The NDP support for the Conservative government's decision to tax income trusts puts the interests of big business ahead of workers and pensioners.
By Harold Stebbe
Published February 09, 2007
The Finance Committee hearings left no doubt. Dominic D'Alessandro made it clear. Income trusts can lead to the breakup of big business corporations. They threaten corporate concentration. They have to go.
Prime Minister Stephen Harper gave big business what it wanted. The Conservative party can now afford big money ads attacking Liberal Leader Stephane Dion, even though the election has yet to be called.
Jack Layton is a smart guy. Add up the positives and the negatives of his support for corporate concentration. In return for his support, Harper gave him pension income splitting and an increase to the age credit. That's it for the positive side.
On the negative side we have the NDP supporting the biggest double-cross in Canadian political history, a double-cross that wiped out a huge chunk of the savings of workers and retirees.
The NDP is supporting a tax proposal specifically targeted at workers' and retirees' savings in RRSPs, RRIFs and pension plans, a tax proposal that is now acknowledged to result in the double taxation of a portion of those savings.
A tax that, in effect, results in the losses of workers and pensioners subsidizing the foreign takeover of thriving Canadian businesses.
When the tax on income trust distributions was announced, it was widely predicted that Lakeport Brewing Income Fund would be amongst the first of the trusts to go. Well, the predictions were right. Lakeport is going to foreign-controlled Labatt.
What will happen to the workers, Jack? What will happen to competition and beer prices?
D'Alessandro and Bank of Canada Governor David Dodge told us that income trusts are bad because they pay out their earnings to unitholders. They said that to grow and be productive corporations have to retain a big part of their earnings to fund new investment.
Did you notice, Jack, that income trusts were actually investing and growing? Do you remember that efficient market theory you studied at university, Jack? D'Alessandro and Dodge obviouly don't.
All those distributions paid out by the income trusts didn't disappear into thin air. Some went to give seniors a better quality of life. The rest constituted a huge pool of capital available to corporations and income trusts alike. Income trusts with good business plans had no problem at all in financing their growth and innovation.
On the other side, Jack, we have big business in Canada with its truly dismal record on innovation and growth. Harper probably asked D'Alessandro to testify because his company, Manulife Financial, is one of the few successes.
But for every Manulife there are probably a dozen BCEs. Remember BCE, Jack? Finance Minister Jim Flaherty had to act quickly and decisively to stop BCE from converting to an income trust and to prevent the loss of billions in corporate taxes.
Lies, Jack. Flaherty had all the time in the world. BCE pays no significant amount of corporate taxes because it has huge losses carried forward. Do you remember, Jack, how BCE got those losses? How its failed business strategy turned $8.7 billion of retained earnings in 1999 into a deficit of $4.8 billion in 2005?
Do you think, Jack, that breaking up BCE into a number of income funds that actually paid out their earnings and put reinvestments to the test of the financial market might just possibly be a good thing?
Are you a beer-drinker, Jack? If so, you surely remember those two stalwarts of the Canadian beer industry, Labatts and Molsons. Do you remember the "I am Canadian!" rant?
Canadian no more, Jack. Bad investment decisions. Molson practically had to beg to be taken over by Coors.
Dodge said income trusts were bad for capital efficiency. Well, Jack, I would take Lakeport's inefficiency any time over Molson's efficiency. I would have thought you would too - but I guess I was wrong.
I have a picture in my mind that I can't get rid of. There you are, Jack, side by side with your new buddy, Stephen, supporting Flaherty on your shoulders as you march over the backs of workers and pensioners to the celebration on Bay Street.
Jack, you have betrayed your constituents, your party and all Canadians. When the moderate left supports the far right in promoting the interests of big business over that of workers and pensioners, God help us all.
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