Thursday, February 08, 2007
Flaherty v. Homeless and Pensioners
Finance Minister Flaherty's intransigent position on Income Trusts was cemented on January 31, when he was quoted in the media as saying: "I am not prepared to sacrifice the interests of millions of hard-working Canadians who pay their taxes and play by the rules so that a select group of special interests can enjoy a tax holiday,..." *
By implication, Mr. Flaherty has accused those who invested in income trusts (a million or so people) of not being hard-working and part of a group of special interests who enjoy a tax holiday.
While such a supposition is nothing short of arrogant and ruthless, not to mention untrue, it should come as no surprise when Mr. Flaherty, in the not too distant past, advocated the jailing of homeless people.
*Globe and Mail, January 31, 2007
By implication, Mr. Flaherty has accused those who invested in income trusts (a million or so people) of not being hard-working and part of a group of special interests who enjoy a tax holiday.
While such a supposition is nothing short of arrogant and ruthless, not to mention untrue, it should come as no surprise when Mr. Flaherty, in the not too distant past, advocated the jailing of homeless people.
*Globe and Mail, January 31, 2007
Labels: Conservatives, homelessness, income trusts, Jim Flaherty
Wednesday, January 24, 2007
Liberals, Bloc, and Income Trusts
Surprise, surprise! Finance Minister Flaherty refuses to disclose information that supposedly supports his decision to destroy existing income trusts. His reason should be patently clear to any average thinking Joe.
And to think some people criticized the Liberals and Bloc for seeking the truth.
Where are the NDP in all of this? Getting better acquainted with their new found Conservative friends perhaps?
Dear Liberals and Bloc:
Keep digging in the muck. You'll eventually find the source of the stench surrounding income trusts.
And to think some people criticized the Liberals and Bloc for seeking the truth.
Where are the NDP in all of this? Getting better acquainted with their new found Conservative friends perhaps?
Dear Liberals and Bloc:
Keep digging in the muck. You'll eventually find the source of the stench surrounding income trusts.
Labels: ethics, income trusts, Jim Flaherty
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
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
