Saturday, February 13, 2010

Ed Clark’s policy pronouncements are opposed by 87% of Canadians

I consider it the height of condescension for someone like Ed Clark, the CEO of a bank to go around invoking Canadians in making arguments that are all his own. Just exactly where does Ed Clark get off saying that: “The Canadian population is extremely unhappy to see these deficits,"? What Canadians is he talking about? Did he conduct a poll? Unikely, since he didn’t invoke the results of a poll, but rather positions himself as a self appointed spokesperson for the people. To do so is the height of arrogance and the height of condescension, as I don’t need some bank CEO advancing his own personal and corporate agenda on the backs of what he alleges Canadians do and do not want. Canadians are quite capable of speaking for themselves without Ed Clark assuming that role on their behalf.

To invoke Canadians without actually polling Canadians or involving Canadians in the discussion in a formal consultative way, is merely to usurp Canadians’ rights and to usurp democracy itself and to leveraged the will of the people falsely, as Ed Clark is doing in exactly the same way that Stephen Harper often does. Thanks, but no thanks to both of them.

Ed Clark is famous for telling people what he thinks is best for them, like the time he tried to convince TD Bank client David Marshall by way of a letter that the income trusts tax that had destroyed David Marshall’s retirement savings and removed an essential investment option away from David and the other 75% of Canadians without a pension for whom this investment choice would result in a vastly diminished retirement lifestyle that this was somehow good, on the basis that killing income trusts brought increased certainty to the market.

I have never heard a more shallow, vacuous and intellectually dishonest argument for a policy move than that. Especially given that the argument was accompanied by the false invocation of alleged tax leakage as somehow justifying what the government had done to David Marshall as just, even though Ed Clark would probably be one of the first people (maybe the last?) to tell you that Jim Flaherty’s argument of tax leakage is a hoax, and therefore a fraud.

To suggest that the income trust tax should be viewed by David Marshall, or anyone else for that matter, on the basis that it brought certainty is truly absurd, given the certainty aspect of what Ed Clark was referring to. He was referring to the certainty of a tax regime that would eliminate income trusts from the investment landscape, while completely ignoring the certainty that David Marshall and millions of other Canadians had assigned to the solemn election promise that the Prime Minister of Canada had made a mere nine months previously of promising that “A Conservative government will NEVER raid seniors nest eggs by taxing income trusts”. What was wrong with that era of certainty, Mr. Clark? Why are you not extolling the virtues of that era of certainty, rather than the trust tax era of certainty if market certainty truly were your bag, as opposed to the trust tax itself?

Speaking of Ed Clark’s much vaunted certainty. If Ed Clark actually has an understanding of the functioning of capital markets, as the CEO of a bank should be expected to, then he should have realized that there were other certainties that the trust tax that he so favoured were OBVIOUS to usher in. This is where Ed Clark’s actions are opposed by 87% of Canadians, since the Environics Research poll that we conducted that shows the Ignatieff Liberals in a four point lead over the Harper Conservatives was conducted on the basis of polling 1,000 Canadians (as opposed to 1 bank CEO or 150 members of the CCCE) and asking their opinion about the foreign takeover of income trusts caused by the income trust tax (favoured by Stephen Harper and Ed Clark). That polling research indicated that 86.8% of Canadians are opposed to the foreign takeover of Canadians business formed as income trust, that were made vulnerable to foreign takeover because the income trust tax served to artificially devalue them.

This outcome was totally predictable from the outcome, as people like me were saying and writing about that very thing during the 24 hours following Flaherty’s Halloween surprise, that I called an exercise in Happy Hollowing, as in hollowing out the Canadian ownership of Canadian businesses by creating a “tax arbirage” that discouraged Canadians ownership, and would result in the massive loss of taxes by making these businesses more attractive to foreign ownership and ownership by non taxable entities.

Surely Ed Clark understand the concept of “tax arbitrage”, and the inevitability caused by the certainty of this trust tax in terms of what it would mean for the foreign takeover of income trusts, that has seen $1.5 billion in tax revenue from the 51 takeovers of trusts? If not, he has no business being a bank CEO or commenting on public policy, especially on matters pertaining to how Canada should deal with its deficit problem, since Ed Clark can be thanked for being a cheerleader for Stephen Harper’s income trusts policy that has seen %1.5 billion in tax revnue disappear for no net benefit to Canada, but rather a net detriment to Canada that was predicted by all, including Don Drummond the Chief Economist of the very bank that Ed Clark id the CEO of?

What is any of this if not complete and utter hypocrisy? Hypocrisy made even the more so, when you realize that Ed Clark was the architect of the NEP in the very same way that Mark Carney was the architect of the income trust tax. These are the Rasputin-like characters that put our elected officials up to these crazy schemes like the NEP or the trust tax. The politicians are simply the figure heads for the often wild and crazy ambitions (conflicts?) of the bureaucracy. What did Ed Clark know about the Canadian oil and gas industry before he set about turning it upside down and on its head? Nothing, since he had never even worked in that industry, however in Ottawa that qualifies someone as being an expert?

The hypocrisy of Ed Clarks position on the NEP when compared to his being a cheerleader for Stephen Harper’s income trust tax is obvious to the naked eye. The NEP’s policy intent was to preserve the Canadian oil and gas wealth of the country for the benefit of Canadians and to impose penalties on foreign ownership of the energy sector. That was Ed Clark in 1981. Fast forward to Ed Clark of 2006 and here he is touting the “certainty” of Stephen Harper’s income trust tax likes its the second coming of free capital markets, when its the exact opposite and the only certainty of the income trusts tax, to any honest and knowledgeable person, was that it was going to usher in a wave of foreign takeovers of Canadians businesses with the resultant loss to Ottawa of BILLIONS of annual tax dollars, the exact OPPOSITE of what Ed Clarks signature NEP was intended to do and what he is now advocating as a policy measure on the deficit, and falsely invoking the will of the Canadian people to help buttress his self serving comments.

I can invoke the will of the Canadian people in a way that Ed Clark can not, as I took the time, the trouble and the expense to actually ask Canadians what they think, before falsely enjoining them in my argument, and I can now report with an accuracy rate of =/- 3.1%, 19 times out of 20, that 87% of Canadians think the foreign takeover of income trusts needs to stop and 92% of those Canadians think the Marshall Savings Plan is the way to accomplish that noble end.

Here are those two questions that were put to 1,000 Canadians:

Q1. Income trusts are profit sharing investments in Canadian businesses that are popular with average Canadians saving for retirement. They are held by both pension funds and individual investors. In recent years, a number of these trusts have been taken over by foreign owners with the result that three times more tax revenues are now being lost than what the government’s policy was intended to address. Would you (support/not support)…the government taking action to keep the remaining income trusts in Canadian ownership in order to ensure that further tax revenues are not lost?

Q2. Arguing that it was losing tax revenues from income distributions paid out by income trusts, in 2011 the Federal Government plans to impose a 31.5 percent tax on the income from income trusts held by Canadians in their RRSPs. This tax is not being applied to pension funds, which will put the 75 percent of Canadians who do not have a pension at a disadvantage compared to those who do. A new savings plan called the Marshall Plan has been proposed that would eliminate the 31.5 percent tax and replace it with a tax on the annual income paid out from them. The government would preserve $6 billion in annual tax revenue, Canadians would not face double taxation on their holdings, and would be placed on a more level playing field with the pensions. Would you (support/not support) the creation of this type of plan?

1 comment:

Dr Mike said...

"that this was somehow good, on the basis that killing income trusts brought increased certainty to the market."

Um ,er , the only certainty I have seen since the massacre is the 19.2% loss of my savings.

I guess the reduced monthly income stream is a second certainty that almost slipped my mind.

I get a sneaky suspicion that neither of these are very good.

Ooops , I almost forgot two more certainties , & that is that we were lied to by our PM & that I will never vote for him again.

Dr Mike Popovich