Harper Valdez, as seen in the Hill Times just in time for the opening of Parliament

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CRA Form T1032 codifies Harper's two tiered pension system

Lest you think terms "tax fairness" or "leveling the playing field" are lofty concepts that Stephen Harper actually believes in, as opposed to arbitrary and whimsical concepts that he trots out when it serves his purposes, you need to take a look at the CRA Form 1032 issued in October 2007 on the matter of income splitting for seniors. Here are the words on Form T1032 (see attached) that exclude the 75% of Canadians who do not have pensions, unlike MPs, Senators and Civil Servants:

"Exclude from the amount at line A of this form any RRIF, RRSP or other annuity payments received by your spouse or common-law partner (other than amounts received due to the death of his or her spouse or common-law partner). (1) "

Form 1032 is the form used for the 14% of Seniors who will benefit from income splitting.

Income splitting has a cash value of up to $12,000 per year in tax savings. There are however, two prerequisites to enjoy this massive tax benefit. You have to have a spouse or common law partner, and you need to have pension income. This automatically excludes 75% of Canadians. RRSP and RRIF income is explicitly excluded.

How can this measure possibly be contained in a piece of legislation entitled The Tax Fairness Plan?

This income splitting measure was held by the CONservatives to have been a form of mitigation to the income trust tax. How completely absurd, since the income trust tax is specifically targeted at the 75% of Canadians who don't have pensions, whereas the PREREQUISITE for income splitting is that an individual have pension income. RRSP/RRIF income is explicitly excluded.

This is just another example of how Stephen Harper is creating a two tiered pensions system in Canada. These are four main measures to bring Harper's grossly discriminatory two tiered pension system into effect:

(1) Income splitting only applies to 25% of Canadians with pension income (only half of whom have an eligible spouse), excludes the 75% without pension income. Measure benefits all MPs, Senators and Civil Servants.

(2) Pension plans can own income trusts in private form, free of the 31.5% income trust tax. RRSPs are double taxed.

(3) Pension plans are free of growth restrictions.

(4) Alleged tax leakage, is permissible if incomes trust are held by a pension plan.

The pension plans are laughing all the way to the bank. No doubt they were consulted on this beforehand by the Harper government. Otherwise, how could pension plans like Teachers have come out with statements like this on November 1, 2006:

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Teachers' response to new federal income trust policy
November 1, 2006

The Ontario Teachers’ Pension Plan has advocated for a taxation policy on income trusts that does not discriminate against pension funds, and we are pleased to see that this is the case with the government’s announcement yesterday (October 31, 2006).

The reality is that, in a protracted period of low interest rates, it is important to find alternate investments with yields that help make up the difference. Income trusts have allowed us to do that in recent years. The challenge will be to find the investment vehicles that will replace the income and cash flow that income trusts have represented to us, but we are confident that our investment team will find them. The four-year implementation period for this new policy will enable us to gradually make any necessary adjustments to our portfolio.

There is good news for pensioners and other seniors over age 65 in this new policy, which will help take the sting out of the new tax policy on income trusts for them: the age exemption tax credit will be increased by $1,000 and income splitting will be permitted.

Contact:

Deborah Allan
Director, Communications and Media Relations
Ontario Teachers' Pension Plan
(416) 730-5347
deborah_allan@otpp.com

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

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

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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

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

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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

Dave Marshall's Story

Remembrance of Halloween Massacre to be held October 31 on Parliament Hill

A year ago Dave Marshall felt comfortable investing in Income Trusts. During the previous election campaign Stephen Harper assured Seniors like Dave and Loreen he would never raid Seniors nest eggs if elected as Prime Minister.

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Dave (70) and Loreen (61) Marshall lost $109,000 of retirement savings when Income Trust tax rule changes were announced on October 31, 2006
Source: The Turner Report

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Like millions of other Canadians, Dave and Loreen took Stephen Harper and the Conservatives at their word and invested a portion of their hard earned retirement savings in Income Trusts.

When Conservative Finance Minister Jim Flaherty announced his surprise big new tax on Trusts last Halloween, Dave says “I didn’t really understand it that night, you know, the full extent of the damage that was being done.”

Dave found out soon enough when $109,000 in market value was erased from his retirement funds. The Income Trust market has not bounced back and Dave isn't getting any younger.

The Initial Loss


The Continuing Loss


Dave needs your help.

On the first anniversary of Harper's broken promise to Income Trust Investors there will be a remembrance on Parliament Hill. Seniors and all Canadians demand truthfulness and honesty from our government, something they did not get from Stephen Harper.

"This is more than about Income Trusts. It is also about the lying that Harper has done during the last campaign and continues to do at every opportunity," Dave continues, "If this type of behavior is unacceptable to you, then this will be a good time to express that feeling. There are just too many decent MP's on the hill that we have to put up with the likes of Harper and Flaherty."

October 31, 2007 Remembrance March - itinerary and details from Dave Marshall:

• Meet Dave at the Justice Building on Wellington Street, 12:30PM to 1:00PM

• Arrive on Parliament Hill 1:00PM

• Remembrance March on Parliament Hill 1:00PM to 1:30PM

• Then get checked through security and go to the visitors gallery for question period. The reason for the long period between 1:30PM and question period is that protesters are given extra attention by security.
  

• Bring clothing that is suitable for the weather conditions.

• We should not bring a sign with a stick as this maybe deemed as a weapon by security.

• For those of us that have trouble walking there is a shuttle bus that runs from the Justice Building to the Centre Block and back. It runs about every five minutes and it is free.
  

Please give this serious consideration, bring your wife, family, girlfriend and lots of friends.

Please let me know if you are coming. We need a good showing.

Thank you,

David Marshall
1-613-938-0810
grumpymarshall@sympatico.ca
Cornwall, Ontario

Related:
‘A valuable investment vehicle’ - garth.ca

One-third of Canadians over 60 worry they'll outlive their savings, assets: poll

Published: Sunday, July 15, 2007 | 1:20 PM ET

Canadian Press: GREGORY BONNELL

TORONTO (CP) - One-third of Canada's senior and near-senior citizens are worried they'll outlive their bank accounts, and half of those over 60 holding jobs say they're working because they need the money, a new poll suggests as a record number of Canadians face the so-called golden years. More...

To: Finance Minister Flaherty, Your Tax Leakage Analysis is Fraudulent

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Canadians not fooled by Flaherty on Income Trusts

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If Flaherty's right then 91% of Canadians must be wrong

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I don't want to be a burden on my children

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