Seniors are demanding action on income trusts!
Liberal MP Garth Turner of Halton is on a speaking tour of western cities, outlining the multitude of reasons why Stephen Harper and the Conservatives ought to be thrown out of office. One of those reasons is the October 31, 2006 announcement by Finance Minister Jim Flaherty that income trusts would no longer enjoy tax-free status.
That announcement quickly devalued trusts, and investors whose portfolios were top-heavy with income trusts felt burned. That hit seniors particularly hard. Garth Turner says as much:
The Harper Party has repeatedly attacked its own bases of support. It betrayed seniors by taking their income trusts – folks who consistently have voted blue.
Seniors had their income trusts taken away? Why would seniors be so heavily engaged in income trusts in the first place? They are not a low-risk investment appropriate for a retiree's portfolio, at least not in a large proportion. You would think that the advice given by investment dealers is the real problem, especially since the taxation sword had been hanging over income trusts for quite some time.
Actually, you would be right to think that. A lot of seniors are thinking that too. If they are angry with Jim Flaherty, it is because they don't think he's moving fast enough on cleaning up that industry, an industry they believe is home to people who are little better than con men and who have been able to collect fees and commissions while dispensing poor advice to people who were too trusting.
Not exactly the spin Garth Turner has been putting on things.
Don't take my word for it though.
Check out other entries from the Garth Turner Lost Tory Tour category
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Update: Garth Turner has posted a response. I encourage you to visit the post and read it after reading this post. Unfortunately he has provided no link to this post, so his readership is getting just one side of the argument. Weigh the evidence and judge the arguments against the material being presented by people like USCO that I've quoted below. Come to your own decision on the issue of income trusts and whether Jim Flaherty did the right thing. If you are still not sure, hey, join the club. Finance is the trickiest portfolio in the business. Go out there, follow the links, do some googling, listen to smart people on both sides (including Garth Turner, of course, who was always cautious about income trusts), get a read on their true motivations that might be spinning their message, and become an educated voter.
Garth Turner is on his western speaking tour, where he will speaking a great deal about income trusts.
How do I know this? It's really simple, actually. If the Canadian Association of Income Trust Investors, or CAITI, is heavily promoting the tour, then it is about income trusts. Brent Fullard and his backers are interested in one thing only -- getting the tax-free status of income trusts back.
So is Garth Turner the savior of the retiree who took the advice of a "professional" investment advisor and put all his money in the single basket of income trusts even as the talk for months and months was on just when the ride was going to end?
Or is he helping out these investment advisors who are looking pretty foolish right now? What's wrong? Never heard of a diversified portfolio?
But setting up a diversified portfolio is hard work. Wasn't it nice to just burp out "income trust fund" and then collect your fee for giving out that wise advice?
But was that advice really all that good even before the October 31, 2006 announcement by Finance Minister Jim Flaherty that income trusts would be losing their tax free status? Maybe not, and that's something that hasn't gotten a lot of airplay.
In August 2007, at a meeting of the United Senior Citizens of Ontario, Diane Urquart gave a presentation entitled "No Investor Protection for Seniors". Here is her opening slide:
- Investor losses from white collar securities crime and excessive mutual fund fees are:
- About $20 billion annually
- About 1% less annual investment return on individual RRSP's, RRIF's, pension plans and investment assets held outside of retirement plans
- About 15% of expected investment return.
- Seniors suffering catastrophic losses are exposed to the second abuse of stonewalling by the investment industry Self Regulatory Organizations, provincial securities commissions and the RCMP, who address less than 5% of the complaints received.
Well, that sets the tone, doesn't it?
I've included the full presentation if you want to study it. It's rather sobering, but I'm going to focus in on income trusts.
The title of that subsection: Financial Advisors on Income Trusts -- Wolves in Sheep's Clothing.
Ouch.
The following slides are full of numbers, and I'll get to those in a moment, but slide #10 is amusing. It is entitled "Wrong on Income Trusts" and you'll find pictures of CAITI president Brent Fullard, and Liberal MPs John McCallum and Garth Turner.
CARP -- Canada's Association for the 50 Plus -- comes in for some special scorn as being in a severe conflict of interest, being too cozy with the investment industry to properly advise retired Canadians on how treat the advice of the investment specialists responsibly. Study the presentation and come to your own conclusion, but I will remind you of this. Back in December 2005, in the middle of the election, when the bombshell was dropped that Ralph Goodale's finance ministry had leaked the decision not to tax income trusts after three months of speculation that a tax would be applied, and as a result of the leak it appeared that professional investors in the know made a killing on the market (not retirees, of course), CARP was in the centre of that scandal:
"The day they made the announcement they phoned us and said something is going to be said," the associate executive director of Canada's Association for the Fifty Plus, William Gleberzon, told CTV News.
Gleberzon said the call came from a senior policy advisor in the finance minister's office.
When asked what exactly he was told, Gleberzon indicated the specifics were vague, but the underlying message was clear.
"They said something was going to be announced later in the day. And we assumed that if they told us that ... it would probably be something we'd be happy with."
So when it comes to CARP and allegations of being too involved in the interests of those whose business is to promote income trusts, this is old news.
Now back to those numbers. There's a few of them, but you can tease out these interesting and disturbing facts. Income trusts were supposed to be sustainable investment oportunities with good cash yields. But already 24% of all income trusts have had distribution suspensions and significant cuts. And there are over $11 billion of capital losses in 62 income trusts, whose prices are now down more than 20% since their IPO or latest secondary offering to the public (one third of the business income trust offerings are now down an average of -48%).
Now you might wonder if the poor performance is solely because of the taxation announcement on October 31, 2006. Fair question. I direct you to the comments made by a professional investment advisor on October 30, 2006, one day before the taxation announcement:
Q Is the underperformance of the trust index year-to-date relative to S&P/TSX composite index mainly the result of the income trust universe's large energy exposure?
A My REITs are up, I have made money on power and utilities trusts. Business trusts are down and oil and gas is down. If you were to compare the performance of the Sentry Select Canadian Income Fund to the Barclays iUnits, which track the S&P/TSX trust index, year to recent close, the Sentry Select Canadian Income Fund's total return is 8.24% versus 4.76% for the iUnits. The defensive approach in that we overweighted REITs and underweighted energy has delivered almost double the return.
Underperformance? But his income trusts are up, so the problem was with having the wrong advisor, and not with income trusts. Of course, the next day Jim Flaherty levelled the field tax-wise, and people began to wonder just why investment advisors weren't more cautious about income trusts after the craziness in December 2005. Well that, and the fact that tax-free or not, income trusts didn't seem to be such amazing investments.
Unless you listen to certain investment advisors, of course.
To be fair, not all investment advisors were cheerleaders for income trusts. Some sounded the warning on income trusts:
The appeal for investors is (of course) income. Once you buy units, you are assured of a steady stream of distributions. For people who used to get systematic payments from their high-yielding mutual funds, this has turned out to be a fine replacement.
And that's why the news out of Legacy Hotels Real Estate Investment Trust last week was such a shock. This trust holds luxury hotel properties, including the Fairmont chain -- the former CP Hotels which have a global reputation for quality and excellence. But with a simple press release, Legacy told unitholders they could forget about receiving any income for the foreseeable future, because of a lousy cash flow.
Is Legacy an isolated case? Apparently not. As a Globe and Mail investigation showed, some income trusts are using bank lines of credit to keep up with their distributions. Other trusts, based on everything from growing peat moss to running harbours, have been forced to cut or eliminate their distributions, because doing business can often be unpredictable.
That should hardly come as a surprise to anyone. But it will probably stun a lot of people who never bothered to actually look at the business behind the trust they were purchasing. Blinded by the big, shiny rate of return posted in the window, they thought these trusts were bullet-proof babies well suited to the rarified atmosphere of their RRSPs. Unfortunately, more than a few trusts are literally burning the furniture to make their distribution targets, which means the underlying value of the trust units is also going up in smoke.
As with any investment, make sure you get the right advice before you write that cheque. And, ironically, you might want to buy a mutual fund instead. Ninety-two out of a hundred made money last month, many of them giving tax-preferred capital gains.
Who gave this sobering review of income trusts? Garth Turner in 2003.
So why with advisors like Garth Turner in 2003 warning investors to be careful and to express some healthy doubts about too-good-to-be-true income trusts did USCO present a brutal report to its members just last week that investment dealers are still taking advantage of its members, especially on income trusts?
Obviously Garth Turner's warning was drowned out by the heavy promotion from other dealers like the one quoted the day before the taxation announcement. But even the OSC called income trusts risky:
Income trusts are not conservative or fixed-income investments. They are equity-like investments that carry varying degrees of risk. Income trust distributions are not assured, and depend almost entirely on the financial performance of the underlying business. Just like any security, the quality of income trust investments can vary. Before you invest, make sure you look at a range of factors such as any business risks specific to the industry involved, and the management structure that is in place.
Despite this, retirees were affected out of proportion to their numbers by the hit to income trust value when the announcement was made to tax them. But if income trusts are so risky, then why were they putting their money into them in the first place? The OSC doesn't even classify them as fixed-income investments despite the marketing as investments with regular payouts.
And now Garth Turner thinks Stephen Harper's government ought to be thrown out of office because of the taxation announcement, instead of delivering the message that investment in income trusts was being made with poor knowledge of the risks, including the blindingly obvious risk that the tax-free status was under constant threat. From the Small Investor Protection Association:
Most Canadians trust their advisors and also do not have the knowledge or the time to conduct their own due diligence. That fact coupled with the failure of the industry to properly disclose the risks associated with income trusts and particularly business trusts has led to many seniors being invested in products that are not suitable for them.
No wonder the USCO is steamed.
But to listen to Garth Turner, the worst thing to happen to seniors in this country was Jim Flaherty. Of course, the investment advisors want that to be the message. Indeed, they want the clock turned back, to have the tax regime restored to what it was on October 30, 2006, to when income trusts were still a favoured investment vehicle for investment professionals to offer to seniors. Don't take my word for it. The CAITI website is quite clear about this:
Canadian seniors and those saving for retirement are the very Canadians who have been responsible for the growth in the income trust market over the last ten years to its present level of $200 billion. These are the very people who have sustained a combined loss in their hard earned savings of $35 billion. This $35 billion loss is a permanent loss and it is the sole consequence of Mr. Flaherty's so called Tax Fairness Plan.
It is these very people, and Canadians like them in years to come who will soon be denied this important investment choice by Mr. Flaherty. It is truly shameful that Mr. Flaherty twists the truth about the impact of his policy on these very people, seniors and those saving for retirement, when the exact opposite is plain for anyone to see.
And Garth Turner who once wrote about the dangers of income trusts wants to bring back that tax-free status that helped drive seniors into income trusts (or at least use that argument as a political attack).
We know investment dealers want Garth Turner to succeed. That's why CAITA is helping fill the halls where Garth Turner will be speaking. But are seniors eager to erase October 31, 2006?
Some are, of course. Money is money, and no description of the risks inherent in income trusts is going to distract them from being bitter about the effect of the taxation announcement on income trust valuation. Of course, those are the seniors with large income trust exposure in their portfolios, thanks in no small part to the advice given to them by those investment dealers.
But other seniors are not sure that Jim Flaherty is their enemy. First consider that at that USCO convention, the Brampton chapter offered up a resolution that USCO adopt as policy a standing demand that the federal government withdraw the new income trust taxes announced by Jim Flaherty.
The attendees voted that resolution down.
And if that wasn't enough, on March 30, 2007, the National Pensioners & Senior Citizens Federation threw down the gauntlet and demanded that the RCMP begin an investigation into deception marketing aimed at seniors to promote income trusts.
The RCMP response makes interesting reading:
The RCMP has in fact received correspondence from other complainants requesting a criminal investigation into the activities of those involved in the marketing and sale of Income Trusts.
I wonder just how many more complaints the RCMP has gotten on this. In any case, the issue was refered to Integrated Market Enforcement Branch (and to show the RCMP was serious, they provided a contact at the IMEB for the NPSCF to bug about progress).
So consider this post to be everything you won't hear at one of Garth Turner's stops on his speaking tour. What you will hear is how the income trust tax announcement hurt seniors, but it seems that investment dealers, like Garth Turner's friends at CAITA, are complaining more. But I doubt that will get mentioned. Nor will the concerns about trusts, their suitability for seniors as investment vehicles, the behaviour of many investment dealers in recommending them, or the multiple formal requests for criminal investigations into that whole income trust fan club.
Or maybe Garth Turner will be covering all these points. Since I don't live near any of his planned stops, I won't be able to attend and see for myself.
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Comments
Lets get two things straight about the .95 Canadian Dollar against the US currency.
First off , Liberals screwed us for about 2.5 $Billion
in the Softwood Lumber tarifs held in trust until Harper actually settled the issue by getting 80% of % billion dollars as opposed the Chretiens plan to get 100% of ZERO .
Secondly , Seniors now have more money to spend in Florida since the US dollars went from $1.55 down to the roughly $ 1.10 of today .
Canadians remind me so much like the CAW bosses that want to share in the Auto profits when GM and Ford finally make money , BUT , during the bad times they want the Taxpayers to keep them employed by making products people aren't buying.
Income trusts for Seniors are a doubled edged sword because the word "Trust" refers to some risk while giving a possible gain well above inflation or bank account interest rates.
Trust Companies are called that because they want YOU to Trust them , not them Trusting you .
Charter Banks have Capital rules for assets to protect the Clients while Trust Companies rely on hope and leverage to use YOUR money to loan out at a higher rate from the risk.
Posted by: Roger at September 4, 2007 02:54 AM
Your points concerning the risk surrounding income trusts is identical to every other security in the investment arena, including bonds! Hell, I could make a case that GICs are risky. I had a bank refuse to redeem a GIC owned by an elderly lady who was dying of cancer. I finally was able to sell it to a bond trader OTC at a discount, better than the stonewalling the bank gave to her request for early redemption. I wish that you knew what you were talking about concerning income trusts. I could line up every argument against income trusts with a contradictory argument about income trusts. In the end, they were overall excellent investments for those who held them for their monthly distributions. Like any security, there are risks attached with having a concentration of one security, but even a moderately diversified portfolio of income trusts has outperformed other asset classes. Can you not intuitively see why they were a threat to the corporate elite in this country? Particularly, the CCCE? It is because there are investment products that couldn't compete with them.
Posted by: Geoffrey L. at September 4, 2007 05:17 AM
And I thought this was a dead issue with you Cons. The campaign must be working.
I never thought I would see the day when Conservatives would be taking their business and economics policy from the NDP's Diane Urqhart and Jack Layton, but when desperate it's any port in the storm I suppose. Most of Janke's post is the usual drivel and myths spouted by the left and by Bay street annuity and mutual fund sellers who see trusts as a threat to their traditional lock on income investors, and has been thoroughly debunked by CAITI. I will agree with Janke on one point though, Garth has flipped on this issue, but then so has Harper!
Posted by: da prince at September 4, 2007 05:18 AM
Your points concerning the risk surrounding income trusts is identical to every other security in the investment arena, including bonds! Hell, I could make a case that GICs are risky. I had a bank refuse to redeem a GIC owned by an elderly lady who was dying of cancer. I finally was able to sell it to a bond trader OTC at a discount, better than the stonewalling the bank gave to her request for early redemption. I wish that you knew what you were talking about concerning income trusts. I could line up every argument against income trusts with a contradictory argument about income trusts. In the end, they were overall excellent investments for those who held them for their monthly distributions. Like any security, there are risks attached with having a concentration of one security, but even a moderately diversified portfolio of income trusts has outperformed other asset classes. Can you not intuitively see why they were a threat to the corporate elite in this country? Particularly, the CCCE? It is because there are investment products that couldn't compete with them.
Posted by: Geoffrey at September 4, 2007 05:18 AM
Roger, when you say:
Canadians remind me so much like the CAW bosses that want to share in the Auto profits when GM and Ford finally make money , BUT , during the bad times they want the Taxpayers to keep them employed by making products people aren't buying.
Did you know that the chief CAW economist had input into crushing income trusts? I find it ironic you talk about the CAW and income trusts in the same post, sounds kind of confused.
Posted by: Geoffrey L. at September 4, 2007 05:22 AM
Let Garth and the Libs blather about income trusts:
1) 99% of people don't care
2) it will hurt them in the long run because they'll get that 1% all worked up and then they'll have to admit that Dion has said he wouldn't reverse the tax decision, he'd just postpone it by a few years.
If I was in that 1% and somebody went on for months about how wrong something was, but then turned around and said they'd do the same thing, I'd be pretty ticked off.
Posted by: Cool Blue at September 4, 2007 06:20 AM
Nice work, Steve. So Garth was against income trusts before he was for them. But we all pretty much know that this is just his weapon of choice for beating Harper over the head.
I agree with Cool Blue; I'll wager the majority of Canadians are like me, just struggling to pay their bills every month, and don't give a crap about income trusts.
Posted by: muttsrus at September 4, 2007 07:11 AM
Garth is flying through the West and he's landed for his first crap on Income Trusts. He's not talking to the large majority of ordinary Canadians who have no interest in the topic. It makes a sob inducing headline to mention "poor seniors", using seniors is what Cads are wont to do to get more attention.
Maybe they better investigate what went down under the Liberals with Ralphy Goodale et al, seems they had a hand in the process but lacked the political guts to do what had to be done.
The Conservatives reneged on the promise but the losses came from frenzied investing when Goodale said they wouldn't be touched. There was another little weasel in on the Liberal hanky panky that gave publicity to the issue, his name is Scott Brison.
Shameless Cads. That's where politics dives into the depths of depravity.
Posted by: Libby at September 4, 2007 07:40 AM
Well , as someone who is over 60 , my view is that everyone who lost money in income trusts was basically greedy and thought they would get a free ride courtesy of younger taxpayers.
Too bad if you lost money ... who ever said any type of investment was a guarantee of success !
The Liberals created the mess , and I question their motives gievn their stellar handling of taxpayers money. The Conservatives had no choice but to cancell it , especially after several large corporations attempted to join the free ride crowd.
Posted by: Brian at September 4, 2007 08:46 AM
Well , as someone who is over 60 , my view is that everyone who lost money in income trusts was basically greedy and thought they would get a free ride courtesy of younger taxpayers.
Too bad if you lost money ... who ever said any type of investment was a guarantee of success !
The Liberals created the mess , and I question their motives given their less than stellar handling of taxpayers money. The Conservatives had no choice but to cancel it , especially after several large corporations attempted to join the free ride crowd.
Posted by: at September 4, 2007 08:48 AM
"my view is that everyone who lost money in income trusts was basically greedy and thought they would get a free ride courtesy of younger taxpayers."
ITs are fully taxed in the hands of the owners, who is getting this "free ride"? I payed over six thousand in tax on my trusts last year, that's no free ride.
"Too bad if you lost money ... who ever said any type of investment was a guarantee of success !"
More 'let's blame the victim'. No one who invests in trusts or any type of equity ever expects a "guarantee of success". We are more than willing to accept 'market risk' and have so for years. Our complaint is with a lying politician who plays bait-and-switch with Canadian financial markets. That's the stuff of third world despots.
Posted by: da prince at September 4, 2007 09:57 AM
This proves once and for all that the bureaucrats really run this country. These Fabians tell the elected puppets what they are going to do. The only difference between the parties, red blue green, whatever, may be in how the issue at hand will be implemented.
This will continue until the CPC is in power long enough to clean house. So far there has only been a reshuffling of the deck chairs on the Titanic. Harper even named a LPC Senator to run a Commission. So far, for me it's business as usual in foggy bottom.
Turner, who had me bamboozzled during the election of 05-06 is doing what any true politician does- make political hay while the sun shines.
Posted by: David P from Campbell River at September 4, 2007 10:56 AM
I'd be willing to bet that good old Garth is passing out donation forms for his re-election campaign at these events!
Posted by: Paul M at September 4, 2007 11:01 AM
The issue has traction because people do not trust Harper. I have been conservative all my life and do not trust Harper. Harper promised not to change the law on income trusts--he broke the promise. Harper promised to uphold the Altlantic Accord, he breached it. Harper promises not to impose a scary agenda if granted a majoprity government.....stuck at 36% in the polls. Little wonder.
There was nothing imprudent about income trust investmetns per se. The problem qwas severe double taxation in Canada, which was alleviated by income trust structures. Only the4 no-matter-what partisans would defend a move to preserve double taxation. Harper says, "double tax." "Yes, Steve; yes, Steve; all bow to Steve"
Posted by: murray at September 4, 2007 12:31 PM
En route AC 255: Why, my wife asked, as she leaned over to read my BB screen on the tarmac, are they still trying to kill you? Which is one reason I love her. The woman is a sieve for malice. Her sunny attitude and continued astonishment at malevolent thoughts makes her the perfect companion to travel west with me for the next two weeks, doing politics.
But back to the Berry. Its weensy little display was showing a tiny little beaver’s head (maybe it’s a groundhog, or a ferret, or a rat – too small to say), above yet another Garth Turner story on a Conservative web site. But not just any blogging Tory. The loser one.
Two weeks ago this guy published a statement, fabricated by a young Con operative who showed up at one of my Town Hall meetings, saying I’d shouted down an 84-year-old veteran. It was crap. A half dozen or so people who were at the meeting posted here saying it was crap. The kid – his work done – disappeared back into juvenile anonymity. Strike one.
This past weekend the loser blogger published a long article admonishing me for using an illustration on my blog which came from another web source. I had identified it as, “Artistic rendering courtesy of The Wingunterer.” TW is a guy I’ve corresponded with, have met, sparred with and quite enjoy – even when he calls me a snake-oil salesman. The allegation that I used this without permission was crap. The Wingnuterer wrote the loser’s blog and said it was crap. Strike two.
But back to my Berry. Today the loser has tried again, even promoting his new anti-Garth posting as “meaty.” This one alleges that my speaking tour is all about income trusts, which were always risky investments (even I warned about four years ago); that I’m out to help my broker “friends” who make money selling trusts; that many seniors support Jim Flaherty’s taxing of them; and, well, that I deserve to die yet another political death.
Sadly, it is crap. The man who styles himself a Canadian investigative online journalist once again would fail the smell test as a cub reporter at the Leamington Bean. But I digress into ad hominem invective. My wife may be reading this.
Truth is, income trusts were, as I wrote in a widely-published newspaper column in 2003, not for everyone. But neither are equities or mutual funds. Even riskless GICs are risky for people who need growth. And bonds – like residential real estate – can be sinkholes for wealth when interest rates start gyrating. There is no “income trust” as a defined investment, as there is no “stock.” Every one is different, and some trusts were conservative with dependable cash flow, while others were poorly structured and destined to disappoint.
The simple belief that every income trust equals every other income trust is a major flaw undermining the pro-Flaherty arguments one hears from non-financial journalists. Another is the constant reiteration that all jilted IT investors now had all their investment eggs on one basket, and were guided there by investment advisors who were incompetent at best, crooks more likely. I suppose some did. But the vast majority of folks I have heard from actually had an excellent balance between fixed income, real estate and equity-based assets, including trusts.
As to the arguments that income trusts should have been taxed in an identical fashion to corporations, well, no easy answer to that. Trust equivalents have functioned extremely well in the United States, and provided hugely-needed capital in the Canadian energy sector. They clearly seem to have a place in the investment firmament.
What the loser fails to point out are the two overriding reasons Jim Flaherty was wrong on October 31st to announce the imposition of a 31.5% tax on income trusts, with neither warning nor consultation. No, it has nothing to do with CAITI or Brent Fullard or any investment sellers (who are not, by the way, sponsoring any of my activities). It has nothing to do with the inherent risk in all market-based securities. It bears no relation to my growing opposition to the economic, taxation and fiscal policies of the Harper Party.
Instead, it boils to this: First, Mr. Flaherty has proven to be wrong, perhaps a liar, in his justification for attacking income trusts. He said it was costing us all money since they were avoiding big whacks of tax, which would grow to be billions over the coming years if companies like Bell converted. I watched as he screamed across the aisle of the House of Commons, accusing Liberal opponents of speaking on behalf of their friends on Bay Street, as opposed to average Canadians.
We now know it is not so. The trust decision was responsible for the sale of many Canadian companies to foreigners, who will pay no tax. BCE is going private as another result, and its new owners will pay no tax at all – unlike the $700 million or so a year that investors would have paid, had it become a trust and distributed taxable profits to them. As well, initial public offerings have dropped almost 80% since the trust announcement, robbing us all of corporate tax revenues which I suppose will have to be made up by Joe and Josephine Average.
Second, well, second is easy. Stephen Harper said Conservatives would never tax income trusts. So, people bought them. Lots of ‘em. Companies converted into trusts. Lots of them, too. Risky or not. Dependable or not. Controversial or not. Foolish or not. At least investors were guaranteed of one thing – if Mr. Harper was elected, there would be no surprise tax.
Surprise. Strike three.
Gee, here we are in The Peg already.
Posted by: Garth Turner at September 4, 2007 12:46 PM
Wow,Garth and his alter ego da prince again show up at the same time.Get back on the meds Garth.
Posted by: paulsstuff at September 4, 2007 12:51 PM
Just checking over my post.
Did I call Garth Turner names like "loser"? No. Check.
Did I provide links to Garth Turner's original material so readers can judge for themselves? Yes. Check.
Did I make it clear that the income trust story is more complex than "Seniors hate Jim Flaherty!" I thought I did, but maybe not. Rely on reader feedback to get a check on that one.
It's too bad that Garth Turner did not see fit to provide a link for his readers to follow to study the material I've provided for themselves. It's also too bad that besides the logo, Garth Turner does nothing to help a person even search out my blog via a search engine.
Well, I'm made of sterner stuff than that. The post above now contains a link to Garth Turner's response. I encourage you to read it and weigh the facts and arguments against each other.
Posted by: Steve Janke at September 4, 2007 01:04 PM
Generally, I agree that people who invest in ANYTHING take a certain risk, and need to be personally accountable for the risk they assume.
However, I don't think its unreasonable, when assessing the risk of an investment, for someone to take a government at its word. The risk of income trusts was X. Then the Tories promised not to tax income trusts, and ran on that, so when they formed the government the risk became X minus Y. So you invest, knowing the trusts won't be taxed, and then after you've made that decision you find out it wasn't true, and that they WILL be taxed. THAT's the issue. These people aren't upset (or at least, have little right to be) that a risky investment didn't pay off. They're upset because the government's actions changed the nature of the risk involved AFTER they had invested their money based on the original risk. They're upset because they made a decision to invest when the risk was X minus Y, and thanks to the government, the risk went back up to X (actually, even higher, as a lot of people rushed out of the income trust market when the government reversed itself).
Frankly, almost everyone lost SOME money due to the income trust changes, because confidence in the market as a whole was shaken, as people concluded that the government promising X to the investment community didn't actually mean they'd give X to the investment community (their status as Canada's NEW government - trustworthy and accountable - notwithstanding).
Anyway, I don't think this is so much people complaining becuase the risk they took didn't work out. I think it's people complaining because the nature of the risk changed, AFTER they had invested their money, becuase the government decided not to keep their word (for the record, probably the right decision, but a reversal that negatively effected people's investments nonetheless).
Posted by: Lord Kitchener's Own at September 4, 2007 01:41 PM
That's a valid point, LKO, and I doubt it was a decision that was taken lightly. But if you want to talk about shaken confidence, consider the effect of a leaky finance ministry and the effect allegations of secret information given to favoured insiders has. But I found it very interesting that the attitude from seniors is hardly monochromatic. Certainly not the uniform rage portrayed by some people. In fact, it looks like seniors involved in income trusts are more upset with shady investment dealers who pushed a risky investment tool on them using fraudulent marketing techniques (their allegation, not mine), so much so that they don't want the tax on income trusts withdrawn for fear that people will start jumping in to income trusts all over again.
That's not the reason Jim Flaherty gave for changing the tax rules, of course. But for seniors who think defenders of income trusts are really defending their own brokerage fees, it was a welcome move.
Like I said, this story is more complicated than it appears.
Posted by: Steve Janke at September 4, 2007 01:55 PM
Income Trusts = Ponzi Scheme ..??!!!
Posted by: Observer at September 4, 2007 02:06 PM
Thanks Steve,
And yes, there is CERTAINLY a lot of grey here (frankly, I'm surprised anyone's pushing this anymore, as it does seem - problematic or not - that it's generally felt that the Tories did the correct thing on this file. That their error wasn't BREAKING the promise, but making the promise in the first place.
A lot of commentators though seem to think this is all about seniors just being ticked because they took a bad risk, and that that is their own damned fault, and that too is much too black and white. Sometimes risks don't work out, and that's not the government's fault. However, in this case, what the government did had an effect on the nature of the risk, and I think that needs to be kept in mind. Clearly the risk of investing in income trusts was different when the government was promising not to tax them than it was after the government changed their tune, and THAT at least is probably, in some cases, worth getting upset about.
It's a pretty silly campaign issue though, and I really don't think it'll do much damage politically. Turner has a personal bee in his bonnett about this one, but I'd be surprised to see it prominently used by the opposition against the new government. Especially given the fact that, from the opposition's point of view, this has to be, like, item #542 on their list of things they don't like about Canada's New Government.
Posted by: Lord Kitchener's Own at September 4, 2007 02:15 PM
Ah, everyone knows the goose that lays the golden eggs will eventually be killed. That's why Garth's new message is fear and panic over the coming real estate bust where we all lose the equity in our homes.
After the Goodale debacle on income trusts, people had to know this was a volatile risk. If they felt assured investing in income trusts because the Conservatives came to power with a slim minority which could be defeated at any time then they weren't very smart.
Posted by: muttsrus at September 4, 2007 02:33 PM
There is still a lot of ignorance about income trusts as an investment vehicle. There is also a lot of ignorance about the tax structure for income trusts.
Garth Turner knows this and hopes to exploit the ignorant and gullible. That's his natural audience!
Posted by: OMMAG at September 4, 2007 02:36 PM
"In fact, it looks like seniors involved in income trusts are more upset with shady investment dealers who pushed a risky investment tool on them using fraudulent marketing techniques (their allegation, not mine), "
I'm not sure what seniors you've spoken with but the ones I know don't blame anyone but Harper, period. The CARP polls taken some months ago confirm this. The "National Pensioners & Senior Citizens Federation" you quote reverently is essentially one man's hobby (Art Field)run out of some place called Little Britan. Try to get membership info? Their web site doesn't seem to work. They speak for no one, unlike CARP which actually exists with dues paying members.
You should disabuse yourself of the notion thats it's only seniors who bought trusts. These were popular investments for a whole range of people looking for income and who had grown tired and disillusioned with corporate scandals and meltdowns like Nortel, JDS, Air Canada, Stelco, Bre-X all non trusts.
Some trusts have had to cut distributions, many more have increased them, at least in the ten years I've been buying trusts. Non-trust corporations have also cut dividends. I owned blue chip TransCanada Pipe in the nineties when it cut it's dividend by 30%. No one suggested that this was the fault of the 'corporate model'.
Investing in equities is risky. But in the twenty plus years I've been investing I have never seen an Income Trust bankruptcy, but I have seen plenty of corporate bankruptcies.
Posted by: at September 4, 2007 02:57 PM
Turner's just jealous Steve, that your blog is better writen, beter sourced and likely has more hits than his own work of ficti....err...I mean blog.
Posted by: Paul M at September 4, 2007 03:06 PM
Muttsrus, you write: "people had to know this was a volatile risk. If they felt assured investing in income trusts because the Conservatives came to power with a slim minority which could be defeated at any time then they weren't very smart".
Well, as to the wisdom of individuals' investment decisions, a lot of these people probably WEREN'T that smart. I'll give you that. However, bringing up the minority government is a bit tricky of you, as it implies that this was a risky move becuase there was a minority government in Parliament, so the government was not guaranteed to be able to implement their election platform. Which is true, but has little to do with income trusts. The Tories aren't taxing income trusts because they didn't have the votes to implement their platform, they simply changed their platform after the elction. Had the Tories been defeated in the legislature (or their income trust plan defeated) no one would have anything to complain about (or, rather, they'd be complaining about the opposition defeating the government's plan, which wouldn't be the government's fault, not the government failing to implement their plan). The government didn't do the opposite of what they said they were going to do because they lost a vote in a minority legislature. They decided on their own to do the opposite of what they said they were going to do. There's no indication they would have done any different if they had a majority (unless you mean to indicate that the decision to tax income trusts is bad policy, and the Tories are just implementing bad policy becuase they've been forced to by their minority status, but I doubt that's what you intended to convey, and no one in the CPC has suggested that tyo my knowledge).
I think that comment illustrates the "investing is risky, it's your own damn fault if things go south" argument that completely glosses over the fact that the government promised not to do X, and then went ahead and did X anyway.
Investing IS risky. Risky enough that we don't need the government adding to the risk by promising that an area of investment will be treated in fashion Y, and then treating that area of investment in fashion X.
I just don't think it's that unreasonable that when the government says they're not going to do something with regards to investing and the economy, that taxpayers can invest in the market secure in the knowledge that the government's not going to do it.
Posted by: Lord Kitchener's Own at September 4, 2007 03:40 PM
Does Garth kiss his wife with that mouth?
You know, I originally thought that Garth was just an immature, ego-centric attention seeker who couldn't handle taking a back seat at any time.
Turns out, I'm partially right. It seems he's also a jerk.
It's probably killing Garth, that he's not even on the radar in most of Canada. THAT'S what Garthapalooza 2007 is all about -- All Garth, All The Time.
Posted by: Yukon Gold at September 4, 2007 05:06 PM
Government Boy blackberried:
initial public offerings have dropped almost 80% since the trust announcement, robbing us all of corporate tax revenues which I suppose will have to be made up by Joe and Josephine Average.
Yep, when government revenues are down don't knock anything off your government paycheque or lay off any of your government staff. And don't cut any porkbarrel spending or welfare programs. Just dig deeper into our pockets. We wouldn't want you to feel "robbed" if foreigners decided not to invest in this high-tax, socialist dump of a country.
Posted by: Joe and Josephine Avg. at September 4, 2007 07:20 PM
If Garth draws as little interest as Dion did on his summer tour he'll be talking to half empty rooms. It would be too bad, the Conservatives could benefit from a few rants from Garth!
Does anyone know how Garth gained such fame?
Posted by: Libby at September 4, 2007 07:26 PM
Government Boy blackberried:
initial public offerings have dropped almost 80% since the trust announcement, robbing us all of corporate tax revenues which I suppose will have to be made up by Joe and Josephine Average.
Yep, when government revenues are down don't knock anything off your government paycheque or lay off any government staff. And don't cut any porkbarrel spending or welfare programs. Just dig deeper into our pockets.
And you Conservatives that are laughing at Garth - wipe that smile off your face. Your prime minister is a high-spending, tax-raising joke.
Posted by: Joe and Josephine Avg. at September 4, 2007 07:33 PM
The same federal civil servants who advised Goodale on ITs also advised Flaherty. Did they change their analysis or was it necessary to kill ITs then as is was now?
Garth is just trying to be Dion's attack dog shit-disturber because Garth's survival in the Liberal party depends on Dion's survival .. which doesn't look very good nowadays.
Posted by: Observer at September 4, 2007 08:40 PM
Despite some of my comments on the blog (and I apology for being immature), I really admits your post. It is more mature and rational compared to Turner's rants. You only looked at the facts while Turner screamed about actions on income trusts being the end of the world.
Posted by: Crazy Dan at September 4, 2007 09:31 PM
One question.......
Wasn't the Income Trust change part of the Budget and that was passed with the support of some Liberals if I remember correctly, maybe even Garth voted for it. If the decision was so bad, why didn't the Liebrano's defeat the Government over it?
The reason is they knew it had to be done and thier own Finance Minister, Ralph Goodale tried to do it and backed down because he knew with an election imminent they would lose votes and so did the next best thing, and allegedly leaked info to thier friends and accomplices in the Investment Community.
I agree it was a dumb statement to say the Conservatives would never tax Income Trusts, as never is forever, as foolish as "I guarantee" but when does one ever, ever put thier hard earned cash on the line based on a Politicians statements.
I have been an investor for over twenty five years, do all my own research, make my own decisions based on the facts, not on what someone else says is good for me. I had some Income Trusts in my Portfolio and held on to them and they are now at new highs.
The red herring in all this is that trust investors lost 25 billion or whatever the number is that was thrown out there.....The fact is you haven't lost or gained anything until you sell and take your profits or losses!!!! The folks who panicked, or were advised to sell and lost money, made a second mistake if the trust was a good one, but those who were prudent in thier original investment decisions in the first place and held on are doing quite well, thank you very much.
A last comment to those of you who would take what Garth Turner says as gospel, have a look at his book, The Strategy, A Homeowners Guide to Wealth Creation, written in the late nineties, I believe and look at his section on morgaging your house to invest in stocks at the peak of the Dot Com bubble.
Yes Garth, keep talking and acting like a Puffin, your parties new mascott.....
Posted by: capndan at September 4, 2007 09:44 PM
...a couple of things i learned from investing:
1. don't put all your eggs into one basket
2. greed never wins, wait.
Posted by: tomax7 at September 4, 2007 09:55 PM
Good points Steve.
I think the most important point of all however, was left out:
Here we have a clear example of Government and a private industry (CAITI is a collection of fund sellers) working together to try and get a legistated market advantage for what they are selling. They plan to do this through Garth and the Liberals if they can get them into government.
Personally I favor lower taxes across the board. I don't like it when I see government being bought out by private individuals trying to get legislation giving their product a market advantage. I don't like it when politicians reverse their promises, but in this case I don't see any gain for Harper for doing this so he's likely doing what he thinks is the right thing. I'm much more concerned about government cronism and it appears Garth is willing to accept those bribes.
Posted by: langmann at September 4, 2007 10:20 PM
I'm not a senior, but I'm saving to be. IT's were an effective investment vehicle, paid good monthly distributions and I bought quality trusts, including REITS which I might point out are still exempt from the new tax. I paid the taxes on the income trusts, at my marginal rate of 42%. I paid happily and I don't need any crap from those of you posting here that I was greedy or stupid or any other reason. Those who post those opinions didn't own income trusts and their investment vehicles are GIC's, bank RRSP cash accounts or government pensions. This decision benefited GOVERNMENT employees and their big fat pensions. The trust decision affected every private sector SDRRSP investor by restricting their choice on investment vehicles to grow their own "pensions". It ensured that "double taxation" survives at investors' expense not government. Harper spoke for government on this, pay us first then we'll see what's left over for you Mr & Mrs taxpayer. Who is buying BCE? Ontario Teachers Pension. Are they going to pay any tax on that income sheltered inside their pension? Why did the government restrict Income Trust holdings inside pensions to 5% of their portfolios? "cause they would have loaded up on income trusts, they are efficient cash producers, to the detriment of government revenues being raked in on the higher marginal rates paid by investors. As for the "risks" on income trusts, that is my decision to take, not anyone elses, because it was my f/n money to spend! I EARNED that money, not Mr Harper or Jim Flaherty. I have the right to spend it and invest it, knowing all the risks, as I see fit! Nobody needs "Government risk" in this country or you will be sucking hard to raise capital in our financial markets. I am also a Conservative voter in Harper's f/n riding. I don't vote for liars, crooks or commies. Harper and the Cons can take a long hard suck to get me to vote for them EVER!
Posted by: jt at September 4, 2007 10:39 PM
Well the desperate Liberal team of Goodale and McCallum et al are now desperately trying to cobble up another scheme with IT's , these are the same people who had an RCMP investigation into what they'd been up to. As with most investigations of Liberal goings on, nothing happened. It should be reopened. If Ralphy could find humility and tell what he knows to be the right course, the one Flaherty has taken, he'd gain some credibility. McCallum, well that's another story, he's a financial "expert", he too should know the score. Alas politics gets in the way of reasoned thought.
Anyone worried about being conned had better not vote Liberal, they're the proven masters of the old game.
Posted by: Libby at September 5, 2007 07:36 AM
There is nothing intrinsically more risky about an income trust--it is just a legal structure designed to alleviate some of the double taxation that applies to dividend recipients in Canada. They work well with an established business with a reliable income stream, such as a pipeline business. These investments are perfect for senior's portfolios, espcially once they have to collapse their RRSPs and rely on dividend income.
The political issue here is trust. I am a lifelong conservative and do not trust Harper one bit. They prmised to leave income trusts intact; they reneged. And they did it in an indefensible manner--leaving REITS but no other sector and doing nothing to alleviate the double taxation problem that made income trust ubiquitous in the first place.
Harper has also blown trust by reneging on his promise not to undermine the Atlantic Accords, which the latest budget breaches in significant ways. Little wonder Harper's polls are stuck at 36%. I, a lifelong conservative, would not trust him with a majority, as the scary right-wing moral agenda is surely in the wings (despite the Harper "promise"). The polls are interesting, because people seem to accept the conservative giovernment, but do not trust Harper.
Posted by: murray at September 5, 2007 08:14 AM
While I agree that the Conservatives should never have promised that IT's were safe from a legislated end and that many people, mostly Liberals and IT losers hold out the Prime Minister and Jim Flaherty to be Liars we can not forget that the move on IT's was a necessary evil. Garth Turner at one of his town halls agreed that IT's had to be changed. He only disagreed with the size and implementation of the tax assigned. John Manley, a potential Liberal leader at one time, agreed with the government's position on IT's. After all is said and done, the Conservative has delivered on 4/5 of its core promise which is more than the Liberals did in 13 years at the Helm.
PFW
Posted by: PFW at September 5, 2007 08:42 AM
The party die-hards can rationalize this nine ways to Sunday but they have their heads in the sand if they do not realize this issue has done them serious damage. A good percentage of conservatives I know are royally pissed off about this and do not trust Harper. The polls show it. Time to face reality.
Posted by: murray at September 5, 2007 08:55 AM
The Cons screwed up royally and will pay for it. You don't whack your core supporters and expect to walk away. The Liberals are consulting with affected parties, something the Cons were afraid to do, and will come up with sound policy to the good of the economy and capital providers (investors). The Liberals proposed 10% tax on trust distributions to foreign holders will eliminate to so-called "tax leakage" which Flaherty used as his excuse.
The damage to the oil patch is already evident. Trusts are no longer able to invest in the marginal fields they specialized in so those resources are going undeveloped possibly forever as the large corps wont bother with them. Oil and Gas explorers who used to use trusts as a ready market for their small, marginal finds no longer have that option and as a result are having difficulty financing new exploration.
Harper is so not a leader.
Posted by: da prince at September 5, 2007 09:27 AM
Anyone so bloody concerned about one so-called lie which is more like a necessary change of mind , had better muster up their recall and remember some doozies the Liberals told.
The rat's bum Chretien got elected in whopping majority for telling a whopper, he'd scrap the GST.
I'm sick of those nagging nellies going on about the IT's, it would have been one huge disaster to them roll. It's to the point anything still floating the Liberals can hang on to to keep them from drowning, they'll grab.
Posted by: Libby at September 5, 2007 10:32 AM
Anyone so bloody concerned about one so-called lie which is more like a necessary change of mind , had better muster up their recall and remember some doozies the Liberals told.
The rat's bum Chretien got elected in whopping majority for telling a whopper, he'd scrap the GST.
I'm sick of those nagging nellies going on about the IT's, it would have been one huge disaster to let them roll. It's to the point anything still floating the Liberals can hang on to to keep them from drowning, they'll grab.
Posted by: Libby at September 5, 2007 10:35 AM
Is there an echo or gremlins in this blog to explain the double posts?
Posted by: Libby at September 5, 2007 10:37 AM
Chill Libby, according to you Cons this is a dead issue.
Posted by: da prince at September 5, 2007 10:40 AM
Garth's credibility waned when he crossed the floor. He by the way, denies doing this! Note to Garth; At least Stronach and Emmerson got Cabinet positions for their move.
It should be beneath an MP to call somebody who disagrees with him a"loser". What will he say if we disagree with his position on say handguns or Afghanistan. He should apologize but don't hold your breath.
Garth I suspect, quit the Con. party in some sort of hissy.
He had a reputation for being egotistical and difficult to work with back in his journalistic days. He hasn't changed much.
Posted by: David at September 5, 2007 11:02 AM
Awesome post as usual but one minor quibble:
"If you are still not sure (about income trusts), hey, join the club. "
The case against income trusts is overwhelming. Off the top of my head:
-Lowers tax burden on rich investors and places tax burden on working people.
-People under 35 are paying off student loans and mortgages and simply don't have as much money to invest as older people, so it's a bad deal for young people.
-Income trusts are a sign of a dysfunctional and uncompetitive economy.
-Income trusts don't re-invest in their own companies enough and unless protected by lack of competition they wither away.
-Finally, they are highly discriminatory against working single moms.
Posted by: Economist at September 5, 2007 12:57 PM
"Finally, they are highly discriminatory against working single moms"
And they discriminate against blacks, natives and the elderly. Oh wait, scratch elderly.
Posted by: da prince at September 5, 2007 01:26 PM
I attended Jason Kenny's town hall meeting in SW Calgary last spring, which talked about income trusts. Judging by the mood of the crowd, in a "safe" Conservative riding, this issue is going to cost them votes in their own ridings. The mood of the crowd was hostile and if we could have got away with it, he would have been tarred and feathered and run out of town on a rail! The Cons know it. They had an earlier morning meeting, unadvertised I might add and that meeting was a free for all, Conservative Party, public whipping. The later audience was peppered by plain clothes COPS, with two uniformed ones standing at the back. The cops filmed the crowd so that they now have a video record of who was present and who might cause these crooks some grief. Not what I call a free and democratic meeting. More like welcome to the Gulag. Here's our policy, f-u. This issue is a hot button because the effects of the decision hit investors of all ages, not just seniors, on their investment choices and the amount of tax being stripped away by government (read government employees of all levels) to fund their own salaries and gold plated pensions. It was outright theft of our future investment returns, confiscated by government on a lie. The lies being propagated by some of the posters on this site are typical of un-sophisitcated boobs, who know nothing about how capital markets work in this country. the effects on the oil and gas industry are already being felt. reduced capital expenditures = less drilling, which affects my job. I thank you all. Nothing like a little governemnt interference in the economy like the Trudeau governemnt and it's NEP policy. Well this is NEP-lite, by a so-called Conservative government. I voted Conservative but I got a central-canadian-government-controls-your-life-Liberal party member elected in this weatern riding. Their actions stripped 20% of my net worth, and I was diversified, and affects my earnings on the job as well as the future of my job. I should just trust these pricks with my future? Not on your life! Flaherty then, didn't win any respect from those affected, by producing blacked out pages of information witheld from those investigating the rationale for their trust decision. If the Liberals had done that, they would have been vilified as the crooks that they are. Well, the Cons are just that, Cons and no better than the shmucks who ruled us for 13 years previously. You want government regulated economies, government interference in your life, then reap what you sow. The effects of thet mentality are free for study in the USSR and China. No freedom of choice and your economy is run like a biker gang.
Posted by: jt at September 5, 2007 02:13 PM
This decision benefited GOVERNMENT employees and their big fat pensions. The trust decision affected every private sector SDRRSP investor by restricting their choice on investment vehicles to grow their own "pensions". It ensured that "double taxation" survives at investors' expense not government.
Attaboy, jt.
For the rest of you ...
There's a war on - or hadn't you heard? There's a war between people who get government cheques on one side, and your income and your savings on the other side. So far the war is going really badly (for you).
Lowers tax burden on rich investors and places tax burden on working people.
Er, no, *income trusts* don't place a burden on working people, *government* does.
In your Economist textbooks, no matter how hard you look, and even if it is the understated premise of nearly everything that you were taught in the government education system, I doubt very much that you will find a Law of Economics that says that government "must" make up its revenues somewhere, from someone. Most of the money taken by your government is wasted and stolen. Why "must" people feed the corruption machine with their hard-earned dollars? Why do people permit the government to inflate the currency every year, destroying the value of whatever they don't tax away? Why - in a million years, given the corruption and egregious stupidity that is revealed in every single AG report - would anyone think that people in government are actually smarter, more generous and more far-seeing than ordinary blokes? The fact that people rather meekly surrender to the tax-grabbers - IN THEIR OWN CONSERVATIVE PARTY - makes me think, boy oh boy, we really are all Turdeau's children, aren't we?
Income trusts are a sign of a dysfunctional and uncompetitive economy.
You may be correct. It seems like a rather odd and stilted way to invest money. But why do you attack that which is only a symptom of a dismal economy, instead of attacking its source - punitive taxation, strangling regulation, rampant cronyism, and massive spending on welfare projects?
Remember Jerry Seinfeld explaining the war between Morning Guy who has to get up and go to work, and Night Guy who likes to party all night?
Night Guy always screws Morning Guy. There's nothing Morning Guy can do. The only thing Morning Guy can do is try and oversleep often enough so that Day Guy loses his job and Night Guy has no money to go out anymore.
The government is Night Guy. They're screwing working people and they don't give a damn. Morning Guy, an ordinary Canadian schlub, will take his revenge by getting government loans, staying in school til he's 30, smoking dope all day, then refusing to work until he gets a government job too. What's Night Guy going to do then? Probably he'll try to create special tax-free economic zones like maquiladoras to lure back foreign investment ... but he'll never give Morning Guy a break. And he's sure as hell not going to stop partying.
Posted by: at September 5, 2007 07:54 PM
Nice work, Steve. So Garth was against income trusts before he was for them. But we all pretty much know that this is just his weapon of choice for beating Harper over the head.
I agree with Cool Blue; I'll wager the majority of Canadians are like me, just struggling to pay their bills every month, and don't give a crap about income trusts.
Posted by: muttsrus at September 4, 2007 07:11 AM
Nice try muttsrus. So Stephen Harper was for income trusts before he was against them. But we all preety much know that this was just his weapon of choice for getting elected and then beating seniors over the head. I'll wager the majority of seniors and those just struggling to pay their bills every month, will understand the dishonesty of Stephen Harper:
Questioning income trusts puts seniors at risk
Byline: Stephen Harper
Source: National Post
Wednesday, October 26, 2005
Page: A20
On September 19, the Prime Minister acted recklessly when he ordered his Finance Minister, Ralph Goodale, to wade into the income-trust market like a proverbial bull in a china shop. On that day, investors were put on notice that their popular income trusts were going to be targeted by a Liberal government seeking higher tax revenues from companies and investors.
Martin's reckless action has caused uncertainty over the future of income trusts, and so has wiped out billions of dollars in market capitalization from Canadian companies and tens of thousands of dollars from the retirement nest eggs of individual investors. Most notable was the damage done to Canadian seniors who may not have the time to recoup their losses.
One couple e-mailed my party to complain that the uncertainty around income trusts caused by the Liberals' announcement trimmed $30,000 from their retirement portfolio in a single day. Another man wrote to tell us that he had lost 15% from his his portfolio.
Many seniors feel the government is putting their retirement at risk and have let Ottawa know. In a letter to the Finance Minister, the Canadian Association of Retired Persons said, "Seniors are actually enraged, frightened and panicked about potentially losing retirement savings that they count on for the essentials of daily living."
Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine. They also provide tax relief from a government that is addicted to taking too much money from their pockets and spending it without care, and very often without meaningful results.
So one must ask, why is the government clamping down on the retirement savings of seniors and investors?
But it gets worse. Instead of immediately moving to assure markets that income trusts are here to stay, the Liberals are justifying their actions in the coldest political terms. As one government member was quoted in the media as saying about income trust investors, "They have no constituency. They don't count politically."
That kind of arrogance cannot go unanswered. There is just no justification for what amounts to a Liberal government attack on investors, and especially on seniors.
The government continues to overtax Canadians and run multi-billion dollar surpluses, yet their first instinct is to attack an investment vehicle that can make the difference between bare survival and a dignified retirement for millions of Canadians.
The government claims that income trusts enjoy an unfair tax advantage over corporate dividends. If they believe this, then the answer is not to shut down a valuable investment vehicle, but to cut the double taxation of dividends. In short, level the playing field and let the market decide between income trusts and dividend-paying companies.
As my party's finance critic, Monte Solberg, says, the success of income trusts represents a rare triumph for investors over the tax man. Let's not be so naive as to assume that the Liberals will do the right thing to protect taxpayers. We'll need to fight hard to keep what we have, and even harder to gain ground.
It's time to stand up to Paul Martin and stop his attack on seniors and investors.
Posted by: Geoffrey L. at September 6, 2007 01:05 AM
Nice work, Steve. So Garth was against income trusts before he was for them. But we all pretty much know that this is just his weapon of choice for beating Harper over the head.
I agree with Cool Blue; I'll wager the majority of Canadians are like me, just struggling to pay their bills every month, and don't give a crap about income trusts.
Posted by: muttsrus at September 4, 2007 07:11 AM
Nice try muttsrus. So Stephen Harper was for income trusts before he was against them. But we all preety much know that this was just his weapon of choice for getting elected and then beating seniors over the head. I'll wager the majority of seniors and those just struggling to pay their bills every month, will understand the dishonesty of Stephen Harper:
Questioning income trusts puts seniors at risk
Byline: Stephen Harper
Source: National Post
Wednesday, October 26, 2005
Page: A20
On September 19, the Prime Minister acted recklessly when he ordered his Finance Minister, Ralph Goodale, to wade into the income-trust market like a proverbial bull in a china shop. On that day, investors were put on notice that their popular income trusts were going to be targeted by a Liberal government seeking higher tax revenues from companies and investors.
Martin's reckless action has caused uncertainty over the future of income trusts, and so has wiped out billions of dollars in market capitalization from Canadian companies and tens of thousands of dollars from the retirement nest eggs of individual investors. Most notable was the damage done to Canadian seniors who may not have the time to recoup their losses.
One couple e-mailed my party to complain that the uncertainty around income trusts caused by the Liberals' announcement trimmed $30,000 from their retirement portfolio in a single day. Another man wrote to tell us that he had lost 15% from his his portfolio.
Many seniors feel the government is putting their retirement at risk and have let Ottawa know. In a letter to the Finance Minister, the Canadian Association of Retired Persons said, "Seniors are actually enraged, frightened and panicked about potentially losing retirement savings that they count on for the essentials of daily living."
Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine. They also provide tax relief from a government that is addicted to taking too much money from their pockets and spending it without care, and very often without meaningful results.
So one must ask, why is the government clamping down on the retirement savings of seniors and investors?
But it gets worse. Instead of immediately moving to assure markets that income trusts are here to stay, the Liberals are justifying their actions in the coldest political terms. As one government member was quoted in the media as saying about income trust investors, "They have no constituency. They don't count politically."
That kind of arrogance cannot go unanswered. There is just no justification for what amounts to a Liberal government attack on investors, and especially on seniors.
The government continues to overtax Canadians and run multi-billion dollar surpluses, yet their first instinct is to attack an investment vehicle that can make the difference between bare survival and a dignified retirement for millions of Canadians.
The government claims that income trusts enjoy an unfair tax advantage over corporate dividends. If they believe this, then the answer is not to shut down a valuable investment vehicle, but to cut the double taxation of dividends. In short, level the playing field and let the market decide between income trusts and dividend-paying companies.
As my party's finance critic, Monte Solberg, says, the success of income trusts represents a rare triumph for investors over the tax man. Let's not be so naive as to assume that the Liberals will do the right thing to protect taxpayers. We'll need to fight hard to keep what we have, and even harder to gain ground.
It's time to stand up to Paul Martin and stop his attack on seniors and investors.
Posted by: Geoffrey Laxton at September 6, 2007 01:08 AM
Nice work, Steve. So Garth was against income trusts before he was for them. But we all pretty much know that this is just his weapon of choice for beating Harper over the head.
I agree with Cool Blue; I'll wager the majority of Canadians are like me, just struggling to pay their bills every month, and don't give a crap about income trusts.
Posted by: muttsrus at September 4, 2007 07:11 AM
Nice try muttsrus. So Stephen Harper was for income trusts before he was against them. But we all preety much know that this was just his weapon of choice for getting elected and then beating seniors over the head. I'll wager the majority of seniors and those just struggling to pay their bills every month, will understand the dishonesty of Stephen Harper:
Questioning income trusts puts seniors at risk
Byline: Stephen Harper
Source: National Post
Wednesday, October 26, 2005
Page: A20
On September 19, the Prime Minister acted recklessly when he ordered his Finance Minister, Ralph Goodale, to wade into the income-trust market like a proverbial bull in a china shop. On that day, investors were put on notice that their popular income trusts were going to be targeted by a Liberal government seeking higher tax revenues from companies and investors.
Martin's reckless action has caused uncertainty over the future of income trusts, and so has wiped out billions of dollars in market capitalization from Canadian companies and tens of thousands of dollars from the retirement nest eggs of individual investors. Most notable was the damage done to Canadian seniors who may not have the time to recoup their losses.
One couple e-mailed my party to complain that the uncertainty around income trusts caused by the Liberals' announcement trimmed $30,000 from their retirement portfolio in a single day. Another man wrote to tell us that he had lost 15% from his his portfolio.
Many seniors feel the government is putting their retirement at risk and have let Ottawa know. In a letter to the Finance Minister, the Canadian Association of Retired Persons said, "Seniors are actually enraged, frightened and panicked about potentially losing retirement savings that they count on for the essentials of daily living."
Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine. They also provide tax relief from a government that is addicted to taking too much money from their pockets and spending it without care, and very often without meaningful results.
So one must ask, why is the government clamping down on the retirement savings of seniors and investors?
But it gets worse. Instead of immediately moving to assure markets that income trusts are here to stay, the Liberals are justifying their actions in the coldest political terms. As one government member was quoted in the media as saying about income trust investors, "They have no constituency. They don't count politically."
That kind of arrogance cannot go unanswered. There is just no justification for what amounts to a Liberal government attack on investors, and especially on seniors.
The government continues to overtax Canadians and run multi-billion dollar surpluses, yet their first instinct is to attack an investment vehicle that can make the difference between bare survival and a dignified retirement for millions of Canadians.
The government claims that income trusts enjoy an unfair tax advantage over corporate dividends. If they believe this, then the answer is not to shut down a valuable investment vehicle, but to cut the double taxation of dividends. In short, level the playing field and let the market decide between income trusts and dividend-paying companies.
As my party's finance critic, Monte Solberg, says, the success of income trusts represents a rare triumph for investors over the tax man. Let's not be so naive as to assume that the Liberals will do the right thing to protect taxpayers. We'll need to fight hard to keep what we have, and even harder to gain ground.
It's time to stand up to Paul Martin and stop his attack on seniors and investors.
Posted by: GL at September 6, 2007 01:12 AM
I listened to "Rutherford" yesterday as McCallum tried to explain the Liberals policy; what an idiot. Dave asked him explain it, he couldn't. McCallum said certain industries should be exempt. Dave asked which ones-John didn't know. And it's his policy !! Today he had John Carpenter on, head of the CGA Association of Alberta. He said the Liberal's plan is the same as the Conservatives. They are just fiddling with the rate. Now the reason McCallum was tapdancing make sense.
Posted by: Boomer at September 6, 2007 03:11 PM
He said the Liberal's plan is the same as the Conservatives. They are just fiddling with the rate.
Both parties are liars and fiddlers because the people who pay taxes are not their true constituency. Their real constituents are the people who they keep on a leash with government cheques. Non-government types who earn their own keep are not really impressed by anything that politicians get up to and they don't buy into the new and improved nanny state crap that politicians are always pushing. But take someone out of the real job market and get them at the trough, they start to feel their talent, drive and marketability slipping away, and they turn into doughy, unambitious fiscal dependents, and oh boy, have you ever got them by the balls. And vice-versa. Have you ever seen a mob of *taxpayers* trying to storm the legislature? Welfare bums is the politician's BFF. Taxpayers rate about as high on the politician's list as dog poo on their shoes.
Posted by: at September 6, 2007 08:19 PM
So that smirking twit Flaherty has started to unleash the attack dogs by disparaging "helpless seniors" and "greedy investors". Well, I'm not buying it. Many of us feeble old seniors were skilled managers and investors before we became befuddled seniors, and we're easily capable of analyzing the quality and risk of our retirement investments. It's just so much Harper crap to try to present this issue as one of saving foolish seniors from financial charlatans. Even the National Post gets on this band-wagon from time to time, saying that seniors should have known better.
However, this is not the issue. The issue is that Stephen Harper went out of his way to assure us that the Conservatives would protect income trusts and that seniors could rely on them if the Conservatives became government. When he and (smirking-twit) Flaherty flip-flopped, it was because they intended to all along, or they were bamboozled by their bureaucrats. They're not saying publicly, so we can safely assume, absent any plausible explanation, that it was one OR the other and these two twits are at the root of it.
We're retired executives now, fully capable of recovering from the financial piracy of two inexperienced and treacherous nitwits, so the issue is not one of degraded investments. The issue for the Cons is how to get badly burned seniors to support a party of treacherous big-spending nitwits. From where I sit in my rocking char, it ain't going to happen. Without our support, they're going to be stuck at 36% for a long time.
Posted by: JJJoseph at September 7, 2007 01:01 AM
So that smirking twit Flaherty has started to unleash the attack dogs by disparaging "helpless seniors" and "greedy investors". Well, I'm not buying it. Many of us feeble old seniors were skilled managers and investors before we became befuddled seniors, and we're easily capable of analyzing the quality and risk of our retirement investments. It's just so much Harper crap to try to present this issue as one of saving foolish seniors from financial charlatans. Even the National Post gets on this band-wagon from time to time, saying that seniors should have known better.
However, this is not the issue. The issue is that Stephen Harper went out of his way to assure us that the Conservatives would protect income trusts and that seniors could rely on them if the Conservatives became government. When he and (smirking-twit) Flaherty flip-flopped, it was because they intended to all along, or they were bamboozled by their bureaucrats. They're not saying publicly, so we can safely assume, absent any plausible explanation, that it was one OR the other and these two twits are at the root of it.
We're retired executives now, fully capable of recovering from the financial piracy of two inexperienced and treacherous nitwits, so the issue is not one of degraded investments. The issue for the Cons is how to get badly burned seniors to support a party of treacherous big-spending nitwits. From where I sit in my rocking char, it ain't going to happen. Without our support, they're going to be stuck at 36% for a long time.
[Please forgive me if this is posted more than once. Steve's blog system doesn't easily tell us what it's doing as it fumbles with our postings. I've tried maybe six time to post this message. Several times it replies "Error 500. Bugger" Only Steve knows for sure what happens after we press "Post"!]
Posted by: JJJoseph at September 7, 2007 01:51 AM
Sorry about that commenting problem, JJJoseph. Understand that this is a shared MT 2.6 installation hosting about 50 blogs or so. So I don't administer global stuff like comments scripts. They break, and then they get fixed, and I'm just as surprised as everyone else. And no, I don't like that error message either. Not very descriptive.
Posted by: Steve Janke at September 7, 2007 07:00 AM
Late in on this discussion, but I noticed the comment about the seniors struggling to pay their bills...?Where are they?Half the seniors I know are comfy but not wealthy enough or informed about investing.They would not be the ones 'upset ' by this. The other half own the house and the condo in Florida and won't notice any difference in the cashflow.
As someone already pointed out Goodale knew what had to be done and chicken farted thru the election campaign. It's obvious once Flaherty and Harper got into the books and started listening to the advisors, they knew what had to be done.
My income is taxed. Why not tax income from investments?
Posted by: bluetech at September 7, 2007 08:07 AM
Income from investments (including trusts) _IS _ taxed - and now it's proposed to tax it TWICE. The problem is not taxation, it's intentional double-taxation. The Tories said they wouldn't, but they did.
It's not right to keep twisting the argument to imply that greedy seniors are cheating the system. They're still paying their share, just like they ought to. That has nothing to do with Harper and Flaherty breaking their word and falling into a PR tarpit because they're too gullible and shallow to figure out what the bureaucrats-with-double-taxation-agenda are feeding them.
Posted by: JJJoseph at September 8, 2007 02:08 AM
 
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