Thursday, March 11, 2010

My submission to Ignatieff's "Big Ideas" Conference


My Big Idea: Income Trusts must be restored as the solution to many major problems facing Canada

Income trusts were/are a made in Canada solution to a number of major problems facing Canada, and provided Canada with many significant benefits including:

- dealing with Canada’s looming pension crisis and how to provide retirement income for Canada’s rapidly aging demographic

- leveling the playing field between the 75% of Canadians without pensions and the 25% of Canadians with pensions

- maintaining Canadian ownership and head office control; of Canadian enterprise and limiting foreign takeovers

- directing capital into a business model that places greater disciplines on management that is more aligned with the interests of society, rather than the interests of management per se, and the many abuses inherent in the corporate model

- maximizing the tax collection of businesses’ earning without restricting the businesses themselves

- providing Canadian businesses with an abundance of low cost, readily available capital and the competitive advantage which that entails

- eliminating the reliance of Canadian businesses on debt and the risks of bankruptcy and business failure that debt entails

- eliminating Canadians reliance on investment products like ABCP and similar schemes and directing Canadians retirement savings into the real economy instead

As such, income trusts need to be restored in Canada, by rescinding the Harper government's 31.5% income trust tax or by instituting the Marshall Savings Plan solution (marshallplan.ca) that has been endorsed by 79.6% of Canadians in a recent Environics Research poll.

Income trusts are a form of profit sharing investment vehicle that represented the "democratization" of the Canadian capital markets that was to the clear advantage of all Canadians, but to the perceived detriment of a very small and powerful few who were intent on maintaining the status quo and these people lobbied the government to shut down income trusts.

Apart from seeing 2.5 million Canadians lose $35 billion in the value of their retirement savings, the direst result of double taxing income trusts has seen 51 Canadian businesses fall into foreigners' hands and non taxable entities who can evade the 31.5% tax, which has now caused REAL tax leakage of $1.5 billion a year, as these foreigners and non taxable entities pay no taxes. Meanwhile the former Canadians who did own these trusts and paid taxes on their earnings at the average rate of 38% are being deprived of owning a piece of the country that they live and work in. The income trust tax was the consequence of intense commercial lobbying by the life insurance industry who were intent on killing their competition for Canadians' retirement savings, and were intent on selling Canadians their investment products that are synthetic and derivative in nature, like life annuities and variable rate annuities. During the Global Financial Meltdown these products were revealed to be the flawed instruments that they are.

Meanwhile Canadians are being deprived of investment opportunities that are better suited to their needs and the needs of the country at large, and as such income trusts need to be restored and encouraged to flourish for the betterment of all.

Brent Fullard, B.Sc., M.B.A.

7 comments:

Anonymous said...

As if Iffy has any interest... he has a Master's in BS... I'm pretty fed up with him, can you tell?

m.

Anonymous said...
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Anonymous said...

.....and a PhD in SFA

Anonymous said...

Our audience is obviously financially illiterate if they don't get this.  We have to keep spelling it out so the lowest common denominator of intelligence and financial literacy can get it.  Perhaps drawing pictures utilizing mind mapping techniques with lots of pretty colours.
 
For example, we need to explain this in pictures for a start...
 
Corporation
-earnings
-tax shelters
-dividends
-share buybacks
 
Income Trust
-earnings
-distributions

Geoffrey

CAITI said...

Geoffrey:

Maybe some background music would help.....like the kind of cheerful crap that always plays in the back of Manulife ads?

Brent

Dr Mike said...

This whole thing blows me away.

The present economic conditions scream for more income trusts & not less.

Tight money , low interest rates , gov`t cuts on the way , higher taxes in the near future , an aging population , all dictate the need for an income stream.

There is nothing better than the income trust structure to provide that stream.

These gov`t people are clueless.

Dr Mike Popovich

Anonymous said...

AWESOME submission.

# 4 Excellent point.
Especially when it comes to the energy sector. If foreign takeovers continue at this pace there will no longer be a need to send any Canadians to climate talk summits. We will have to send the Koreans instead to represent us. Why should anyone listen to the Canadian government about anything environmental if we don't own or manage our own resources?


If foreign takeovers continue there is no longer a need for tax payers to fund expensive high tech university or college programs in newer clean energy technology. If there are no Cdn. head offices or decent paying jobs in those sectors, graduates will flock to other countries for work and rightfully so.

What do Iggy, the NDP or the Bloc have to say to that? As opposition parties they are all responsible for the damage caused by this flawed CON legislation.