The first two points are one and the same really. Me losing a lot of money all of the sudden is a direct result of how Flaherty decided to handle this issue. He wanted to contrast how the Liberals did it:
Flaherty imposes new tax on income trusts
"Well, the last government did nothing but muse about it and that was the problem," said Flaherty. "There's still an RCMP investigation of the Department of Finance in Ottawa about leaks arising from that."But the problem with how the Liberals handled the affair was that they leaked the decision before the announcement to folks on Bay Street. It was known generally that an announcement was going to be made, but not what that decision was going to be. Contrast Flaherty and the Conservatives who showed absolutely no intention to deal with trusts until last night. As a result the market has to absorb this shocker the instant the doors open in the morning. If you are planning on screwing with the market you warn people that you are thinking about it so that the market can deal with it rationally when you announce the decision a month (or whatever) later. Today was a mad scramble. In addition if you warn, you can consult.
Then there is the nature of corporate taxes, capital gains and dividend taxation. As Andrew Coyne points out "No corporation ever paid a dime of tax. All taxes are paid by people: the people who own the corporation, or the people who work for it, or the people who buy its products. A corporation is just a piece of paper, a legal document on file at the registrar's office." So why the hell are people getting double taxed left right and centre? And then, depending on the source of the money taxed at different rates. Income is income is income - tax it once and all at the same rate. (keeping it progressive of course). By making the move at the corportate tax level is an attempt to placate the NDP who don't understand Coyne's point and are always going after corporations to pay more taxes.
Lastly, I am not a senior and ther was nothing in Flaherty's announcement that was designed to soften the blow of the announcement. He was abviously sucking up to that demographic, but they are not the only people who have invested in income trusts. Why the hell must I bear the full brunt of the blow while others get deliberate cushioning?
Looks like I'm not the only one who lost, looks like some lost BIG:
globeandmail.com : globeinvestor.com : Surveying the fallout from the trust bombshell
Income trust investors suffered more than $20-billion in paper losses on their portfolios as some of Canada's best-known companies — from telecom giants BCE and Telus to Yellow Pages, CI Financial, Canadian Oil Sands and Aeroplan — were battered by the rush selling following Mr. Flaherty's surprise announcement that trusts will be taxed.
Technorati Tags: Income Trusts, Conservatives, Taxation, Canada, Politics, Conservative Party of Canada,
4 comments:
It stinks of Nortel. I think they jumped the gun. It's ironic that a Conservative government did this. Then again, the Tories are the ones who introduced socialist initiatives throughout Canada's history.
Income trusts were a shaky tax dodge. No surprise that the tax man chose to close this loophole before its revenue evaporated.
It is not wise to pile your finances into risky investments (as I learned in the tech crash)
Flaherty really messed this one up. As far as I am concerned this is a rookie mistake by a rookie government. The key is not to forget this, or let others forget it, come election time.
Here we go:
1. Leaks can be avoided if you ensure discipline amongst the political staff knows. The Liberals had a culture of leaks and the media seemed to expect it.
2. Many of the companies that were/are income trusts are rock solid - not like dot com startups or Nortel. They are making profits, selling things and have serious capital investment. I doubt that they will be fundamentally changed by this decision. We are seeing irrational reaction. Nonetheless the shock to the market delivered by Flaherty will, I think, probably have more of an effect than the decision to tax.
3. I understand and sympathise with the reasons for closing the loophole. It is probably a good decision, however, I object to the method by which the decision was delivered and the unfair cushioning given to only some segments of the population.
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