Bell Canada Enterprises

[hiti]

Quote - One of my mother’s prized possessions were her Bell Canada shares. How many, I don’t know. But after my father died, they formed an important part of her income. Like millions of other Canadians, she received a steady stream of dividends, upon which she paid tax.

In fact, Bell (later BCE Enterprise), was the most widely-held stock in the country, our greatest publicly-traded corporate success.

But soon, this will be a public company no longer. And if my mother were still kicking, she’d have to sell her stock, pay some capital gains taxes, then try to find some other investment that could match the yield BCE was pumping out. By the way, the financial hit on all taxpayers – even those who never owned a single share in Bell – will likely be enormous. And for that, you can thank Jim Flaherty, the finance minister who is far, far over his head.

On the weekend, BCE succumbed to a leveraged buy-out from the Ontario Teachers’ Pension Plan. The move will mean that Ottawa will soon lose the tax it has been collecting on BCE’s massive profit - $7.5 billion last year. The company will no longer be profitable, since all the revenue generated will be used to pay interest on a mountain of debt which was used to finance the deal. That means all the tax my mother and a zillion other little old ladies and other investors paid on their BCE dividends, will be lost. After this deal is finished, as Bay Streeter Brent Fullard points out, all interest and dividends association with BCE debt and operations will flow tax-free to non-taxable pension funds and foreign investors. -end quote

Why did this happen?

http://www.garth.ca/weblog/

And this is only the tip of the iceberg as to the damage that Flim-Flam and Steve have inflicted on Canada's economy. Just like when Mulroney was in, we will spend years paying the price for electing idiots to government.

[M.Dancer]

So in effect, you blame Harper for the current rise in private equity and institutional interest in mergers and acquisitions?

Here I was thinking that instititionals like the teachers fund and OMERS were doing it to increase the value of their members portfolios by acquiing properties that would make them money......and all along it's Steve.........

So, Did harper change a law to allow institutionals to operate under the same rules as corporations or did he not pass a law prohibiting their freedom?

......this btw was predicted at least a year ago, There was a feature in the Globe and Mail June 4th called the Deal which touched on the evolving dynamic of M&A and the rise of the giant institutionals.....

[Topaz]

I wonder how this affects the RRSP's who have invested in BCE or even if it does. Why not invest in the Ontario Teachers Pension fund? I'm sure one can. As far as the Min. of Fin. he wasn't that good for Ont. and he's not so good for Canada and its just another reason to kick these guys out!!!

[M.Dancer]

Why not invest in the Ontario Teachers Pension fund? I'm sure one can.

How sure?

I think you might need be a teacher.....in ontario......

[M.Dancer]

I wonder how this affects the RRSP's who have invested in BCE or even if it does.

Depends who is managing the RRSP. BCE is up 3% so if the manager choose to sell .......but Teachers is offering slightly more.....and if Telus makes another run or if another private equity group make a bid the price will rise.....

[White Doors]

But soon, this will be a public company no longer. And if my mother were still kicking, she’d have to sell her stock, pay some capital gains taxes, then try to find some other investment that could match the yield BCE was pumping out. By the way, the financial hit on all taxpayers – even those who never owned a single share in Bell – will likely be enormous. And for that, you can thank Jim Flaherty, the finance minister who is far, far over his head.

What utter nonsense! Shares in BCE were hovering at around $29.00 for about 3 years. When the acquisition talk started to hear up, the stock went up to almost $40. Your mother would have made alot of money. The reason Bell was bought out was because of the poor poor performance of it's stock - due mainly to having a poor market share of the wireless division.

You should really do some research on what it is you are talking about if you don't want to appear foolish. My apologies if it was your intent to be so.

[hiti]

So in effect, you blame Harper for the current rise in private equity and institutional interest in mergers and acquisitions?

Here I was thinking that instititionals like the teachers fund and OMERS were doing it to increase the value of their members portfolios by acquiing properties that would make them money......and all along it's Steve.........

So, Did harper change a law to allow institutionals to operate under the same rules as corporations or did he not pass a law prohibiting their freedom?

......this btw was predicted at least a year ago, There was a feature in the Globe and Mail June 4th called the Deal which touched on the evolving dynamic of M&A and the rise of the giant institutionals.....

Yes. The excessive taxing of IT's has invited the private takeover of many companies by foreign investers with our tax dollars leaving the country and people's incomes disappearing. No more federal or provincial tax on BCE profits.

Quote -The demise of BCE as a public company can be traced, its purchaser says, to the bombshell Jim Flaherty decision last October to thwart Bell from turning into an income trust. Arguing that allowing the conversion would cause “tax leakage” to Ottawa, JF stopped it dead by imposing a massive new tax on all income trusts. That dashed BCE plans and set in motion a chain of events which led to this weekend’s LBO (leveraged buy-out).

In the end, the deal may be good for BCE, as it tries to grow aggressively. It had better, since there is a huge amount of debt to service. It might be a good investment for Teachers, and its American and Canadian banker-investors.

But it will not be good for millions of investors who will no longer receive taxable company dividends. It won’t be good for the federal government, which stands to lose billions a year in taxes it was collecting before the income trust-busting announcement. It certainly will not be beneficial for all Canadian taxpayers who will have to pay more to make up the difference, or forego any new tax cuts in the future. And, if there is any justice at all, it will be lethal for the finance minister who caused the dominoes to start falling.

Oh yeah, there is a final irony.

[White Doors]

Yes. The excessive taxing of IT's has invited the private takeover of many companies by foreign investers with our tax dollars leaving the country and people's incomes disappearing. No more federal or provincial tax on BCE profits.

Another falsehood. Income trusts were an anomoly unique to Canada, they had to go. They need to reduce the corporate income tax, yes. I'm sure that they will soon. Watch Layton be all up in arms when they try to cut corporate taxes.

Anyways, BCE, even private will still pay federal and provincial tax.

Also, it is a democratic sale. One vote per share, of the majority don't like it, it won't happen.

Also, Garth's mother ( your faulty quoting made it look like he was you) could have invested the profits to other companies that paid dividends.

You are clearly demonstrating your ignorance for all to see.

Carry on

[geoffrey]

Another falsehood. Income trusts were an anomoly unique to Canada, they had to go. They need to reduce the corporate income tax, yes. I'm sure that they will soon. Watch Layton be all up in arms when they try to cut corporate taxes.

They are called income trusts only in Canada. The US has it's own set of flow through entities, as does much of the world.

Shutting down income trusts decreased tax revenue and every single independant report has said that it will have a hugely negative effect on investment (notably foreign) and productivity.

The only option other than allowing flow-through entities is to completely eliminate all corporate taxes.

We had our chance at being productive once again, and the government took it away.

Also, Garth's mother ( your faulty quoting made it look like he was you) could have invested the profits to other companies that paid dividends.

Best point. There are alot of other areas to invest in. And if they were really a significant investor, they can look at private equity opportunities as well. The average Joe? Who cares, they rarely care about their finances until something not up their political alley happens. Most just have mutual funds which may include BCE (likely in an income fund). Whoop-de-do. Guess what, they'll get the same return next year without BCE.

[jdobbin]

Another falsehood. Income trusts were an anomoly unique to Canada, they had to go. They need to reduce the corporate income tax, yes. I'm sure that they will soon. Watch Layton be all up in arms when they try to cut corporate taxes.

You are clearly demonstrating your ignorance for all to see.

Income trusts were not just unique to Canada as has been pointed out.

As for the insults you toss around, put a lid on it.

[White Doors]

They are called income trusts only in Canada. The US has it's own set of flow through entities, as does much of the world.

Perhaps, but with different rules. No major corporations in the US are taxed the way Telus and NCE were applying to be. The popularity of income trusts was a side effect of our high corporate tax rates. There should be a level playing field for all and having a tax loop hole like income trusts would have kept the corporate tax rate higher if they were allowed to survive.

Shutting down income trusts decreased tax revenue and every single independant report has said that it will have a hugely negative effect on investment (notably foreign) and productivity.

I disagree - Our best chance at increasin productivity is decreasing the taxes on the individual worker, and decreasing the corporate tax rate. Also, increasin the amortization allowance and the tax incentives for businesses to invest in equipment - this last piece was addressed in the last budget. Also, Canada has nothign to worry about in regards to foreign investment, we are the darling of the global investment community. We are no longer 'faking it' with our low dollar.

The only option other than allowing flow-through entities is to completely eliminate all corporate taxes.

Make them more competitive for sure, eliminate? not necessary.

As for the insults you toss around, put a lid on it.

jdobbin, were you trying to be funny?

[Michael Bluth]

As for the insults you toss around, put a lid on it.

jdobbin, were you trying to be funny?

He was trying to moderate the boards. Simply ignore him and move on.

I really wonder if income trusts will be much of an issue come fall of '09.

The number of those who will base their voting choice on this issue becomes smaller and smaller as time goes by.

There is no way any party will propose changing back to the old rules. So there can't really be much of an issue.

[kimmy]

Quote - One of my mother’s prized possessions were her Bell Canada shares. How many, I don’t know. But after my father died, they formed an important part of her income. Like millions of other Canadians, she received a steady stream of dividends, upon which she paid tax.

In fact, Bell (later BCE Enterprise), was the most widely-held stock in the country, our greatest publicly-traded corporate success.

But soon, this will be a public company no longer. And if my mother were still kicking, she’d have to sell her stock, pay some capital gains taxes, then try to find some other investment that could match the yield BCE was pumping out.

boo hoo. Be glad she didn't invest her nest egg in Nortel stocks instead.

Playing the stock market carries a risk.

I don't have much sympathy for people who lose money in the stock market.

I certainly don't have much sympathy for someone whose stocks have been the target of a lucrative buy-out. Someone bought Garth Turner's mom's BCE shares for more than they're worth? Boo hoo!

If he wants to complain about this, maybe he should complain about the management of BCE, whose poor business decisions turned the company into a prime target for a take-over.

Like I said earlier, if Garth's mom had had the misfortune to buy Nortel shares instead of BCE, she'd be left with pennies on the dollar. So quit whining. Hey Garth, tell her to go buy some GICs if she wants a safe reliable return with no risk.

-k

[jdobbin]

The popularity of income trusts was a side effect of our high corporate tax rates. There should be a level playing field for all and having a tax loop hole like income trusts would have kept the corporate tax rate higher if they were allowed to survive.

jdobbin, were you trying to be funny?

Our corporate tax rate is still lower than the United States which is our chief trading partner. The income trusts were an investment vehicle focused on producing dividends for the client. The Conservatives chose to reduce the GST over lowering the corporate tax to European levels.

As for your other comment, why don't you focus on making your points. I don't know that the new moderator will see the validity in your personal rejoinders.

[White Doors]

The popularity of income trusts was a side effect of our high corporate tax rates. There should be a level playing field for all and having a tax loop hole like income trusts would have kept the corporate tax rate higher if they were allowed to survive.

jdobbin, were you trying to be funny?

Our corporate tax rate is still lower than the United States which is our chief trading partner. The income trusts were an investment vehicle focused on producing dividends for the client. The Conservatives chose to reduce the GST over lowering the corporate tax to European levels.

As for your other comment, why don't you focus on making your points. I don't know that the new moderator will see the validity in your personal rejoinders.

Why don't you mind yoru own business?

I calls them as I see them.

If you spent as much time worry about yourself as you do on others, you would probably be a happier person.

The GST was a good tax to lower too. Lower it again to 5% then concentrate on corporate and personal income tax.

[jdobbin]

Why don't you mind yoru own business?

I calls them as I see them.

If you spent as much time worry about yourself as you do on others, you would probably be a happier person.

The GST was a good tax to lower too. Lower it again to 5% then concentrate on corporate and personal income tax.

I'd rather have lower corporate and income taxes than a reduction in the GST.

I'm perfectly happy. I'd just like to see posts that don't personalize. I'll call that as I see it as well.

[Michael Bluth]

Why don't you mind yoru own business?

I calls them as I see them.

If you spent as much time worry about yourself as you do on others, you would probably be a happier person.

The GST was a good tax to lower too. Lower it again to 5% then concentrate on corporate and personal income tax.

WD, interesting how officiousness and an outward appearance of an in inflated sense of self are often tied to a lack of happiness. Good on you for standing up to the empty threats.

Yes, the GST was a good tax to lower. An extra point will definiely take place at some point in the next 2 years and a bit. My guess is that it comes in for the 2008 budget.

[hiti]

Anyone who owned IT knows that what this government did to them is bad and that it stopped billions from entering the treasury. BCE going private means less taxes. IT's being bough by foreign companies means less federal revenue.

I doubt that there will be enough funds to lower the GST without raising personal income taxes. The surplus is disappearing.

The posters here who have supported the elimination of ITs don't own any stock, didn't lost from $25,000 to $100,000 in net value and now need to scramble to pay bills because their income has dried up.

It's always easy to be flippant when one doesn't know what they are talking about but just parroting the party line. The senior who lost $100, 000 in net worth will remember when he votes in 2009.

I always identify what is quoted.

Quote -The retired teachers who collect a pension from their pension plan which owns BCE, and which does not pay taxes on its investment income, are now able to split that pension income with their spouses, and reduce their income tax.

The inherent inequity of our tax system is amplified. Public revenues go down. Our largest public company slips off the market. Private income trust investors lose tens of billions of dollars. And all taxpayers will feel the effect.

The prime minister calls himself an economist. It is to laugh. -end quote

All those taxes from BCE - gone with much smaller returns in federal taxes that someone has to make up. Who will it be? Certainly not another GST cut. Can't afford a personal tax cut.

Harper and Flaherty are in over their heads.

[White Doors]

You only lost money on income trusts if you were dumb enought to sell right after the announcement.

IT are down only vey very marginally from what they were prior to the announcement.

The GOC could not afford it's biggest companies converting to IT and paying NO tax.

That is why they changed it. They had to.

Hiti is clearly over her head.

[ScottSA]

Hiti is clearly over her head.

What a surprise.

[hiti]

What Flim Flam doesn't know.........

http://caiti-online.blogspot.com/

CANADIAN ASSOCIATION OF INCOME TRUST INVESTORS WEBLOG

Too bad some of the posters here also don't know squat.

Listen to the experts. I am glad to be in over my head with them.

[Michael Bluth]

Hiti is clearly over her head.

What a surprise.

Not at all. From reading the posts the irrational anger is scary. Definitely not somebody to meet in real life. Unless hours long harangues against the Government are your thing.

[Charles Anthony]

The title of this thread was initially:

title: How Flim-Flam and Steve sc***ed over the taxpayer...

subtitle: And some think Harper an economist.....

It has now been altered to convey some semblance of objective accuracy as well as to avoid provoking an inflammatory or insulting discussion.

[scribblet]

Hiti is clearly over her head.

What a surprise.

Not at all. From reading the posts the irrational anger is scary. Definitely not somebody to meet in real life. Unless hours long harangues against the Government are your thing.

Sorta like Harper you know - scary scary

I'm not sure what the purpose of the original post was as last time I looked this is a democracy. Did the original poster want the feds to step in and stop the buyout thereby helping out her mother? Would this apply to any other future buyouts, and is this a precurser to wanting nationalization of Bell et al a la NDP type thinking?

Also doesn't the gov't stand to gain a huge windfall through capital gains taxes?

Speaking about the Ontario teacher's pension plan: I'd like the 4 billion or so of taxpayer's money back that Bob Rae agreed to pay out when they had a huge unfunded liability. Now they've made so much money maybe they should return some of it to the taxpayers.

edited to ad: whoops sorry guess it Garth's momma

[jbg]

Sorta like Harper you know - scary scary

Harper is

1. Eating your children;
   
2. In his kitchen;
   
3. At 24 Sussex Drive;
   
4. In Ottawa;
   
5. In Ontario;
   
6. In Canada
   

I'm not making this up. I'm not allowed to make this up.

Choose your Canada!!!