Tuesday, November 28, 2006
Too Meek to Speak
Unsurprisingly, the motion acknowledging that "...the Québécois form a nation within a united Canada" passed without any wavering from the vast majority of MP's who, like a heard of cattle, followed their respective leaders down a another Constitutional path to wherever and voted in favour of the motion.
Yet, not one of the mindless bovine could define "nation" or "Québécois" or any potential booby traps the motion might trigger in the future. However, what this motion did do was define the majority of MP's, particularly Conservatives, as our unworthy representatives in Ottawa. Conservatives were "ordered" to vote in favour of the motion or at worst, simply abstain. So much for representation by the people for the people.
Other than 15 Liberals and one Independent who voted according to their conscience or their constituents' wishes, 265 MP's apparently ignored their constituents given a recent Leger poll suggested 77% of Canadians were not in favor of the motion. The remainder of MP's either abstained, were not present, or were paired up.
The only B.C. MP's who voted against the motion were Don Bell, Raymond Chan and Hedy Fry - all Liberals. Good thing they're not Conservatives or they'd probably be sitting with Garth Turner as Independents.
The moral of this story might be to vote in future elections for the person, regardless of party, who likely has the mental capacity to remember who voted for them and are not too meek to speak up in Parliament.
Yet, not one of the mindless bovine could define "nation" or "Québécois" or any potential booby traps the motion might trigger in the future. However, what this motion did do was define the majority of MP's, particularly Conservatives, as our unworthy representatives in Ottawa. Conservatives were "ordered" to vote in favour of the motion or at worst, simply abstain. So much for representation by the people for the people.
Other than 15 Liberals and one Independent who voted according to their conscience or their constituents' wishes, 265 MP's apparently ignored their constituents given a recent Leger poll suggested 77% of Canadians were not in favor of the motion. The remainder of MP's either abstained, were not present, or were paired up.
The only B.C. MP's who voted against the motion were Don Bell, Raymond Chan and Hedy Fry - all Liberals. Good thing they're not Conservatives or they'd probably be sitting with Garth Turner as Independents.
The moral of this story might be to vote in future elections for the person, regardless of party, who likely has the mental capacity to remember who voted for them and are not too meek to speak up in Parliament.
Labels: general politics, Québécois
Thursday, November 23, 2006
Flaherty Makes Some Cents, But...
At first glance the Finance Minister's thought processes may have stabilized with today's announcement that the Conservative government intends to continue the tradition of previous Liberal governments by focusing on paying down the national debt. However, there is a catch. Mr. Flaherty refers to 'net' debt, not national or total debt. But, I'll get back to that later.
When you consider that the cost of servicing the national debt is about 17 - 18 cents of every tax dollar sent to Ottawa, Mr. Flaherty's decision (this time) might make more sense for every Canadian than any impact from income splitting. Paying down the national debt is fair to everyone; old, young, single, married, homosexual, or heterosexual. The best part of the plan will be realized when future generations continue to reap the benefits of low or no debt.
How did we get in this predicament? Our debt soared like a kite under Trudeau from $11.3 billion when he entered office to $128 billion and no deficits to deficits of $25 billion annually by the time he left office. Then, the Mulrooney Conservative government launched the debt into orbit to nearly $500 billion. Not until 1995 under Prime Minister Chrétien's watch and later Paul Martin's, did the debt begin to fall, and fall significantly until Martin was defeated. Now, Flaherty appears to be on the same track as his predessors.
But, Mr. Flaherty's proposal does not target national debt. Instead, he's going after 'net' debt, which is the total debt minus government's financial assets such as cash in the bank, short term investments, pension funds, and loans.
Whether it's net debt or total debt, it matters not. Focusing on paying down either is a good thing. Mr. Flaherty intends to pay down net debt at the rate of $3 billion per year. At that pace, he says the net debt will be paid off in 15 years or 2021. Assuming a 5.5% interest rate, the net debt must be slightly in excess of $30 billion. In contrast, the national debt is about $480 billion. Assuming the same interest rate and payment schedule, the national debt would be paid off sometime in the 22nd century.
In any event, we the taxpayer, will save hundreds of millions of dollars in interest savings on the net debt if the Finance Minister can maintain the same rate of success as his Liberal predecessors.
Not withstanding Mr. Flaherty's apparent good intentions, the Michael Ignatieff link stays.
When you consider that the cost of servicing the national debt is about 17 - 18 cents of every tax dollar sent to Ottawa, Mr. Flaherty's decision (this time) might make more sense for every Canadian than any impact from income splitting. Paying down the national debt is fair to everyone; old, young, single, married, homosexual, or heterosexual. The best part of the plan will be realized when future generations continue to reap the benefits of low or no debt.
How did we get in this predicament? Our debt soared like a kite under Trudeau from $11.3 billion when he entered office to $128 billion and no deficits to deficits of $25 billion annually by the time he left office. Then, the Mulrooney Conservative government launched the debt into orbit to nearly $500 billion. Not until 1995 under Prime Minister Chrétien's watch and later Paul Martin's, did the debt begin to fall, and fall significantly until Martin was defeated. Now, Flaherty appears to be on the same track as his predessors.
But, Mr. Flaherty's proposal does not target national debt. Instead, he's going after 'net' debt, which is the total debt minus government's financial assets such as cash in the bank, short term investments, pension funds, and loans.
Whether it's net debt or total debt, it matters not. Focusing on paying down either is a good thing. Mr. Flaherty intends to pay down net debt at the rate of $3 billion per year. At that pace, he says the net debt will be paid off in 15 years or 2021. Assuming a 5.5% interest rate, the net debt must be slightly in excess of $30 billion. In contrast, the national debt is about $480 billion. Assuming the same interest rate and payment schedule, the national debt would be paid off sometime in the 22nd century.
In any event, we the taxpayer, will save hundreds of millions of dollars in interest savings on the net debt if the Finance Minister can maintain the same rate of success as his Liberal predecessors.
Not withstanding Mr. Flaherty's apparent good intentions, the Michael Ignatieff link stays.
Wednesday, November 22, 2006
Good Police Work = Cheap Political Points
Stockwell Day, our Emergency Preparedness and Public Safety Minister, responded to the excellent work of the Sûreté du Québec, RCMP, and Montréal Police and other agencies by saying: “...We're sending a message that this government intends to have safe and secure communities. People should not test our resolve."
Mr. Day's comments are a transparent attempt to gain inexpensive political points on the coattails of excellent police work involving several police forces, particularly when this investigation likely began years before the Conservatives came to power. It's the police who deserve every bit of the credit, not Stockwell Day or the Conservative government.
Mr. Day's comments are a transparent attempt to gain inexpensive political points on the coattails of excellent police work involving several police forces, particularly when this investigation likely began years before the Conservatives came to power. It's the police who deserve every bit of the credit, not Stockwell Day or the Conservative government.
Labels: organized crime, police, Stockwell Day
Tuesday, November 21, 2006
Flaherty's "Rithmetic".
Dumbfounded. Confounded. Unfounded. These are words that aptly describe Finance Minister Flahety's "rithmetic" lesson on taxes.
Bearly three weeks ago, Finance Minister Flaherty changed the rules governing income trusts and in doing so destroyed $20 - $34 billion of taxpayer savings in order to save $500 - $800 million in alleged lost tax revenue. In exchange for destroying so much wealth Mr. Flaherty proposed income splitting for pensioners - crumbs compared to what he took away from them after tinkering with income trusts.
Today, he is considering extending income splitting to all Canadians and for all types of income. It is reported that such a measure would cost the government about $5 BILLION in lost tax revenue.
Does this man actually know what he's doing?
One thing is now clearer than ever. There was obviously no need to destroy so much taxpayers' wealth on October 31, 2006.
But, even if the Finance Minsister's idea comes to be, why should pensioners and couples be the only people to benefit from such extensive tax reform? If Mr. Flaherty wants to make meaningful contributions to tax reform, just give us a flat tax rate and a one page tax return. Then all Canadians will benefit equally and fairly.
Bearly three weeks ago, Finance Minister Flaherty changed the rules governing income trusts and in doing so destroyed $20 - $34 billion of taxpayer savings in order to save $500 - $800 million in alleged lost tax revenue. In exchange for destroying so much wealth Mr. Flaherty proposed income splitting for pensioners - crumbs compared to what he took away from them after tinkering with income trusts.
Today, he is considering extending income splitting to all Canadians and for all types of income. It is reported that such a measure would cost the government about $5 BILLION in lost tax revenue.
Does this man actually know what he's doing?
One thing is now clearer than ever. There was obviously no need to destroy so much taxpayers' wealth on October 31, 2006.
But, even if the Finance Minsister's idea comes to be, why should pensioners and couples be the only people to benefit from such extensive tax reform? If Mr. Flaherty wants to make meaningful contributions to tax reform, just give us a flat tax rate and a one page tax return. Then all Canadians will benefit equally and fairly.
Labels: income trusts, taxes
Monday, November 20, 2006
Our National Lampoon Style of Government
The more I see of this government, the more my attention is drawn to the Liberal leadership race.
We have a Prime Minister who treats us like mushrooms. His Communications Director Sandra wants staff in the various ministries to spy on their managers and secretly report back to her. Talk about a bi... er... "treacherous person". Then you have Jim Flaherty's off the cuff knee jerk whimsical financial policy decisions; Rona Ambrose's fumbling and bumblings with her environment portfolio; Peter MacKay's puerile behaviour in his bitter relationship with Stronach; Vic Toews wanting the police to help him select our judges; and a host of Conservative MP's too meek to speak.
I have always been right of centre in my political thinking and I have always voted either PC, Reform, Alliance, and recent years, Conservative. But, I confess I'm chomping at the bit to watch the Liberal Leadership Conventoin. Go Michael, Go.
We have a Prime Minister who treats us like mushrooms. His Communications Director Sandra wants staff in the various ministries to spy on their managers and secretly report back to her. Talk about a bi... er... "treacherous person". Then you have Jim Flaherty's off the cuff knee jerk whimsical financial policy decisions; Rona Ambrose's fumbling and bumblings with her environment portfolio; Peter MacKay's puerile behaviour in his bitter relationship with Stronach; Vic Toews wanting the police to help him select our judges; and a host of Conservative MP's too meek to speak.
I have always been right of centre in my political thinking and I have always voted either PC, Reform, Alliance, and recent years, Conservative. But, I confess I'm chomping at the bit to watch the Liberal Leadership Conventoin. Go Michael, Go.
Labels: environment, foreign affairs, income trusts, judiciary
Sunday, November 19, 2006
What's Next for Income Trusts?
Apparently, Finance Minister Flaherty is not finished wreaking havoc on income trusts, pensioners and other investors holding income trusts in their RRSP's, RRIF's and LIF's. If the Finance Minister has his way, we may suffer further losses in the coming weeks.
In addition to announcing new tax rules for income trusts effective in 2011, the Finance Minister is creating new guidelines that may place restrictions on how income trusts can finance the growth of their companies. From a lay person's perspective, such guidelines would effectively stifle growth, productivity, and competitiveness for these companies.
Is Flaherty trying to force income trusts back into a corporate structure sooner than later?
Consequently, investors may not be the only victims of Flaherty's capricious policy making. Income trusts employ over 250,000 Canadians who could also be adversely affected by the new guidelines.
This "getting things done for all of us" Conservative government is creating an unstable investing environment in this country. Personally, I think its time to take my investments and focus on more stable areas of the planet like the U.S., Europe and China. Forget about Canada.
In addition to announcing new tax rules for income trusts effective in 2011, the Finance Minister is creating new guidelines that may place restrictions on how income trusts can finance the growth of their companies. From a lay person's perspective, such guidelines would effectively stifle growth, productivity, and competitiveness for these companies.
Is Flaherty trying to force income trusts back into a corporate structure sooner than later?
Consequently, investors may not be the only victims of Flaherty's capricious policy making. Income trusts employ over 250,000 Canadians who could also be adversely affected by the new guidelines.
This "getting things done for all of us" Conservative government is creating an unstable investing environment in this country. Personally, I think its time to take my investments and focus on more stable areas of the planet like the U.S., Europe and China. Forget about Canada.
Labels: income trusts, taxes
Saturday, November 18, 2006
Canadian Professional Police Association
Tony Cannavino, President of the CPPA claims the Judicial Advisory Committees are "private clubs" responsible for secretly picking our country's top judges. "It's like scratch my back, I'll scratch yours..."* Mr. Cannavino strongly supports Justice Minister Toews' proposal to put police representatives on these committees. Does this mean Mr. Cannavino is looking for a little back scratching himself?
Mr. Cannavino doesn't seem to get it. The judiciary need to be independent of political and police influence for reasons that should be obvious to Mr. Cannavino, but apparently not.
If the government follows through with its idiotic proposal to allow police on these committees, what about other special interest groups? Perhaps representatives from victim groups, civil liberty associations, feminists, minorities, environmentalists, and senior citizens should also be included. Where does it end?
Before the CPPA gets involved in matters outside its purview, its' members might want to look after their own back yard first. Mr. Cannavino preaches transparency and objectivity, yet police are the first to decry transparency and objectivity when it comes to civilian oversight. Mr. Cannavino wants to hold other professions accountable, but not his own.
*Janice Tibbetts, Canwest News Service, as reported in the Vancouver Sun November 16, 2006
Mr. Cannavino doesn't seem to get it. The judiciary need to be independent of political and police influence for reasons that should be obvious to Mr. Cannavino, but apparently not.
If the government follows through with its idiotic proposal to allow police on these committees, what about other special interest groups? Perhaps representatives from victim groups, civil liberty associations, feminists, minorities, environmentalists, and senior citizens should also be included. Where does it end?
Before the CPPA gets involved in matters outside its purview, its' members might want to look after their own back yard first. Mr. Cannavino preaches transparency and objectivity, yet police are the first to decry transparency and objectivity when it comes to civilian oversight. Mr. Cannavino wants to hold other professions accountable, but not his own.
*Janice Tibbetts, Canwest News Service, as reported in the Vancouver Sun November 16, 2006
Labels: accountability, judiciary, police
Thursday, November 16, 2006
CBC Fifth Estate - "The Denial Machine"
If you didn't have the opportunity to see "The Inconvenient Truth", a documentary by Al Gore about global warming, be sure to watch Fifth Estate's "The Denial Machine" being re-broadcasted on November 18 at 10:00PM ET (7:00PM PT) or click on this article's title for further information about the CBC program.
Like Al Gore's documentary, the Fifth Estate's documentary clearly shows that global warming is an urgent threat to our planet as well as the strong similarities between US and Canada environmental (or non-environmental) policy. Mr. Harper is obviously taking his cues from Mr. Bush.
Like Al Gore's documentary, the Fifth Estate's documentary clearly shows that global warming is an urgent threat to our planet as well as the strong similarities between US and Canada environmental (or non-environmental) policy. Mr. Harper is obviously taking his cues from Mr. Bush.
Labels: Al Gore, Bush, CBC, environment, greenhouse gases, Harper
Wednesday, November 15, 2006
'No Environment Minister' Rona Ambrose
'No Environment Minister' Rona Ambrose, who is representing the Government of Canada at the environment conference in Kenya made a complete fool of herself in front of the entire world, to the point I felt embarrassed for her and our country. Ambrose, whose speech contained obvious references to petty domestic politics blaming the previous Liberal government for our environment inaction, hung herself out to dry at an international conference for all to see.
Why would the international conference participants care about who governed this country in 2005? Attendees were focused on the environment and what each of the representative countries were doing about global warming. In Canada's case, nothing is being done, save and except for the proposed useless Clean Air Act.
I was tempted to suggest that the government get rid of 'No Environment Minister' Ambrose and replace her with someone more competent. But, then I remembered that 'No Environment Minister' Ambrose's 'no environment' position is also the 'no environment' position of our government, which by the way, is a near template of the White House 'no environment' policy.
Why would the international conference participants care about who governed this country in 2005? Attendees were focused on the environment and what each of the representative countries were doing about global warming. In Canada's case, nothing is being done, save and except for the proposed useless Clean Air Act.
I was tempted to suggest that the government get rid of 'No Environment Minister' Ambrose and replace her with someone more competent. But, then I remembered that 'No Environment Minister' Ambrose's 'no environment' position is also the 'no environment' position of our government, which by the way, is a near template of the White House 'no environment' policy.
Labels: environment
Tuesday, November 14, 2006
Police Selecting Judges?
Justice Minister Vic Toews suggests police should have representation on the Judicial Advisory Committees and input into the selection of federally appointed judges. A scary thought indeed. You would think someone with the Minister's credentials and background would understand the foolishness of such an undertaking, but apparently not.
Worse yet, the Minister apparently has the support of an ally by the name of Jamie Graham, Chief Constable of the Vancouver Police and retired Chief Superintendent of the RCMP. He believes the police have a role to play in this regard because they have experience in selecting personnel for supervisor and management positions. Wow! That experience oughta come in handy when it comes to selecting Supreme Court Judges.
Whatever happened to the concept of an independent judiciary where judges protect Canadians from the potential abuses of politicians (like the one the Minister is proposing) and police? Thanks, but no thanks. Keep the police out of it.
Worse yet, the Minister apparently has the support of an ally by the name of Jamie Graham, Chief Constable of the Vancouver Police and retired Chief Superintendent of the RCMP. He believes the police have a role to play in this regard because they have experience in selecting personnel for supervisor and management positions. Wow! That experience oughta come in handy when it comes to selecting Supreme Court Judges.
Whatever happened to the concept of an independent judiciary where judges protect Canadians from the potential abuses of politicians (like the one the Minister is proposing) and police? Thanks, but no thanks. Keep the police out of it.
Finally, Clean Air - In 2050
Rona Ambrose and the rest of the Ottawa politicians should take the time to view "The Inconvenient Truth", a documentary on global warming. After being in selected theatres, it is due out in DVD. This documentary, if accurate and I have no reason to believe otherwise, is an enlightening, yet shocking and alarming exposé discrediting the notion that global warming is just a normal planetary cycle. Click on the title of this article to view the documentary's trailer.
Global warming is an urgent matter requiring urgent action, not navel-gazing through to the year 2050.
Per capita, Canada is infamously world renowned for being one of the worst polluters on the planet.
The government's proposed Clean Air Act in its current form is ineffective and irrelevant in today's world.
Global warming is an urgent matter requiring urgent action, not navel-gazing through to the year 2050.
Per capita, Canada is infamously world renowned for being one of the worst polluters on the planet.
The government's proposed Clean Air Act in its current form is ineffective and irrelevant in today's world.
Labels: environment
Monday, November 13, 2006
A Clear Understanding Of Our Afghanistan Mission
I have always supported our past and present government's commitment of Canadian troops to Afghanistan. I understood from my own ideological perspective why Canadians should be in Afghanistan. It has never been a question in my mind.
What is concerning is that the government has never been able to articulate its rationale for the mission in Afganistan, at least in such a way as to convince a wide majority of Canadians to support the mission.
It was not until November 10, when I attended President Bill Clinton's speaking engagement in Kelowna on Canadian and American Relations, which turned out to be more a talk on global issues. President Clinton succinctly explained to the 5,ooo+ audience why it is critical for Canada (as well as NATO, including the U.S.) to remain in Afghanistan. It was not the subtance of Clinton's explanation (preventing terrorism in the West) so much as it was the manner in which he delivered his convincing explanation. I sat in my seat attentative to his every word.
Later, I thought about our country's contemporary leaders, past and present. Canada has not been simultaneously blessed with a Prime Minister and a statesman since Lester B. Pearson. Trudeau and Mulroney might have been considered charismatic in their day; Chrétien and Martin were neither; and now, Harper enters the 'neither' category.
Unfortunately, it took an American statesman and former President to confirm my faith in what my country is doing in Afghanistan.
What is concerning is that the government has never been able to articulate its rationale for the mission in Afganistan, at least in such a way as to convince a wide majority of Canadians to support the mission.
It was not until November 10, when I attended President Bill Clinton's speaking engagement in Kelowna on Canadian and American Relations, which turned out to be more a talk on global issues. President Clinton succinctly explained to the 5,ooo+ audience why it is critical for Canada (as well as NATO, including the U.S.) to remain in Afghanistan. It was not the subtance of Clinton's explanation (preventing terrorism in the West) so much as it was the manner in which he delivered his convincing explanation. I sat in my seat attentative to his every word.
Later, I thought about our country's contemporary leaders, past and present. Canada has not been simultaneously blessed with a Prime Minister and a statesman since Lester B. Pearson. Trudeau and Mulroney might have been considered charismatic in their day; Chrétien and Martin were neither; and now, Harper enters the 'neither' category.
Unfortunately, it took an American statesman and former President to confirm my faith in what my country is doing in Afghanistan.
Labels: Afghanistan, military
NDPer's to Vote Liberal?
Bob Rae says if he becomes leader of the Liberal Party, his leadership would stifle the NDP vote in the next election*. I'm not sure who would stifle who as the Liberals and NDP would become ideologically indiscernible with Bob Rae at the helm.
*Bill Curry, Globe and Mail, November 13, 2006
*Bill Curry, Globe and Mail, November 13, 2006
Labels: general politics
Friday, November 10, 2006
CARP Survey On Income Trusts Continues
The CARP survey continues to show that increasing numbers of pensioners over the age of 50 are realizing they got fleeced by Finance Minister Flaherty and Prime Minister Harper.
As of November 10th, the total number of respondents increased to 2,195 compared to 638 on November 8.
Only 4.0% of the pensioners feel they are better off as opposed to 9.7% on the 8th. 59.0% feel they are worse off compared to 45.1% two days ago. Only 37.0% say the decision to tax income trusts did not affect their finances, down about 8% from November 8. Two days ago, 52.7% concluded the government made the right decision. Today only 39.1% feel the same way.
Given that Mr. Flaherty seems unwilling to reach the logical conclusion to grandfather income trusts, it will be interesting to see what impact this mess will have on the Conservative's hopes for a majority government in the next soon-to-be federal election. Between the Conservative fall from grace in Québec and their tie in the polls with the leaderless Liberals, my bet is they’ll be lucky to maintain their minority status. But, then again, I was wrong when I bet the government wouldn't tax existing income trusts.
What I do know for absolute certainty is that unless the Conservatives come to their senses and simply grandfather income trusts, there are two votes in Vernon, B.C. they will not get.
As of November 10th, the total number of respondents increased to 2,195 compared to 638 on November 8.
Only 4.0% of the pensioners feel they are better off as opposed to 9.7% on the 8th. 59.0% feel they are worse off compared to 45.1% two days ago. Only 37.0% say the decision to tax income trusts did not affect their finances, down about 8% from November 8. Two days ago, 52.7% concluded the government made the right decision. Today only 39.1% feel the same way.
Given that Mr. Flaherty seems unwilling to reach the logical conclusion to grandfather income trusts, it will be interesting to see what impact this mess will have on the Conservative's hopes for a majority government in the next soon-to-be federal election. Between the Conservative fall from grace in Québec and their tie in the polls with the leaderless Liberals, my bet is they’ll be lucky to maintain their minority status. But, then again, I was wrong when I bet the government wouldn't tax existing income trusts.
What I do know for absolute certainty is that unless the Conservatives come to their senses and simply grandfather income trusts, there are two votes in Vernon, B.C. they will not get.
Labels: CARP Survey, income trusts
Thursday, November 09, 2006
Political Donations and Income Trusts
For those of us whose investments have been decimated by the Conservative government, there is likely little we can do other than continue to write our MP's and Senators; withold political donations to the Conservative Party, but redirect them to other political parties (assuming you can still afford to do so); and finally, remember them at the polls in the next election anticipated to be in 2007.
Labels: general politics, income trusts
Wednesday, November 08, 2006
CARP Income Trust Survey
The Canadian Association of Retired Persons is hosting an ongoing Decima Research survey on their website concerning income trusts. As of November 8, the total number of submissions received is 638. The survey asked the following two questions. Here are the responses:
1. Did the federal government's announced changes to the tax treatment of income trusts affect your financial situation for the better, for the worse or did it not really affect your financial situation at all?
A. For the better ( 9.7%)
B. For the worse ( 45.1%)
C. Didn't affect my situation at all ( 45.1%)
2. Some feel the federal government did the right thing for the future health of the Canadian economy and the fairness of the tax system. Others think the government did the wrong thing because they broke a promise and caused lots of investors to lose money. Which is closer to your view?
A. The federal government did the right thing for the future health of the Canadian economy and the fairness of the tax system. ( 52.7%)
B. The government did the wrong thing because they broke a promise and caused lots of investors to lose money. ( 47.3%)
Will the 45.1% of pensioners who have been negatively impacted by the Conservative government vote Conservative in the next federal election?
1. Did the federal government's announced changes to the tax treatment of income trusts affect your financial situation for the better, for the worse or did it not really affect your financial situation at all?
A. For the better ( 9.7%)
B. For the worse ( 45.1%)
C. Didn't affect my situation at all ( 45.1%)
2. Some feel the federal government did the right thing for the future health of the Canadian economy and the fairness of the tax system. Others think the government did the wrong thing because they broke a promise and caused lots of investors to lose money. Which is closer to your view?
A. The federal government did the right thing for the future health of the Canadian economy and the fairness of the tax system. ( 52.7%)
B. The government did the wrong thing because they broke a promise and caused lots of investors to lose money. ( 47.3%)
Will the 45.1% of pensioners who have been negatively impacted by the Conservative government vote Conservative in the next federal election?
Labels: CARP Survey, income trusts
Tuesday, November 07, 2006
The Stench Left By Income Trusts
The Conservative government’s “Tax Fairness Plan” is a phrase of contradiction when compared to the negative fallout of the government’s hasty, poorly conceived, deceptive, and thoughtless decision to destroy income and royalty trusts. This decision resulted in the vaporization of an estimated $20 - $34 billion from the personal banking and brokerage accounts of Canadians. The fallout will continue as distributions from these companies to its investors begin to decline as we get nearer to 2011. The unpropitious consequence is hardly mitigated by the government's simultaneous introduction of new tax reduction initiatives.
The government’s needless broad based destruction of so much of its constituents' personal assets is likely unprecedented in the history of Canadian governments. In hindsight, the cost of waste in the collective Chrétien and Martin governments now seems more like the passing of an unpleasant odour from a mild fart compared to the lingering stench left by the Conservative's “Tax Fairness Plan”. While this plan offers a few small plastic encapsulated toys as consolation prizes to the lower income seniors and little and no prizes to most middle income taxpayers, it is more akin to a massive tax increase for the investing public.
When Prime Minister Harper and Finance Minister Flaherty secretly met to discuss a resolution to the perceived income trust problem, they decided to use the shotgun approach that resulted in the destruction of billions of dollars in the savings of Canadians for the sake of a measly $500 million dollars in alleged lost income tax. All of this despite previous assurances from Prime Minister Harper that he would not touch income trusts.
Was there a problem brewing with income trusts? Yes, you bet. Had Telus, BCE, Encana, and potentially the big banks followed down the income trust path, billions in tax dollars might have been lost. It was the potential for future conversions to income trusts that PM Harper and finance minister should have focused their attention, not the current income trusts. A simple passage of law grandfathering income trusts effective January 1, 2007 would have more than adequately resolved the problem. Instead, PM Harper and Mr. Flaherty chose to crucify every existing and future income and royalty trust (except REITs) along with the Canadians who held them in their RRSP's, RRIF's, LIF's. Those who held them in their non-sheltered accounts will fare better as they have the option to claim capital losses.
Mr. Flaherty was well aware that corporations who had converted to trusts long before October 31, 2006 posed no threat to the country’s tax regime. That is clear from his statements in the House of Commons on November 6, when he said:
"...the information we used with respect to decision making on the income trust issue was the information that was available about the growth of income trusts, about the reality that we were seeing income trusts being chosen as an instrument of conversion by companies in the telecommunications business, that there were many more to come, and the kind of economy that we would end up having in Canada, not to mention the tax fairness issue where large telecommunications companies could avoid taxes in excess of $1 billion."*
That being the case, where is the rationale to kill existing income trusts and where is the impetus to support a future Conservative government?
Kudos to the Liberals for supporting Canadians on this issue.
*Hansard 77 (2006/11/06)
The government’s needless broad based destruction of so much of its constituents' personal assets is likely unprecedented in the history of Canadian governments. In hindsight, the cost of waste in the collective Chrétien and Martin governments now seems more like the passing of an unpleasant odour from a mild fart compared to the lingering stench left by the Conservative's “Tax Fairness Plan”. While this plan offers a few small plastic encapsulated toys as consolation prizes to the lower income seniors and little and no prizes to most middle income taxpayers, it is more akin to a massive tax increase for the investing public.
When Prime Minister Harper and Finance Minister Flaherty secretly met to discuss a resolution to the perceived income trust problem, they decided to use the shotgun approach that resulted in the destruction of billions of dollars in the savings of Canadians for the sake of a measly $500 million dollars in alleged lost income tax. All of this despite previous assurances from Prime Minister Harper that he would not touch income trusts.
Was there a problem brewing with income trusts? Yes, you bet. Had Telus, BCE, Encana, and potentially the big banks followed down the income trust path, billions in tax dollars might have been lost. It was the potential for future conversions to income trusts that PM Harper and finance minister should have focused their attention, not the current income trusts. A simple passage of law grandfathering income trusts effective January 1, 2007 would have more than adequately resolved the problem. Instead, PM Harper and Mr. Flaherty chose to crucify every existing and future income and royalty trust (except REITs) along with the Canadians who held them in their RRSP's, RRIF's, LIF's. Those who held them in their non-sheltered accounts will fare better as they have the option to claim capital losses.
Mr. Flaherty was well aware that corporations who had converted to trusts long before October 31, 2006 posed no threat to the country’s tax regime. That is clear from his statements in the House of Commons on November 6, when he said:
"...the information we used with respect to decision making on the income trust issue was the information that was available about the growth of income trusts, about the reality that we were seeing income trusts being chosen as an instrument of conversion by companies in the telecommunications business, that there were many more to come, and the kind of economy that we would end up having in Canada, not to mention the tax fairness issue where large telecommunications companies could avoid taxes in excess of $1 billion."*
That being the case, where is the rationale to kill existing income trusts and where is the impetus to support a future Conservative government?
Kudos to the Liberals for supporting Canadians on this issue.
*Hansard 77 (2006/11/06)
Labels: income trusts, taxes
