Wednesday, October 31, 2007

One year after Stephen Harper's Income Trust Betrayal: The Top Ten questions still unanswered.


OTTAWA, Oct. 31 /CNW/ - Stephen Harper broke his election promise to never raid seniors' nest eggs through taxing income trusts, by doing that very thing on Halloween 2006. 365 days later, the following questions for Stephen Harper remain unanswered:

(1) Where is your government's proof of alleged tax leakage? 18 pages of blacked-out documents are all that you have provided to back up this claim.

(2) Why were the taxes paid by 38% of all outstanding income trusts held in RRSPs and pension accounts not included when evaluating possible tax losses to the government?

(3) Where is the promised transparency and accountability? Such a sweeping change in tax law should at the very least have involved public consultation.

(4) Why did the Department of Finance demand the return of the 18 pages of blacked out documents issued under the Access to Information Act?

(5) How could the proposed conversions of BCE and Telus into income trusts have had any effect on tax revenue when neither were paying taxes as corporations and were not expected to for several years?

(6) What policy advantage is there, now that BCE has been taken private through a highly debt levered buyout, and which has caused a loss of the $793 million more PER YEAR that BCE would have paid as an income trust?

(7) How is the stated objective of tax fairness and leveling the playing field achieved when government sponsored pension plans are allowed to own trusts, free of tax in their private equity portfolios, while 70% of individual Canadians are not? Why are government sponsored pension funds exempted both from the punitive 31.5% tax and growth restrictions of this policy? Furthermore, why does income splitting for seniors only benefit the 30% of Canadians with pensions, and not the 70% without? Why is this government deliberately creating a two-tiered pension system in Canada? Is this the government's response to the retirement time bomb of an aging population?

(8) Why was the 15% withholding tax paid by foreigners on interest on leveraged buyout loans reduced to zero as part of this same tax policy, at a cost to Canadians of $300 million a year? This special foreign tax loophole makes Canadian public companies more susceptible to leveraged buyout foreign takeovers, at the same time as the trust tax causes them to become grossly undervalued, because of the discriminatory nature of the tax, which only applies to Canadians and not pension funds or foreigners. As such the government has, in effect, introduced tax subsidies to encourage foreign takeovers. Why?

(9) What effect will the loss of $2 billion in annual tax revenues arising from the $65 trust takeovers to date (including BCE) have on the average Canadian taxpayer or Canada's social program spending? Will individual taxpayers be the ones to make up the shortfall? Once the entire sector is taken over by foreign private equity and government sponsored pension plans, the loss in annual tax revenues will rise to $7.5 billion, the equivalent of a 1.5% GST increase. What plans are in place to address this inevitable shortfall in light of all the other tax reductions contained in yesterday's fiscal update amounting to $60 billion. At what point will the cupboard be bare?

(10) Stephen Harper wrote the following in the National Post on October 26, 2005. "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." If so, then why did he so abruptly and without notice or public consultation reverse his promise, leaving investors and seniors with losses of $35 Billion and their incomes reduced by 31.5% and in some cases 50%? How is this socially just or fair?

(11) Meanwhile, why is Jack Layton and the NDP supporting this policy when they profess to be against wholesale foreign takeovers of Canadian businesses and supposedly in favour of protecting seniors' dignity and seniors' retirement savings? Where is Jack Layton's and the NDP's proof of tax leakage? Is the NDP in possession of confidential insider information that would underlie the basis for the following claims contained in correspondence from NDP MPs to their many concerned constituents:

"I have spoken with the NDP party's Finance Critic, Judy Wasylycia-Leis, and she assures me that the government's estimates of future tax revenue losses, are solid."
Jack Layton

What is the basis for these assurances from Judy Wasylycia-Leis? Canadians are demanding of answers from both the Leader of the NDP and the Prime Minister of Canada on this cornerstone assumption.

Conclusion:

Taken as a whole, this is a travesty of democracy, starting with the breaking of a promise, the false premise for breaking the promise, the complete absence of consultation and the litany of adverse policy repercussions as the aftermath of a policy borne out of zero accountability and a complete lack of government transparency. All Canadians are adversely affected. Narrow special interests have successfully manipulated Canada's New Government for their selfish ends.

Alleged tax leakage is the cornerstone assumption behind this tax policy. It constitutes two of the five provisions of the Ways and Means Motion. The other three provisions of the Ways and Means Motion are verifiable constructs as well. Meanwhile transparency and accountability are the cornerstones of a democracy. The real danger to Canadians is that the Conservative Government is flagrantly undermining our democratic institution known as Parliament, if major tax laws are being enacted and passed on the basis of their foundations being assumed to be true, when in fact no proof whatsoever has been provided by the Government.

Dangerous Precedent:

This is an extremely dangerous precedent to have established, since it gives extraordinary powers to the Government to pass important legislation by invoking fact based arguments, that are devoid of fact based evidence. If this is allowed to occur under circumstances like these, then the risk for future abuse of our Parliamentary democracy under matters that are not verifiable in nature, is limitless.

Public Inquiry:

Stephen Harper together with Jack Layton, and the members of their respective parties are acting in concert to abrogate Canadians' democratic institution known as Parliament. As such, we are calling for a Public Inquiry, to fully examine the matter of alleged tax leakage, particularly in light of the Government's announced reduction in corporate tax rates by a staggering 32% from 22% to 15% in 2012. If the original policy intent on income trusts was to "level the playing field" with corporations, then this changed tax regime for corporations announced by the government yesterday, demands a re-examination of the extent to which these most recent measures will have tilted the playing field in favour of corporations and to the detriment of income trusts.

Furthermore, all Canadians need to establish whether Professor Jack Mintz was correct when he stated:

"I do want to point out that there is a serious flaw in some analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero".
Jack Mintz

This level of uncertainty over the central premise of tax leakage is significant and fails to meet the standards of the Auditor General, who states:

"Parliamentarians need objective fact based information on how well the government raises its funds (taxes)".

Until this standard is met, Canadians will never know whether the following policy measure of this new tax is fact or merely political deceit:

"strengthening Canada's social security system for pensioners and seniors" (Ways and Means Motion)"

Brent Fullard
President & CEO
Canadian Association of Income Trust Investors
www.caiti.info

For further information please contact the:
Canadian Association of Income Trust Investors
media@caiti.info or by calling (647) 505-2224

Source: CNW

Income Trust Investors still angry at Harper Government decision

"These guys open their mouths and you know they are lying"
David Marshall, October 27 2007



Related:
Finance Committee Report on Income Trusts

“Halloween massacre‘‘ still horror story for oilpatch one year later

TORONTO _ Major oil patch players say Finance Minister Jim Flaherty‘s “Halloween massacre‘‘ has turned into a full-blown horror story a year later, with oil and gas income trusts more prone to foreign takeovers and less able to access capital.

“We‘re not just a bunch of spoiled brats concerned because a toy has been taken away. This is something that is an enormous mistake,‘‘ said John Dielwart chief utive of Arc Energy Trust.

Dielwart, whose company was among the first to adopt the popular investment model, has been one of the most vocal opponents to Flaherty‘s plan to impose a 31.5 per cent tax hike on income trusts by 2011.

Dielwart said Flaherty made a big mistake in interfering in capital markets, which helped a $100-billion energy trust sector.

“It wasn‘t a gimmick, it wasn‘t based on artificial tax advantages. It was based on a very solid business model,‘‘ he said. “This was, if not the optimal model, it was pretty darn close.‘‘

Eilat warns that Canada‘s oil and gas sector _ owned and operated and run by Canadians _ will get back into foreign control “and I don‘t think anybody wants that.‘‘

One key example is PrimeWest Energy Trust, which Abu Dhabi-based state-owned energy firm TAQA is proposing to take over for $5-billion.

“We‘re going to see a lot more of them fall into foreign hands,‘‘ said Ross Freeman, a partner in Calgary‘s Borden Ladner Gervais LLP, but he adds that most of the activity won‘t happen until the four-year grace period comes to an end.

“The vast majority of the royalty trusts are still out there. They‘ve hung in there. They‘re trying to take advantage of the remaining grand fathering period. But they‘re under increasing pressure to do something and certainly there‘s a lot of pressure from overseas,‘‘ Freeman said.

He says the biggest losers from the income trust decision have been junior producers.

“Killing income trusts was a very, very severe blow, not just to the income trusts themselves, but to the whole junior sector, and that‘s where the impact, I think, was grossly underestimated by a lot of people,‘‘ he said.

With the weakening of that structure, juniors are getting less investment and fewer are being “gobbled up‘‘ by other trusts.

“The amount of financing the juniors were able to be doing just crashed. They just couldn‘t get investors any more,‘‘ Freeman said.

The majors, on the other hand, are doing ok, he said.

“They were never in the model of distributing their cash flow. They were not a yield investment. Even the very largest ones pay only very modest dividends. So clearly they‘ve been the winners of all of this.‘‘

They majors have also done well in the face of the income trust decision because it‘s brought their operating costs down, Freeman said. The cost of drilling has plummeted by more than 50 per cent over the past year, leading to the creation of far fewer wells.

“From an oil and gas company‘s perspective, that‘s a positive, it‘s cheaper to drill. Not so good if you‘re a drilling contractor,‘‘ he said.

Les Stelmach, an analyst with Bisset Income Fund agrees larger players may not have so much to lose in the short term.

“They‘re large, they have diversified asset portfolios, so they‘re less sensitive to changes in commodity prices or changes to royalty rates. They‘re certainly a viable business 2011. For smaller trusts, they, too can be very viable,‘‘ Freeman said.

He says smaller energy companies can also remain viable if they carve out the right course.

“The crux of the matter is they can‘t pay as much for property so they‘re less likely to be as acquisition focused as they were in the past,‘‘ he said, adding producers that have carved out specific niches will do better than ones that rely solely on acquisitions.

As the chief of one of the so-called “majors,‘‘ Dielwart said he disagrees that the bigger companies aren‘t taking as much of a hit. He said his company saw a 25 per cent decrease in capital from pre-Oct. 31, 2006 levels.

He also takes issue with the argument that values have somewhat recovered since the initial blow. Arc Energy units are trading about $7 below what they were a year ago, which Dielwart blames on the income trust decision.

“One one who suggests that values have recovered are just not doing their homework,‘‘ he said.

Meanwhile, ripples are being felt south of the border, too.

A Chicago couple, saying Flaherty‘s move has cost Americans and Canadians billions of dollars in lost investments, is using a provision of NAFTA to challenge the Conservative government‘s move.

“The Halloween 2006 income trust decision by the Government of Canada has had a massive financial impact on thousands of investors in Canada and the U.S. and we believe that it breached Canada‘s NAFTA obligations,‘‘ Marvin Gottlieb said in a statement Tuesday on behalf of himself and his wife.

“Because of this decision, more than $30 billion has been lost by individual investors in Canada and more than $5 billion has been lost by energy trust investors, including Elaine and me, in the United States.‘‘

Source: Oilweek Magazine - Canadas Oil and Gas Authority

Tuesday, October 30, 2007

Questioning income trusts puts seniors at risk

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.

Source: National Post

Americans Take on Canadian Prime Minister over Income Trust Injustice - Diane Francis

A Chicago couple is opening up a Pandora’s Box of litigation against Prime Minister Stephen Harper under the North American Free Trade Agreement because he reneged on a promise not to tax income trusts. Marvin and Elaine Gottlieb today filed under Chapter 11 of NAFTA, a little-used provision which is designed to remedy financial damages caused by any of the treaty’s three signator governments against citizens of the other two. It’s been used rarely and bypasses the regular court system, deferring to a tribunal of experts. The tribunal is comprised of one appointee from the accused government, one from the country in which the victims live and a third agreed to by both. They hear evidence and render a verdict that cannot be appealed.

Canada Disappoints

“I’ve done a lot of business in Canada and with Canadians and I’m disappointed the government would do this,” said Mr. Gottlieb in an interview today before his press conference in Ottawa. “What better promise than the Prime Minister of a country who said he had reviewed the issue and was not going to tax trusts. Then a year ago he did. We relied on that pledge to expand our investments and so did a lot of people.”

The Flip Flop

Harper’s flip flop, cobbled together over a weekend last year for no reason then poorly marketed by Finance Minister Jim Flaherty, wiped $35 billion in value off income trusts. It led to the takeover of 46 trusts by foreigners and private equity buyers.

Here’s where this legal action gets interesting:

  • Canadians cannot sue their own government for damaging them, but a Canadian who also holds Mexican and/or
  • U.S. citizenship is entitled to file an action under Chapter 11, irrespective of where they live. “Dual nationals and landed immigrants, who were damaged, can get involved even if they are residents of Canada,” said Mr. Gottlieb.
For information as to what the case is about and who qualifies please look at website, naftatrustclaims.com

Who Can Sue


In general, those who can sue under Chapter 11 are:
  • Canadians with dual citizenship
  • Landed immigrants in Canada with Mexican or U.S. citizenship.
  • Mexican citizens not living in Canada
  • American citizens not living in Canada
The last Chapter 11 case was waged by the Loewen Group, a Canadian funeral home chain. The company was bankrupted after an ignorant Mississippi jury awarded US$600 million in punitive damages to a local funeral home operator even though he was only suing for US$2 million in a contract breach case. Founder Ray Loewen of Vancouver made a Chapter 11 claim but lost after several years.

Most recently was a case involving B.C. lumber giant Canfor Corp., which sued over the unfair softwood lumber tariffs and quotas imposed by a U.S. federal agency over the years. This case was launched by an American against the Canadian system. Mr. Gottlieb, a successful retired businessman, began investing in Canada pretty heavily beginning in 2000, mostly in the energy trust sector.

He increased his investments as a direct result of the Prime Minister’s promise to leave income trusts alone in the last election. He is suing for $6.5 million in damages and doing what he can to help others get their day in court too.

“This is not about politics or politicians,” he said in an interview this morning before his press conference in Ottawa. “We are not concerned about them, but the ground rules on NAFTA is what we’re asking for. NAFTA treaty rules. Not politics.”

Why Chapter 11

Chapter 11 was written into NAFTA, ironically, mostly amid concern about Mexico and its corruption and past proclivity to expropriate assets or discriminate against foreigners.

But the high-handed behaviour of the Canadian government vis a vis income trusts is more egregious than anything the Mexicans have done.

“It’s a question of ethics. NAFTA is the only avenue we have,” he said. “We’re talking about a broken commitment by a Prime Minister.”

“We will be attempting to attract other American investors who found themselves in a similar disadvantage as a result of a government decision. This is about fair and equitable treatment,” he said.

After the announcement about income trusts, Mr. Gottlieb started a letter writing campaign, with others, to convince the Tories to reconsider their decision.

“I contacted other government organizations and got stock answers, don’t bother me anymore was the attitude,” he said. “We learned that NAFTA might be the opportunity for an individual in the U.S. to bring this attention to the public.”

“These hearings may also bring sunlight to the project. There were no reasons for the action and only generalities,” he said. “A NAFTA tribunal will show who was right and who was wrong.”

“There has also been serious damage to the energy sector, in particular,” he said. “This is very important to Canadians.”

Source: Americans Take on Canadian Prime Minister over Income Trust Injustice - The Financial Post

Attention U.S. Investors in Canadian Income and Royalty Trusts

I am very pleased to make you aware of a significant development and an exciting legal opportunity for all US members of CAITI and all US investors in income trusts. The Gottliebs are seeking as their remedy to this legal matter brought under NAFTA ,a grandfathering of the energy trusts. Such a remedy will be to the benefit of all trust investors. Please support this major new initiative undertaken by Marvin and Elaine Gottlieb of Chicago , who I am proud to say are members and early supporters of CAITI.

Please visit http://naftatrustclaims.com/

Brent Fullard
President and CEO
Canadian Association of Income Trust Investors
www.caiti.info/

416 486-2224
647 505-2224 (cell)

Note: A link to naftaclaims is located in the upper right menu of this website.

Ottawa News Conference - The Top Ten Unanswered Questions for Stephen Harper and Jack Layton

OTTAWA, Oct. 30 /CNW/ - The Canadian Association of Income Trust Investors (CAITI) will be holding an Ottawa news conference on Wednesday October 31, 2007, on the one year anniversary of Stephen Harper's broken election promise to not raid seniors' nest eggs by double taxing income trusts.

The theme of the press conference will be The Top Ten Unanswered Questions for Stephen Harper and Jack Layton.

The Press Conference will be held in the Charles Lynch Room of the National Press Gallery, Room 130-S in Center Block of Parliament at 3:45 pm EST.

Presenting will be Brent Fullard, President and CEO of CAITI.

The press conference will also available by conference operator, by dialing one of the following numbers:

403 398 9531
416 644 3427
800 591 7539

Thank you.

For further information:
Canadian Association of Income Trusts Investors
media@caiti.info
(647) 505-2224
Source: CNW

NDP Complicity: How Jack Layton helped Stephen Harper destroy Canadian's RRSP savings.


com·plic·i·ty: Involvement as an accomplice in a questionable act or a crime. Source: TheFreeDictionary





Related:
New Democratic Poodles

Income trust fall-out: American couple the first to launch NAFTA challenge against Government of Canada for eliminating income trusts; inviting others

OTTAWA, Oct. 30 /CNW Telbec/ - Marvin and Elaine Gottlieb are taking on Prime Minister Stephen Harper, Finance Minister Jim Flaherty and the Canadian government for the Halloween 2006 broken promise on the elimination of income trusts. The Chicago couple are the first Americans to file a Notice of Intent to Submit a Claim to Arbitration under the North American Free Trade Agreement (NAFTA). The couple are among the thousands of US investors who lost a total of $5 billion dollars in the fall-out from the Conservative Government's decision last year to effectively tax income trusts in the energy sector out
of existence.

"The Halloween 2006 income trust decision by the Government of Canada has had a massive financial impact on thousands of investors in Canada and the U.S. and we believe that it breached Canada's NAFTA obligations", said Marvin Gottlieb. "Because of this decision, more than $30 billion has been lost by individual investors in Canada and more than $5 billion has been lost by energy trust investors, including Elaine and me, in the United States.

"Based on Stephen Harper's very public promise, thousands of individuals and grandparents like us invested our hard earned money in income trusts and energy trusts. This is not just a nightmare on Bay Street. It's a nightmare on Wall Street."

For further information:
Susan Smith
Bluesky Strategy Group
C: (613)371-0624
susan@blueskystrategygroup.com
Source: CNW

Related:
Chicago couple seeks NAFTA arbitration of income trust taxation policy

Monday, October 29, 2007

Halloween income trust fiasco one year later...Midwest American family the first to take on the Canadian government under NAFTA

OTTAWA, Oct. 29 /CNW Telbec/ - Marvin and Elaine Gottlieb's Halloween nightmare with the Conservative government's decision to tax Canadian income trusts in the energy sector is far from over. Now it may be the Conservative government experiencing a Halloween surprise.

The Chicago couple will be in Ottawa tomorrow, Tuesday, October 30, 2007 to give notice of a challenge under NAFTA Chapter 11 against the Government of Canada. Their claim is based on the fall-out of Finance Minister Jim Flaherty's surprise Halloween 2006 decision to eliminate income trusts on the heels of the Conservative government's pledge to leave them alone.

Mr. and Mrs. Gottlieb will hold a news conference at 10:30 am in Room 130-S, Centre Block, Parliament Hill, Ottawa.

ALL MEDIA ARE INVITED TO ATTEND

DATE: Tuesday, October, 30, 2007
TIME: 10:30 am
PLACE: Room 130-S, Centre Block, Parliament Hill, Ottawa

For further information: or interview requests please contact:
Susan Smith
Bluesky Strategy Group
C: (613) 371-0624
susan@blueskystrategygroup.com
Source: CNW Group


Who is Marvin Gottlieb?

Marvin Gottlieb has been active in international corporate affairs for 35 years. In 1965, he founded M. Gottlieb Associates, Inc. (MGA), an international manufacturers’ representative company that specializes in matching world-class technologies with the needs of its Fortune 500 clients. He has been a limited partner of Trident Capital (a venture capital fund) since its inception in 1992. Headquartered in Chicago, IL, MGA had offices in Indiana, Michigan, Mexico, Singapore, Hong Kong, London, Portugal, Japan, and Yugoslavia.

He has also served as a consultant to IBM, and advisor to General Motors, Ford, and Zenith Electronics on global procurement issues. He traveled extensively in the Far East and Australia with top officials of the Defense Department, under the Reagan administration, on trips concerning acquisition and procurement. Recently, Mr. Gottlieb visited Cuba as a member of a fact-finding tour sponsored by the Center of International Policy.

As a leader in the field of electronics manufacturing, he helped to establish and then served as co-chairman of the IEEE (Institute of Electrical and Electronic Engineers) Spring Conference from 1960-1985. This major annual conference focuses on innovations in electronic engineering and manufacturing technologies.

An active member of the Chicago Council on Global Affairs, Mr. Gottlieb is a founding member of the Chairman’s Circle. Marvin is currently an adviser to the Hiroshima Gateway Peace Project. He recently stepped down as a member of the Board of Directors of the Juvenile Diabetes Foundation of Chicago, on which he served for the past 10 years. He founded a family foundation that supports medical research in juvenile diabetes, breast cancer and several major cultural organizations in Chicago. He is a member of the International Map Collectors Society.

Marvin is also the President of Howland International, a UK-based Corporation, which is actively involved in energy issues, and oil reserves. He is currently interested in new approaches for oil exploration, production and alternative sources of energy. He is an active member of the Association for the Study of Peak Oil and the Canadian Association of Income Trust Investors. Marvin and his wife, Elaine divide their time between Glencoe, Illinois, Palm Beach, Florida and Cedar Grove, Wisconsin. They enjoy travel, golf and spending time with their four granddaughters.

Source: marvingottlieb.com

Saturday, October 27, 2007

CAITI responds to 'Trust Treat' by Terence Corcoran in October 27th National Post.



October 27, 2007

Letter to the Editor

Mr. Doug Kelly
Editor in Chief
National Post

Evidently my efforts of the last 12 months have struck a nerve. The truth has a habit of doing that. Especially when there are so many who are attempting to suppress it.

Meanwhile Terry Corcoran lives in a world of his own vindictive and narrow minded creation. Back in December he had this falsehood to say in your paper;

“Before our seniors rush off with the thought that the income trust issue is a call to re-fight the Second World War, they should know that Fullard is employed by the Canadian Association of the 50 Plus (CARP). CARP in
recent years got into bed with investment firms selling income trust products to its members. If I were running CARP, I'd be fighting mad, too -- at somebody.”

That was an outright falsehood and which had no basis in fact and that, once Mr. Corcoran learned was untrue, lost total interest in correcting as well as his total sense of journalistic zeal and was not man enough to retract the statement

Now we are to learn in today’s ranting tirade by Mr Corcoran that:

“One source familiar with the Fullardmort operation says CAITI now receives no money from his original deep-pocketed backers and is just spending his own dime and time cranking out ugly political commentary.”

Yet another falsehood perpetrated by Terry Corcoran that has no basis in fact. There are others, such as the time he promised to publish an opposing view of mine in response to an article in your paper that was centered around the views of CAITI, and then reneged after we had agreed to a word count and a deadline. He claimed that the original opinion article was “more right” than my rebuttal. Subsequent events have proven how correct indeed I was as evidenced by the foreign takeovers of all the income trusts such as Prime West by Abu Dhabi and TransAlta Power by Li Ka-Shing.

Mr. Corcoran has failed in his fundamental duty as a reporter, in that he did not speak with myself or anyone at CAITI before printing these two falsehoods. Meanwhile who is doing the fact checking at your newspaper before the printing of such slanderous articles?

I expect a full retraction and apology on the part of your paper for the falsehoods that Mr Corcoran is perpetrating about myself and our association and for reasons known only to himself, and perhaps his friends in the PMO.

Thank you,

Brent Fullard
President and CEO
Canadian Association of Income Trust Investors
www.caiti.info




Dear Sirs

Terence Corcoran's personal attack on Brent Fullard in his column today is in extremely poor taste, unbefitting a national newspaper. From the schoolyard name-calling to the expression that he would like to see Mr Fullard "vaporized" -- surely this is not journalism. Clearly the man has some deep-seated personal issues with Mr Fullard, and is using his position at the National Post to wage a personal vendetta.

As to the rest of his column, I find it ironic that the accusations hurled Brent's way, of fulminating, of being overly partisan, can all be applied equally to Mr Corcoran himself, whose froth and fury spew from his column on a regular basis.

And what on earth does he mean by an "alleged" organization? There is nothing "alleged" about the Canadian Association of Income Trust Investors. It is as real as the National Post, and its membership is composed of many thousands of individual trust investors who were betrayed, even set up, by Stephen Harper's broken promise to "never raid seniors' nest eggs".

Yes, the anniversary of that stunning reversal is approaching. And, as Mr Corcoran laments in his opening paragraphs, there are sure to be many column inches devoted to the issue. Including, seemingly his own. Clearly the standards he applies to others do not hold when it comes to himself.

And what of the standards of the National Post? Highly opinionated columnists spark interest and fuel debate, but when they call for the vaporization of those they disagree with, they are getting dangerously close to uttering death threats.

Mr Corcoran owes Brent Fullard an immediate and sincere apology.

Sincerely,

Val Fullard
Communications Director
Canadian Association of Income Trust Investors
www.caiti.info

visit our new blog at: C A I T I - O N L I N E

Dr. Michael Popovich - Tax fairness plan masks Harper's broken vow



Letters to the Editor
London Free Press
October 27, 2007

The first anniversary of the Oct. 31 implementation of the tax fairness plan is almost upon us.

Will we ever forget Stephen Harper's promise just prior to the last election: "Don't forget , the Liberals were going to tax income trusts. Don't forget we will never let that happen. We will never raid seniors' hard-earned money."

However, Harper did tax income trusts within nine months of taking power and thousands of small investors, mainly seniors, had to suffer the consequences of a $35-billion loss to their savings. The only beneficiaries were corporations like Manulife that had competing products to sell. Private equity firms and pension funds were allowed to buy up these same trusts and hold them tax-free.

Despite running on a platform of accountability, there have been no attempts made to show any verifiable justification for this action -- unless 18 blacked-out pages count.

Seniors and small investors across Canada, whose only fault was to try to make ends meet, were the collateral damage in this plan to satisfy the needs of the ultra-rich.

As the next election approaches and you hear Stephen Harper chant, "Promise made, promise kept," you might want to reassess his abysmal record on promises.

Dr. Michael Popovich
Rodney, Ontario

Source: London Free Press

Related:
Stephen Harper on Income Trusts - Election 2006
Stephen Harper on Accountability - Election 2006

Friday, October 26, 2007

Garth Turner speaks on Income Trusts, tax and interest rate pressures on Canadian families in the House of Commons - October 25/07

MP Paul Szabo (Mississauga South, Lib.) presents petition to House of Commons (2)

Excerpt from October 25th Hansard:

Mr. Speaker, pursuant to Standing Order 36, I am pleased to present another petition on the income trust broken promise, submitted to me by Mr. Robert Longmore, of Calgary, Alberta, who remembers the Prime Minister boasting about his apparent commitment to accountability when he said that the greatest fraud is a promise not kept.

The petitioners remind the Prime Minister that he promised never to tax income trusts, but he broke that promise by imposing a 31.5% punitive tax which, in less than two days, wiped out over $25 billion of the hard-earned savings of two million Canadians, particularly seniors.

The petitioners therefore call upon the Conservative minority government to admit that the decision to tax income trusts was based on flawed methodology and incorrect assumptions, secondly, to apologize to those who were unfairly harmed by this broken promise and, finally, to repeal the punitive 31.5% tax on income trusts.
Paul Szabo, House of Commons, October 25/2007

Related:
Member of Parliament Profile (Current) - Paul Szabo
Stephen Harper on Accountability - Election 2006

Halloween Gathering in Ottawa - Yorkdale Bus Pickup Details

Toronto - Yorkdale Bus Pickup Details

For those traveling to Ottawa on Wednesday October 31, 2007 by bus from Toronto, please find attached two maps.

The first map is called “zoomed out” and gives the broad co-ordinates of where the bus will be picking up passengers, marked by the green arrow.

The second map is called “zoomed in” and provides greater details on the pickup point, again marked with a green arrow. The pick up will be on the south side of the road, at the north exit/entrance of the Yorkdale subway station, and situated under the Allen Road bridge.

It is also conveniently located across from the Yorkdale Go Bus Terminal, and parking is available nearby.

The bus will arrive at 6:45 am and depart immediately at 7:00 am. If the bus is not there between these two times, it is because there is a limit on how long a bus can stand idling.

Your coordinator for the bus trip will be Brent Fullard, who can be reached on the day of departure on his cell phone at 647 505-2224. He will arrive by 6:45 am at the pick up point.

The bus will be departing Ottawa between 4:30 and 5:00 pm, and is expected to arrive at Yorkdale about five hours later.

The bus is 54 seat motor coach operated by PMCL and has a washroom facility on board. No food will be provided and there are no planned stops on the trip. Please plan accordingly.

Also please print out both of the attached maps and bring them with you to avoid any confusion on the departure day.

For a detailed description of the Ottawa and Calgary events click here


Zoomed OUT



CLICK FOR FULL SIZE IMAGE


Zoomed IN



CLICK FOR FULL SIZE IMAGE

Months after destroying Income Trust sector, Flaherty admits his 'tax leakage' analysis is flawed.

Canadian tax-exempt investors, such as Canadian pensions and RRSPs, are subject to tax neither on Flow-Through Entity income nor on dividend income. Jim Flaherty, October 31 2006

"The purpose of the pension funds, ultimately, is to ensure they can honour their pension obligations. And there is taxation, of course, when pensions are paid out," Jim Flaherty, July 4 2007



No wonder the Conservatives think there is tax leakage - they left out almost half of the taxes!

The term tax leakage is used to describe a situation in which it is believed that the Government of Canada collects fewer taxes from one form of business ownership structure relative to another form of business ownership structure. Many who oppose the income trust form of business ownership would like Canadians to believe that Income Trusts cause tax leakage when compared to corporations.

Tax leakage has to be determined by looking at the taxes paid not just by the business itself but also the taxes paid by its owners on the distributions/dividends paid from the business to its owners (shareholders/unitholders).

On this basis income trusts do not cause tax leakage, rather it is the Department of Finance's analysis (which to date our Minister of Finance refuses to release to his fellow MP's or Canadians) that causes tax leakage, since this analysis completely ignores 31% of the good when it performs its good/bad analysis of Income Trusts relative to Corporations.

The Department of Finance does not include the taxes (retirement taxes) that it receives on the 31% of Income Trusts that are held in retirement accounts (RRSPs and the like) in the false treatment of retirement accounts as being "tax exempt" Charities and not-for-profits are "tax exempt" , retirement accounts and RRSPs clearly are not "tax exempt".






All withdrawals from retirement accounts are taxed at the highest marginal rate of personal taxation, just like income from employment. In fact retirement income is the second largest source of personal income taxed by the Government, second only to income from employment. During 2004, the most recent year for which data is available, Canadians paid $9 billion in retirement taxes on $52 billion of retirement income. Retirement taxes are not tax exempt, but rather they are tax deferred. When comparing income trusts to corporations in its analysis, the Department of Finance is not even "internally consistent" in its treatment of deferred taxes. The deferred taxes paid by income trusts held in retirement accounts are totally ignored, whereas the deferred taxes paid by corporations are included.

This profound analytical bias by the Minister of Finance and the Department of Finance causes tax leakage. Income trusts do not cause tax leakage.

Finance Minister Flaherty needs to justify his actions. Tax leakage is a discernable fact. Canadians need facts not fiction. MPs need facts not fiction, before voting Flaherty's so called "Tax Fairness Plan" into law. If there is no tax leakage why are we doing this?

Canadians will lose an important investment choice for both today and the future. Canadians have sustained a loss in their hard earned savings of $35 billion as a sole consequence of Mr. Flaherty's actions. This is profoundly wrong. This can not be justified. Source: caiti.info

Related:
Simple to the extreme
To: Finance Minister Flaherty, Your Tax Leakage Analysis is Fraudulent
CAITI Mythbusters

Thursday, October 25, 2007

Flaherty was pilloried unfairly according to Keith Woolhouse - Brent Fullard responds

Evidently this reporter thinks its preferable that Middle Eastern oil sheiks (Khalifa bin Zayed al Nahyan of Abu Dhabi Energy) and Hong Kong billionaires (Li Ka-Shing of Cheung Kong Infrastructure) own these companies with "internal problems" like Prime West Energy Trust and TransAlta Power, rather than Canadians who are trying to provide retirement income in a protracted low interest environment.

I guess that fact that these foreign buyers will not pay the draconian 31.5% double taxation or be limited by Flaherty's growth restrictions and yet Canadians will be, is the reporter's idea of tax fairness and leveling the playing field.

Why can the government sponsored pension plans like the federal civil servant's own Public Sector Pension Plan own Thunder Energy Trust without being taxed, and yet the average Canadian holding that very same trust in their RRSP is?

The only internal problems at hand are the internal thought processes of this reporter. Meanwhile the real problem facing these trusts is the external problem brought down upon them by a double talking, double taxing two faced government.

Good thing this government has friends/shills in the press who are happy to practice yellow journalism, since no civilized and fully informed society would let this kind of egregious policy of gross unfairness to ever go down. Do you suppose if this reporter knew that once these trusts are all relieved of their "internal problems" by foreign private equity and government sponsored pension plans that Ottawa's tax collection will be reduced by an ANNUAL amount of $7.5 billion. That's the equivalent of a 1.5% GST increase.
Brent Fullard, October 25 2007


High-yield income trusts offer choice, but not for faint of heart

Keith Woolhouse, Citizen Special
Published: Thursday, October 25, 2007

It was at this time last year that federal Finance Minister Jim Flaherty was set to rock the markets with his Tax Fairness Plan that effectively slammed the door shut on corporations converting to income trust status and gave existing trusts a four-year window to convert back.

The ensuing hue and cry from investors was predictable as the S&P/TSX composite index plunged and most trusts lost around 22 per cent of their value.

Flaherty was pilloried, unfairly so, as it turns out. The sector's recovery and ensuing acquisitions have largely vindicated him. Those who still believe otherwise may argue that unit values and the distribution rates have suffered. That's a moot point. Most of the still depressed companies have internal problems.
Read the Complete Article

Related:
Perpetuating the Big Lie
Conservatives signal foreign takeovers OK until next year

Wednesday, October 24, 2007

Why Leaders Fail



A leader's credibility is the result of two aspects: what he or she does (competency) and who he or she is (character). A discrepancy between these two aspects creates an integrity problem.

The highest principle of leadership is integrity. When integrity ceases to be a leader's top priority, when a compromise of ethics is rationalized away as necessary for the "greater good," when achieving results becomes more important than the means to their achievement -- that is the moment when a leader steps onto the slippery slop of failure.

Often such leaders see their followers as pawns, a mere means to an end, thus confusing manipulation with leadership. These leaders lose empathy. They cease to be people "perceivers" and become people "pleasers," using popularity to ease the guilt of lapsed integrity.
Source: Mark Sanborn, CSP, CPAE

Related:
The only thing a politician has is his word. A message to Stephen Harper from Ralph Klein

Tuesday, October 23, 2007

Singapore gains altitude by gaining taxes.....

Singapore is different than us. Their politicians in office excelled at academics and also understand life’s realities and the need for income amongst their aging population as well as the need to attract investment capital in a competitive global economy.

Our politicians in office, neither excel, nor understand. They issue daily ultimatums and respond by panicked policies induced by false fear. Such as the taxes that would presumably have been lost by the twin conversions of BCE and Telus. One troubling question among thousands of unanswered questions still remains. How can the government lose taxes that were never being paid in the first place?

Neither BCE nor Telus were paying taxes at the time of Harper’s policy borne out of panic and neither were expected to pay taxes for at least another 6 years (combined). As income trusts they would have paid combined taxes of $1.2 billion MORE PER YEAR starting immediately. Go to Myth #3: The sky is falling... the tax threat of BCE and Telus converting

Stephen Harper Houdini. Our fear mongering misleader in office.
Brent Fullard, October 23 2007


GE Aviation-backed trust to have 14 planes on IPO

SINGAPORE, October 12 (Reuters) - The world's first listed trust with aircraft as assets, backed by General Electric (GE.N: Quote, Profile, Research) unit GE Commercial Aviation Services (GECAS), will have an initial portfolio of 14 leased planes.

Reuters had reported in August that the trust planned to raise $400 million from the initial public offering in late 2007.

Singapore, which is one of Asia's top centres for Real Estate Investment Trusts, is also home to several specialised investment trusts, including shipping trusts.
Read complete news release


Singapore Altitude Trust Sees 2008 Distribution Yield At 8%

SINGAPORE October 23 (Dow Jones)- Altitude Aircraft Leasing Trust, which is planning an initial public offering in Singapore to fund a fleet of 14 jets valued at about US$650 million, said its distribution yield could grow to 8% next year from an estimated 7.39% this year.

The IPO will create the first aircraft-leasing trust to list in Asia, and follows a recent string of Singapore IPOs by vehicles invested in ships and infrastructure assets.

Business trusts have gained in popularity in the city-state, where they can pay distributions directly from operating cashflows rather than from accounting profit.
Read complete news release

Monday, October 22, 2007

Halloween Gatherings in Calgary and Ottawa

With only nine days to go, I want to remind you about the two events being organized for Halloween (Wednesday of next week, October 31, 2007) by two dedicated CAITI members.

  • Ottawa at the Parliament Buildings (plus entry to Question Period)
  • Calgary at Stephen Harper’s constituency office.

The time of the Calgary event has been changed from 7:30 pm to 2:00 pm to better accommodate more people’s schedules. Please make every effort to attend these events or ask a friend or relative to attend in your place. For those who are able to attend, the numbers would double if everyone brought someone else along with them. A free bus is being provided for the Ottawa event with round trip passage from Toronto (departing Yorkdale Shopping Center at 7:00 am).

Details and contact names are provided below.

Thank you very much,

Brent Fullard
President and CEO
Canadian Association of Income Trust Investors
www.caiti.info

647 505-2224 (cell)



Ottawa, Ontario: October 31 - Gathering and Question Period Attendance

  • Meet at the Justice Building on Wellington Street, rear of building, 12:30PM to 1:00PM
  • Arrive on Parliament Hill 1:00PM
  • Remembrance Gathering on Parliament Hill 1:00PM to 1:30PM
  • Attend House of Commons visitors gallery for Question Period entering at 1:30PM
Ottawa Event Co-ordinator:

David Marshall
phone: 613-938-0810
email:
grumpymarshall@sympatico.ca




Ottawa Meeting Place Map - click on blue placemark for further information




Calgary, Alberta: October 31- Gathering:

  • Meet at 2:00 PM.
Stephen Harper's Constituency Office
Suite A203, 1600 90th Ave. SW
On west side of Glenmore Landing Shopping Centre, which is on northwest of 14th St
Calgary Event Co-ordinator:

Bruce Benson
phone: 403-285-8491
email:
BruceBenson@shaw.ca




Calgary Meeting Place Map - click on blue placemark for further information

Fairborne Energy Trust Announces Plan to Convert to a Growth Oriented E&P Company and a $100 Million Equity Private Placement

"Here we have a US tax flow through entity, Denham Capital Management Limited Partnership, funding the conversion of a Canadian tax flow through entity, Fairborne Energy Trust. We can't own what they can. We are double taxed. They aren't. We are subject to growth constraints. They aren't. We pay taxes on these earnings, they don't. We sell undervalued investments, courtesy of our government. They buy undervalued investments, courtesy of our government.

We are second class citizens in our own country. So much for the fruits of being a energy superpower, as Harper likes to call us. It's more like being an energy supermarket in which Canadians work the check out counter and stack the shelves. Meanwhile our Prime Minister is stacking the deck in favour of uber wealthy middle eastern oil sheiks and Hong Kong billionaires and every foreign private equity firm known to man. Denham Commodity Partners Fund IV Limited Partnership in aisle four-eight."

Brent Fullard, October 22 2007







TSX: FEL.UN
Oct 22, 2007 02:01 ET

CALGARY, ALBERTA--(Marketwire - Oct. 22, 2007) - Fairborne Energy Trust ("Fairborne" or the "Trust") (TSX:FEL.UN) is pleased to announce its plan to convert into a growth oriented, exploration and production company (the "Reorganization"). Concurrent with closing of the Reorganization, Denham Commodity Partners Fund IV LP ("Denham"), a U.S.-based private equity fund advised by Denham Capital Management LP, will subscribe for, on a private placement basis, approximately 13.4 million common shares of the new corporation (the "Corporation") at a subscription price of $7.45 per share (the "Subscription Price") for aggregate proceeds of approximately Cdn$100 million (the "Private Placement"). The Subscription Price represents a premium of 8% to the closing price of Fairborne's trust units on October 19, 2007 of $6.90 per unit and 13% to the volume weighted average trading price of $6.57 per unit over the last 30 trading days. Denham's investment is conditional on the successful closing of the Reorganization.

Proceeds from the Private Placement will initially be used to reduce outstanding indebtedness. Fairborne plans to continue its current monthly distributions until the closing of the Reorganization, including the November distribution payable on December 17, 2007. Denham's investment will significantly improve Fairborne's financial flexibility and position the reorganized Corporation for growth. Following the Reorganization, Fairborne plans to reinvest 100% of its cash flow to fully exploit its attractive drilling opportunities and grow its production base, while retaining use of its credit facilities for acquisitions. After giving effect to the Private Placement, the reorganized Corporation will have approximately $85 million of net debt drawn against its current borrowing base facility of $220 million.

Fairborne's current production is 13,100 Boe/d (75% natural gas) and the Trust anticipates exiting 2007 at a production rate of approximately 13,400 Boe/d based on recent drilling successes at Columbia/Harlech and Marlboro. The 2008 capital program for the reorganized Corporation is planned to be between $125 million and $150 million.

ABOUT DENHAM

Denham Capital Management LP is a private equity firm focused on the energy and commodities sectors, including natural resources, power and utilities and energy-related infrastructure and services. It invests globally, with investments currently in the US, Canada, South America, Europe and Asia, and across all stages of corporate and asset lifecycle, from development projects to mature, operating businesses. Denham typically targets equity investments in the $50 million to $250 million range. It currently has offices in Boston, Houston, New Jersey and London.

PLAN OF ARRANGEMENT

It is contemplated that the Reorganization will be completed pursuant to a plan of arrangement. Holders of trust units (collectively the "Unitholders") of Fairborne will receive an equal number of common shares of the new Corporation that will hold the assets previously held, directly or indirectly, by the Trust. Exchangeable shares will be exchanged for common shares in the new Corporation based on the then current exchange ratio. This will result in approximately 83.2 million common shares of the new Corporation being outstanding after giving effect to the Reorganization and the Private Placement. Fairborne's outstanding convertible debentures bearing a coupon rate of 6.5% and a conversion price of $13.50 will be assumed by the new Corporation and be convertible into common shares of the Corporation with no change to the terms. One representative from Denham will be appointed to the board of directors of the Corporation on completion of the Reorganization. The Reorganization is subject to receipt of all required regulatory approvals and securityholder approval by at least 66 2/3% of the votes cast by Unitholders and holders of exchangeable shares. It is anticipated that an information circular and proxy statement in connection with the special meeting to consider the Reorganization will be mailed to securityholders of the Trust in mid-November, in connection with the meeting of securityholders relating to such approvals anticipated to be held in December, 2007.

BOARD OF DIRECTORS RECOMMENDATIONS

The Board of Directors has unanimously concluded that the Reorganization and Private Placement are in the best interests of Fairborne and Fairborne securityholders, and has unanimously resolved to recommend that Fairborne securityholders vote their Fairborne trust units and exchangeable shares in favour of the Reorganization. Officers and directors of Fairborne beneficially owning approximately 13% of the issued and outstanding trust units and exchangeable shares of Fairborne have indicated that they intend to vote their trust units and exchangeable shares in favour of the Reorganization. Fairborne has agreed that it will not solicit or initiate any discussions concerning the sale of material assets or any other business combination until completion of the Reorganization.

All of the members of the Board of Directors as well as the CEO, CFO and COO of Fairborne have agreed to waive their right to accelerated vesting of their Restricted and Performance units under the current Trust incentive plan. There will be no change of control or severance payments triggered by the Reorganization for these officers.

RBC Capital Markets acted as financial advisor to Fairborne with respect to the Reorganization and has provided its opinion to the Board of Directors that, as at the date hereof, the consideration to be received by Fairborne Unitholders in connection with the Reorganization and after giving effect to the Private Placement, taken together, is fair, from a financial point of view to Unitholders. Cormark Securities Inc. is acting as a strategic advisor to Fairborne. CIBC World Markets Inc. acted as exclusive financial advisor to Denham with respect to the Private Placement.

TRANSACTION RATIONALE

Strategically, the Reorganization and Private Placement position Fairborne as a high growth natural gas focused exploration and production company with a very strong balance sheet. The Private Placement combined with cash flow from operations will allow the Corporation to aggressively capitalize on over 500 identified drilling prospects, acquisitions and other opportunities identified by its technical staff.

"We see greater value creation to securityholders from investing all of our cash flow in our existing assets and growth opportunities than under the current Trust structure. The Denham investment will significantly improve our balance sheet without diluting existing shareholders as the equity investment is at a substantial premium to the current unit price." commented Steve VanSickle, President & CEO of Fairborne. "The Reorganization will enable us to aggressively pursue identified opportunities on our existing asset base. We are confident that our team can deliver production growth that will more than offset the value of the lost tax shields through the end of the tax fairness period in 2011. We are delighted that, after significant study, a leading private equity firm like Denham, shares our vision and has agreed to acquire approximately a 16% interest in Fairborne," added Mr VanSickle.

"Fairborne's seasoned management team and strong asset base will provide a firm foundation to execute a strategy of growth" said Carl Tricoli, Senior Managing Director of Denham Capital. "We believe that with our strong financial commitment to Fairborne, the Corporation will be well positioned to capture the tremendous value creation opportunities present in the basin today."

Fairborne currently has tax pools of approximately $490 million. Management expects the Corporation to remain non-taxable beyond 2011 as a result of existing tax pools as well as incremental tax pools created through an expanded capital program.

PRELIMINARY 2008 PROGRAM

The Reorganization and the Private Placement will allow Fairborne to transform the growth outlook of the Corporation and significantly increase its reserves, production and cash flow through the development of its large inventory of identified drilling prospects. Fairborne currently has 233,500 net acres of undeveloped land. In addition, the Denham investment will allow Fairborne to reduce debt levels and thereby pursue selected acquisitions.

The Corporation's preliminary 2008 capital expenditures budget will be set between $125 million and $150 million. The budget is balanced between high impact exploration drilling and lower risk infill and step out drilling on well defined existing prospects and is currently planned to include:

- 117 (83 net) wells
- 75% of drilling capital in lower risk locations and 25% directed towards exploration
- $35 mm at Columbia/Harlech
- $25 mm focused on light oil at Brazeau and Clive
- $25 mm in the Deep Basin
- $20 mm for CBM
- The balance of capital will be spent on land and seismic and in other areas.

This budget is based on achieving capital efficiencies of $25,000 per flowing Boe (consistent with Fairborne's three year average) and an operating netback of approximately $30 per Boe (based on CDN$6.00/mcf and US $80.00 per bbl)

Source: Marketwire

Related:
The environment has now turned quite good for Private Equity
Fairborne Energy to convert from trust, raise $100M in equity financing - Oilweek
Fairborne Energy Trust Announces Plan to Convert - Trading Markets

Sunday, October 21, 2007

Senator Larry Campbell’s Weblog: How Stephen Harper trapped Randy Kellen

November 16, 2006

I’m 52 years old, self employed most of my working life and of course no organized pension fund other than what I have managed to save over the years. I’m a saver, frugal even, we have RSP’s but it is not a great amount; both my wife and myself have other savings, my house is paid out and we have also managed to put some money into a resp for my daughter should she decide to carry on her education.

In planning for our retirement I have being looking for several years on options to continue an income stream upon retiring; and in so doing happened upon Trusts about 4 years ago and started slowly to create a portfolio of diversified and royalty trusts. We educated and informed ourselves regarding trusts and what to look for as to sustainability of income flows. We did not invest blindly into trusts!

In doing financial planning for my self and wife we will need to earn almost $80,000 before tax to continue with the same life style that my wife has become accustom to. I was surprised at this amount and repeated it several time only to continue to come up with this same figure. We are not big spenders, three quarters of the after tax money went straight to living expenses.

So you see why I had fallen in love with Trusts, it would allow us to enjoy a life style that we had grown accustom to and potential growth. So, over the past few years we have slowly added to our portfolio to the point I could see some light at the end of the tunnel and perhaps a retirement date in the near future.

Last year, when the Liberal government suggested that trust should be tax or the structure of trusts be change we lost on paper a fair amount of capital. We along with all trust investors were quite relieved when they decided to not proceed with these changes. Further, a new conservative government stated that no future changes would be needed or attempted.

Now I am in a bit of a quandary, under the presumption that this new government would not touch trusts, we made application for a margin account and of course purchased more trusts to take advantage of the low prime rate and the attractive over all return on our basket of trusts. What could go wrong, we were finally on top of our financial future by using all the tools and resources legally allowed to us and sanctioned by our own government! We have lost far more money now than we ever thought possible!

This week, like tens, thousands, hundred of thousands, perhaps millions of others, have run the full range of emotions from disgust, to fear, to loathing this government. We have lost a fair amount of capital, and we still owe the margin amount to the bank.

The future looks grim for us and many others, we will have less capital, less money to spend, less trips and our standard of living if and when we retire will be lowered substantially. With less spending from the so-called “boomers” what will happen to the Canadian economy. Business communities have being gearing up for the future spending of this group that I think will not be as great now as it could have been. Tax loss selling and expenses will no doubt be greater this and following years to offset there income from years previous. We will ultimately pay fewer taxes to help fund Revenue Canada and many trusts will be at risk of being purchased from other than Canadian companies. Our resources are slowly being purchased and controlled by non-Canadians along with any income, tax revenue (if any is available after write offs) and the ultimate spending benefit from such.

What is ultimately the trickle-down effect, we are not the only Income, Reit or Royalty trust holders. Many individuals from mutual fund investors, to pension funds, to CPP, to perhaps even yourselves. How is this multi billion dollar loss in investors portfolios going to affect spending habits of the so called “boomers”. For the last ten years we have been hearing about this massive group of individuals that will have money to spend or at least did until this attack on fixed income retirees and those of us who where close to retiring. Spending from this group will affect every business from restaurants to cosmetic surgery.

The future looks grim for ourselves and many others, we will have less capital, less money to spend, less trips and our standard of living if and when we retire will be lowered substantially. With less spending from the so-called “boomers” what will happen to the Canadian economy?

To me this ill-advised, knee jerk reaction that this Government has proposed will ultimately hurt not only our country but those that have built this country by paying their taxes in the past. My wife and I, since owning trusts, have never paid so much tax as we have these past four years.
As I mentioned above that our future retirement timing, capital and income has been affected greatly by this government decision.

Please add your voice; say no to this incredibly destructive proposal!

Source: Senator Larry Campbell's Weblog

Related:
Stephen Harper lays his trap

Saturday, October 20, 2007

Letters to Editor: Betrayal not forgotten

Looks like Mr. Harper is spoiling for an election, money is starting to flow to all kinds of causes, and he even let the press talk to him and it wasn’t scripted. I’m sure all kinds of promises will be made, just as before the last election.

The first anniversary of what has been the cruelest act of any Canadian government to its seniors, who he encouraged to invest for yield, is on Oct. 31. “Don’t forget, don’t forget,” he said before the last election. Don’t forget the Liberals were going to tax income trusts. Don’t forget we will never let that happen. We will never raid seniors hard earned money.

Well, guess what? He lied. Betraying seniors meant nothing to the Conservatives once they had what they wanted. This was just one of the many broken promises the Conservatives made.

Accountability means nothing to them, patronage appointments number in the hundreds. His own pension fund is one of the beneficiaries of the attack on seniors with no pensions. Their friend, Manulife, has gained the most from the broken promise; days after the betrayal they popped up with Income Plus. Coincidence? Hardly.

Let us, the voters, not forget broken promises and betrayal. Mr. Dion has been chastised by the press for not being strong but he has not lied to me. I know where my vote is going.

CAREY TURNER
Source: The Lethbridge Herald

Related:
Stephen Harper - Promises Made 1
Stephen Harper - Promises Made 2

Friday, October 19, 2007

Stephen Harper lays his trap

op·por·tun·ist

One who takes advantage of any opportunity to achieve an end, often with no regard for principles or consequences.

The Free Dictionary



Questioning income trusts puts seniors at risk

Stephen Harper
National Post

Wednesday, October 26, 2005

On September 19 [2005], 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. Source: National Post

Related:
Stephen Harper - Promises Made 1
Stephen Harper - Promises Made 2

Thursday, October 18, 2007

Energy Trust Takeover Keeps Canada's Conservatives in Tough Spot

Yet another round of his ongoing royalty trust blunder was played by Canadian Prime Minister Stephen Harper this week as he stated any protectionist legislation regarding royalty trust acquisitions by foreign buyers would be put off until next year.

Because last year's bombshell that Canada would change the way it treated royalty trusts was fraught with political risks, not only did the ruling Conservatives pull it off with surprising ease, they've dodged all the bullets since. This latest one, however-- the announced takeover of PrimeWest Energy Trust (PWI) by Abu Dhabi's national oil company-- may be a tougher bullet to dodge. Here's a quick summary of the big royalty trust political events of the last year, capping with the latest:

1) Late last year-on Halloween, fittingly-the minority Conservative government in Canada announced a plan to prohibit the creation of any new royalty trusts and to force all existing trusts to convert to normal corporations by 2011, a 180-degree reversal from every promise it made on the topic, both pre- and post-election.

  • The Political Risk: barely a year earlier, in late 2005, the then-ruling Liberal government simply floated the idea of changing the tax status of royalty trusts and voters revolted, particularly retirees who relied on the hefty dividends the royalty trusts paid. In fact, it became one of the key issues which toppled the tenuous ruling coalition and helped to sweep Conservatives into power for the first time in 15 years.
  • The Political Solution: when the time came for the Conservatives to go back on their word in late 2006, they didn't just float an idea-they had a plan. That strategy consisted of well-crafted baubles for senior citizens, tax breaks for the retirement set carefully planned to mute the uproar that would have been expected. The plan worked; while CARP (Canada's AARP) eventually came out against the proposal, its reaction was slow and half-hearted, due in part to its happiness with income splitting and other tax goodies they were given.

2) The next big challenge was the budget process in the Spring of 2007, during which the Conservatives needed to pass the "Tax Fairness Plan" that contained the royalty trust tax change they had proposed months before.

  • The Political Risk: because the budget process is by definition a confidence measure in Canada's parliamentary system, the government can fall and new national elections can result if an officially tabled budget doesn't pass. Being a minority ruling coalition (Conservatives have the most seats in parliament but not a majority of them), the Conservatives need the votes of at least one of the minority parties in order to pass its budget and avoid national elections.
  • The Political Solution: Conservatives bought the votes they needed from the Bloc Quebec, which received a huge package of tax transfers from other Canadian provinces in return for their support of the budget. Thus, the Halloween proposal became enacted law.

3) Finally, the announcement on September 24th that TAQA, the Abu Dhabi national energy company, would be acquiring PrimeWest Energy Trust posed yet another challenge for the Conservatives.

  • The Political Problem: shortly after the Conservatives announced their proposed change to the royalty trusts and the stocks got clobbered as a result, energy trust CEOs warned that they had been made sitting ducks for acquisition by foreign buyers. At the time, Finance Minister Flaherty brushed off the claims as self-serving propaganda on the part of the energy trust CEOs who opposed the tax change proposal, but TAQA's bid for PrimeWest-at a 30% premium-proved the trust CEOs correct. The Conservatives' tax law change had perhaps set the stage for the selling of Canada's vital natural resources to foreign buyers.
  • The Political Solution: this one clearly has the Conservatives in a quandary. At first, Prime Minister Harper reacted swiftly, using the Middle-Eastern origin of the buyer to float the idea of blocking the deal on national security grounds. However, this deal was TAQA's 3rd takeover of the year in Canada, and one of those purchases has already closed; if it wasn't a national security issue then, why would it be now? Since that wouldn't make sense, he then backed off and said such protectionist legislation would be coming soon, but that the TAQA deal would be reviewed based on existing laws, preserving its ability to complete the PrimeWest deal. Even this solution wasn't ideal however, as it would keep the topic of the TAQA deal in the news, reminding Canadians that the energy trusts were indeed trading at fire-sale prices as a direct result of the change in their tax status.

Ultimately, there has been no political solution to the PrimeWest takeover, and this week's announcement by Canada's Conservatives that no such national security takeover legislation would be crafted until next year shows clearly they don't quite know how to make this problem go away. They must be hoping the topic will die down, that they'll have time to quietly pass such legislation at some point in the future.

Will this work? Maybe, but the fact still remains that the TAQA takeover of PrimeWest signaled clearly that Canadian energy trust assets are very inexpensive. In reality, a foreign acquirer might actually step up any similar plans in hopes of getting a deal done now, before any new legislation that would block such foreign buyers is tabled next year.

Regardless, the royalty trust tax change was a huge mistake, and the lack of any clever political play in the aftermath of the PrimeWest takeover shows that Harper, Flaherty and their team will have an increasingly difficult time covering up that fact.

Note: click here to listen to my podcast interview with Roger Conrad about current energy trust valuations in general and the PrimeWest takeover, in particular.

Disclosure: Author has a long position in PWI

Source: Seeking Alpha

MP Paul Szabo (Mississauga South, Lib.) presents petition to House of Commons

Excerpt from October 17th Hansard:

Mr. Speaker, pursuant to Standing Order 36, I am pleased to present a petition on the income trust broken promise, on behalf of Mrs. Gina Palmer of Calgary, Alberta, who remembers the Prime Minister boasting about his apparent commitment to accountability when he said “the greatest fraud is a promise not kept”.

The petitioners remind the Prime Minister that he had promised never to tax income trusts, but he recklessly broke that promise by imposing a 31.5% punitive tax, which permanently wiped out $25 billion from hard-earned retirement savings from over two million Canadians, particularly seniors.

The petitioners therefore call upon the Conservative minority government to: first, admit that the decision to tax income trusts was based on flawed methodology and incorrect assumptions; second, to apologize to those who were unfairly harmed by this broken promise; and finally, to repeal the 31.5% punitive tax.
Paul Szabo, House of Commons, October 17/2007

Related:
Member of Parliament Profile (Current) - Paul Szabo
Stephen Harper on Accountability - Election 2006

Wednesday, October 17, 2007

Creating a Canadian Corporate Advantage - Dion speech to the Economic Club of Toronto

Excerpt from Oct 12 Speech:

Our fourth priority for the Speech from the Throne is a plan to create a strong Canadian economy. And…surprise, surprise that is what I want to talk to you about today, here at the Economic Club of Toronto. How to generate more investment, higher living standards, and good jobs for ourselves and our children. I want to thank the Economic Club for giving me the opportunity to talk about this issue.

We need this plan, especially given the fact that the Harper government has done more harm than good to Canada’s competitive position.

They are in the process of squandering $12 billion per year to pay for their two point cut in the GST, money that could otherwise have been used far more productively.

Their original interest deductibility proposal was a frontal attack on the competitiveness of Canadian companies and denounced as the worst tax policy in 35 years. As reported in the press yesterday, their new version of interest deductibility will still cost Canadian companies billions and will serve mainly to enrich foreign governments. It is beyond belief. The Prime Minister has not listened to common sense. It is not too late for him to do so.

We expect the Speech from the Throne to address economic measures including infrastructure, post secondary education, research and development, the manufacturing sector, labour market shortages and middle class tax relief.

But today, I want to talk about an important policy I believe Canada needs to create more investment. To create rising living standards. To create the jobs of tomorrow in the Canada of today. To create a competitive tax system. To create a Canadian corporate advantage.

I am talking about the necessity to further reduce the federal corporate tax rate, deeper than has been already announced.

The previous Liberal government reduced the federal corporate tax rate from 28% to 19%. The Conservatives took the “bold step” of going further…to 18.5% in 2011. I would go deeper than that and I will tell you why.

My conviction that corporate tax cuts must be on Canada’s economic agenda has been strengthened by a process of consultation with parliamentary colleagues, workers and Canadians who want better jobs for themselves and their children. I am convinced that a further reduction in the corporate tax rate cut is the right thing to do.

My conviction has been reinforced by what I have heard from experts and business leaders at round tables and other forums across the country. I am thinking in particular of the outstanding Montreal conference of September 10th where experts and business leaders seemed to speak with one voice – but in both official languages! - a lower corporate tax rate is a powerful weapon in the federal government’s arsenal to generate more investment, higher living standards and better jobs.

It is true that business leaders I have spoken to have also called for an extension of the Accelerated Capital Cost Allowance for manufacturing and processing industries. This is especially true with a Canadian dollar at par. It has never been more affordable for Canadian businesses to invest in new machinery and equipment. But today I will focus on the corporate tax.

I will give you three reasons why we must deepen the cuts to the corporate tax rate. It is a good economic policy as such within the Canadian economy. Second, it will help us compete with other countries. Third, it will strengthen our economic sovereignty. Let’s develop these three points.

It is a good policy for an economy like Canada’s. Why? Because living standards are driven mainly by productivity. Productivity is driven mainly by investment. How, for the sake of good jobs and rising living standards, can we encourage Canadian companies to increase their investments?

The answer is simple. If you lower the corporate tax rate, you lower the cost of capital for Canadian companies. Therefore, these companies are induced to spend more on capital equipment.

It is important for Canada to increase capital spending. Right now we are not doing very well. In fact, Canadian companies invest $1600 per worker less than US firms and $700 per worker less than the OECD average.

This brings me to my second point, competing with other countries. Today the Canadian dollar is at around par with the United States. A low Canadian dollar was at best a mixed blessing, but it did create a competitive advantage for our exports and an inducement for companies to locate in this country. How, for the sake of good jobs and rising living standards, can we create a new Canadian advantage that relies on something other than a weak currency?

By now it is clear that my answer is to create a new Canadian advantage based on a lower corporate tax rate.

Some may question why Canada needs a specific advantage to win in global competition. The answer is that every country seeks an advantage and that Canada especially needs one given the fact that our neighbour is the world’s largest economy.

As a destination for investment in North America, Canada is not top of mind. As the world’s only superpower, the United States is always top of mind. So we need a big hook to snare investment, including Canadian investment, that might otherwise go south of the border.

We already have some good arguments for investing in Canada – for example, our skilled work force, our internationally respected status as a nation, our successful multicultural and bilingual society. But corporations are oriented to the bottom line, and one of my biggest hooks as a future Prime Minister would go straight to the bottom line: come to Canada and you pay a much lower corporate tax than in the United States.

How would the United States react to this Canadian advantage? It could after all match Canada’s corporate tax reduction. But here’s a case where Canada’s small size is an advantage. If Canada creates a big corporate tax gap vis a vis the United States, there is unlikely to be any reaction south of the border. We’re under the US radar screen because we’re small.

My third and final argument for a lower corporate tax rate is that it would strengthen Canadian companies against foreign takeover. We want our companies to be predators rather than prey. The best way to do that, for the sake of good head office jobs and other benefits, is to strengthen our companies by taxing them less. It lowers their cost of capital. It better equips them to take on the world.

To conclude, let me sum up the argument. A key competitive advantage for Canada used to be our weak currency. Now that our dollar is at par, and we have lost this weak currency advantage, a key advantage must be a competitive corporate tax rate.

A tax advantage is better than a weak currency advantage. I can’t think of a country that has succeeded on the basis of a weak currency. But I can name several countries, including Sweden, Denmark, and Ireland, that have done very well by creating a low corporate tax environment.

I would much rather be the Prime Minister of a country that grows investment and good jobs through a competitive tax regime than a country that aspires to greatness through a devalued currency.

Some will say that a cut in corporate taxes is a right wing policy. I’m sure my friend Jack Layton will say this. But to believe this is to believe that Sweden, with its low corporate tax rate, is the hot bed of neo-conservatism while the United States, with its very high corporate tax rate, is a socialist paradise – or to quote Stephen Harper when he described Canada – “a second tier socialistic country”. A low corporate tax rate is not a right wing policy or a left wing policy. It is a sound policy.

The world does not owe Canada a living. For a richer, fairer, greener Canada we need to create a Canadian corporate advantage. We need a more competitive Canada.


Read the complete speech