Hey, four out of four ain’t bad?
At the invitation of local resident William Barrowclough, I attended a pre-budget meeting in Peterborough last night that was hosted by Liberal Candidate Betsy McGregor and featured Liberal Finance Critic John McCallum. It was probably a good thing that I did attend, on several fronts, given the comment I received from John McCallum who said words to the effect” “I hadn’t thought of it that way before”.
What John McCallum was referring to was the point I made to him at the meeting that the pending double taxation of retirement income from income trusts in RRSPs (but not pension plans!) is going to become the economic equivalent of Canada losing 2.5 million full and part time jobs in less than a year’s time.
This was relevant to last night’s discussion for the simple fact that John began the evening by describing what the Liberals to four priorities for the upcoming 2010 Budget will be and the basis on which the Liberal’s will evaluate the Budget namely:
(1) Jobs. Will jobs be protected/created
(2) Pensions. What will be done to address pension crisis
(3) Social Policy. Will any cuts to social programs be done “fairly”?
(4) Deficit. How successful are the measure in addressing the budget
The Marshall Savings Plan directly, and SIGNIFICANTLY addresses all four of these measures in ways that no other single policy measure could. I will address them in the reverse order of the Liberals priorities, and end with a description of how the Marshall Savings Plan addresses the Liberal’s number one priority, namely jobs
(4) Deficit: The MSP will generate $6 billion in annual tax revenue, 38% of which is presently going unrecognized by the Harper government, if you adopt the government’s flawed methodology behind their bogus “tax leakage” argument and 100% of which is at risk of being permanently lost ig the remaining 169 trusts suffer a similar fate to the 51 trusts that have been taken over to date through non-taxable means that has seen $1.5 billion a year lost by all taxpayers.
(3) Social Policy. Double taxing retirement income from income trusts held in RRSPs but not pension funds is the antithesis of fairness and is regressive to those people in society who can least afford it, namely the 75% of Canadians who are without an employer pension, who already have ebnough of a challenge facing them in their attempts to provide themselves with retirement income, without the government creating a grossly unlevel playing field, more than already exists by the diubke taxation of income trusts and the denial of pension income spltting. The MSP addresses this inequity head on, in a way that is tax revenue positive, Name one other policy that can do that?
(2) Pensions: The MSP is a major pension initiative that addresses the needs of all Canadians and especially the 75% of Canadians without pensions and is revenue positive to boot. This is why the MSP was able to achieve the phenomenal level pf publci support of 79.6% acceptance in a recent Envioonic Research Poll. Name one other serious measure that could be implemented by the Liberals or any other party that is able to achieve that kind of public support.
(1) Jobs: Evidently John McCallum did not read my email of February 2, 2010 or my blog of the same day that reads:
Flaherty’s INCOME trust tax is like 2.5 million looming job losses
Tuesday, February 2, 2010
What is a job, if not a stream of INCOME, in return for work invested by Canadians in the Canadian economy?
What is an income trust, if not a stream of INCOME in return for money invested by Canadians in the Canadian economy?
For the 2.5 million Canadians who wisely invested in profit sharing income trusts ( rather than some synthetic derivative investment like Manulife’s (unhedged) Income Plus or some ABCP house of cards), owning a diversified portfolio of INCOME trusts was like having one of the most secure jobs in Canada. Almost like being an MP or an unelected Senator, but on a much smaller scale.
For some, this income stream represented a part time job, that gave them discretionary income to improve their standard of living, send their kids to college, help pay for their parents retirement home costs, etc. In less than year’s time, these people have received there MASS LAYOFF NOTICES from Stephen Harper and Jack Layton and will lose this stream of income as these trusts get taken over by pension funds who are exempt from the tax, or foreigners like state owned Korean National Oil Company whose desire to make Korea more energy self sufficient appears to be more important to Ottawa than Canadians having the stream of income they need to live on? Hello NDP?
For others, and probably the vast majority of INCOME trust investors, INCOME trusts represent a full time job, as the INCOME from their profit sharing income trusts are the sole means of their daily survival and standard of living.
Don’t take my word for it, Read the comments from Canadians across the country who are deeply afraid and frightened by the “job losses” that are before them caused by Jim Flaherty’s callous recklessness, not to mention incompetence and deceit, by going to : http://marshallplan.ca/index.html
There you will see comments like this:
“When the income trust tax proposal becomes effective in 2011, I believe the cash flows from these investments will dissipate and I will be left with no viable investment alternatives. This will result in insufficient funds for my wife and me in our retirement years. There are many hundreds of thousands retirees in the same position as I, who would like to see this unjustifiable income trust tax proposal revoked.’
“Income trusts are the only way we can support ourselves in retirement. If the government approves The Marshall Savings Plan it will at least give many of us a chance of financial freedom instead of personal bankruptcy.”
“Canadians need Income Trusts as an investment choice. There is no honest or reliable return on capital by any other investment. Most retirees do not have pensions and when one considers the "Baby Boom" generation, there's going to be a disastrous decline in the standard of living as they retire. This will negatively affect the economy beyond all belief. As GDP falls, so will government tax revenue. The Marshall Plan is all the "stimulus" that is required and it costs nothing. Wow! Who can't get their head around that?”
All of these people’s income is going to fall off the cliff in LESS than a YEAR”S time! Do people not know how devastating that will be for these people as well as the ENTIRE Canadian economy? In today’s Globe, Flaherty is getting advice in the headline article of the Report on Business that:
Flaherty urged to keep spending taps open
Jeremy Torobin and Tavia Grant
Globe and Mail
February 2, 2010
Ottawa, Toronto —
Canada's leading private economists are urging Finance Minister Jim Flaherty to tread a cautious path in his March budget and keep spending flowing in a fragile recovery.
At a meeting in Ottawa on Tuesday, the economists will suggest Mr. Flaherty look past some of the better-than-expected data in Canada and the United States and resist moving too quickly to rein in the deficit.
The economists have boosted their projections for the economy, which Mr. Flaherty uses to shape his own assessments. They now see average economic growth of 2.7 per cent this year, according to a Bloomberg survey. That's higher than the 2.3 per cent Mr. Flaherty projected in his September fiscal update, but still well below the 5 per cent to 6 per cent that typically follows a deep slump.
“The dominant theme here is that unlike recoveries from previous recessions this one's going to be fairly slow and drawn out,” said Craig Alexander, deputy chief economist at Toronto-Dominion Bank. “I don't think the government should be tightening fiscal policy before the recovery has gained greater traction.”
In the U.S., President Barack Obama is facing intense political pressure to start taming a deficit on track to reach a record $1.6-trillion (U.S.), even as a stubbornly high unemployment rate forced him to ask Congress on Monday for another $100-billion to create jobs.
Canada, by comparison, is in a better position to carefully talk about a plan for tackling the budget shortfall that the global downturn spawned. Mr. Flaherty and newly minted Treasury Board President Stockwell Day have said the budget will include a road map to bring the budget back into balance within five years.
Most Canadian economists say outlining such a strategy is a good idea, but caution against being too aggressive.
“Unless economic growth turns out to be significantly stronger than economists like myself are projecting, the recovery won't do enough to get back into a balanced budget,” TD's Mr. Alexander said. “The budget is an opportunity to lay out a framework for what you try to do over a five-year horizon, and in that context there's a perfectly good opportunity to outline how you intend to, after the economy's gained significant momentum, get back into a balanced budget.”
At the same time, some economists are so cautious in their outlook that they say it's premature to even talk about spending restraint. Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said that even if the Parliamentary Budget Officer's recent warnings come true and Canada faces a so-called structural deficit of up to $19-billion (Canadian) five years from now, the country's debt load wouldn't be rising at a pace that increases the ratio of debt to gross domestic product.
“We're not Greece, so we don't have to impose an austerity program while the economy's still weak, or even talk about it,” Mr. Shenfeld said. “There's lots of time to adjust fiscal policy if it turns out three or four years from now we're still running a modest deficit.”
The deficit spending, and when and how to refill the hole, will be the front-and-centre topic at today's meeting, said Michael Gregory, senior economist at BMO Nesbitt Burns, not least because of nagging concerns about the effect that an aging population and health-care costs will have on long-term growth, regardless of the economic slump.
Reports late last week on both sides of the border showed Canada's economy grew at a faster-than-anticipated 0.4-per-cent pace in November and that the U.S. economy expanded at an impressive 5.7-per-cent annual pace in the final three months of 2009. Still, although both numbers caused some forecasters to increase their estimates of Canada's growth in the fourth quarter, many economists are skeptical the U.S. can keep growing at anywhere near its October-through-December pace, most of which was attributed to companies replenishing depleted inventories.
In any case, growth in both Canada and the U.S. this year will be on the strength of billions in government stimulus measures, not to mention rock-bottom interest rates, so fiscal policy makers face the crucial task of timing their belt-tightening just right because it remains unclear when the private sector will see self-sustaining demand.
Deficit reduction is important, but governments will have to walk a tightrope in the next year, said Jay Myers president and chief executive officer of Canadian Manufacturers & Exporters, which is hosting Mr. Flaherty at a conference later Tuesday in Ottawa.
“The year of recovery is going to be much more challenging for federal and provincial governments than the year of recession,” Mr. Myers said. “They basically knew what they had to do in recession. It's much more challenging now, to make the right choices.”
The balance hinges on beginning to unwind the extraordinary spending while also encouraging investments in new technology, innovation, skills development and market diversification that help growth over the long haul, he said.
Other topics that might be raised Tuesday range from new housing regulations to learning to live with the strong dollar, said Sheryl King, head of economics at Merrill Lynch (Canada).
The Finance Minister warned last month he will step in if the white-hot home resale market continues to push prices higher by tightening the rules for borrowers, such as increasing minimum down payments and shortening the maximum length of mortgages.
Friday, February 26, 2010
Posted by Fillibluster at 6:34 AM