I guess the NDP, in their infinite wisdom , thought that blindly supporting Harper’s income trust tax would make Canada a better place by achieving these goals on Layton's "to do" list
(1) Reducing Canada’s tax base by some $7.5 billion a year, with no offsetting revenue or intangible benefits to speak of....Check
(2) Leave cash flow rich profitable businesses ripe for foreign takeover and control.... Check
(3) Leave the 20% of Canada’s oil and gas production that resides in trusts ripe for foreign takeover....Check
(4) Pander to Corporate CEOs and Life Insurance CEOs to kill competition for their junk food investment products and to perpetuate the abuses that are inherent in the corporate model but kept in check in the trust model....Check
(5) Destroy a made in Canada form of “profit sharing” investment vehicle that was essential to the 75% of Canadians without pensions, that ushered in a new “democratization” of the capital markets....Check
(6) Make second class citizens of the 75% of Canadians without pensions, who are being discriminated against, because they can’t own trusts and don’t get the same income splitting benefits as the 25% of Canadians with pensions....Check
(7) Make a mockery of Canada as a democracy by passing sweeping tax legislation that was based on the premise of tax leakage, but whose only proof was 18 pages of blacked out documents, in the face of highly credible groups like the Royal Bank, BMO Capital Markets, HLB Decision Economics and PricewaterhouseCoopers saying that tax leakage was a complete hoax and a farce.....Check.
Time is running out on the NDP. They are in the same corner as Harper himself. Based on that deal that Jack Layton cut with Stephen Harper at their noon meeting on October 31, 2006 to support Harper’s absurd trust tax policy. Obviously the NDP had no idea whatsoever about what they were agreeing to. Fortunately the NDP have a graceful way out of this blind alley position they have themselves boxed into.
Knowing that Jack Layton called Diane Francis as the start of the Global Financial Meltdown for advice on what Canada should do to improves its lot in life, he would be wise to capitalize politically on this piece of patently obvious advice, before Harper and the electorate throw Jack to the wolves:
'Marshall Plan' for trusts
Diane Francis, Financial Post
Tuesday, January 19, 2010
The income trust flip flop in fall 2006 still haunts Stephen Harper, the Prime Minister. It has cost him in polls and will likely do so in 2010 again as Ottawa's punitive 31.5% tax on the remaining 169 income trusts will force them to privatize or be taken out by big corporations or pensions.
His policy boondoggle caused damage:
-A broken promise by the Prime Minister made, unequivocally, to leave trusts intact because of their importance to small investors and retirees.
-The soiling of the country's reputation because the flip-flop was retroactive and confiscated $35-billion in value.
-The disappearance of 51 income trusts (out of 220) bought by foreigners and others who do not pay taxes.
-Evidence that the Finance Department did not understand nor do the necessary homework.
The Liberals say the 31.5% income trust tax should be 10% this year to prevent huge disruption. But a more elegant solution has been put forward by a truck driver from Cornwall, Ont., David Marshall, and his wife, Lorraine. Dubbed the "Marshall Plan," it has been formally submitted in response to requests by the government for ideas before the March budget.
In a nutshell, the "Marshall Plan" calls for creation of a unique tax shelter where income trust units held in RRSPs could be placed and the 31.5% tax avoided. In return, any capital gains tax would be deferred until monies were withdrawn but the distributions to unitholders would be taxable every year.
This could be an instant windfall to Ottawa. The 169 trusts that are left pay out about $16-billion annually in distributions to their unitholders and this income, if taxed annually at an average dividend rate of 38%, would generate $6-billion a year in taxes to Ottawa.
If this is not done, the damage already caused will multiply. Since 2006, the policy led to the buyout of 51 income trusts by purchasers who don't pay taxes (pensions) or who will write off profits against interest payments on debts used to acquire the trusts. This phenomenon is the most damning indictment of the 2006 nonsense and will be compounded this year.
Some may argue that the Marshall Plan constitutes another bailout. But that's nonsense. How can a tax shelter that yields $6-billion a year in taxes be a bailout? How can a tax shelter that allows the feds to eventually tax capital gains when it collapses or funds are withdrawn be characterized as a bailout?
The Caisse de Depot et placements du Quebec, National Bank and others were rescued after they didn't do their homework and peddled or bought asset-backed commercial paper. So what's the justification for not rescuing innocent investor-victims who did their homework and were promised protection, then double-crossed?
The income trust policy is a blunder but can, thanks to a truck driver and his wife, be somewhat corrected. Only if Harper and Jim Flaherty, the Minister of Finance, heed and adopt the Marshall Plan in the budget this March.
Sunday, January 24, 2010
Posted by Fillibluster at 10:57 AM