You Don't Know, Jack

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.

Foreign Takeovers

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?

Income Trusts can Finance Growth

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.

Big Business: Dismal Record

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?

"I Was Canadian"

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.

Harold Stebbe is a Chartered Accountant. He spent 21 years working for the Office of the Auditor General in Ottawa. After leaving the OAG, he worked as controller for a small business in Ottawa before retiring to Vancouver Island in 1993.


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By Lucy (anonymous) | Posted February 09, 2007 at 18:58:49

I recently googled "limosine liberal" and saw a picture of Jack Layton kissing Bob Rae on the lips. Jack is as horrible as Paul Martin and his crew, which is saying something.

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By Colin Mudle (anonymous) | Posted February 10, 2007 at 20:07:38

When are Jack and Judy going to wake up and relize there is no tax Leakage/tax leakage?

When are Jack and Judy going to wake up to the fact that Flaherty was set up by Canada corporate elite?

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By Ian (registered) | Posted February 10, 2007 at 21:09:04

Layton is alienating most of his base and driving them to the Liberals. May as well rename the NDP to the NRP...New Reform Party. Bye Bye Jack.

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By For Jack (anonymous) | Posted February 10, 2007 at 21:14:25

Remember Jack, Honorable Dave Lewis described your new allies as " Corporate Welfare Bums ".
You ignore retirees and small investors and side with right wingers Cons, helping the richest of the richest.
What's wrong with you ?

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By Reese (anonymous) | Posted February 10, 2007 at 21:50:15

Great article - finally somebody gets it!!!!

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By Reese (anonymous) | Posted February 10, 2007 at 21:51:37

I have voted NDP in the last 6 elections. Theie abandonment of seniors ensures I will never vote for them ever again!

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By anticon (anonymous) | Posted February 10, 2007 at 22:19:39

Are Jack & Judy puppets (Like Punch & Judy)with Harper pulling the strings? Or is Harper the puppet being controled by the NDP? Either way Canadians lose.

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By Penny (anonymous) | Posted February 11, 2007 at 00:24:30

Great article-We must keep the pressure on these guys & try to educate the newspaper reporters
Can we the investor & trust companies ask the auditor general for a full review of the TRUST meltdown??

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By SMOKINGJOE (anonymous) | Posted February 11, 2007 at 00:36:35

Don't tell me that the NDP Finance critic, who has no background in finance, is relying only on the Conservative figures ( or lack of ) to decide party policy. Maybe they gave her the version that was not blacked out?? Canada Pension Fund, Ontario Teachers Pension and several others are exempt from the proposed tax...any NDP bells and whistles going off here??? By the way Jack, check and see what BCE and Telus are paying for taxes..

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By Reno (anonymous) | Posted February 11, 2007 at 07:44:45

The Cons and the Fiberals want ITs gone because this is the will of the real power brokers of this country and their post political employers.
The NDP want ITs gone because they fear citizen independence which would mean less dependance on government. Sort of like a dictator who starves the citizens so they are to hungry to fight.
Canada at the political level is a JOKE!!!!!!

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By get real (anonymous) | Posted February 13, 2007 at 14:15:31

Oh give it up! This is nothing more than NDP bashing (which by the way is not needed since far too many never take them seriously anyway). Trying to blame a party not in power for problems arising from those who are in power is rediculous. I would also add seniors are far less affected by the income trust change as measures have been put in place. The only truly affected are rich whiners who have lost one of their gouging opportunities to make themselves even richer.

This issue is not about Layton, so why is he being used as a scapegoat? You should actually try voting the guy in before ripping him apart for legislation he did not produce.

Layton and the NDP are no worse than any of the other parties and actually have less a track record. But if you cannot stand them, vote Green or some other party. But quit whining about a party and a leader when they have not even been in power to make change especially since the majoiry of you voted either Liberal or Conservative so often that we find ourselves in the mess we are in today.

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By jacksquat (anonymous) | Posted February 13, 2007 at 14:44:39

Did it occur to you that maybe we just hold the NDP to a higher standard? Saying the Conservatives only care about the rich is like saying babies sometimes cry. I don't know about other readers but I expected better from Layton than sucking up to Harper to curry favor and claiming he helped hold off an election. So what--it just means we have to wait longer for real action on climate change and urban renewal.

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By mark (registered) | Posted February 14, 2007 at 10:49:59

You must admit, with Layton's NDP first propping up the Liberals in 2004 to avoid an election, then propping up their political polar opposites, the Conservatives, in 2006, they come across less of a champion of the downtrodden (cliche description of NDP) and more of a political whore. It's no wonder former NDP support(myself included) is bleeding to the Greens. Whinging on with knee-jerk accusations of NDP-bashing won't stop the bleeding, some serious navel-gazing and re-evaluation of party principles and priorities need to be done.

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