VOICE MAIL

Sean:

I left a voice message for Andy Bell of BNN and Kevin O’Leary of CBC on their cell phones. My call to Kevin took places at 11;56 am today and was 5 minutes in length.

Unlike my message for Andy Bell, I reminded Kevin O’Leary that he now works for the public broadcaster and that he must act in a way that, at least, is perceived to be free of commercial and political interference, and told him to acquaint himself with the results of CBC’s viewer poll, if he is not already. I told him that it was morally incumbent upon him as a business news reporter at Canada’s public broadcaster that he challenge the sitting government on their unproven allegation that income trusts cause tax leakage, irrespective of what his own commercial best interests might dictate about making such inquiries. Failure to do so will constitute a clear conflct of commercial interest on his part, as he is not without commercial interest in the income trust issue’s final outcome. He benefits from the income trust uncertainty that prevails as he gathers assets for his O’Leary Funds from people who are confused over the future direction of income trusts, making them susceptible to pitches like those made by O’Leary Funds to gather up these assets, in order to earn a fee stream for O’Leary Funds. Meanhwhile the other half of the Lang O’Leary Exchange, namely Amanda Lang has shown great bias on this issue and has shown no willingness to challenge the sitting government apart from lobbing soft ball questions at Flaherty, like “are you sure you aren’t going to revisit this decision” as simply the means to solidify the governments’ position and the governments agenda.

I don’t think Jim Lehrer of PBS manages funds as his day job or practices softball journalism when interviewing leading US Politicians like Barack Obama or Timothy Geitner.

This is what Canada’s public broadcaster, the CBC, has succumbed to. Grossly biased and commercially conflicted coverage of business news and politics.

That said, it is INCUMBENT on the CBC to examine this income trust matter in depth, given their public broadcast mandate, and the deluge of support from their viewers to get this cover up uncovered. I don’t care how many people I piss off in this country, including at the CBC. I simply want the truth. That is not a right that I am willing to cede to Stephen Harper, namely my right to know the truth. I guess that’s where I differ from the CBC. But we’ll soon see, as the CBC is the only thing presently standing in the way of all Canadians knowing the truth/fraud about tax leakage.

I left Kevin O’Leary my number to call. BNN is probably a total lost cause in exposing Harper’s lie about tax leakage. I have not yet passed final judgment on the CBC. The ball is in their moral court. Let see if they can return the volley.

Brent

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Brent,
I sent the CBC link to BNN and suggested they look at it to find out what concerns Canadians. My comments are below. – Sean

I understand that BNN will be interviewing PM Harper at 6:20 this evening. I suggest that you review the questions on the below site. CBC has poled questions in "Your Question Period - questions you want to ask politicians". The questions are terrific and the priorities of Canadians is revealing. CBC has opened a Pandora's box and they are ignoring the questions. -- Sean

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.

CBC Poll indicates that pension issue far more important than detainee issue

Canadians were asked by the CBC to select from a list of five questions to be put to Stephen Harper in an upcoming segment called "Question Period", now that Harper has canceled the reality version of that show.

This poll of 9,454 respondents indicates that for every Canadian who is concerned about the Afghan detainee issue (more like “whipped into a frenzy”), there are more than 2 Canadians who are concerned about the pension crisis issue in this country (which is going totally neglected, aside from the endless banal rhetoric spewing across the lips of ostensibly concerned politicians).

These results don’t surprise me in the least. I think Harper intuitively understands these results as well, as his current focus is on the economy, and yes evading accountability on the Afghan issue. But what else is new, since evading accountability is the constant theme of the Harper government, and the Afghan detainee issue is merely the current manifestation of that constant.

Therefore, if you were the Liberals and wanted to be responsive to the innate kitchen table concerns of Canadians revealed by these polls, as Harper is doing, WHILST ALSO demonstrating that Harper is an inveterate liar, not to be trusted, which issue would you be better off focusing your limited resources on as a party? Afghan detainees or the pension issue, an issue that directly subsumes Harper’s income trust/tax leakage lies and the massive loss of tax revenue to Ottawa and Canadians' pension savings and loss of retirement savings investment choice, that the income trust issue is uniquely emblematic of?

The answer is so obvious, politically speaking, as to not even merit being asked.

As such, the Liberals are very much running the risk of taking on Harper on some esoteric plain, that doesn’t resonate with Canadians. Meanwhile Harper will be waging his war on some entirely different battle field of public opinion using all the resources of the government to focus on the economy and his latest Con job, this time focused on jobs, jobs, jobs.

I have news for the Liberals. Try as they might, not every Canadian is as concerned about Human Rights as perhaps Michael Ignatieff is. I would hope that Michael Ignatieff is aware of the concept of Maslow's hierarchy of needs, as it pertains to explaining human psychology, and which recognizes the self evident truth that humans’ need for food and shelter rank ahead of humans’ needs for morality. It can't be denied.

Pensions and retirement savings and retirement income are a food and shelter issue, LITERALLY. Whereas the treatment of Afghan detainees is a morality issue. That’s a simple fact of life, as defined by Maslow’s universally accepted hierarchy of needs.

Please don't shoot the messenger.

Therefore, my advice to the Liberals, is the same advice that they have been ignoring from me for the better part of three years now, and that is to get back to the pocket book issues that resonate most with Canadians. The ones that Maslow’s needs hierarchy acknowledges as being of supreme importance, when push comes to shove and forming Government is concerned, Needs such as the most basic of needs that arise when Canadians summarily lose $35 billion of their life hard earned retirement savings based on Harper’s fraudulent tax leakage lie. But like the Afghan detainee issue, the income trust issue is also a morality issue, and therefore spans the entirety of Maslow’s hierarchy of needs, as few issues seldom ever do.

Why does it appear from the Liberals’ apparent dead silence on income trusts and Harper’s tax leakage lie, as if the Liberals are going to give Harper a big “ get out of jail free” card on that massive pocket book issue, in the same way that Ignatieff gave Harper a get out of jail free card on HST, another massive pocket book issue that has been left to the NDP party to exploit politically and which will garner them with major political support in the raucous days ahead, post-HST implementation in July 2010. Could it be because the CEOs of large corporations who benefit from both the death of income trusts and the HST, matter more to the Liberals than do the average citizens of Canada? That would be the only conclusion that would follow from such a move.

There only are so many “get out of jail free cards” in any game of Monopoly. Ignatieff has already played one too many insofar as the policy actions of Harper are concerned, that he might find himself in a treahcerous game of snakes and ladders, instead.

So my advice to the Liberals is to get with the program of Canadians, especially in these hard economic times and times of economic uncertainty, namely by focusing on the pocket book issues that face Canadians in their every day lives.

It concerns me greatly that the Liberals seem to be tolerant of Harper’s lies about tax leakage, in a manner that would be completely unacceptable to me, if they were ever to form a government, as the matter of Afghan detainees seems to be of concern to Michael Ignatieff.

While Ignatieff may personally prefer to apply his sense of morality to the matter of the potential past abuses of Afghan detainees, which is his sole prerogative to do, however if Ignatieff wants to represent the people of Canada, he better conform himself to their priorities, rather than attempt to conform theirs to his. Meanwhile failure to conform himself to Canadians priorities, under these circumstances will result in double jeopardy for Ignatieff as he will be allowing himself to get out foxed by the ever-coy Stephen Harper who will be waging his battle for public opinion on issues where the public currently resides and not where Michael Ignatieff wishes they would reside, namely the economy, stupid.

As the wise proverb instructs us, "If the mountain won't come to Muhammad, Muhammad must go to the mountain."

This is very apt advice for Michael Ignatieff to take under these circumstance, and somewhat ironic, since Maslow’s Hierarchy of needs as drawn, is always depicted as a mountain-like pyramid . At the base of that mountain is where Ignatieff will find the greatest number of voters, not at the top, as indicated by the following CBC ranked results. Ignore them at your peril. Ignore income trust investors at your peril.

Dion’s dismal failure was foretold by polling results just like these, that he ignored at his peril and persisted in pursuit of his lofty and totally esoteric Green Shift plan. This is not me talking here, but rather Canadian voters talking. The only difference, is that I am listening, whereas it appears others may not be:


What will government do to protect the employees, pensioners and disabled workers who may be left without protection? 49% (5,700 votes)

What did the prime minister know about Afghan prisoners being transferred into unsafe Afghan prisons and when did he know it? 33% (2,359 votes)

How does my representation in Ottawa work when there is no Parliament? 12% (953 votes)

How is government listening to Canadians in advance of the new budget in March? 3% (244 votes)

With the government's new 'tough on crime' legislation what is the government's plan to house the influx of prisoners? 3% (198 votes)

How does my representation in Ottawa work when there is no Parliament? 12% (789 votes)

Total Votes: 9,454

Canada’s 31.5% IPO Tax

Canada is the only country in the world that imposes a tax for the act of a company going public or for the act of company being public.

Why would the act of being public/going public be the basis upon which a tax is levied, especially a tax as massive as a 31.5% tax on everything that a company earns? Especially when the average tax paid on every other company in the land averages less than 6.2%, on an apples to apples comparison basis?

What country would institute tax policies that discourage companies from going public and gaining access to the largest pool of capital out there, namely the public capital markets? Why would any government want to make companies captive to the capital pools known as private equity, and the propensity of private capital to use excesses amounts of debt to lever up their investments, especially in light of the recent hard lessons learned from the Global Financial Meltdown.

It makes no sense whatsoever, but this I what the Harper government has done. Is it any wonder that IPO acrivity in this country has fallen off the cliff. Who in their right mind would want to take a company public, if it meant attracting a massive 31.5% tax. Better to remain private/

But it gets worse. Because this new tax was imposed on companies that already were public. It was a retroactive tax, that penalized those companies that had made the decision to be public. Their only recourse is to go private again to avoid this tax. That creates a classic catch 22. Go private to avoid the tax like other private companies, but suffer the penalty of not having adequate access to capital in order to grow and remain competitive. What country would willingly create these types of dilemmas for businesses. It almost has religious or cult like overtones to it. Almost like a case where legislation had been based upon some one person’s superstitions?

But it gets worse. Not only is there a massively unlevel playing field as between a company that goes public and a company that goes private, there is also a massively unlevel playing field as between those investors who participate in the public market and those that participate in the private market.

This observation provides the clue to understand what is actually going on here. There actually is some method to Jim Flaherty’s madness, not that you are going to like it.

You see, the whole purpose of this new tax was not to penalize companies per se, but rather to penalize investors and to take options away from certain investors, but not others.

The hard reality is that not all investors can participate in the private market, whereas all investors CAN participate in the public market. This is analogous to saying that not all people can belong to a private club, whereass all people can belong to a public club. Why would a government want to turn the act of investing into the equivalent of a private country club?

Perhaps that question is best directed to Jack Layton of the NDP, as without the support of the NDP, this private country club form of advantaged investment would not exist. If Jack Layton starts babbling on about something called tax leakage< I would suggest that you cut the conversation short and simply ask him to produce his proof for such ann unfounded allegation. Jack Layton has no proof for the simple fact that there is no tax leakage. Full stop.

Then you can get to the root of the issue and ask why in the world would any fair minded and fiscally sane government ever insttute a policy that created these gross discrepancies in investment opportuinities as between private investors and public investors? Why kind of democracy of the people would preclude people at large from investing in the country in which they reside and pay taxes, in order to make Canada the exclusive reserve of those who belong to the private country club known as private equity.

So who exactly is private equity? To answer this question, one merely has to look at the very people who have been involved in the transactions to date that have occurred in the income trusts market. These transactions to date are nothing more than money laundering operations. A more accurate term would be tax laundering operations, since all of these transactions have involved the sale of income trusts from Party A to Party B, such that Party A would have otherwise paid the 31.5% tax, whereas Party B will not.

Like the policy itself this makes no sense whatsoever. What country in this world taxes the same object in one person’s hands at 31.% and in the other person’s hands at 0%? It would be conceivable that a country that wanted to adopt protectionist measures that discriminated against foreign investors might want to creat such an unfair and unlevel playing field, but that does not explain what is going on here, since this 31.5% tax applies to Canadian taxpaying citizens. So who are these Party B’s who have been handed this huge tax advantage to the detriment of the average Canadians taxpaying investors. Once again, we simple need to look at the acquisitions of income trust that have occurred to date.

In all of the following instances, the private buyers in question will continue to own these businesses as income trusts and WILL NOT be subject to Flaherty’s 31.5% tax, whereas average Canadian investors would have been. This is Flaherty’s idea of leveling the playing field and these are the direct beneficiaries of Flaherty’s largesse (courtesy of Jack Layton and the NDP):

Sleep Country Canada Income Trust: Thomson Family Private Holding Company (Canada’s wealthiest family, and controlling shareholders of the Globe and Mail and CTVGlobemedia, who are constant promulgators of the falsehood known as tax leakage)

Teranet Income Trust: Ontario Municipal Employees Retirement Fund (OMERs)

Prime West Energy Income Fund: Abu Dhabi Energy Company (state-owned entity)

TransAlta Power Income Fund: Li Ka Shing (Hong Kong billionaire)

Harvest Energy Income Trust: Korean National Oil Company (state-owned entity)

Thunder Energy Income Fund: Public Sector Pension Plan (pension plan for federal civil servants including people like Mark Carney and all the others in the DoF who concocted this crazy scheme, and who are its intended beneficiaries)

Legacy Hotel Income Fund: Caisse (today run by Michael Sabia who was instrumental to Jim Flaherty in bringing about the income trust tax and maneuvered for that outcome while the CEO of BCE)

Precision Drilling Income Fund: Goldman Sachs (former alma mater of Mark Carney who was the architect of the income trust tax and the very tax loophole that we are discussing in this article)

....and the list goes on.

This is grossly unfair on the one hand, and does nothing to address Jim Flaherty’s alleged problem with income trusts on the other hand, as changing their owners will do NOTHING to deal with his alleged concerns about income trusts. Nothing!

Meanwhile there is the issue of the $35 billion of investment value that was lost by the 2.5 Canadians who owned these trusts on that fateful Halloween of 2006. To them, that money has been permanently lost, never to be recovered, unless this absurd tax is repealed before it comes into effect in a year’s time. However that money has not been lost to the overall “system”. Flaherty’s policy created a system, where the money that would be lost by Party A,namely average Canadians investors, would simple be recouped by any Party B that would be willing to take these income trusts private. Bingo, you win part of the $35 billion prize.

Therefore, this income trust tax is one of the most corrupt and incompetent policies this country has ever witness and the most corrupt and incompetent policies this side of the privatization of Russian state owned companies in the 1990’s that Mark Carney while at Goldman Sachs adviced the Russina government on, and that minted dozens of billionaires overnight, now known as Russia’s Oligarchs. Apart from being fabulously wealthy, these Oilgarchs basically run the country.

So this is what Canada has now devolved into. A mini-make of the Russian oligarchy, where average Canadians get raped overnight by the Harper government to the tune of $35 billion in order to enrich a bunch of Stephen Harper’s cronies and bunch of government run pension funds, including the very pension fund of the buraeucrats who concocted this corrupt scheme of self dealing in the first place.

I for one won’t stand for it, nor will I stand for the lies about this policy that are constantly printed in the Globe and Mail and other organs of the Canadian Oligarchs who own.

Meanwhile were is Canada’s Official Opposition on this total rip off in the making? Are they a Party of the people or a party of the Oligarchs? Meanwhile Jack Layton along with Gilles Duceppe have a lot of explaining to do.

Prove the case or drop the tax. This kind of massive corruption can not stand. I refuse to be lied to by the Canadian government as the basis upon which they are expropriating my assets in order to hand them to their privileged class friends, who are happy to sit back and effectively steal my wealth on false pretenses. This is gross discrimination of both an economic and social kind. It is also blatant theft and fraudulent.

What else did you expect from a band of thugs like Harper/Flaherty? Tommy Douglas they are not. Meanwhile where is Jack Layton and Michael Ignatieff in all of this? They stand idly by while this con game continues, In California that would be considered an offence in its own right, the act of idly standing by while others are getting raped. It is called the Good Samaritan Law. However the Good Samaritan Law was never intended to get politicians to do what they are PAID and ELECTED to do. Apparently Canada needs a Good Samaritan Law of its own, One that applies to elected officials like Ignatieff and Layton, along with the lesser citizens that we have all become.

So what say you Micahael Ignatieff and Jack Layton? Where is your opposition to this daytime rape that is occurring before your very eyes, or is this your respective parties’ idea of pension reform? Steal from the poor and give to the rich.