Conservatives Plans News Tax on Trusts

[Figleaf]

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.

The more obvious question is why make that promise in the first place? Answer: Just like Mackay's promise to Orchard, they're willing to promise anything to get elected and don't care about being honest.

[Riverwind]

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.

Anyone who beleived the gov't would not change the rules for trusts has no one to blame but themselves (much like the people that actually believed the Liberals would scrap the GST in 1993). The gov't had two choices: 1) tax trusts and cause a drop in trust units or 2) eliminate dividend tax credit and cause a drop in dividend paying stocks. Neither choice is pleasant but one choice had to be made - the move by BCE and Telus forced the gov't to move sooner than it would have liked.

[Canuck E Stan]

....they're willing to promise anything to get elected and don't care about being honest.

The "they" you should be referring to is any party that has run this country or is trying to run this country, not just the present government.

Do you know of any ruling government of Canada that didn't break a promise?

"Better break your word than do worse in keeping it."

- Fuller, Thomas

[Renegade]

Brison should have gone to jail.

The reason Brison's leak is different than signals to the market is the timeing and scope. It is fine to signal to the maket so long as it is completely public and not at a time when trading will be disrupted because some people have quicker access to the information than others. The issue happens when the leak is only to a select group which then can act on information the rest of the market does not have.

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?

Companies have learned some time ago that extreme and sudden volatility is a bad thing. That is why most pubilcally traded companies "manage expectations" of analysts. Most "educated" market watchers did not see this happening as suddenly as it did because they took the government at its word.

I understand why the government took the action that they did, but I think they could learn a thing or two about managing expectations otherwise their credibility in the financial markets will be shot.

[normanchateau]

....they're willing to promise anything to get elected and don't care about being honest.

The "they" you should be referring to is any party that has run this country or is trying to run this country, not just the present government.

Do you know of any ruling government of Canada that didn't break a promise?

I love it. The Cons have sunk so low that now even their supporters have to resort to claiming that they're no worse than previous governments. Perhaps "honest" Harper can incorporate that into his campaign advertising in the next election.

[geoffrey]

Brison should have gone to jail.

The reason Brison's leak is different than signals to the market is the timeing and scope. It is fine to signal to the maket so long as it is completely public and not at a time when trading will be disrupted because some people have quicker access to the information than others. The issue happens when the leak is only to a select group which then can act on information the rest of the market does not have.

Umm no. Brison sent an e-mail to his good buddy on Bay Street, which to a reasonable observer would indicate a leak. Should he have gone to jail? Don't know, my opinion yes, in a legal sense maybe not, is there enough evidence? Unlikely.

Should he have resigned his seat and left politics, absolutely. You do that when there is a preceived insider trading scandal above your head. You wouldn't stay in the senior management of a company long if you were accuse of that with even a little bit of evidence, we should hold our officals to the same standard.

--

The issue with the CPC release is that they said it wouldn't happen, it shocked the market and we all lost alot because of it.

[Renegade]

Umm no. Brison sent an e-mail to his good buddy on Bay Street, which to a reasonable observer would indicate a leak. Should he have gone to jail? Don't know, my opinion yes, in a legal sense maybe not, is there enough evidence? Unlikely.

Frankly I don't see a difference in what I said and what you described. It makes no difference if the select group I referred to was his good buddy or a small group of traders.

Should he have resigned his seat and left politics, absolutely. You do that when there is a preceived insider trading scandal above your head. You wouldn't stay in the senior management of a company long if you were accuse of that with even a little bit of evidence, we should hold our officals to the same standard.

Yes I agree.

The issue with the CPC release is that they said it wouldn't happen, it shocked the market and we all lost alot because of it.

Yes, of course. And how dumb we must be to take government at its word.

[geoffrey]

I must have misunderstood you, I thought you were saying it was ok for Brison to send the e-mail or something along those lines.

[Renegade]

I must have misunderstood you, I thought you were saying it was ok for Brison to send the e-mail or something along those lines.

No, I certainly don't think it was ok for Brison to leak the information. I should have been more clear to avoid misunderstandings.

[August1991]

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.

Scriblett, the problem was the promise in the first place. The Tories should never have promised not to touch income trusts. They knew even in January 2006 that that was a promise they'd be unlikely to keep if elected.

In fairness, the Liberals and NDP never called the Tories on that unkeepable promise. Think back to the past federal election and how income trusts embarrassed the Liberals. The Tories played (a little) politics to get elected.

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.

Maybe I'll go back to that thread and dig up the one-liners. We'll have a bunfight.

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.

They got a holiday for four years which sounds pretty good to me. All corporations got a tax cut. I'd say off-hand that whoever forms the next government, there'll be major surgery to Canada's corporate tax regime.

Canadian corporations are living with B&W TV. Income trusts were like small, colour TVs - an improvement. We are about to get widescreen plasma screens.

[B. Max]

I doubt if they'll be re- eleced now. They've screwed a lot of people. Individuals, pension plans and the oil patch all at once. A lot of junior exploation companies will likely be closing their doors, and the bigger oil companies won't do the work they were doing.

[geoffrey]

I doubt if they'll be re- eleced now. They've screwed a lot of people. Individuals, pension plans and the oil patch all at once. A lot of junior exploation companies will likely be closing their doors, and the bigger oil companies won't do the work they were doing.

A Liberal elected in Calgary? I said it was impossible, I'd like to change my mind now.

This changes the whole dynamic of the Liberal leadership convention. They need to play a hardline fiscal conservative, tax cut after tax cut, and they will win a majority. It's well within their idealogy, there are alot of pro-business minds in that party (unlike the CPC apparently).

My biggest fear with the CPC was that they'd be all theoretical idiots, they lack business contacts, they lack real world experience. Now, the Liberals are simply a big group of crooked businessmen, but businessmen they are. A businessman wouldn't have made the call Harper made.

Am I willing to trade a corrupt businessman that will not raise my taxes for Harper? I haven't decided yet on that. Depends on how good this corrupt businessman can be.

[August1991]

I understand why the government took the action that they did, but I think they could learn a thing or two about managing expectations otherwise their credibility in the financial markets will be shot.

On the contrary, I am impressed about how well this was done.

Markets can handle risk and surprise. They perform badly when they suspect there is an angle on the information. The Tories did this perfectly - both from a market perspective and from apolitical perspective.

I liked Flaherty's comment during the press conference to a journalist:

Hon. Jim Flaherty: If you look in the backgrounder -- do you have the backgrounder? No. Well, you’ll have it. On page 7 there’s a chart. We would have had some material but you’ll appreciate there’s only a few people knew about this so I didn’t have -- we didn’t have people to do all sorts of things that would often be done.

Link

It appears only a few people in Finance, the PMO and PCO knew about this beforehand. That's professional. If you were about to put in an offer on a house, would you want everyone to know your offering price? Who would you hire as your real estate agent? A blabbermouth or a discrete professional?

[jdobbin]

A Liberal elected in Calgary? I said it was impossible, I'd like to change my mind now.

This changes the whole dynamic of the Liberal leadership convention. They need to play a hardline fiscal conservative, tax cut after tax cut, and they will win a majority. It's well within their idealogy, there are alot of pro-business minds in that party (unlike the CPC apparently).

My biggest fear with the CPC was that they'd be all theoretical idiots, they lack business contacts, they lack real world experience. Now, the Liberals are simply a big group of crooked businessmen, but businessmen they are. A businessman wouldn't have made the call Harper made.

Am I willing to trade a corrupt businessman that will not raise my taxes for Harper? I haven't decided yet on that. Depends on how good this corrupt businessman can be.

I'd go with tax cuts, just not GST cuts. Income taxes are the way to go. I can see even see a corporate tax decrease.

Business in Canada has to improve its management though. That's all on them, not the government.

[B. Max]

Am I willing to trade a corrupt businessman that will not raise my taxes for Harper? I haven't decided yet on that. Depends on how good this corrupt businessman can be.

I see a lot of conservative voters staying home next election. There was no need to do this. They are running surpluses, what the hell is wrong with them. They should have been cutting the size of government. Conservatives win when they act like conservatives. What a bunch of idiots.

[August1991]

This changes the whole dynamic of the Liberal leadership convention. They need to play a hardline fiscal conservative, tax cut after tax cut, and they will win a majority. It's well within their idealogy, there are alot of pro-business minds in that party (unlike the CPC apparently).

Dream in technicolour.

You Albertans complain, complain, complain.

You are not being taxed now. You may be taxed in 2011. You made the (foolish) investments and took the chance. Suck it up.

[B. Max]

You Albertans complain, complain, complain.

You are not being taxed now. You may be taxed in 2011. You made the (foolish) investments and took the chance. Suck it up.

No we are being screwed now and that's something we know all to well. Maybe that's why you can't recognize it.

[geoffrey]

This changes the whole dynamic of the Liberal leadership convention. They need to play a hardline fiscal conservative, tax cut after tax cut, and they will win a majority. It's well within their idealogy, there are alot of pro-business minds in that party (unlike the CPC apparently).

Dream in technicolour.

You Albertans complain, complain, complain.

You are not being taxed now. You may be taxed in 2011. You made the (foolish) investments and took the chance. Suck it up.

Where are the income trusts mainly situated? How many Alberta executives lost millions in their options and benefits packages?

Who cares about the execs you may say? Not many. But the CPC will get what's coming to them for it. Mulroney pissed off his Western base, and Harper did the same with this. It's said that the Calgary oil community will pick the next Premier... I'm confident in their power to do so. You don't think they have any play on Harper's success?

Quebec isn't enough... 28 seats that were safe as can be are now less so. Unlikely will you see a Liberal breakthrough in Alberta (Gerard Kennedy would likely win a couple of Edmonton seats, maybe if the Liberals really played it right a few more)... but the CPC is damaged goods out here now.

Where's Preston when you need him?

[B. Max]

Where's Preston when you need him?

Believe it or not he turned into a watermelon.

[geoffrey]

Where's Preston when you need him?

Believe it or not he turned into a watermelon.

I knew it.

Oh well, it's time someone got back into the West wants in concept again. Apartently our poster boy sold us out to Quebec at the first great chance he got. All those dividend paying Quebec companies are just relishing the return of their investors after their brief vacation in the world of modern taxation.

Sold out seniors, sold out most investors. Sold out everyone that voted for him and his promise not to raise our taxes.

[August1991]

Dear B.Max and Geoffrey,

Some Bay Street lawyers came out to Calgary, said "Income Trusts are the latest deal to avoid taxes" and then charged hefty commissions to set them up for you.

Be happy that an honest Torontonian son of a tax accountant put a stop to the scam before you lost more.

Don't get me wrong. Corporate tax is increasingly uncollectible and will soon be non-existent. But Income Trusts are not the way to cut corporate taxes, and anyone who believed otherwise was naive, greedy or probably both.

[jdobbin]

Some Bay Street lawyers came out to Calgary, said "Income Trusts are the latest deal to avoid taxes" and then charged hefty commissions to set them up for you.

Be happy that an honest Torontonian son of a tax accountant put a stop to the scam before you lost more.

Don't get me wrong. Corporate tax is increasingly uncollectible and will soon be non-existent. But Income Trusts are not the way to cut corporate taxes, and anyone who believed otherwise was naive, greedy or probably both.

Albertans are among the maddest about this change because so many of the oil companies were income trusts. They feel that they are a lot poorer today than they were yesterday. Last time they felt this betrayed, they started a new right wing party.

[Ricki Bobbi]

Where are the income trusts mainly situated? How many Alberta executives lost millions in their options and benefits packages?

Who cares about the execs you may say? Not many. But the CPC will get what's coming to them for it. Mulroney pissed off his Western base, and Harper did the same with this. It's said that the Calgary oil community will pick the next Premier... I'm confident in their power to do so. You don't think they have any play on Harper's success?

Quebec isn't enough... 28 seats that were safe as can be are now less so. Unlikely will you see a Liberal breakthrough in Alberta (Gerard Kennedy would likely win a couple of Edmonton seats, maybe if the Liberals really played it right a few more)... but the CPC is damaged goods out here now.

Where's Preston when you need him?

There is a reason why companies can't add unrealized gains in share valuation to their asset base. The losses were gains in share value more than anything else.

Those Alberta execs are going to accept it. How are they going to give the Conservatives 'what they have coming'?

People forgot that income trusts was always considered a risky option. If you wanted safe and secure take your T-bill rates and be happy. You go chasing the higher returns you take on higher risk.

The Calgary oil community has a lot more sway over picking the next Premier (*cough* *cough* Jim Dinning) than it does over picking the PM. Do you really think they wanted 13 consecutive years of Liberal rule?

Kennedy-lead Liberals winning a couple of seats in Edmonton? Hmmm, there are only two seats in the Province that the Conservatives won by less than 15 points in January. But that would swing because of Gerrard Kennedy???

Don't kid yourself about the effect this will have on the Conservatives in Alberta. The Conseratives have tons of cash. They are still running far ahead of the Liberals in fundraising. There is only one seat in the entire province that they aren't guaranteed to win by at least 10 points in the spring.

[B. Max]

Dear B.Max and Geoffrey,

Some Bay Street lawyers came out to Calgary, said "Income Trusts are the latest deal to avoid taxes" and then charged hefty commissions to set them up for you.

Be happy that an honest Torontonian son of a tax accountant put a stop to the scam before you lost more.

Don't get me wrong. Corporate tax is increasingly uncollectible and will soon be non-existent. But Income Trusts are not the way to cut corporate taxes, and anyone who believed otherwise was naive, greedy or probably both.

Tell it to the hundreds of thousands that are going to lose their homes. Harper had better move to Quebec. He can move in beside Joe Clark on traitor street.

The income trusts were created to create new junior oil companies. Companies that would go out and do exploration where the big oil companies wouldn't go anymore. When they found new reserves they sold their finds to the bigger companies to bring into production. Those that are all gloating right now likely don't remember the NEP. When it all came to a stop back then it created a recession right across the entire country. I would estimate that all the people who moved here in the last four years will soon be heading back to where they came from. Couple that with the lay offs they are going to have in Ont. most especially and it will likely take that province down.

[Ricki Bobbi]

Tell it to the hundreds of thousands that are going to lose their homes. Harper had better move to Quebec. He can move in beside Joe Clark on traitor street.

Hundreds of thousands of people are going to lose their houses because of income trusts?

Who are you kidding?

This isn't going to hurt the Conservatives that badly.

Let's look at 1993. Two of the main policy planks in Red Book I were getting rid of the GST and abrogating NAFTA. It was in the best interest of Canadians to break those promises. They won a majority again in 1997.

This interest was in the best interest of Canadians. We'll win again in the spring.