Income Trusts

[madmax]

Flaherty defends position held by NDP. To bad so sad for those whom bought into CPC election promise.

Flaherty says he won't back down on income trusts decision

at 12:11 on January 30, 2007, EST.

OTTAWA (CP) - Finance Minister Jim Flaherty says it's unfortunate that some investors lost money because the government changed the rules on income trusts, but he won't back down.

The minister said he knew when he announced last fall that the government would impose a new tax on these trusts that some investors would be hurt.

But, he added, it was absolutely necessary to bring in the new tax.

[margrace]

Hope you aren't in the income group that was sold the lies about RRSP's I would think there are a lot more of us.

[B. Max]

Flaherty defends position held by NDP. To bad so sad for those whom bought into CPC election promise.

Flaherty says he won't back down on income trusts decision

at 12:11 on January 30, 2007, EST.

OTTAWA (CP) - Finance Minister Jim Flaherty says it's unfortunate that some investors lost money because the government changed the rules on income trusts, but he won't back down.

The minister said he knew when he announced last fall that the government would impose a new tax on these trusts that some investors would be hurt.

But, he added, it was absolutely necessary to bring in the new tax.

There is a committee looking into this right now. Flaherty can be replaced.

[Who's Doing What?]

There is a committee looking into this right now. Flaherty can be replaced.

Even if he is replaced that won't get people their money back.

[B. Max]

There is a committee looking into this right now. Flaherty can be replaced.

Even if he is replaced that won't get people their money back.

Probably not.

[JerrySeinfeld]

There is a committee looking into this right now. Flaherty can be replaced.

Even if he is replaced that won't get people their money back.

Probably not.

Sure it will.

[Who's Doing What?]

Sure it will.

How would replacing him and reversing the income trust get people back the money they have already lost?

[B. Max]

Sure it will.

How would replacing him and reversing the income trust get people back the money they have already lost?

Whether it does or doesn't is not what's important right now. Investment adviser's have been referring investors to the US who are looking for safe investment. Away from Canada because of the income trust fiasco. I don't think Flaherty will be there that much longer. The fact that this committee even exists tends to point in that direction.

[Who's Doing What?]

Whether it does or doesn't is not what's important right now. Investment adviser's have been referring investors to the US who are looking for safe investment. Away from Canada because of the income trust fiasco. I don't think Flaherty will be there that much longer. The fact that this committee even exists tends to point in that direction.

Any ballpark figure on what this has cost Canada in terms of investment dollars?

[geoffrey]

Any ballpark figure on what this has cost Canada in terms of investment dollars?

Not much, the Trust index quickly rebound afterwards. Maybe a hundred million or so, not likely in the billions?

Longterm the costs are huge. Why invest in Canada, governments don't do anything they promise, who knows what will happen tomorrow. Unpredictability is the last thing you ever want as a descriptor of your countries investment rules.

[B. Max]

Any ballpark figure on what this has cost Canada in terms of investment dollars?

No I don't, and in fact didn't even know it was happening until this past week end.

[Who's Doing What?]

Any ballpark figure on what this has cost Canada in terms of investment dollars?

Not much, the Trust index quickly rebound afterwards. Maybe a hundred million or so, not likely in the billions?

Longterm the costs are huge. Why invest in Canada, governments don't do anything they promise, who knows what will happen tomorrow. Unpredictability is the last thing you ever want as a descriptor of your countries investment rules.

This is true. So this is going to have a ripple effect that could cost the country untold amounts of money.

B. Max.

No I don't, and in fact didn't even know it was happening until this past week end.

Even the "hundred million or so" geoffrey mentioned above is more than enough for me. But if it has long term effects into future investment, who knows what the final numbers could be.

[Keepitsimple]

An important element of Income Trusts does not get much play - and Flaherty is very worried about it. It's complicated, so he doesn't talk much about it to avoid confusion. In general, here it is.

Income Trusts are really supposed to be used for "mature" companies - simplistically for example, a company makes a product and has invested in a plant but has no intention of making other products. The product will eventually run it's course and that will be the end of it - they'll sell off the remaining assets and it's over. Everybody at the company makes a fat salary and they account for their day-to-day operating costs but all the profit gets paid out to the shareholders. That way, they don't have to pay any corporate tax - the shareholders pay tax on the dividends they receive. Dividends are taxed at a lower rate than corporate tax......but the BIG PROBLEM is that if the company plays honestly, there is little or no money for R & D and no incentive to upgrade equipment or services. If you buy stock at $100 per share, you get steady revenue but how about the investors who are left holding the bag when the company decides that it's going to close the doors - their stock value plummets (that's another issue).

Now, apply this to the companies who were thinking of converting to Income Trusts - phone companies, Banks. They were thinking of spinning off parts of their business. With no incentive for R & D or customer improvements - who ends up suffering? Consumers, that's who. And why? Becuase the big companies are greedy and will try and find any way to avoid paying corporate tax....so the line between what is, and what is not an Income Trust will be very blurry.

What I've presented is very simplistic but this relates to Jim Flaherty's comments that "Canada will end up with a hollowed out core of businesses" or something to that effect.

A very messy situation that I think had to be addressed. I feel sorry for those who genuine lost money but in reality, they had very poor Financial advice, if any for a number of reasons:

1) Regardless of Harper's promise, they didn't buy stock ahead of the Conservatives win because nobody could know that they would actually form the government.

2) Again, regardless of Harper's promise, the Conservatives only formed a fragile minority government. With Income Trusts being a contentious issue - why gamble with your retirement funds?

3) And for those who went ahead, any portfolio should not be too heavily weighted in any one category - especially retirement funds. Some people got greedy.

4) Finally, most Income Trusts declined by no more than 15% and you only "lost" that amount if you sold.....and if you hung onto the stock, the distributions (monthly/quarterly payments) continued to be paid - just like before.

[geoffrey]

Do you have any reputable evidence of this, or are you just shouting on the latest press release??

Capital expenditures actually increase dramatically in trusts, most of there money is invested long term.

Read this my friend: http://www.pwc.com/ca/eng/ins-sol/publications/itr_1206.pdf

From an independant, reputable source. While some would suggest what your doing, there is actually zero actual evidence that happened, and in fact, quite to the contrary. Income trusts outperformed financially and in large capital investment traditional investment in Canada.

So this was a money grab by the CPC... absolutely NOTHING else. All evidence says this hurts the economy from all angles. So ya, it was a politcial move to go get those bad ass oil companies for Quebecois and to boost the revenues of the government so they could spend the 3x inflation that they did last year.

[Ricki Bobbi]

Now, apply this to the companies who were thinking of converting to Income Trusts - phone companies, Banks. They were thinking of spinning off parts of their business. With no incentive for R & D or customer improvements - who ends up suffering? Consumers, that's who. And why? Becuase the big companies are greedy and will try and find any way to avoid paying corporate tax....so the line between what is, and what is not an Income Trust will be very blurry.

Very solid point.

To add to that Telus converting to Income Trusts provided them incentive for doing an incredibly short-sighted thing for a technology company. Cutting their investment in R & D.

Somebody please explain this one?

[geoffrey]

To add to that Telus converting to Income Trusts provided them incentive for doing an incredibly short-sighted thing for a technology company. Cutting their investment in R & D.

Somebody please explain this one?

There is no evidence that converting to Trusts reduces R&D investment... I've posted independant statistics that refer every single study done it. What else do you need?!?!?

Trusts did not impede productivity or investment in long-term capital. In fact, the opposite was true, the most rapidly developing and productive firms were Trusts.

Don't believe everything Mr. Flaherty feeds you, those arguments are BS and I've proven it with, so far, irreputable evidence.

So until you prove statistically or with an independant report that IT's reduce productivity and L/T capital investment, you've really got to stop contributing to propaganda.

It's extremely sad that the CPC would make a politically motivated move at the expense of seniors, of all investors really, and most importantly our long run investment climate. It's worse when they purposely misrepresent an issue, knowing damn well that maybe 1% of Canadians understand the realities of the situation.

It's filthy to the extreme.

[Who's Doing What?]

It's extremely sad that the CPC would make a politically motivated move at the expense of seniors, of all investors really, and most importantly our long run investment climate. It's worse when they purposely misrepresent an issue, knowing damn well that maybe 1% of Canadians understand the realities of the situation.

It's filthy to the extreme.

Sounds like you are ready for a new political party.

Want to start a centralist party, little bit of the left, little bit of the right and end up somewhere just above centre?

[scribblet]

Hope you aren't in the income group that was sold the lies about RRSP's I would think there are a lot more of us.

Personally I am not, not under either gov't, anyone rushing out to put all or a too large portion of their investments based on any parties promises would be a fool.

Prove that the CPC lied. In order for it to be a lie they would have had to have all the information about future conversions and tax losses prior to the promise; then make the promise knowing full well that they would break it. They made a mistake making a promise when they didn't have all the facts. You can't prove it, speculation only.

[madmax]

Just watched Ralph Klein state that the only way for Harper to redeem himself is to reverse the income trust position. He spent alot of time slamming the decision. Jason Kenny came in to present the government position.

[Ricki Bobbi]

Just watched Ralph Klein state that the only way for Harper to redeem himself is to reverse the income trust position. He spent alot of time slamming the decision. Jason Kenny came in to present the government position.

Yeah, whatever Ralph...

[madmax]

Prove that the CPC lied.

They didn't lie, they misled voters. They told them before the election, what they would do. Essentially they were against the NDP position on income trusts. Once in power, one doesn't expect a Conservative Party to adopt and NDP position, particularly when they campaigned against it. So, they are in power, people feel secure, and have been investing this past year, and WHAMMO.

SUCKER!!!

As they say, I can't believe, I believed a politician.

In order for it to be a lie they would have had to have all the information about future conversions and tax losses prior to the promise; then make the promise knowing full well that they would break it. They made a mistake making a promise when they didn't have all the facts. You can't prove it, speculation only.

Their appear to be more facts that may support income trusts? Would a reversal again, occur. Where would government credibility fall? I see the income trust supporters mounting a strategic campaign. I am quite surprised myself. These people are pretty ticked off CPC supporters and their dissappointed hasn't faded away yet.

Gosh, the CPC made a "mistake", and some people are out 70,000 overnight from their future. I watched Garth Turner backing them personally. Ralph Klien added to the fold.

At least the NDP was honest about their position.

[Ricki Bobbi]

Gosh, the CPC made a "mistake", and some people are out 70,000 overnight from their future. I watched Garth Turner backing them personally. Ralph Klien added to the fold.

And they made 65,000 of that loss back within the next month.

Very important omission. Convenient too.

[madmax]

Gosh, the CPC made a "mistake", and some people are out 70,000 overnight from their future. I watched Garth Turner backing them personally. Ralph Klien added to the fold.

And they made 65,000 of that loss back within the next month.

Very important omission. Convenient too.

I don't know the women on the microphone. You have information on her investments?

[Ricki Bobbi]

I don't know the women on the microphone. You have information on her investments?

If she is representative of most investors in Income Trusts that would have been what happened.

You don't know her but you are willing to take her word at face value only when it supports your viewpoint?

[madmax]

I don't know the women on the microphone. You have information on her investments?

If she is representative of most investors in Income Trusts that would have been what happened.

You don't know her but you are willing to take her word at face value only when it supports your viewpoint?

Shall I insert the word "Allegedly" to make you happier? I was typing on the fly while watching it on televison. So, Garths standing there and she's telling the cameras she's lost $70,000.

I dunno, call her a liar if you like. I am not the one p**** off.