The "Tax Fairness Plan" has nothing to do with tax fairness and everything to do with giving Stephen Harper the power to enact his agenda for Canada.
By Harold Stebbe
Published February 26, 2007
The Tax Fairness Plan is not Flaherty's Folly, nor is it a stupid, ill-conceived plan dreamt up by Finance. It is a plan of sheer genius. How else to describe it?
The plan introduces a 32 percent tax (including expected provincial participation) that effectively exempts the rich and savages the savings of seniors and workers - and succeeds in selling itself as achieving "fairness".
It is conceived without any prior consultation with anyone but leaders of big business - and succeeds in selling itself "as the result of months of careful consideration and evaluation."
It is undertaken with utter disregard for the losses it imposes on seniors' and workers' savings, with utter disregard for its profound negative effects on a significant part of Canadian industrial and business activity, and with utter disregard for the losses it imposes on the savings of foreign investors many of whom are retail investors in the same situation as those hurt in Canada - and succeeds in selling itself as "decisive."
It introduces a tax that hinders Canadian productivity by raising the cost of capital for entities that comprise 11 percent of the market capital on the TSX - and succeeds in selling itself as a means to increase "economic growth and competitiveness".
It falsely asserts that corporations convert to income trusts as a means of tax avoidance whereas conversion to a trust structure actually results in income trust earnings being taxed at higher personal rates - and succeeds in selling itself as an attack on the avarice of big business and the rich.
It results in reduced taxes for the federal and provincial governments as a result of the reduced earnings potential of the affected income trusts and greatly reduced taxable incomes of investors - and succeeds in selling itself as checking the loss of billions of dollars in revenue.
It hinders the growth and access to capital of the energy and infrastructure income trusts in Canada while their US counterparts are growing rapidly - and succeeds in selling itself as bringing Canada "in line with other jurisdictions throughout the world."
It exempts real estate trusts and private trusts held by wealthy Canadians and in large pension plans such as those of federal public servants - and succeeds in selling itself as "level[ling] the playing field between income trusts and corporations."
It further skews the tax system to favour the rich at the expense of pensioners and workers - and succeeds in selling itself as being "in the best interest of all Canadians".
No, this plan was not conceived by any lightweight. It bears the stamp of the evil geniuses who engineered the demise of the Reform Party and resurrected the Conservative Party in the neo-conservative mold already perfected to our south.
It is the proud achievement of Prime Minister Stephen Harper and his inner circle of advisors. Stephen Harper, a man driven to succeed, a man secure in his knowledge that what's best for him is best for everyone, a man who, like his role model to the south, believes that his ends justify the means - any means.
Nothing said in the plan about the reasons for or the effects of the tax on income trust distributions is true. If you want to read something resembling the truth from Stephen Harper, read his October 26. 2005 op-ed in the National Post. You will see that his actions as Prime Minister are the exact opposite of his promises as Opposition Leader.
I implied above that the plan to tax income trust distributions is the means to some end. It is evident from the "successes" of the plan that the real motive must be something very different from the reasons given in the plan. Very simply, the purpose of the plan is power.
Stephen Harper wants power to push his agenda for Canada. He believes corporate Canada can give him the power if he gives corporate Canada what it wants. And so we have the Tax Fairness Plan.
I, too, have an agenda, one which I'm proud to declare - and that agenda is to remove from power the evil genius of Stephen Harper. The income trust issue is the one on which he can be brought down.
Harper is vulnerable because he has overplayed his hand. He has hurt too many people. His damage to Canadian industry is becoming increasingly evident.
Unfortunately, there is no political leadership willing to take on the job. The Liberals are torn between wanting to expose the Conservatives and fear of further alienating corporate Canada.
The federal NDP have thoroughly compromised themselves by their dealings with the Conservatives and are slowly being slimed out of existence.
Strange as it seems, the best hope for political leadership in this battle may be the Bloc, a party dedicated to the breakup of our country. But they have good reason not to want a federal election in the near future - so there is a limit to how far they will go.
Income trust groups and income trust investor groups are leading the fight against the Tax Fairness Plan. The main thrust of their efforts is education - to show by reasoned argument that the plan is a tissue of lies.
But it is hard to get the message out without the help of the media and the media are mostly indifferent, at best.
Harper has been very careful to distance himself from the plan. Although he is the architect of the pain being borne by the income trusts and investors, he is leaving it to Finance Minister Jim Flaherty to bear the political cost.
You will notice that he is standing right up front when he and Baird are spending our money to save us from global warming. But he is nowhere near Flaherty when the injured investors are demanding justice.
So what is the point of this rant? You can't fight effectively if you don't know who your enemy is and what he wants to achieve. Flaherty is a minion. Raging at him will get you nowhere.
The enemy chief is Harper. He has staked his political life on this plan. He has reversed himself 100 percent on income trusts for what he says are compelling reasons. He can't back down.
We know the reasons are bogus. Most Canadians do not. If Canadians can be made to see the light, Harper is undone.
By rufus (anonymous) | Posted February 26, 2007 at 19:44:39
Absolutely required reading for every air-breathing investor, voter, politician.
Thank You Harold Stebbe, you are my mouthpiece.
By DON COYOTE (anonymous) | Posted February 26, 2007 at 20:27:57
I think the halloween dictum on income trusts came about as result of lobbying by a group of brokers(well named) and financial advisors whose game(fear-sell,greed-buy,expert-crystal ball and commiss.)was upset by the retail investors-retirees etc.fondness for income trusts.They carried on a strident campaign of total guff in the media since 2003.It failed so they went to big brother.The result can be seen in the attack ads against the liberals well in advance of any election call.They must be flush with cash;your cash.Most brokers knew in advance.Their comments in the media on nov.1 were heartless; of the kind usually heard from common swindlers.The NDP is clueless;their financial critic being coached by a vested interest and outspoken critic of income trusts and they are all ignorant.The'o6 Finance surplus now stands at7.6billion and counting as a direct result of income trust distributions received by individuals.That bonanza is over.
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