Liberals, Bloc show down on Trusts

[geoffrey]

Two sides to this one. The CPC thinks this new trust tax will play well in Quebec, which strangely it isn't, and that it's going to be a cash cow and return their spending ability back up to pre-Martin days. Then the Liberals and the Bloc want to play a card with the seniors and support giving the trusts a tax break until today's seniors are all dead. They are unwilling to actually say what they are doing, mostly because of Canadian's ignorance about where the burden of corporate taxes really fall. So we're stuck behind a party with a ridiculous plan and two parties that are unwilling to stand up for a principle.

Boy Canadian politics are a sad sad adventure right now.

Mr. Flaherty:

"Those who want to extend the time period to 10 years from four years really are being too cute by half," Mr. Flaherty said.

"What they're really saying is, 'We disagree with the decision and we don't want to come out and say we favour unfairness in taxation, so we'll try to do this guile thing of four years to 10 years,' " he said.

"That would really kill the income trust decision."

Well, actually any corporate tax is unfair because individuals don't believe they pay them... when it fact they pay all of them. He's just spitting out pure rhetoric.

Also, changing the rules half way through the game is silly too.

On top of that... there are already companies studying a debt-equity issue that would greatly avoid taxes legally yet again. As long as the government thinks they are smarter than business, this cat and mouse will go on at the expense of the Canadian economy. It's time to set fire to corporate taxes like Ireland did and watch the phenomenial growth that we desperately need as our economy outside of Alberta implodes.

Then there is the reality that the CPC is avoiding:

Income trusts have produced experts to repudiate Ottawa's tax leakage estimates, but Finance has so far rebuffed requests to divulge exactly how it derived those figures.

I had posted this study by the highly reputable PwC: http://www.pwc.com/ca/eng/ins-sol/publications/itr_1206.pdf

I've yet to see any supporters of this taxation come out with evidence to the contrary, that trusts will tear apart our economy... perhaps because they were the biggest contributor to productivity growth and investment in Canada?

But that's not important to anyone. And instead our economy will continue down it's slope towards the bottom of the civilized world.

Should the CPC at least be required to cite one professional independant report that favours increasing the corporate (and therefore total) tax burden on Canadians?

Article Source: http://www.theglobeandmail.com/servlet/story/LAC.20070122.RTRUSTS22/TPStory/TPBusiness/Politics/

[Ricki Bobbi]

Well, actually any corporate tax is unfair because individuals don't believe they pay them... when it fact they pay all of them. He's just spitting out pure rhetoric.

Flaherty is spitting out rhetoric?

Do you actually read what you write or is a double-standard nothing you worry about???

(In case you don't understand my point: you are complaining about Flaherty's rhetoric when your post is nothing but rhetoric.)

[geoffrey]

Well, actually any corporate tax is unfair because individuals don't believe they pay them... when it fact they pay all of them. He's just spitting out pure rhetoric.

Flaherty is spitting out rhetoric?

Do you actually read what you write or is a double-standard nothing you worry about???

(In case you don't understand my point: you are complaining about Flaherty's rhetoric when your post is nothing but rhetoric.)

My post is far more than rhetoric, I have expert evidence that Trusts were a major benefit to the economy. Is there any independant source that will agree with your contention that the CPC had to act before Canada's tax base collapsed and we all sunk into social program poverty?

Don't worry though, I don't side with the Liberals on this one. They're even worse, unwilling to stand up for what they believe is the economic right decision... because corporate tax cuts don't play in Quebec.

[Ricki Bobbi]

My post is far more than rhetoric, I have expert evidence that Trusts were a major benefit to the economy. Is there any independant source that will agree with your contention that the CPC had to act before Canada's tax base collapsed and we all sunk into social program poverty?

Do share the expert evidence.

While you are at it who said we would "all sink into social program poverty"?

What was the issue with rhetoric again?

[August1991]

Well, actually any corporate tax is unfair because individuals don't believe they pay them... when it fact they pay all of them. He's just spitting out pure rhetoric.

What is unfair (and costly to an economy) is if Company A pays higher corporate tax than Company B. Why? Solely because Company B went to some lawyers and got some fancy papers.

I can understand why lawyers would favour income trusts, why some corporate managers and even some shareholders. But anyone interested in true wealth creation would not.

Be happy with the tax holiday you got and be done with it. Income trusts are in no shape or form a replacement for tax reform.

[scribblet]

I am comfortable with the fair taxation regarding income trusts. Why should the working Canadian pay more taxes so off shore investors can make more money.

[Topaz]

Anything that hurts Canadians, the govt sure think once, twice and three times before doing it! I'm sure anyone who was affected by this will not vote for the Cons, if they live in the west or Quebec! I just wonder if any of the govt had money in "trusts" or any of their families.??? I guess not!!

[geoffrey]

Do share the expert evidence.

Read the above PricewaterhouseCoopers report on Income Trust structures. There is a whole section (I believe section 3) that has analysis of various Trusts and how their structures promoted investment and growth.

What is unfair (and costly to an economy) is if Company A pays higher corporate tax than Company B. Why? Solely because Company B went to some lawyers and got some fancy papers.

I disagree August. You have to look at the bigger picture. Like I said there are many companies studying debt-equity combination issues now that would avoid taxes yet again (essientially your investment is booked as mostly equity, with say a $1 in debt that pays an enourmous interest rate... interest payments are an operating write off for the company). There will always be an Income Trust type situation out there, you can't avoid the issue forever. We accountants and lawyers will always have a hand up on the Federal Tax man as long as he tries to make the system more complex and confusing instead of simplifying.

I can understand why lawyers would favour income trusts, why some corporate managers and even some shareholders. But anyone interested in true wealth creation would not.

That's simply unfounded. Your buying what they are telling you. The facts are quite clear in that the more capital intensive (drawing and making investment) the industry, the more likely they are to convert to trusts. Energy is a hugely capital intensive, investment driven... and you find trusts. Same with manufacturing and real estate.

Read the above report especially in regards to section 3.2.3:

This findings would suggest that, contrary to the concerns expressed by Aggarwal and Mintz, income trusts are continuing to invest in productivity enhancing products and technology.

Section 3.2.4 regarding Jog and Wang's report.

- income trusts were not only financing no-growth, one-time business, but were also aggresively raising capital for capital expenditures and new aquisitions, and

- over 50% of new financing had gone into new acquisitions and capital expenditures.

Section 3.2.5 regarding Canaccord's findings:

According for reserach conducted by Canaccord Adams ("Canaccord"), the average business increased its capital expenditures by 28% after converting to a trust. Furthermore, trusts reinvested approximately 20% of their revenues as capital expenditures. This compared to only 10% reinvestment by members of the TSX 60.

...

In addition, Canaccord reported that many firms choosing to convert to a trust structure retained anywhere from 10% to 50% of their cash flow in order to fund growth. Canaccord further pointed to the emergence of "payout ratio investing", or investing in income trusts that retain cash flow to fund growth, as signalling an evolution in the characteristics of the income trust segment.

PwC goes on to conclude that no one has ever presented any crediable evidence on the productivity issues of trusts... because, it just doesn't exist.

I've got a very reputable source backing my side of the argument. Income Trusts were Canada's edge internationally. Try to find any real evidence in the Minister of Finance briefings on ITs or wherever you can look. You simply won't find any.

ITs were highly productive, invested more in wealth creation than traditional companies and were a highlight of our economic growth.

Again, where is Flaherty's research here? All the experts disagree with the assertion that Trusts were bad for wealth growth (well, besides your Global/CTV/CBC news anchor, who's obviously an expert in markets).

--

Scriblett... off shore syphoning of funds can be dealt with while preserving the highly productive trust structure quite easily. Instead the government lowered the taxes for people that export money on any type of investment, instead of just protecting trusts from exploitation overseas.

[hiti]

snip

Don't worry though, I don't side with the Liberals on this one. They're even worse, unwilling to stand up for what they believe is the economic right decision... because corporate tax cuts don't play in Quebec.

Please... slam the Liberals all you want but be honest about it. Yes, the Liberal government was going to tax income trust and Goodale made the announcement that he was going to consult with the industry and review income trusts. After the review Goodale announced the Liberal government would not tax the popular income trusts and would also lower the taxes on dividend paying stocks. The only mistake he made was to announce that he would be making an announcement. Everybody was telling everybody that an announcement was coming and some jumped on the news and made money because they sensed that the announcement was not going to be bad but good news. Probably Goodale was smiling.

Of course because some people are just good at knowing how the wind is going to blow, which pissed off the NDP and they asked the RCMP for an investigation. They tried that trick at another bi-election but it didn't work. Giuliano Zaccardelli could have, should have been fired for leaking during an election that the RCMP were investigating the Liberal party.

Quote=The Liberals were leading in the polls until the Dec. 28th bombshell announcement by New Democratic Party MP Judy Wasylycia-Leis.

She had received written notice from the RCMP of a ''criminal investigation'' into a possibly illegal transfer of information in advance of the federal government's Nov. 23rd announcement regarding the taxation of corporate dividends and income trusts.

The RCMP notice said there was no evidence of wrongdoing or illegal activity on the part of anyone associated with the investigation and it named only Goodale. -end quote

That is the only reason that Steve won. So did Steve owe Zacc a big favour?

Still today, no answer from the RCMP.

[geoffrey]

Zaccardeli was fired already.

There was an obvious leak, Brison's e-mail to his investment banking buddy is pretty damning. But again, it's a government offical, so they seem for some reason to be spared from the same laws that apply to the rest of us.

When I do work on a company's financial statements, I sometimes have to sign an agreement withe company not to trade in their shares or bonds prior to the release of the statements. I'm also forbidden from telling you how good the company is doing before the statements become public.

The same should apply to the government. Brison saying "there is going to be really good news for you tomorrow" is clearly a violation of fair trading principles and he should be jailed for IMO. He's guilty as shit.

If you knew I was working on company "x's" financials and I sent you an e-mail saying "oh yes buddy, do some investing, some good news is coming tomorrow"... and you sent that e-mail to the police, no doubt I'd be investigated and likely charged.

[hiti]

Zaccardeli was fired already.

There was an obvious leak, Brison's e-mail to his investment banking buddy is pretty damning. But again, it's a government offical, so they seem for some reason to be spared from the same laws that apply to the rest of us.

When I do work on a company's financial statements, I sometimes have to sign an agreement withe company not to trade in their shares or bonds prior to the release of the statements. I'm also forbidden from telling you how good the company is doing before the statements become public.

The same should apply to the government. Brison saying "there is going to be really good news for you tomorrow" is clearly a violation of fair trading principles and he should be jailed for IMO. He's guilty as shit.

If you knew I was working on company "x's" financials and I sent you an e-mail saying "oh yes buddy, do some investing, some good news is coming tomorrow"... and you sent that e-mail to the police, no doubt I'd be investigated and likely charged.

You misquoted Brison's email. What he really wrote.

I think all Liberal MPs, even civil servants had a good feeling about what Goodale was going to announce regarding the income trust file. The decision to leave IT alone and lower taxes on dividends to make them more competitive was a logical conclusion based on what was happening behind the scenes, Nobody expected IT taxes to rise so close to an election and it didn't take a brain surgeon to figure that out. Especially with Steve thumping his chest as the saviour of all those seniors investments with his announcements that a conservative government would never tax their hard earned savings.

[geoffrey]

If everyone knew, then many of the major investment banks wouldn't have lost money.

It was an obvious leak from Brison, I don't know how you can disagree.

[hiti]

Then why haven't the RCMP charged Brison?

[geoffrey]

Why hasn't a politican or senior deputy minister gone to jail over sponsorship?

It appears my friend that politicans are immune from the law in Canada.

[hiti]

You need evidence that will stand up in court, not just wishes and wanna punish someone cause they sent an email saying 'I think you will be happier very soon, this week probably'

And I am sure that Gomery would have loved to charge a politician, if he could. After all the audits, all the hearings, all the scanning hundreds of pieces of paper and hearing hundreds of witnesses, no evidence against any politician or senior deputy minister.

If there was any evidence do you not think that Gomery would have found it?

If there was any evidence against Brison, don't you think Zacc would have loved to charge him to please Steve?

[geoffrey]

hiti, you've really got to think harder about this. Perhaps a private sector example.

The Deputy Minister is the senior official in charge of the department, and the Minister holds the political responsibility. The spending on Sponsorship was done through a government department, Public Works I believe, so there was a minister/deputy responsible.

Perhaps niether played a direct role in the activities. But in the private sector, a CFO (sometimes a controller is more directly responsible) would be held responsible if the company was being defrauded of hundreds of millions of dollars. Not knowing it's happening is as big, if not bigger, an issue than participating in it.

Both the Minister and the Deputy Minister were extremely negligent in their duties and should be held to account for it... whether that's criminal, possibly but too hard to prove. In a civil sense of it, they likely would be held responsible in a private sector scenario if it was reasonable that they should have known (which it was in Sponsorship).

At the end of the day, there were no controls, an out of control program that was hijacked by corrupt Liberals trying to make a quick buck for their party in Quebec. The fact that no controls or follow up existed is 100% the responsibility of thse in charge of the department.

--

Want to know something else a little quesitonable about Mr. Dion and his connections with Sponsorship? The President of the Treasury Board (controls government spending) at the time of Sponsorship is now on Dion's transition team...

Personally I think he's responsible too. Possibly Martin in a similar regard and most definitely Chrietien because much of the directives came from his department (being the PMO).

[hiti]

hiti, you've really got to think harder about this. Perhaps a private sector example.

The Deputy Minister is the senior official in charge of the department, and the Minister holds the political responsibility. The spending on Sponsorship was done through a government department, Public Works I believe, so there was a minister/deputy responsible.

Perhaps niether played a direct role in the activities. But in the private sector, a CFO (sometimes a controller is more directly responsible) would be held responsible if the company was being defrauded of hundreds of millions of dollars. Not knowing it's happening is as big, if not bigger, an issue than participating in it.

Both the Minister and the Deputy Minister were extremely negligent in their duties and should be held to account for it... whether that's criminal, possibly but too hard to prove. In a civil sense of it, they likely would be held responsible in a private sector scenario if it was reasonable that they should have known (which it was in Sponsorship).

At the end of the day, there were no controls, an out of control program that was hijacked by corrupt Liberals trying to make a quick buck for their party in Quebec. The fact that no controls or follow up existed is 100% the responsibility of thse in charge of the department.

--

Want to know something else a little quesitonable about Mr. Dion and his connections with Sponsorship? The President of the Treasury Board (controls government spending) at the time of Sponsorship is now on Dion's transition team...

Personally I think he's responsible too. Possibly Martin in a similar regard and most definitely Chrietien because much of the directives came from his department (being the PMO).

Many were responsible for the sponsorship program but only a few (and they have been charged) were aware/responsible for double billing, charging excess fees, kick-backs (just like with Mulroney and Airbus) payoffs and whatever.

The same conditions that existed with the Adscam Boss, the Tory Chuck Guite still exist in government. Harper could have his own Guite in charge of a program and skimming off the top. Chretien changed the rules and the rules were just ignored.

I know it's good politics to keep on saying it's the Liberal fault and that the Liberals are all crooks, but those who were guilty have been charged and sentenced. The public knows this and have accepted the fact that the guilty ones were caught and the rest are not guilty.

And no, the media is not at fault either.

[geoffrey]

Many were responsible for the sponsorship program but only a few (and they have been charged) were aware/responsible for double billing, charging excess fees, kick-backs (just like with Mulroney and Airbus) payoffs and whatever.

Doesn't matter. When you lead a department, a business, what happens under you is your complete responsibility. If Mr. Gagliano was in charge of the department, he is responsible for the fraud that the Liberal party commited from his department. Ignorance is not an excuse in management, it was his negligence (or cooperation with the criminals) that caused the scandal, and he should either go to jail or personally reimburse some of the damages.

Martin, in charge of government spending for sometime through the scandal should also be held responsible for the loss, something he was never willing to do.

Which suprises me. A former private sector CEO certainly knows the rules involved in industry... but thinks that governments should be held to a lesser standard.

The same conditions that existed with the Adscam Boss, the Tory Chuck Guite still exist in government. Harper could have his own Guite in charge of a program and skimming off the top. Chretien changed the rules and the rules were just ignored.

Why do you call Guite a Tory? Where is that coming from? Because he sometimes wears a cowboy hat?

I know it's good politics to keep on saying it's the Liberal fault and that the Liberals are all crooks, but those who were guilty have been charged and sentenced. The public knows this and have accepted the fact that the guilty ones were caught and the rest are not guilty.

And no, the media is not at fault either.

No, those who were guilty have not be charged. The scandal was caused by the cooperation or the negligence of many senior cabinet ministers, all the way to the PMO itself. When private sector standards are applied to the Liberal party, then I'll be satisfied that they paid the price.

It's one thing to be accountable... to be responsible to the tax payer. But despite knowing about some inconsistencies in the program, no senior leadership called in the RCMP, or let the public know, until Mrs. Fraser's damning report.

It's hard to say you tried to be accountable by being open... only after you've been caught.

Dion welcoming this scum back into the party just shows that the Liberals don't care about the misappropriation of our money.