Conservatives Plans News Tax on Trusts

[Riverwind]

Hmm... why not just cut the corporate taxes completely... how much does that cost? I don't know. $13b?

Eliminating corporate taxes means the taxes on people who receive dividends go up because the dividend tax credit would have to be eliminated as well. Many people with pensions depend on dividend income so eliminating corporate taxes would hurt them - just like people are hurt by taxing trusts. The only thing you change is which group of people gets gored.

The gov't could not leave the dividend tax credit in place and eliminate corporate taxes since that would create a massive loophole that would allow anyone running a small business to pay zero income tax on up to 90,000 in earnings.

The bottom line is I don't think Harper had any other practical choice.

[Argus]

Which is many people, myself included. Have a pension?

I used to have a bunch of trusts in my RRSP but I got rid of them in 2003 because I thought they were a fad that was going to get clobbered eventually. I did not expect the gov't to the one that would do the clobbering I just looked at the returns of 12-15% and figured they were too good to last forever. That said, I have friends and family whose portfolios dropped 20% this week.

It's a big deal... it wasn't supposed to be a gamble though River, that's the issue. Income trusts weren't supposed to be touched.

As soon as BCE announced it was going to turn itself into an income trust anyone with more than half a brain should have known the government would have to do something about it.

[scribblet]

I'm not happy that an election promise was broken - hardly a lie as we don't know that they actually intended to tax the trusts when they said that. IMO They are doing what's in the best for Canada, sometimes it hurts in the short term - sometimes you have to break some eggs to make an omelette.

I don't feel too sorry for individuals to might have put a lot of money into income trusts, after all, any kind of investment in such things is a gamble. If people close to or retired put a large chunk of their portfolio into income trusts I'd say they got some bad advice at best.

[Ricki Bobbi]

The big sad part though again is this ideological shift away from the fiscal conservativism towards a tax hike. Ouch. Even a little tax hike is a horrible thing, taxes should only be cut.

$13b in surplus? The Tories could have let this slide.

That's the sadness with the Ayn Randian libertarian viewpoint.

No matter what taxes should be cut is ridiculous. That can only support the belief that there should be no taxes of any kind and government shouldn't exist in any form.

Huge accumulated debt? Who cares about paying it off. Better to *never* raise taxes than to deal with our responsibilities here and now.

[jdobbin]

Dobbin, as a Liberal, don't confuse hope and practice, symbol and reality.

The Tories are not about to divide.

IMHO, Albertans don't create new political parties because of a potential future tax (2011) on obscure saving instruments (income trusts). Albertans create a federal political party when Quebec/Ontario tries to get a better deal (Meech Lake/Charter).

"new right wing party"? You don't understand Canadian politics. It's not ideological. It's regional. What kind of Liberal are you Dobbin?

The Reform party was a regional movement as well as idealogical. I was quite interested in them in the beginning at their founding in Winnipeg. What I didn't like was that they picked up so many social conservatives and ultimately, I gave them a pass in support. In my constituency, the best way to defeat the Conservatives was to vote Liberal. Winnipeg went almost all Liberal in 1988. The Reform party, built on the anger of the CF-18 contract, split the conservatives vote (in the west that split benefited the Reform much more).

You obviously don't remember much about what triggered so much anger in the west with the Conservatives. It was the unfairness of a contract that started it. People in the west were solidly behind the Conservatives when Mulroney first elected.

Winnipeg has a large number of income trusts as well. I've been concerned about them for some time. The Liberals looked at the idea and were told in no uncertain terms that it would devastate investment and make smaller oil and energy firms vulnerable to takeover. The Liberal government was told that it would hurt individuals and especially seniors. Given all this information, the government backed down.

The Tories made a promise to not tax income trusts. I find it surprising that they could not come up with a better option and for this reason so many in the west are angry. It is especially galling to westerners to hear easterners say suck it up.

The biggest beneficiaries of the income trust tax have been banks all based in the east.

[scribblet]

The Tories made a promise to not tax income trusts. I find it surprising that they could not come up with a better option and for this reason so many in the west are angry. It is especially galling to westerners to hear easterners say suck it up.

The biggest beneficiaries of the income trust tax have been banks all based in the east.

I guess I learned more about Harper this week, that is, he obviously has the guts to make a decision based on what they feel very strongly is the right thing to do for Canada, regardless of the political ramifications. That takes courage and integrity.

[normanchateau]

The Tories made a promise to not tax income trusts. I find it surprising that they could not come up with a better option and for this reason so many in the west are angry. It is especially galling to westerners to hear easterners say suck it up.

The biggest beneficiaries of the income trust tax have been banks all based in the east.

I guess I learned more about Harper this week, that is, he obviously has the guts to make a decision based on what they feel very strongly is the right thing to do for Canada, regardless of the political ramifications. That takes courage and integrity.

There's no question that it takes courage to break a campaign promise not to tax income trusts. Whether it takes integrity to break a campaign promise is a matter of debate. I suppose there are some who would argue that Chretien showed integrity in breaking his promise to get rid of the GST which was, of course, first brought in by the Mulroney Conservatives.

[jdobbin]

I guess I learned more about Harper this week, that is, he obviously has the guts to make a decision based on what they feel very strongly is the right thing to do for Canada, regardless of the political ramifications. That takes courage and integrity.

This is what some people said when Mulroney awarded the CF-18 contract to Quebec. They said it took courage to do it.

[scribblet]

I guess I learned more about Harper this week, that is, he obviously has the guts to make a decision based on what they feel very strongly is the right thing to do for Canada, regardless of the political ramifications. That takes courage and integrity.

This is what some people said when Mulroney awarded the CF-18 contract to Quebec. They said it took courage to do it.

Was it the right decision in the long run?

It is interesting to read how some people would prefer that a campaign promise be kept even if it is detrimental to Canada and our economy. Nothing like a hatred of someone such that it blinds them to any sense of reason.

Maybe we should have a poll: do you think that a politician should keep his promise even if a situation changes, such that the present situation is harmful to the country and the economy.

[normanchateau]

I guess I learned more about Harper this week, that is, he obviously has the guts to make a decision based on what they feel very strongly is the right thing to do for Canada, regardless of the political ramifications. That takes courage and integrity.

This is what some people said when Mulroney awarded the CF-18 contract to Quebec. They said it took courage to do it.

Was it the right decision in the long run?

It is interesting to read how some people would prefer that a campaign promise be kept even if it is detrimental to Canada and our economy. Nothing like a hatred of someone such that it blinds them to any sense of reason.

Maybe we should have a poll: do you think that a politician should keep his promise even if a situation changes, such that the present situation is harmful to the country and the economy.

The campaign promise was detrimental to the country when it was made. Goodale wanted to impose the tax a year ago but the Conservatives howled in outrage and shamelessly used this to their advantage to win an election.

[scribblet]

The campaign promise was detrimental to the country when it was made. Goodale wanted to impose the tax a year ago but the Conservatives howled in outrage and shamelessly used this to their advantage to win an election.

ROTFLMAO sure whatever, and the Liberals aren't shameless - Read about Goodale & Brison’s complicity in their income trust debacle before and after the election. It’s “Pot Calling Kettle Black” syndrome.

[normanchateau]

The campaign promise was detrimental to the country when it was made. Goodale wanted to impose the tax a year ago but the Conservatives howled in outrage and shamelessly used this to their advantage to win an election.

ROTFLMAO sure whatever, and the Liberals aren't shameless - Read about Goodale & Brison’s complicity in their income trust debacle before and after the election. It’s “Pot Calling Kettle Black” syndrome.

Surely the Conservatives might want to aspire to something better than being no more shameless than the Liberals.

[scribblet]

Surely the Conservatives might want to aspire to something better than being no more shameless than the Liberals.

Glad you see the Liberals as being shameless - but since their actions have proven them to be far superior so far its a non starter.

[normanchateau]

Surely the Conservatives might want to aspire to something better than being no more shameless than the Liberals.

Glad you see the Liberals as being shameless - but since their actions have proven them to be far superior so far its a non starter.

It remains to be determined whether Harper is less shameless than the next Liberal leader. I suppose it depends on who the Liberals select in December.

The Conservatives would also benefit from having a new leader but alas for them, they're stuck with social conservative Harper in the next round. I suspect Harper will be dumped after the next election. He can't possibly win a majority so whether he loses the election or wins another minority government, he'll be dumped like garbage.

[geoffrey]

That's the sadness with the Ayn Randian libertarian viewpoint.

No matter what taxes should be cut is ridiculous. That can only support the belief that there should be no taxes of any kind and government shouldn't exist in any form.

Huge accumulated debt? Who cares about paying it off. Better to *never* raise taxes than to deal with our responsibilities here and now.

No, there is a base level of acceptable taxation. As long as there is any wealth transfers though, I'm going to be opposed. If you want to take this to an ideological level, people earn their money, and no one else has a right to take it away. Contributions to public goods, like police and roads, ok. Contributions to Joe Blow that hasn't worked in 10 years is not acceptable. There are still far too many contributions to Joe Blow.

Huge accumulated debt? You mean the one a majority of adult Canadians have with their bank at far greater interest rates than the government pays? Sure! Let's pay it off! Give the people some tax cuts so they can!

[Canuck E Stan]

Toronto Star-Some trusts in trouble long before Flaherty

The latest came late Tuesday when Finance Minister Jim Flaherty said he would introduce a tax to stem the number of companies converting to the tax-dodging structure.

Now I have to do what any reasonable investor would do — find somebody to blame.

I should have known better.

I decided to play the wounded over-50 innocent victim retired guy routine and blame my adviser, who told me these things were safe. After all, were not the words "income" and "trust" used to describe these wonderful risk-free high yielding bond-like securities?

My adviser passed the blame to the federal government, saying, "I'll never vote Conservative again."

This was the same guy who a year ago said, "I'll never vote Liberal again," after the previous government shocked the market just over a year ago by announcing that it was concerned about the growth of income trusts and would no longer provide advance tax rulings for trust conversions.

That game ended on Wednesday when we had a "valuation crash" caused by early investors who were not willing to wait around for new investors.

Here's one guy who says he should have known better than putting so many eggs in this basket.

Maybe Greed prevailed for to many investors.

[Higgly]

It was obvious to any educated market watcher ...

Believe it or not, being a market watcher involves listening to what the government might say. Incredible. Are you saying we should ignore that?

[Higgly]

Should [brison}]have resigned his seat and left politics, absolutely.

For sure; this is the here and nnow.

[Higgly]

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.

Exackly! They have pissed in their own nest.

[Higgly]

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

It wasn't done well at all. It was a sandbagging, pure and simple. It was Lyin' Jim Flaherty doing what he did before the last Ontario election. It was arrogance; it was not consultation or even forethought.

It was a panic attack by a government lacking the depth to undertsand that the geeks in Finance have even the smallest sense of the economy and the people who make it work.

[Higgly]

You Albertans complain, complain, complain.

And who is it exactly who is driving our economy these days? Look at this morning's employment numbers. Look at real estate values. What makes you more important?

[Higgly]

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.

In fact, income trusts were an opportunity for junior oil and gas companies to attract investors by offering to share revenue when capital appreciation was unlikely. Income trusts kept our energy sector alive in very tough times. The Canadian Oil Sands Trust (COS.UN) and a number of others are now at risk of being taken over by New York fedge fund a$$hole$ and foreign governments, and Canadians who trusted Harper and relied on these fixed income instruments to pay their bills have been hung out to dry.

What have you done for the economy lately, August?

[Higgly]

Those Alberta execs are going to accept it.

Sure they will. The Alberta oil and gas economy has been built on companies that are completely structured on the income trust model. These companies will have to restructure to accept this. Get real.

[Higgly]

The only people who lost 'real' money in this were the greedy buggers who took out loans to try and take advantage of the income trust loophole.

Ricki Bobbi, you are ignorant, inexperienced and uninformed.

[Riverwind]

In fact, income trusts were an opportunity for junior oil and gas companies to attract investors by offering to share revenue when capital appreciation was unlikely.

The gov't already has made an exception for real estate trusts - if you argument has any merit then then the government could make an exception for energy trusts as well.