| nov 12 2006 | | Taxing Canadian Income Trusts. | Jim Flatuence, Canada’s Finance Minister blew the unit trust market apart with a single eloquent blast. After promising before the election that he would not tax investment trusts, he did what all crooks do when the victim has been sucked in by their lie. He turned around and announced they would be taxed. He fleeced them. Please don’t claim you were surprised that a politician lied.
Dim witted supports of the "you are not taxing me enough" and "please spend my money, you do it so much better than I could" brigade were heard to opine that the situation had changed. Apparently these sycophantic excusers whine; too many companies were converting to investment trusts. Maybe that was so, but he did have the opportunity to grand-father in the new proposed taxation to leave current unit holders unaffected, also he could have exempted the energy trusts which are developing the continuing supply of oil and gas that the country needs. If, businesses were jumping on the trust bandwagon and too many foreigners were taking advantage of their distributions, there were ways that he could have curbed this. We like to think there are clever people working in the civil service. The only conclusion is that this was a well thought out deliberate plan.
So C$27 billion was wiped off the TSX in order to try to recover the C$2 billion the government claim they are losing.
There are two issues that arise from this debacle. The first is obvious. Why would we want the government to get their lying hands on another two billions dollars of our cash. The dividends paid out to unit holders are the most efficient way of distributing funds. These unit holders, mostly pensioners, will spend it in the manner best for them. The government “says” they will spend it on education and health care, both commendable areas if only we could trust them to follow through. Unfortunately, if the past is any guide, the lying bastards will distribute our money out of the pork barrel to their buddies to slurp up in outrageous and mostly unaccountable schemes.
The second issue is more serious than politicians lying and stealing, that is after all their nature. The problem is this. Since the trust funds have been whacked it means they are vulnerable to take over by foreign interests. Interests, which probably don’t coincide with what is best for Canadians or for our economy.
But then why would any politician give a thought for the public living on fixed incomes. They get their salary, their perks, their kick-backs and if they should get found out and canned, they get a fat pension and a job from the boys.
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