreign takeover and leveraged buyouts. The new tax revebue would equal $2.3 billion a year as follows:

Total distributions paid annually by income trusts: $16 billion
Percent currently held in RRSPs : 38%
Average tax rate paid by holders of RRSPs: 38%

Tax revenue collected under new proposal : $16 billion x 38% x 38% = $2.3 billion

This would be a huge WIN-WIN-WIN. It leaves Jim Flaherty with no excuses, unless he wants to start arguing on the basis of what this policy’s true ulterior purposes were.

Does Jim Flaherty really want to reveal those ulterior purposes or accept my proposal which addresses head on his ostensible reason for this tax.....namely alleged tax leakage.....which is now gonzo.

1 comment:

Dr Mike said...

The Brent Fullard plan is a good one---it would let Flaherty off the hook (& save face) & it would allow all registered retirement account holders to not be double taxed.

Unless of course , this is what the gov`t wanted all along.

Dr Mike