Friday, August 31, 2007

So just how many people has Harper sucker punched in his quest for power?

suck·er-punch /(sŭk'ər-pŭnch')

–verb (used with object) Slang.
to strike (someone) with an unexpected blow.

Harper’s biggest and most blatant sucker punch to date has got to be the one he delivered to an unsuspecting public by promising never to tax income trusts (in order to get elected). Upon entering office he turned around a delivered a $35 billion blow to the groin of the 2.5 million Canadians who had taken him at his word. To paraphrase an old expression: once sucker punched, twice shy. That doesn’t bode well for the new platform of policies that Harper has concocted over the summer in an attempt to delude voters once again with a newly re-invented version of Canada’s New One-Two Punch Government. Maybe Stephen Harper derives his political doctrine from P. T. Barnum, famous for saying that there’s a sucker born every minute.

I don’t suppose Danny Williams likes being taken for a sucker when it come to the Atlantic Accord. Just ask the foreign oil companies he negotiated the Hebron deal with, which is in stark contrast to the type of deal that Jim Flaherty would have negotiated on bended knee with industry, such as the Bruce Power Nuclear deal where he sold off all the upside and kept all the operational downside.

That pretty much sums up the seeds that Harper has sowed with his litany of broken promises: he has sold off all his political upside and kept all the downside. I have only mentioned the two most prominent of the many broken promises of our sucker punching Prime Minister. There’s a website dedicated to this formidable task of keeping tack of Stephen’s non-accomplishments at Trustbreaker which at last count was up to 42. Harper’s September throne speech will no doubt provide fodder for many new entries in the days leading up to the next election

Monday, August 27, 2007

The cheque's in the mail

Evidently Harper is an advocate of enshrining property rights into the Constitution and compensating individuals who may have suffered property losses as a result of government legislation. This commitment was contained in the Conservative’s 2006 Campaign Platform (see below). Harper also advocated that compensation would be made on a timely basis. Does this mean that the $35 billion cheque is in the mail? Actually if the cheque hasn’t been sent yet, please understand it’s not money we want, just the future cash flow stream you stole from us. Believe it or not, but our retirement needs are no different than the MPs and civil servants in Ottawa or the Ontario teachers who Jim Leech manages retirement assets for and for which his challenge is "We must find long-term investments that provide good cash flow into the future," Jim Leech, senior vice-president of Teachers'.

I really like the part below that talks about due process of law. Do you suppose 18 pages of blacked out documents would constitute definitive proof of tax leakage in a court of law? This matter would be a two day trial, that would be terminated because of the abundant lack of evidence in support of the government’s punitive and capricious actions. Mssrs. Harper/Flaherty: See you in court, just after you’re finished with Lorne Calvert. Court is a venue that Flaherty is very familiar with, unfortunately none of his background career in ambulance chasing will be of much help to him on this one, as he is the accused and not the plaintiff. Perhaps he will wow the courtroom and borrow that stock phrase form the lawyers in DoF who at the Public Hearngs boldly reasoned in their defense: “I guess if we were incompetent, we wouldn’t admit to it”. Not to worry, since the charge is not one of incompetence but rather property theft through fraudulent practices and attempted cover-up.

The 1960 Bill of Rights, introduced by the Right Honourable John G. Diefenbaker, confers the protection of property rights on Canadians. However, property rights are not mentioned in the Charter of Rights and Freedoms.

The plan

A Conservative government will:

• Propose an amendment to the Constitution to include the right to own property, as well as guarantee that no person shall be deprived of their just right without the due process of law and full, just, and timely compensation.

• Enact legislation to ensure that full, just, and timely compensation will be paid to all persons who are deprived of personal or private property as a result of any federal government initiative, policy, process, regulation, or legislation.

By the way this was also part of Harper’s alleged Plan that got considerable air time in the election. It was very effective in achieving it’s sole intended purpose:

Security for seniors

"The Liberal track record for Canadian seniors is a sad story of unfair taxation, poor government services, and now an inexcusable policy blunder that has destroyed the retirement savings of Canadians invested in income trusts.It is time for a government that respects those who have spent their lives raising families, saving for their retirement, and building this country.

A Conservative government will stop the Liberal attack on retirement savings and preserve income trusts by not imposing any new taxes on them."

Saturday, August 25, 2007

The allegory of the three agent provocateurs

Photo: LeDaro. See animated version here.

Is it possible that these three unidentified agent provocateurs at the Montebello Summit are simply an allegory of the summit itself and the three “leaders” who convened it? Bush, Calderon and Harper.

Like the masked men themselves, do we really know who these three “leaders” are and their true intent with the power that they hold in their hands? They fashion themselves as the three amigos, as if to signal friendliness. Friendliness to whom? We know that they had considerable time to listen to the innermost thoughts of the 10 CEOs that they had each selected to sit on the NACC. Apart from the facile jelly bean agenda of David Ganong, little is known about how these 30 CEOs are going to improve life for the other 500 million residents of North America who were devoid of representation. I understand that David Ganong thinks all our problems will be solved if only he could ship his jelly beans in one standardized printed package to the US. Does this universal packaging concept of his contemplate dropping  the French language requirements under Canadian packaging standards?  It’s far from certain whether US consumers of his jelly beans would appreciate their new French language packaging in the new Freedom Fry country called the US of A, which is the Bush mandated politically correct name for what the rest of the world calls French fries and the US did too before Chirac didn’t see fit to join Bush to rid Iraq of its cache of non existent WMD and replace it with a cache of otherwise non existent IEDs.

If not, I guess that means the universal packaging initiative proposed by David Ganong contemplated moving to a trilingual standard to also include Spanish. Or did his thinking not go that far? How far did his thinking go beyond the confines of his own jelly bean manufacturing facility? What will his “solution” mean for the $6.3 billion (as of 2002) packaging industry in Canada who profitably exist in this country primarily because of the (relatively) low volume runs that they provide under Canada’s bilingual packaging standards? No doubt these offsetting concerns were being fully dealt with by others on the NACC. Perhaps Manulife CEO  Dominic D’Alessandro knows a lot about the packaging industry since he launched one of the most successful packaged products in Canada during the last year by the name of Income Plus, with a little help from the unforeseen (at least by those in the public) tax measures to tax income trusts. If not, we can be well assured that the CEO of Home Depot Canada knows what’s best for Canadians, which is no doubt the only reason why Stephen Harper made room for her on the NACC.

Unfortunately very little else is known about the Summit itself except for the jelly bean communique and the allegory provided by the three masked agent provocateurs.

Perhaps it isn’t an allegory, but rather an unfortunate annoyance, this agent provocateur thing, who some in the press have aptly called the Three Stooges

The unfortunate aspect of that is that the Three Amigos and their jelly bean agenda may have been totally undermined by the Three Stooges, in which case  the SPP Summit at Montebello will unfortunately be forever known as the Subversion of Police Protocols.

Or maybe none of this occurred by accident, and these Three Stooges tactics were condoned by those staging the summit and the architects of SPP, in which case the summit is deserving of being known as the Subversion of Parliamentary Procedures since the SPP has been methodically set up in such a way so as to avoid parliamentary oversight. Just ask the architects themselves. While you’re at it, ask them just exactly what they meant when they said their overall operating tactic for the SPP will be one of "evolution by stealth".

Doesn't sound very security or prosperity-like to me. But that’s for the other 500 milion not represented at the summit to fuss about, or as I pointed out in an earlier e-mail, let them eat pesticides, as we march down the road called the lowest common denominator in search of the holy grail of corporate profitability and the further concentration of power amongst the corporate elite. The proverbial bottom line of SPP. Phooey to that.

Thursday, August 23, 2007

Gaming the system via contrived circumstances

In many respects the powers of democratic governments are very limited. However the ability of governments to contrive circumstances is quite extensive, at least for those willing to take this unfortunate route to governing. Stephen Harper is one such person.

The incident reported on yesterday involving the alleged infiltration of a group of peaceful demonstrators at the SPP meetings in Montebello with members of the police force whose clear rock-toting intent was to transform a peaceful protest into a violent protest is very revealing indeed and quite disturbing. Two things about this incident are quite certain. First is that the security protocols for a summit of this sort would be as tightly managed and highly choreographed as it gets. It is impossible to imagine that any member of the security detail would be given the discretion or latitude to adopt rogue procedures that would allow a peaceful demonstration to morph into a violent one. Therefore the approvals for such a tactic would go very high up within the chain of command. Second, these three alleged demonstrators whose actions were caught on a YouTube video were clearly members of the police force as judging by their mock arrest (as a result of no provocation and to simply allow them to comfortably exit the scene) and the fact that they wore the exact same footwear as the police themselves, as made abundantly obvious by the identical yellow logos on the soles of their boots caught on video.

I wonder how many people were sitting around the boardroom table discussing the use of this tactic for the upcoming Montebello meeting? More to the point, which members of the trilateral security detail thought it would be a good idea to contrive such a set of circumstance that would foment violence among an otherwise peaceful group of protestors? What twisted logic was used as the justification for contriving these circumstances and whose approval was given to implement such a tactic?

This willingness to contrive circumstances is not a new tactic for Canada’s New Government. The income trust betrayal was probably the first such situation that gained prominence. Stephen Harper had significantly limited his options when he was voted into office on an explicit promise to never tax income trusts. This was a  very successful strategy at garnering votes and helped install Stephen Harper as Prime Minister. Having entered the heady realm of high office, Stephen Harper found himself being fawned over by Canada’s corporate elite who had been unsuccessful in the previous government under Finance Minister Ralph Goodale in their efforts to eliminate income trusts in order to preserve the status quo as they knew it and as benefited them as issuers in the capital markets and as  sellers of competing financial products like life annuities etc.

This created a problem. How do I, Stephen Harper, reverse such an explicit promise in order to ingratiate myself with my new friends in high places? Nothing like a contrived set of circumstance to offer the opportunity to game the system. Eventhough we knew that our promise to never tax income trusts was highly likely to provide corporations with the necessary confidence to proceed with conversion into income trusts in an atmosphere of fiscal certainty, we will use this very outcome of our promise as the rationale for totally reversing our promise. We will simply say that the  circumstances have now changed. To add fuel to this fire we will contrive an analysis that concludes that these conversions will result in a significant loss of taxes to Ottawa. We will contrive this tax leakage result by totally ignoring in our analysis the taxes that  are paid by RRSPs which hold 38% of all outstanding income trusts, by assuming they never pay taxes. We will cite National Security as the rationale for why we deliver 18 pages of blacked out documents to Gordon Tait in response to his request under the Access to Information Act. We will further contrive the circumstances by ignoring the known fact that neither BCE nor Telus actually pay any taxes as the corporations that they will be forced by out actions to remain. We will ignore the fact that any experienced person would know that this policy will make BCE and Telus and the entire $200 billion income trust market highly vulnerable to leveraged buyouts by foreign private equity which will have the result that virtually no Canadian taxes are paid by either the companies themselves OR their new owners.

Canada’s New Government will employ a tactic of contriving circumstances to free ourselves from the constraints of the electorate and our election promises, in order that we can game the system to our political advantage. Wouldn’t it be just great if we could get Michael Sabia who has resisted at every opportunity converting into a trust, to announce BCE”s conversion to an income trust? That would be the perfect trifecta of contrived circumstance to reverse our income trust promise. Changed circumstances, tax leakage, BCE and Telus. That way the Globe could report that: “ Amid this escalating tension, Mr. Sabia's phone call became a flashpoint, prompting the federal government to accelerate its crackdown on the sector. Mr. Flaherty was convinced the twin conversions of icons such as Telus and BCE would incite other corporate titans to follow in their wake.” and Flaherty could be quoted as saying; ““We were going to see the two largest telecommunications companies in the country not pay corporate taxes. That's a clear and present danger to fairness in the Canadian tax system. I thought we had to act.”

The fact that this whole premise is blatantly false, doesn’t seem to matter, with the Canadian press at least. However, it is to the exception of a handful of journalists and about 2.5 million Canadians who were robbed by their own government and the 70% of Canadians who were betrayed by losing an important investment choice that they had been assured would be available to them as they undertake the difficult task of providing for their own retirement income in a protracted low interest rate environment.

Monday, August 20, 2007

Flaherty's "fairness" runs afoul of Charter rights

It’s no  wonder that Stephen Harper didn’t see fit to celebrate or acknowledge the recent 25th anniversary of the Charter of Rights and Freedoms, as it  represents just another check and balance that he would rather not subject  himself or his government to.

Flaherty’s Tax Fairness Plan to tax income trusts runs afoul of the Charter of Rights and Freedoms, as it is premised on a wholly arbitrary measure that discriminates between those Canadians who are not members of pension plans and those who are. The recently  announced purchase of Golf Town Income Fund by OMERS provides a perfect example. This very same business held by Canadians in their RRSP is subject to  a 31.5% tax and growth restrictions on its business activities, whereas upon transfer of Golf Town to OMERS in which Golf Town will fully retain its trust  structure, no such tax and no such growth constraints will exist. This government has made Golf Town worth more to OMERS (as the buyer) than it’s is  worth to average Canadians (as sellers). This government is double taxing the  earnings of Golf Town held in RRSPs and not double taxing the earnings of Golf Town held in OMERs. One retiree benefits from the absence of the tax, the  other retiree suffers.Beyond that, nothing else is accomplished, as Golf Town continues on as a trust. To the extent that tax leakage existed or reinvestment in the economy is imperiled or that Golf Town was nothing more  than a ponzi scheme, none of that will have changed. Only the  owners/beneficiaries will have been changed. Strange policy outcome indeed.

Taxes and new tax measures are commonly used by Government to incent certain behaviour among taxpayers and to also discourage other behaviour among taxpayers. Nothing wrong with that. However widely panned that it may be, Flaherty’s “Green Levy” is a good example of the carrot and stick nature of taxation. The Green Levy introduced incentives for certain fuel efficient cars and penalties for certain fuel inefficient cars. Nothing prevents Canadians at large from owning and purchasing a Toyota Prius versus owning a new Hummer. There is nothing inherently discriminatory about that, as all Canadians can freely choose whether they are going to receive the tax incentive or pay the tax penalty. Freedom of choice.

The same however  can not be said for the tax on Golf Town Income Fund. Neither I, nor any other  Canadian can simply opt to become a member of OMERS. Neither I nor any other Canadian can simply opt to organize myself as a group pension plan. The RRSP  was brought into effect in 1957 by  Liberal Finance Minister Walter Harris to enable average Canadians to enjoy the same tax deferred savings benefits as those Canadians who were members of group pension plans. This Conservative Government is taking this privilege away, and it is doing it in a  way that conveys “lost” value from average Canadians in the form of  “found” value to Group Pensioners and more specifically their Plan Sponsors, who for the most part are Governments themselves, like the Government of  Ontario in the case of OMERS. This is both discriminatory and an exercise in self dealing, since this practice extends to the Federal Government’s own pension plan, as with the purchase of Thunder Energy by the Public Sector Pension Plan. No doubt, more purchases by government sponsored pension plans  will follow those already made by OMERs, PSP, Teachers, Caisse, AIM(Alberta) and BCIMC.

The Charter of Rights and Freedoms holds:

Equality  Rights
Equality before and under law and equal protection and benefit  of law        

15. (1) Every  individual is equal before and under the law and has the right to the equal  protection and equal benefit of the law without discrimination and, in  particular, without discrimination based on race, national or ethnic origin,  colour, religion, sex, age or mental or physical  disability.

Therefore this taxation of Golf Town Income Fund held  in RRSPs  which does not apply to the very same trust held in a group pension plan, creates discrimination between citizens who save for their retirement and those whose retirement is provided for them. This does not constitute “equal benefit of the law without discrimination”. The Tax Fairness Plan involves arbitrary distinctions amongst Canadians based on their pension arrangements and doing so is inherently discriminatory since I can no sooner become a member of a group pension plan (which benefits under this  law), than I can choose to alter my ethnicity or race.

Forgetting the Charter for a moment, let’s examine the legislative policy intent of the income trust tax. Was it explicitly contemplated that the tax was intended to  convey benefits to one group of Canadians to the detriment of another group?  Was it intended to convey value and restrict investment choice from the 70% of Canadians without group pensions to the 30% with? If so please let me know  where this subliminal message appears in the following provisions of the Ways and Means motion. Surely tax fairness did not intend for the wholesale introduction of tax inequity and the arbitrary distinction between Canadians, with the purpose of benefiting those with group pensions and penalizing those without.

If anyone is driving the Hummer in this situation, it’s those who belong to OMERs and not those are denied such post retirement  luxuries.

Notice of Ways and Means Motion to Amend the Income Tax Act

That it is expedient to amend the Income Tax Act, in accordance  with proposals announced by the Minister of Finance on October 31, 2006, to  uphold the value of fairness for Canadians by:

    * levelling the playing field between  trusts and partnerships and corporations,

    *  ensuring that taxes are not unfairly shifted onto the shoulders of Canadian  taxpayers, especially Canadian families,

    *  strengthening Canada’s social security system for pensioners and  seniors,

    * helping corporations make choices  that are consistent with economic growth and competitiveness,  and

    * bringing Canada’s approach to the  taxation of trusts and partnerships back in line with other  jurisdictions,