Conservatives Plans News Tax on Trusts

jdobbin · November 2, 2006

Grubel, who is now with the Fraser Institute, pointed out recently that an income tax cut would have been far more beneficial to the Canadian business community than a 1% drop in the GST.

The GST cut was stupid. I think the income tax would have done a lot more people good.

normanchateau · November 2, 2006

Grubel, who is now with the Fraser Institute, pointed out recently that an income tax cut would have been far more beneficial to the Canadian business community than a 1% drop in the GST.

The GST cut was stupid. I think the income tax would have done a lot more people good.

I anticipate that by the time the next election is called, Harper will finally acknowledge this and propose income tax cuts rather than another GST cut. It'll be another flipflop like the trusts.

Ricki Bobbi · November 2, 2006

I anticipate that by the time the next election is called, Harper will finally acknowledge this and propose income tax cuts rather than another GST cut. It'll be another flipflop like the trusts.

You'll probably see both. The income trust announcement makes it affordable for the Conservatives to do both.

Higgly · November 2, 2006

I'm wondering if a class action lawsuit against the Tory government might have some legs here.

Ricki Bobbi · November 2, 2006

No it wouldn't.

normanchateau · November 2, 2006

I'm wondering if a class action lawsuit against the Tory government might have some legs here.

For lying? Or for getting rid of a tax avoidance loophole?

Renegade · November 2, 2006

I'm wondering if a class action lawsuit against the Tory government might have some legs here.

What exactly would be the baisis of the suit? Breaking an election promise? Lying? None of those thing are illegal.

Or perhaps, you don't think that parlament has the authority to unilaterally change taxation legislation?

Riverwind · November 2, 2006

I'm wondering if a class action lawsuit against the Tory government might have some legs here.

The BC Liberals tried to use the courts to go after the NDP because they lied about the balanced budget. The courts (correctly) refused to accept the suit claiming it ws a political matter.

Higgly · November 2, 2006

No it wouldn't.

Yes it would!

For lying? Or for getting rid of a tax avoidance loophole?

Well gee, what do you think?

bk59 · November 2, 2006

No it wouldn't.

Yes it would!

Sorry Higgly, but you've got this one dead wrong. Legally Parliament can pass whatever laws it wants. I think the only exception is when Parliament passes a law that goes against the Constitution.

So what was said in an election doesn't matter at all.

Very eloquent responses though.

Higgly · November 2, 2006

No it wouldn't.

Yes it would!

Sorry Higgly, but you've got this one dead wrong. Legally Parliament can pass whatever laws it wants. I think the only exception is when Parliament passes a law that goes against the Constitution.

So what was said in an election doesn't matter at all.

Very eloquent responses though.

I really had to raise the bar to respond to Ricki Bobbi

Would be fun to see someone try this. Just the buzz would accomplish something.

August1991 · November 2, 2006

Higgly, are you planning on becoming a journalist?

Keep this in mind the next time you're tempted to compare me to Homer Simpson, August.

At the risk of starting a personal vendetta, I'm confused by your remark.

My reference to a journalist concerned being only partly quoted.

As to this Tory policy decision, I agree with you that it's an utter flip-flop compared to their announced promise during the campaign. I'm reminded of the reaction to Emerson crossing the floor and bringing Fortier in through the Senate. (And I suspect the general anger we're seeing now will have the same long term effect.)

Under the circumstances, the Tories had little choice in announcing this change. With Bell and Telus about to go for an income trust, they had to do something.

In general, I think income trusts are lousy because they are a costly way to avoid corporate taxes. Instead, we should abolish coprorate taxes entirely (as Ireland has successfuly done) but that it is politically unpalatable in Canada now.

The losers out of this will be Bay Street lawyers who set up income trusts. Now, they're going to have to find or invent new tax avoidance schemes.

As to the fall in the TSX, I'm amazed and astonished. Heavens! The TSX300 is back to where it was two weeks ago. You win some, you lose some.

But some win more than others, senior citizens for example. They get to income split and they get extra credits.

If they (or the Liberals) are going to skewer the Tories on a broken promise, I'd aim for the wait time guarantee. This matters to seniors and the Tories have done nothing.

----

PS. Your description of Canada's monetary system was genuinely funny in a Homer Simpson kind of way.

Ricki Bobbi · November 2, 2006

I really had to raise the bar to respond to Ricki Bobbi
Would be fun to see someone try this. Just the buzz would accomplish something.

You did that sir. :huh:

What is that "something" the buzz would accomplish?

Michael Hardner · November 2, 2006

I have to say that this decision makes Harper even more of a mystery to me. He really seems to be going in a complete unique direction, almost like he's ignoring anyone who has a lobbyist.

Who's Doing What? · November 2, 2006

I have to say that this decision makes Harper even more of a mystery to me. He really seems to be going in a complete unique direction, almost like he's ignoring anyone who has a lobbyist.

Gone mad with power, young master Harper has begun to run amuck. :blink:

scribblet · November 2, 2006

I'd say your applause for Harper has more to do with your use of the word 'gutless' to describe the Liberals than it does with your ideas on principled government.

I consider principled gov't to be what is best for Canada, not what is best for the party. Obviously Harper put economics ahead of optics, he obviously knew what the fallout would be. As far as the Liberals go its all feigned outrage anyway as they would have had to tax them eventually.

The obvious question is, should a gov't renege on a promise or stick to the promise even if it means the loss of billions and is bad for the country. One cannot call it lying as the promise was made based on the figures and economics etc. of the day, I'd rather have a politician do the right thing under these circumstances.

I don't remember anyone wanting a class action suit against Chretien when he promised to cut the GST.

The Department of Finance has prepared a sensible backgrounder on this.

http://www.fin.gc.ca/news06/06-061e.html#Backgrounder

According to Finance tax changes had already been put in place to equalize the taxation of the average Canadian of income from a "trust" vs income from a large corporation. The concern is that out of country investors and tax exempt entities are ending up paying less tax than the hard working Canadian.

The TSE lost less than 300 points and is still above the 12,000 level last night, so the sky didn't fall today.

Based on what I have read and understand I support the changes. I also think it was good strategy, it shafted Layton and took the heat off the environmental issues, for now anyway.

Higgly · November 2, 2006

PS. Your description of Canada's monetary system was genuinely funny in a Homer Simpson kind of way.

Sure it was. That's why the only thing you've managed to do so far is slap down one liners. Of course your howlers on uncompensated housework really raised the bar here.

And speaking of Homer Simpson...

As to the fall in the TSX, I'm amazed and astonished. Heavens! The TSX300 is back to where it was two weeks ago. You win some, you lose some.

D'oh!

The trust index fell some 15%. A lot of people had a lot of money in these things because they were counting on the government to keep its word. Pulling a stunt like this without a whisper of warning after having made a commitment is why so many are ticked off. They have every right to be.

My guess is that your comments on my posts are coming from an entirely different direction altogether. If you can't attack the facts, then you attack the messenger.

Higgly · November 2, 2006

I consider principled gov't to be what is best for Canada, not what is best for the party. Obviously Harper put economics ahead of optics, he obviously knew what the fallout would be. As far as the Liberals go its all feigned outrage anyway as they would have had to tax them eventually.

Economics ahead of optics. Nice soundbite. People invested in these things because they believed what the 'accountability' government told them. Optics be damned. Principled government my fanny.

Higgly · November 2, 2006

I really had to raise the bar to respond to Ricki Bobbi
Would be fun to see someone try this. Just the buzz would accomplish something.

You did that sir.

What is that "something" the buzz would accomplish?

Well people might start to think it possible to hold a government accountable for its words.

Ricki Bobbi · November 2, 2006

Well people might start to think it possible to hold a government accountable for its words.

Situations change. At the time Harper made the promise he never envisioned EnCana, Telus and BCE converting to trusts.

It's a minor issue. Already out of the news cycle.

From a story in today's Globe and Mail. (Considered a 'pro-business' paper IIRC.)

Flaherty knew that virtually every major company in Canada, from the banks to the insurers to the big oil and gas plays, had begun modelling the trust structure. Some had even informally approached Ottawa about the possibilities for their business, further spooking the Conservative government.

How much more revenue would have been lost?

Higgly · November 2, 2006

Situations change.

When you have made a commitment, then you have an obligation to send some sort of signal that things might change or at least that they are being looked at. This was a sandbagging pure and simple.

Ask the people who logged on to their online broker and looked at their investments this morning whether they think it is out of the news cycle.

Funny how the same right wing press that howled and growled at the Liberals for even thinking of doing the same thing are now full of apologies for the Conservatives...

Ricki Bobbi · November 2, 2006

When you have made a commitment, then you have an obligation to send some sort of signal that things might change or at least that they are being looked at. This was a sandbagging pure and simple.

Actually the right-wing pressed *howled* at the Liberals because Scott Brison leaked the story to his buddies.

Sending a signal is not in the best interests of the market. They did it, did it efficiently and without leaks. Level playing field for all...

Higgly · November 2, 2006

Actually the right-wing pressed *howled* at the Liberals because Scott Brison leaked the story to his buddies.
Sending a signal is not in the best interests of the market. They did it, did it efficiently and without leaks. Level playing field for all...

Well then there should be some kind of legal action against Brison. In any case, the market drop was what unleashed the most tongues - this was scornfully referred to on ROBTV as the "Goodale Hiccup" for months.

There are plenty of ways to send a signal. When BCE announced it was going to trust (and the Chair of BCE actually called Flaherty to warn him), the Tories could have said, on the numerous opportunities they had to do so, 'We are looking at the mattter and expect to have a policy decision in the next few months.' Not saying what they are going to do, but simply that they think a re-think might be in order. They could also have said, as the Liberals did, 'We are putting a freeze on new trust conversions and looking at the matter.' Instead what they said was 'No comment.' In other words, the status quo stands.

philosopher · November 2, 2006

I Hope The Political Left in Canada is Listening

Prime Minister Stephen Harper told a House of Commons Committee meeting earlier this year, and I paraphrase here,

"If you block my attempts at Senate and government reform, you will be sorry,.."

With the new taxation on income trusts, I hope those who were the intended recipients of that remark have now opened their ears and minds to more freedom for all in the country.

- The Peasant Philosopher

Ricki Bobbi · November 2, 2006

Well then there should be some kind of legal action against Brison. In any case, the market drop was what unleashed the most tongues - this was scornfully referred to on ROBTV as the "Goodale Hiccup" for months.
There are plenty of ways to send a signal. When BCE announced it was going to trust (and the Chair of BCE actually called Flaherty to warn him), the Tories could have said, on the numerous opportunities they had to do so, 'We are looking at the mattter and expect to have a policy decision in the next few months.' Not saying what they are going to do, but simply that they think a re-think might be in order. They could also have said, as the Liberals did, 'We are putting a freeze on new trust conversions and looking at the matter.' Instead what they said was 'No comment.' In other words, the status quo stands.

Brison should have gone to jail.

Why should they have given such signals?

It was obvious to any educated market watcher some action had to be taken.

They preserved the integrity of the market by keeping leaks to zero ... where they should be.

What would forewarning the market have done? The drop in market value would have come over a few weeks instead of overnight?