Instead of leakage, what if income trusts could be made to cause a tax motherlode?

....the $6 billion tax motherlode that would occur to all Canadians' benefit if Stephen Harper adopted the Marshall Savings Plan suggestion put to his government by way of various members of his caucus.

This is THE QUESTION that we all need to put to Kevin Page and to every PAID ELECTED Member of Parliament. in order to stop this public policy train wreck. Email them today by clicking on the links embedded above.

As such, here’s a question I would like to pose to every Canadian in this country including journalists and politicians alike, as well as Canada’s Parliamentary Budget Officer, Kevin Page, copied on this email.

What if, instead of leakage, it was possible to transform the income trust matter by turning things on their head, such that income trusts would now begin to have billions in cash taxes flow into Revenue Canada to fund much needed social programs and help deal with Canada’s massive structural deficit? This is exactly what the Marshall Savings Plan solution does.It has been submitted to the Conservative government as part of Stephen Harper’s solicitation of suggestions to be incorporated into the 2010 Budget.

The Marshall Savings Plan (MSP) achieves this result by transforming the deferred taxes that are paid in future periods on income trusts held in RRSPs into cash taxes paid to Revenue Canada in the year incurred. The details of the MSP are less important than the thought process of how to assess such a wonderful opportunity, but can be found here on Diane Francis’ site, where she calls the Marshall Plan, “brilliant”.

The Marshall Savings Plan.

One of the great virtues of the MSP solution is that it is a completely face saving solution for all of those whose mistakenly jumped prematurely, and armed with virtually no facts or studies, onto Jim Flaherty’s bandwagon back on the fateful Halloween day in 2006.

It takes an honest person to admit a mistake, like the income trust policy, but it takes a petty and spiteful person to not support a policy solution that addresses and resolves ALL of the reasons why the policy made any sense in the first place.

Like Warren Buffett said during the Global Financial Meltdown, “You don’t know who’s swimming naked until the tide goes out?” The arrival of the Marshall Savings Plan solution on the Canadians political and fiscal landscape at a time of massive budget deficits and a looming pension crisis, especially for the 75% of Canadians who don’t have pensions who came to rely on the profit sharing investment vehicle known as income trusts, is like the tide going out. We will soon find out who is swimming naked, as their are no longer any reasons that remain standing as to why this policy was implemented in the first place.

In the stark presence of the Marshall Plan, any one who now argues against preserving the average Canadians' profit sharing income trust vehicles will simply be making bald face arguments on behalf of the ulterior reasons why this policy was foisted on to Canadians in the first place, namely on behalf of these utterly self serving greedy dudes from boardrooms and corner offices in Canada and from the massive life insurance lobbyists like Paul Desmarais whose idea of good competition is for the government to destroy it on his behalf. Something that Stephen Harper was too pleased to actively do on Paul Desmarais and Dominic D’Alessandro’s behalf:

So what did these people charged with a fiduciary duty to maximize shareholder value do? They went to the government to, in effect, sabotage their shareholders, the very OWNERS of their companies to whom they owed a fiduciary duty, as follows:

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.”

In this instance however the political dynamic is QUITE DIFFERENT. For example, if Michael Ignatieff and the Liberal Party (same for the Bloc) were to do nothing to promote this brilliant idea for inclusion in Harper’s 2010 Budget, as Harper asks the opposition parties for good suggestions to deal with issues like the deficit and the pension crisis, then he will have enjoined himself into the entire income trusts imbroglio. Not acting will mean that Michael Ignatieff and the Liberals will be co-joined at the hip for allowing a policy that brought about everyone of the negative outcomes that was predicted by myself and many others, including this submission to the Goodale Consultative Round in the fall of 2005 by non other than Don Drummond and the TD Bank.

Given that the income trust matter is far from a lost cause, given that the GLASS IS 75% FULL, with 169 of the original 220 non-REIT trusts still out there, the time to act is NOW by embracing the win win win solution to Jim Flaherty’s income trust fiacso in a completely face saving way, himself included, and allow Canadians from all levels of society, not just the rich and powerful (and immensely greedy) participate in a profit sharing vehicle that will allow them to direct their retirement savings dollars into the country they are CITIZENs of, rather than being taken advantage of some Bay Street genius intent on extracting some fee stream from them under the next scheme invsestment product to blow up, like ABCP or Manulife’s variable rate unhedged annuities like Income Plus.

The failure to act and to embrace the Marshall Savings Plan, will simply mean that every journalist, every TV host, every network, every politician will have made themselves part of the problem and not part of the solution, namely the Marshall Savings Plan solution that will avert all of the following from perpetuating in the 12 months left that we have to fix this Beverley Hillbilly of a tax policy that must have been conceived of by back water mountain folk in the hills of Kentucky and the product of too much in-family breeding. Do you really want to be associated in any way with the following, as failure to act will make this YOUR LEGACY as well as JIM FLAHERTY’s LEGACY.

This is what blacked out documents as “proof” of tax leakage will buy you. Equally this is what not implementing the Marshall Savings Plan will buy you, as your lasting legacy:

Subject: TD Bank, accurately, predicted a major "welfare loss" from Flaherty's income trust tax:

TD Bank Financial Group Submission to the Department of Finance on Flow Through Entities: Goodale Round: Flaherty ignored EACH and EVERY ONE of these warnings and still had the temerity to say “it’s not my fault”. The immense negative outcomes and “welfare loss” that would result, were predictable from the very outset. Those who lobbied for this policy and those who implemented and supported it should be ashamed of themselves

(1) Warned against applying a distribution tax (ie like Flaherty’s 31.5% tax), stating

(2) At this point we must return to one of our original points of “do no harm”.

(3) A distribution tax would inevitably reduce demand for FTEs and hence lower their market value......ie $35 billion permanent loss of Canadians retirement savings purchasing power

(4) Further, it would provide a competitive edge to private LBOs, performed mainly by U.S. Equity firms, at the expense of Canadian-made income trusts....ie exactly what happened with BCE and many others like Union Energy Waterheasters Income Fund

(5) Lower market values would wipe out the wealth of Canadians and cause a revenue loss to the federal government....to date the takeovers have caused REAL tax leakage of over $1 billion to address phanton tax leakage of half that amount

(6) Hence, we must be very careful that any policy move does not have the ultimate result of hurting Canadians......that’s the only thing that this policy has caused, harm to all Canadians, with no offsetting benefits

(7) So if the distribution tax is very large, the market values would plummet and Canadians would be badly hurt.....what’s the permanent loss of $35 billion in purchasing power between friends

(8) The above arguments suggest that a distribution tax effectively targeted at foreigners would be counterproductive to Canadian interests....this is exactly what Flaherty did

(9) The same arguments can be made for a tax that would target the Canadian tax-deferred sector. Again the superficial appeal of such a tax is understandable.

(10) If any distribution tax were not creditable to the tax-deferreds, market values could greatly fall and badly hurt taxable Canadians....Flaherty totally ignore this warning

(11) If non-taxable entities essentially determine the market for business trusts and overall equity, such a distribution tax could raise the cost of capital for all firms.

(12) Further ,any tax in income trusts might simply cause a substitution to entities avoiding corporate taxes by purchasing debt and using LBOs as a substitute for an income trust.......this describes exactly what happened with B

(13) A welfare loss would also be inflicted on Canadians if the pension funds substituted offshore holdings for Canadian FTEs.....this is exactly where most of the CPP’s and other large shore public pension plans money is going...offshore. Meanwhile CPP lost $300 million as a direct result of Flaherty and the NDP’s income trust tax from their trust portfolio holdings....how’s that for a “welfare loss”?

Welfare loss: A situation where marginal social benefit is not equal to marginal social cost and society does not achieve maximum utility.

"Let us replace accountability with corruption" (direct quote)

you say either and i say either
you say neither and i say neither
either, either, neither, neither
let's call the whole thing off

you say tomato. I say tomato.
you say accountability. i say corruption.
you eat potato and i eat potato
accountability, corruption, potato, potato
let's call the whole thing off

so, if you wear pajamas and i wear pajamas
i'll wear pajamas and give up pajamas
for we know we need eachother so we
better call the calling off, off
oh, let's call the whole thing off

Confessions of a life long Conservative

Image above: Ben Lobb


January 12, 2010

Mr. Ben Lobb
Member of Parliament for Huron—Bruce, Ontario
Member of the Conservative Party of Canada

Dear Mr. Lobb:

I am a former Conservative supporter (when it was truly progressive) and also former card carrying Reformer who several times contributed significant money to the Reform party. I have voted Liberal only twice in my 56 years and never missed a vote.

I felt Manning was a man of integrity and liked many of the things the party stood for. Some sort of reform of the senate, a Canadian is a Canadian whether Aboriginal, from Quebec or any other part of Canada, deficit elimination and debt reduction, government transparency ,accountability, open votes in parliament etc. He was the best Opposition Leader Canada has had and I think greatly influenced the Liberal fiscal responsibility to eliminate 44 billion deficit left by Mulroney and decrease debt by 90billion.

I was apprehensive when Reform joined the Conservatives to form the Alliance. My concern was for the wrong reasons however because I never dreamed that the eventual leader, Harper, would be so disingenuous, depend so much on former Harris cronies who left Ontario 5 billion in debt and who themselves were divisive. Harper screwed Jim Prentice over during the leadership convention and MacKay had a part to play. I have voted Conservative and Reform most of my life because I believed they were fiscally the best.I was wrong.Trudeau left Canada with a 100 billion debt, Mulroney added 300 billion and it got to 500 plus billion by the time the Liberals took over at which time the deficit was eliminated and debt repaid by about 90 billion. Now Harper and your party is going to add 160billion to the debt that will take generations to get back to where we were when Harper took over.I am now of the belief that it is only the Liberals who can be our salvation. During the last election I read many Conservative comments about Liberals being facists.

Check the dictionary and it describes Harper perfectly and it is frightening. He is controlling, divisive, controlling even with his own MPs, highly partisan, deceitful, deceptive. He constantly avoids issues by blaming others. Because Liberals did it does not make it OK for Harper to do it.

He has lied about income trusts, accountability, transparency. He sidetracks important issues like Cadman, throws money at Quebec to get votes and then boneheadedly attacks the arts which is close to the hearts of Quebecers, he and Flaherty have always wanted tax harmonization but has McGuinty take the heat (I am for it), Missing in action on the Caledonia/native issue when native land disputes are a federal responsibility and lets McGuinty take the heat(I am not a big fan of McGuinty), prorogue to avoid a confidence vote and a democratic coalition( I did not like this idea but dislike shutting down parliament more),suggests that one is against our troops just because one questions the government regarding Afghan detainee issue.

Harper, until a few years ago denied global warning and suggested it was a socialistic money grab. Hires Bush's former press secretary Ari Fleischer who repeatedly lied to the world about WMD. Is he know going to advise Harper how to lie and get away with it? The USA looked at the Afghan detainee issue and found that 400 of 600 detainees were innocent and of no threat and should be released. Our troops, Red Cross, Amnesty International and the USA all warned Canadian authorities and other countries as well. Critics are NOT pointing a finger at our troops, who expressed concern, but at Canadian authorities and specifically the Canadian Conservative government including Harper, MacKay and their front man Mulroney(David I believe).

They have shut down discussion on Income Trusts. I have a document released through Freedom of Information that was the governments justification for taxing income trusts because of tax leakage.21 of 28 pages have been blacked out. So much for trasparency.It has happened with other parliamentary committees including Afghanistan, Linda Keen, Kevin Page etc.

You people have lied about tax leakage, allowed many Canadian companies to be taken over by private equity and foreign interests. $35 billion of savings were lost. Income trusts only offered the same tax benefits as pension plans for federal employees, MPs, OMERS, Teachers’, pension plans, private equity and others.

Now the GST. Canada's budget is about 300 billion. The gov't surplus was maybe 15 billion or 5% which in my opinion a reasonable buffer and not over taxation. Conservatives said the surplus was evidence of over-taxation. Does that mean that now with a 56billion deficit we are under-taxed? The GST is a better tax than what we had but should never have been reduced from 7 to 5 %.

I know I am rambling and long winded. I am extremely disappointed and believe Harper, Van Loan, Baird, Clement and other offensive bit bull type of politicians have to go. There is no place in society for these types. Even Tom Flanagan ,formerly Harper's right hand man, is speaking out as if Harper has overstepped his place and is very critical.

Ben, I believe you are a good person but those around you are reflecting badly on you. I will not vote for you and do what I can to get rid of the Harper Conservatives ASAP

Yours truly,

Anonymous Constituent

cc: Brent Fullard, CAITI

Manulife: The power of One

Manulife: The power of One.....that’s Manulife’s new slogan from their TV ad campaign.

It didn’t occur to me how sinister this new slogan actually is until I read this Canadian’s comment on CBC’s web site, where Canadians are being given the chance to ask His Harperness a question.

All the top rated 25 questions, as determined by viewers, are all about income trusts and Steve’s lie about tax leakage. Here is one that caught my eye that tells the story in the succinct way that has eluded me so far in all my advocacy on this issue. Keep in mind this is now the sinister facet of Manulife: The power of One

This was a promise from Harper, taken from 2006 CON platform:

"Stop the Liberal attack on retirement savings and preserve income trusts by not imposing any new taxes on them."

Was Manulife's influence that great that seniors savings had to be sacrificed?

What a great question!

Answer: Yes. Manulife's idea of a "level playing field is to remove the opposing team (ie income trusts) from the field, in order to make Canadians; saving for retirement (note: the little icon in picture above) more captives to their wares. So they went to the Harper government and lobbied the Harper government to KILL income trusts. It's that simple and that wrong. Manulife's idea of good competition is to have none. In order to achieve Manulife's desired objectives, the Harper CONs came up with a "plausible" sounding policy argument that would allow them to renege on their 2006 election problem:

Create a faux crisis. A faux crisis called tax leakage. Then the perfect opportunity presented itself. Telus announced its conversion. Let's get BCE to do likewise, even though Michael Sabia didn't want BCE to become an income trust. But this way, by piling on with his own announced conversion, he could kill the whole income trust model, with the frenzied atmosphere of everybody converting, caused by his announcement that the "sky is falling". This would be the "perfect storm" excuse for Flaherty to take drastic measures and to NOT CONSULT with the public. Added to the this concoction of manufactured panic would be the argument that would easily enjoin every Tom, Dick and Harry in the country into thinking the government's draconian actions were "just", by saying that "income trusts cause tax leakage."

Eureka! The entire nation would be gamed by this grandeur of delusion. That's the power of One.

The fact that tax leakage is a patent falsehood or that Canadians would lose $35 billion of their life's retirement savings, or that large swaths of the Canadian economy would become foreign takeover targets, or that real tax leakage would take the place of non-existent tax leakage after all these takeovers of trusts, or that the pensions funds got a special exemption from this tax to shut them up so they would go along with this rape of the average Canadian saving for retirement didn't matter at all, as we had decisive Jim Flaherty in charge. Decisive indeed. Decisively wrong, but he achieved his objective, namely Manulife's objective along with their insurance lobby brethren, like Power Financial of making Canadians more captive to their grossly inferior wares that were unable to compete on a playing that was level, so together they cooked up this scheme, and let Flaherty execute it, whereupon they clumsily tried to deny they were behind it when giving testimony before the Finance Committee to buy the CONs and the NDP with cover for their treacherous deeds of ripping off Canadians, every single taxpayer included who will pick up the multi-billion dollar tab.

That's Manulife: The power of One

Policy Outcome Postscript: Having succeeded (at least temporarily) in making Canadians saving for retirement income more captive to Manulife's synthetic and derivative junk food investment wares, things like Income Plus and variable rate annuity contracts that provide Canadians with only NOTIONAL participation in stock market plays, what does Manulife do, they get greedy and decide they are smarter than the stock market by making the premeditated decision to NOT HEDGE the very risks that are embedded is such a risky game, with the result that Manulife is almost blows itself up financially, which imperils through collateral risk its other lines of businesses, like life insurance itself!

What kind of public policy destroys the FAVOURED means by which Canadians were making direct investments into Canada's REAL economy, in order to steer those people like sheeple into becoming more captive to making investments in junk food like Manulife's Income Plus, for the sole purpose of Manulife being able to extract fees? Meanwhile in their desire to maximize that fee stream, Manulife acts imprudently in river boat gambling fashion and FAILS TO HEDGE those risks, resulting in that grotesque flip side of the Power of One, namely TOO BIG TO FAIL.

As it was, Manulife required a form of bail out to deal with the spiraling-down financial situation it had created for itself in the midst of a market crash whose risks became multiplied in the hands of Manulife, given their propensity to take massive unhedged risks tied to that collapsing stock market the world experienced during the precipitous Global Financial Meltdown.

The next time taxpayers may not be so lucky, and will find themselves with another AIG on their hands, a Canadian version of AIG, or what would become known as AIG North.

Making this entire lobbying exercise by Manulife of killing income trusts in order to make Canadians captive to the wares of Manulife, an exercise in fiscal self-flagellation and the spinning of evil webs, in which Manulife itself got caught, and Canadian taxpayers narrowly escaped.

Name one sane intelligent Canadian who thinks this constitutes their idea of "smart policy"?

Could Jim Flaherty and Stephen Harper have been any more SHORT SIGHTED and GROSSLY NEGLIGENT if they tried? They are: The power of Dumb..

Will wonders never cease: Corcoran’s actually calling for facts? LOL

I had to laugh out load when someone pointed out this article of Terry Corcoran’s in today’s Financial Post. The hypocrisy of this is too rich to let pass by without the appropriate ridicule that it so richly deserves, in which Corcoran concludes an article on pension reform by writing:

“Maybe with facts to work with, needed pension reform could more usefully proceed.”

What a joke, Facts? Corcoran has no interest in facts except as a smoke screen. Is this the same Terry Corcoran who maligned me left, right and center at every opportunity that he could including making up all sorts of libelous comments about me working for CARP or me funding CAITI on my “own dime” and calling for me to be vaporized for whatever reason and on any occasion for the simple fact that I have been relentless in pursuit of the truth and gaining access to the very FACTS that have been missing since that fateful day that Flaherty and Harper told Canadians their lie of tax leakage with NOTHING in the way of evidence or facts to justify an action that destroyed $35 billion of Canadians retirement savings.

Facts? Terry Corcoran has NO interest in the FACTS, Puhlease! If Corcoran had any interest in facts he would not have fought such an aggressive full frontal campaign to malign and slander those of us who sought the truth about Harper’s lies about tax leakage. Corcoran’s little lap dog at the Financial Post, Johnny Chevreau even went to the absurd length of writing an article entitled “Earth to Income Trusts investors: Don’t blame Ottawa for your investing blunders” that was totally devoted to blaming the victim and absolving Harper of blame.

Yeah, blaming the victim, with no proof of tax leakage. That’s the kind of interest that this Terry Corcoran thug has in knowing the facts.

The sole purpose of this sudden interest in calling for more facts is for Corcoran to find some “plausible” justification for kicking this pension issue down the road. Corcoran has no genuine interest in having the facts. Just who does he think he is fooling? ROFLMAO Thugs have no interest in facts.

If McGwire can fess up about steroids, why can’t Harper fess up about tax leakage?

Turns out McGwire was lying, but man enough to finally admit he took steroids. Turns out the players were gaming their own system, gaming their own game as it were. Pumped up on steroids and corrupting their own sport in the process. Deluding their fans with unearned statistics. Why can’t Harper admit he was lying about his pumped up claims of tax leakage, and allowing others to steal bases while depriving us of options? What kind of a sport is it when the game is so rigged? A “level playing”, means one with no competition. Harper is totally corrupting our game with his false claims of tax leakage, while reporters do nothing to call out his lies, or the Liberals for that matter. They have become the McGwires of baseball. The inside baseball known as ripping off taxpayers and fostering Harper’s lies about tax leakage, while oblivious to the harm they are causing by corrupting our system of fairness and democracy. Canadian media are all on steroids, as they attempt to game our lives as Canadians on behalf of their team owners. Its a game without referees, as long as the Liberal do nothing, perhaps that’s how they like it.

If you want the truth, I guess you turn to the Sport Pages of the Globe but never the Report on Business, the aptly named ROB, sister publication to the Biased News Network. And for referees you turn to Facebook, rather than your Paid elected Members of Parliament, and certainly not Liberals, as I have attempted to do with Ralph Goodale and countless others whose idea of fair play is to wait forever and do nothing and allow Harper to pump lies to Canadians with impunity.

For this we pay their salaries and give them fat pensions? A game rigged in THEIR favour.

Is understanding tax leakage, like discovering the atomic bomb?

Brent,

I thought you said that Deborah Yedlin lived in Calgary?

I guess good journalists don’t mix with oil & gas folks. The article is very simplistic and shallow, like she recently thought of these issues. However the article gave me an idea. It is clear that CBC is trying to block the questions in “Your Question Period”, however if real journalists became aware of the questions all hell could break loose. You have great media contacts so why don’t put them onto the CBC questions so we can get so awareness of the Tory Income Trust betrayal. -- Sean


Good line Sean!!!...good journalism doesn’t mix with oil and gas. This piece by Deborah Yedlin is an exercise in droning and dumbing-down. What a farce, you’d think understanding tax leakage was the equivalent task of splitting the atom or discovery DNA. Total Neanderthals.

Brent Fullard

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

--------

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.

Changing the channel

As we speak, we are witnessing Harper ”changing the channel”, from the Politics channel to the Business channel. Leaving the Liberals behind to wallow in the dust.

The coy Stephen Harper will be on BNN’s Squeeze Play today at 5 pm.. When has that ever happened in the past? Never.

This is why Harper prorogued Parliament, in order to “change the channel”.. How good of BNN to oblige. Any chance that BNN will ask him about his TAX LEAKAGE LIE which caused Canadians to lose $35 billion of their life savings. Maybe Harper will have some more stock picks to share with Canadians like “A Conservative Government will never raid seniors’ nest eggs by taxing income trusts”. What a CON job that was! Where is the representation in Ottawa for these people and that massive scam? Does that channel even exist? The Accountability Channel? I guess not.

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

It's about the democracy, stupid

It’s interesting that the issue of prorogation seems to have become the tipping point. where Canadians have awakened to just how easily Canada’s so called democracy can be manipulated.

For me, that awakening took place on the afternoon of November 1, 2006 when after making but one phone call as a private citizen I learned that Canada’s Prime Minister Stephen Harper and Canada’s Finance Minister had just been plastered all over the news media in the previous 18 hour period making their claim that “circumstances had changed”, and because of that that, were now reneging on their promise to never raid seniors nest eggs by taxing income trusts made in the 2006 election, nine months previously. The argument they employed to justify this outright betrayal of the voters’ trust was the argument that income trusts cause tax leakage.

My one phone call on the following day revealed for me that their claim of tax leakage was false. Definitively false, since the study by HLB Decision Economics that I learned about in this one phone call (and subsequently received by rush courier that afternoon), entitled: “The tax revenue implications of income trusts” and that had been conducted collaboratively with the Department of Finance, proved there was NO TAX LEAKAGE. The only way for a person to conclude that there was any tax leakage was to falsely construe the numbers, by excluding large amounts of taxes received by the government from the analysis, for which there would be NO JUSTIFICATION in doing so. That’s what Stephen Harper, Jim Flaherty and Mark Carney decided to do:

Falsify the numbers by employing the mantra of the Rasputin of the CONservative government, Tom Flanagan, which is “It doesn’t have to be true, it just has to sound plausible”.

Such a strategy is at the very foundations of the erosion of Canada’s democracy that we are witnessing with Stephen Harper. Sounding plausible is the weak underbelly of democracy in Canada, for the simple fact that sounding plausible is all that it takes for the pronouncements of the Harper government to be dutifully taken down by reporters and transcribed into articles that immediately hit the airwaves, with virtually NO FACT CHECKING WHATSOEVER, and into the homes of minds of Canadians across the county. Time was you could trust the press, That time is long since over

This is exactly what happened with the income trust issue and the most telling comment of admission that applied to all journalists in this country was the one afforded by Carol Goar of the Toronto Star who said:

“I didn't explore the possibility that [Flaherty] was lying. Perhaps I should have.”

That incident prompted me to write many articles about this major weak link in Canada’s democracy, namely the media, on my blog in pieces like “It shouldn’t be the role of journalists to knowingly propagate lies.”

How could something as verifiable and fact-based as tax leakage be allowed to be fostered in the press by one and all, when I, as a private citizen, was able to make a single phone call and establish its bone fides as a BLATANT LIE. I didn’t just blindly accept the conclusion of the study by HLB Decision Economics, but rather I conducted my due diligence in establishing its veracity by tracking down the lead author, Dennis Bruce and challenging him on his findings, Only upon being satisfied about the reports rigorous and understanding first hand where the error lay, did I go out and start making a stink, which is the most important prerogative that is granted to a citizen in a democracy, along with being able to know (i.e. have access to) the truth. Without access to the truth, there can be no accountability. Without accountability, there can be no democracy

George Orwell taught us in his book “1984”, that the true test of a democracy is whether 2 plus 2 is allowed to equal 4, and no other number, regardless of how “plausible” sounding or how oft repeated that other number might be.

In Canada the year was 2006. We were told income trusts cause tax leakage. It sounded plausible. The press consumed it in the Pablum form that it was spoon fed to them in. The press then regurgitated this nonsense in newspapers, television shows and radio stations across the land. The number 3 was to become the new number 4, wherein 2 plus 2 was now going to be 3, and not 4. If 2 plus 2 were allowed to be viewed as 4, then there was no tax leakage, and hence there would be no basis whatsoever for Stephen Harper to renege on his promise to those gullible seniors across this country who believed him and this new number would allow Harper to abandon them and his promise with relative ease and impunity AND would allow him to do the commercial bidding of the following shareholder saboteurs who were knowingly using the Stephen Harper government goons to do what was in their personal best interests, knowing it was not in their shareholders best interests. As such, both they and Harper were acting in direct contravention of their fiduciary duties. Harper’s to Canadian taxpayers. Them to their shareholders. The press, with the exception of Diane Francis of the Financial Post, played the essential role of making the falsehood of tax leakage sound plausible, for fear the truth would ever be known. BNN, the Globe and Mail, the National Post the Toronto Star etc., they were all in this game fostering the lie about tax leakage They even wrote editorials about for god’s sake, to promulgate Harper’s lie. Little did any of these people know how they were toying with the very foundations of Canada’s democracy, assuming it would have made a wit of difference if they had, since the press continues to hide the blatant falsehood about tax leakage under heavy lock and key, knowing full well that it is false. For example, what had Carol Goar done since her epiphay above? Nothing, just let sleeping dogs lie. No need to correct past errors and oversights.

We also have these people to thank:

“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,

Meanwhile just where the hell have the Liberals and the NDP and the Bloc been in exposing Harper’s blatant lie about tax leakage? Harper is without effective opposition in the House. When Michael Ignatieff talks about wanting to make Canada more of a knowledge society is he talking about a knowledge society in which 2 plus 2 equals 4, or the one from 1984 in which 2 plus 2 equals 3, or 5 or whatever?, on those occasions that suit Paul Desmerais Jr and the other nameless saboteur High-profile directors and CEOs mentioned above? I need to know, as it will affect how I vote, assuming the future Canada still permits voting, since any meaningful access to the truth about tax leakage has been blocked from being revealed to the broad public by their very own PAID ELECTED members of Parliament, so voting may be the next thing to go?

Message to Ignatieff/Layton/Duceppe?Canadian media at large: It's about the democracy, stupid!

Where’ Harper’s proof of tax leakage, since in the words of a true Canadian: “Prove the case or drop the tax” (Diane Francis)”

To which I would add “”Prove your utility, or drop the charade about democracy or being “opposition” parties”

My Question for CBC's Question Period

In light of Stephen Harper’s prorogation of Parliament, CBC’s The National is asking Canadians to submit questions to them for a new segment of their show starting next week. Questions that you would ask the Prime Minister if you were an MP and Parliament were in session.

Here is my submission, If you agree with my submission please go to the link at the bottom of this page and vote for it. Thank you in advance. We all need to know the answer to this question, so we can all go about our normal lives, comfortable in the knowledge that Parliament works, in one guise (ie CBC), if not the another:

Mr. Prime Minister:

During the 2006 Election you promised that you would NEVER raid seniors nest eggs by taxing income trusts. Nine months later you did that exact thing arguing that "circumstances had changed" and that, suddenly, income trusts caused tax leakage. The only proof of tax leakage that you provided Canadians for your tax leakage argument was 18 pages of blacked out documents. How does the use of blacked out documents achieve the level of transparency and accountability that your government also promised to Canadians? Why did you subsequently demand these documents be returned to you, resulting in zero transparency? What is your government trying to hide? Meanwhile reputable private sector groups like BMO Capital Markets and PricewaterhouseCoopers are saying that there is no tax leakage from income trusts, and therefore, your policy actions are WITHOUT justification.

When will your government admit to Canadians that they were misled into believing that you would never tax income trusts in exactly the same way that you are attempting to mislead them on your current hoax about tax leakage?

When will your government take off its veil of blacked out documents and release the truth about tax leakage in order that Canadians can better understand why they lost $35 billion of their retirement savings and the loss of an essential investment vehicle for retirement income for the 75% of Canadians, unlike you, who are without pensions, at a time of pension crises?

Supplemental Question: Could the Prime Minister please comment on the rash of foreign takeovers of income trusts like the $4 billion takeover of Harvest Energy Trust by state-owned Korean National Oil Company or the $5 billion takeover of Prime West Energy Income Trust by state-owned Abu Dhabi Energy, to name just 2 of the 51 takeovers to date caused solely by your policy and tell Canadians how much tax revenue is being lost by ALL Canadian taxpayers as a result? Are the estimates by Canadian Association of Income Trust Investors/Taxpayers of an annual tax loss of $1.2 billion a year, rising to as much as $7.5 billion a year, valid or invalid? Please answer this question with hard evidence and analysis, rather than blacked out obfuscations.

Please vote HERE. for my question that was posted: 2010/01/07 at 10:06 PM ET

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.

Parliament works better when it’s closed

It is a mistake for Canadians to think that Parliament works better when it’s open. Sadly, it actually works better when it’s closed.

You see, when Parliament is closed it is prevented from passing legislation, as it has done in the past, that is passed on complete falsehoods. Take the income trust tax for example. This is a policy that caused Canadians to lose $35 billion of their life savings on the policy pretense that income trusts cause tax leakage. The FACT is that income trusts DO NOT CAUSE tax leakage. Income trusts are no more responsible for causing tax leakage, than every pension fund in the country is responsible for causing tax leakage, or that RRSPs cause tax leakage or that Jim Flaherty’s law firm causes tax leakage. Those are the facts of the situation. So why were income trusts singled-out for this 31.5% tax, and only publicly traded income trusts targeted for this tax? For the simple fact that the users of capital in this country (i.e. corporations and their CEOs) did not want to live by the rules of the income trust model which was favoured by the providers of capital in this country (namely average Canadians citizens saving and investing for retirement).

So the capital users went crying to the politicians in Ottawa, who are ostensibly the representatives of the people, and concocted a bespoke tax policy that allowed these Corporate CEOs to carry on with their abusive corporate practices and screw the average Canadian saving for retirement and employ the services of the elected politicians to tax investment options away from the average Canadian based on premises that were and are completely false.

This is the irrefutable REALITY of how Parliament works when it is in session. It passes laws that are regressive to the vast majority of Canadians based on completely false premises, in order to appease and kowtow to a very small and select powerful group of people in this country. How contemptible is that?

As such, Parliament works better when it’s closed. Parliamentarians themselves, through their very actions of the past are the ones who have proven that to be the case. Parliamentarians like Jack Layton of the NDP. What hard proof did he and his party have that income trusts cause tax leakage? None whatsoever. Did he even ask for proof? No. For Jack Layton to assume that income trust cause tax leakage, would also mean that Jack Layton would be equally willing to assume that RRSPs themselves cause tax leakage. Would that mean that Jack Layton would support a 31.5% tax on all RRSPs? I doubt it, and yet such a policy of taxing RRSPs at 31.5% makes as much sense as taxing income trusts at 31.5%.

That’s the problem with Canada’s Parliament. It is completely lacking in any degree of intellectual of factual rigour in how it conducts its affairs. Instead Canada’s Parliament operates on assumptions. Assumptions that are often begun by paid lobbyists who spend their entire lives lobbying MPs for legislation that favours their own self interests. Blind assumptions like the one made by the NDP party and virtually every MP In Parliament that income trusts cause tax leakage. That is simply not the case, as income trusts DO NOT cause tax leakage. Instead Parliament operates on assumptions. And you know what they say about people who assume. People who assume, make asses of u and me.

Much like the politicians in the US Congress made the blind assumption that Iraq possessed Weapons of Mass Destruction as their false assumption on which to base their disastrous invasion of Iraq, so too Canadians politicians in Parliament made the blind assumption that income trusts cause tax leakage as their false assumption on which to base their disastrous taxation of income trusts, that has led to the lose of an essential investment choice for the 75% of Canadians without pensions ( at a time when Canadians are more concerned about their retirements than ever) the loss of $35 billion of Canadians retirement savings, the wholesale foreign takeover of over $100 billion in policy related takeovers, causing the massive loss of REAL tax revenue to all Canadian taxpayers that will ultimately reach $7.5 billion PER ANNUM in lost tax revenue.

If this is the quality of the decision making that goes on when Parliament is in session, it is impossible to argue that Parliament works better when it’s closed. Closing Parliament is much like taking away the keys from some drunk driver before he gets into his car and takes the life of some innocent pedestrian or fellow motorist, which is analogous to what Jack Layton and the NDP did when they voted for the income trust tax along with every one of the sycophant Conservative MPs in Parliament. That House of ill repute. Please keep this institution closed until such time as it demonstrated it has sobered up to the point where legislation no longer gets passed that is based on complete falsehoods. The way to demonstrate its new sober attitude to governing the country, would be to demand that Jim Flaherty expose the falsehoods about tax leakage that are hidden by his 18 pages of blacked out documents. The 18 pages of blacked out documents that Jack Layton and the NDP party along with every sycophant Conservative MP thought was proof of tax leakage, but which instead was proof of their utter incompetence and contempt for democracy.

The GAAPing hole in Flaherty’s argument

The textbook, Financial Accounting, that is in widespread use in Universities and Colleges across Canada informs students about the "Accrual accounting" method versus the "Cash Accounting" method of accounting, by stating on page 107:

"Cash Basis Accounting records revenue when cash is received and expenses when cash is paid.

Accrual Accounting Basis records revenues when earned and expenses when incurred, regardless of the timing of cash receipts or payments."

The significance of this basic difference in accounting methods to the issue of income trusts is that Flaherty's argument of tax leakage only has any validity if he uses the Cash Method of Accounting and IGNORES the deferred taxes paid on the 38% of income trusts held in RRSPs, and gets "tax leakage", by ignoring all of the 38% of the taxes actually collected by the government from income trusts, whereas if Flaherty uses Accrual Accounting then these deferred taxes get included, and there is NO tax leakage.

Eventhough this presents a choice, in theory, about which approach is best, Flaherty had no choice, since the Auditor General called upon the Government of Canada to adopt Accrual Accounting a long time before Flaherty showed up on the scene, and yet he went ahead and used the wrong Accounting standard.

In the world of law that Flaherty comes from, this is called jurisdiction shopping, where you seek out the jurisdiction that is most favorable to the point you want to make/defend/promote.

Except this isn’t the world of law, but rather the world of accounting and the rules of the Government of Canada and the Auditor General.

Meanwhile the textbook goes on to conclude: "Therefore, generally accepted accounting principles (GAAP) require the accrual basis accounting for financial reporting purposes."

No wonder that Flaherty is hiding his analysis of alleged tax leakage behind 18 pages of blacked out documents....because of this GAAPing hole in his logic.

And to think, this is the same clown who preaches that we need greater financial literacy in this country? Perhaps that could begin with a few reporters in the media poiting out the Finance Minister’ own misunderstanding and misuse of some of the most rudimentary concepts of Finance and Financial Accounting, himself?

Jack Layton thanks you for writing

Mr Layton:

When are you going to expose Harper's lies about tax leakage, that was his false justification for the income trust tax?

He only provided 18 pages of blacked out documents as his so called "proof" of tax leakage, just like he's trying to get away with on the Afghan detainee matter.

Are Afghan detainees more important to the NDP than Canadian seniors who lost $35 billion of their retirement savings for what may be NO GOOD REASON?

Why the double standard? Do you not want to be like Barack Obama who said he wants to be known as the Empirical President, a president whose decisions are based on facts and not just hollow dogma, like tax leakage with zero proof?

Please get us the facts upon which the NDP party supported Harper's income trust tax. Your party will be rewarded for asking. Punished in the polls for not.

It's your choice. Honesty in gov't or blacked out documents?

I await your response. OUR democracy turns on it.

Brent Fullard
President and CEO
Canadian Association of Income Trust Investors
www.caiti.info

647 505-2224 (cell)


On 12/18/09 12:15 PM, "LaytoJ@parl.gc.ca" wrote:

> We would like to acknowledge receipt and thank you for your correspondence.
> Please be assured your comments and views are valued as all emails receive
> proper attention. If required, we will be providing a specific reply to your
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>
> If you would like information concerning the work of our team of New Democrat
> MPs and our latest policies, please visit our website at: http://www.ndp.ca.
>
> Again, thank you for writing.
>
> All the best,
>
>
> Office of Jack Layton, MP (Toronto-Danforth)
> Leader, Canada's New Democrats

Flaherty: Cause of pension fund crisis or solution?

Photo: Taken in the riding of Whitby-Oshawa during the 2008 election.

This is pretty rich coming from Flaherty who destroyed $35 billion in Canadians retirement savings, and took away essential investment choices from Canadians seeking pension income, based on his patent lie about tax leakage/



Ministers meet for pension crisis talks
Participants set sights on holding 2010 summit
Les Whittington Ottawa Bureau
Toronto Star
December 16, 2009

OTTAWA–With nearly a third of all Canadian families lacking any pension savings, Finance Minister Jim Flaherty and his provincial counterparts are hoping in the next few days to find new ways to keep seniors from winding up in poverty. While the gathering in Whitehorse on Thursday and Friday is far too short to solve Canada's "pension crisis," participants hope to come up with a schedule that would lead to a "summit" involving Prime Minister Stephen Harper and the premiers next year.