Manufacturing his tax leakage lie on Manufacturers Life's behalf

Hello “Retail Investor”:

Barry Critchley was kind enough to pass on the analysis that you performed on our proposed Marshall Savings Plan.

Thank you for your interest in the MSP and for taking the time to evaluate and consider it.

I would like to respectfully point out that I do not agree with your analysis, since I believe you are comparing apples to apples.

Now I realize that the apple analogy usually takes the form of arguing that someone is improperly comparing apples to oranges, rather than apples to apples, except in this case the whole exercise of the MSP is to preserve the option of income trusts as an asset class (apples), rather than simply being captive to owning common shares.(oranges)

Income trusts as an asset class possess some very unique investment attributes that make them essential to preserve and not just for the pension funds who were given the privilege of owning the income stream from private income trusts without a double tax tax regime, whereas RRSPs were hit with a double tax regime.

The attached report entitled “The inconvenient truth about trusts” by Gordon Tait makes this point on page 4, where the unique risk/reward attributes of income trusts are presented based on historical terms.

Income trusts provide the promise of higher returns with lower risk than common shares and the added benefit of monthly income. It’s no wonder than Manulife Financial and others lobbied the government so hard to kill income trusts because the ownership of income trusts was a vastly superior investment proposition than owning synthetic investments like Manulife’s grossly inferior Income Plus or Manulife’s grossly inferior common shares of Manulife itself, in which Manulfe’s decision to not hedge Income Plus brought undisclosed risks to not only that synthetic product, but to Manulife itself creating a vicious circle of spiraling and compounding risk and systemic risk to the Canadian financial market place borne of Manulife’s management’s own recklessness.

But enough about Manulife as the Marshall Plan provides an elegant means to circumvent the policy disaster that Manulife and other self serving lobbyists brought upon all of Canada, when Flaherty manufactured his tax leakage lies on Manufacturer Life’s and other’s behalf as his false premise to kill income trusts.

Therefore the better way to think of the MSP is to compare apples to oranges. In its most base form the MSP would be the retirement vehicle in which you would hold income trusts, as that market would now be fully revived given that we have addressed alleged tax leakage, but in a way that avoids the unfair double taxation of income trusts (given pension funds can avoid double taxation on income trusts), and the RRSP would be the place that you might wish to hold your common shares or various types of debt securities. This is the way to evaluate the merit of the MSP: the MSP holding the unique asset class of income trusts versus an RRSP holding either common shares or various types of debt securities.

In its more advanced state, what we call MSP “extra. we have proposed that the MSP could become the policy vehicle by which the dividend treatment of dividends within a retirement savings plan could be introduced. This is a case where the apples to apples comparison is the correct one. Such a feature would have profound benefits when comparing the holding of a dividend paying common share in an MSP and the same security in an RRSP, as I am sure that your analysis would reveal.

Thanks again for your interest,

Brent Fullard