Three quotes of note, following the comment made today on AM640 Talk Radio by Ernie Eves who thinks the Marshall Plan is a good idea to solve the income trust mess and should be pursued.
The first quote is from Ralph Klein in response to Diane Francis’ article of yesterday, and distributed with Mr Klein’s consent.
From: "Klein, Ralph"
Date: Wed, 20 Jan 2010 12:56:04 -0700
To: Brent Fullard
Conversation: Diane Francis in today's Financial Post
Subject: Diane Francis in today's Financial Post
Brent....I would have said "Look, you figure it out...There are 1000 of you in the finance dept...most have phd's and masters and there are probably some bachelors...and when you figure out the policy report to me....Ralph
Friedman said "The danger of the Galbraithian view is that it stresses the importance of the expansion of the government's role. Unfortunately, while he assumes that the government is carried out by
disinterested intellectuals, it will not be. It will be carried through by very highly interested bureaucrats, and they (read Mark Carney) will run society from the centre, as such societies have always tended to be run: as
collectivist societies which reduce and greatly limit the freedom and choices of individuals.( ie destroy income trusts in order to make Canadians caotive to corporate CEOs and the synthetic investment junk sold as faux retirement investments by the Big Candians LifeCos)
“I guess if we were incompetent, we wouldn’t admit to it” Brian Ernewein, Department of Finance, at the Public Hearings on Income Trusts, when challenged about the Department’s bogus tax leakage claims February 1, 2007
'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.
Full details on the Marshall Plan here: http://caiti-online.blogspot.com/2010/01/2010-budget-consultations-marshall.html
Diane’s article from above, here: http://www.nationalpost.com/opinion/columnists/story.html?id=5b0325ec-9c4f-437b-9500-c2415441fab5
Wednesday, January 20, 2010
Posted by Fillibluster at 3:31 PM