The Canadian Association of Income Trust Investors (CAITI) is growing by leaps and bounds. Founder Brent Fullard dropped by the income trust meeting I held in my riding the other day, and together we will be mounting another in a location to be announced tomorrow, during the week of May 22nd.
Below is a video CAITI has created to further its cause, which is the defeat of the falsely-premised income trust tax. For me, that includes the end of the Stephen Harper government. Its crimes: Lying, deceiving and fabricating.
85 comments ↓
WOWSERS! There will definitely be a pole Harper will try like mad to avoid…because in days of old it was known as a SPIKE…as in the enemy’s head upon it!
Will Elections Canada allow this to be aired during the election? Probably not as its political advertising by an outside organisation.
Pity, because thats when it will have most impact. Of course the Libs can always use it as negative advertising if they want to go down the dirty road!
CPC do everything Donkey backwards.
They announce taxes on gas guzzlers with no consultation with the Auto Industry and send Bernier to consult with same after the fact and now he comes back to Flatter-me with the concerns of the auto sector.
Same with Income Trusts. Flatter-me tried to outsmart the public and cannot prove tax leakage. His ill conceived slaughter of The Trust Sector has caused a wholesale sell out to foreign interests, completely eliminating the prospects of collecting future tax revenue. The Elfin Minister then said he felt bad to fulfill the command and broken promise of Harper to seniors and investors. A real class act….Banana Republic style.
The efforts of Garth Turner, CAITI and McCallum are really started to put the truth out front and show to Canadians just how deceitful and unfair the CPC tax policies are.
Corporate Canada is becoming highly critical of CPC governance. Time has come for change. NO MORE BUFFOONS!
Bring on the election.
Oh wow, an amazing add that sums up how PMSH broke his promise to NEVER tax Income Trusts.
Indeed, not only this, but Harper ignores the Kyoto Protocol, denied that the Geneva Convention was being broken when Afghan Detainees were tortured when transfered to Afghan Authorities from CF’s.
So ya, I think it’s time we had an election soon!
James-Chatham,
Good point re: Elections Canada, however, there probably are no restrictions to private ads paid for by private organizations. Still, a good and solid point.
I would not want the LPC to run a negative ad anymore than I want the GPoC to do so.
Folks get your collective heads out of your collective arses. Two things; 1. if you lost mega-bucks from the Income Trust situations, get yourselves a new advisor, and 2. this ain’t gonna change. Most Canadians weren’t so unbalanced in their investments and don’t want corporations to turn away from R & D or not pay their fair share of taxes. Sorry folks, I’m not a CPC lover, but they did the right thing here…get over it.
Thank you, Mr. Flaherty. Nice to have you drop by. — Garth
S.S. Harper taking on water!
Sheila, your are talking my language!
http://www.torontosun.com/News/Columnists/Copps_Sheila/2007/05/06/4157959-sun.html
Yikes! If the presentation is slightly dry the first time around, that flag at the end should get the viewer to hit rewind, or if televised, pay close attention from start to finish the next time it airs. Not to mention that rather cavalier-looking “Joe Feeney” pose of Jim Flaherty, which should resonate with the demographic group most affected. Serious yet effective advertising, without all the over-the-top embellishments that is the trademark of political adverts these days.
BMU,
Buy the lie matee, drink the Kool Aid while its cold.
“Folks get your collective heads out of your collective arses.”
Who is the arse here?
“Two things; 1. if you lost mega-bucks from the Income Trust situations, get yourselves a new advisor, and…”
…or I would say vote in a new government!
“2. this ain’t gonna change.
…but Mr. Flaherty, I thought that things change all the time! Like when Stephen said that ‘a CONservative government would never let that [income trust tax] happen’ and then you said that things changed! BCE, a company that does not pay tax as a corporation by writing off R&D, is on the auction block to tax exempt entities! How is that a justification to destroy the income trust asset class?
“Most Canadians weren’t so unbalanced in their investments…”
…you haven’t seen a lot of individual RRSP/RRIF accounts of seniors then. You would know that many seniors invested heavily in the income trust sector due to the monthly income stream and the security in knowing that Harper would keep his election campaign platform promise to NEVER tax income trusts, because he recognized them as important investments for seniors’ income.
“…and don’t want corporations to turn away from R & D or not pay their fair share of taxes.”
I average Canadians walk down the street mumbling this mantra, but I bet you do.
“Sorry folks, I’m not a CPC lover,…”
…I guess not, because this one issue will probably kybosh the CPC’s chances of getting re-elected!
“…but they did the right thing here…get over it.”
Sorry, but you haven’t proven this thesis Mr. Flaherty, at all. You have handed us and now want back 18 pages of McCarthy, FBI style blacked out documents.
Thank you, Mr. Flaherty. Nice to have you drop by. — Garth
By BMU on 05.06.07 8:10 pm
At least he is communicating Garth!
Pretty low brow YouTube video.
More a reflection upon who prepared it.
Great message and the truth and only the truth.
The liar is speaking and documents submitted by his valet are shown.
What we need is a new leader in charge and a new government.
I won’t change my mind and liars will never have my respect.
My word and believe me….
NEVER TRUST HARPER….Period.
TRUST HARPER………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
TO LIE.
He is very very good at that.
marte
Garth, I have to say I’m with you on the QP issue. I think if I see Peter Van Loan obfuscate or evade one more question from you, I’ll probably tear my hair out.
Look, I’ve been following Canadian politics for a long time, over 20 years. You pointed out the futility of QP in your book from almost 15 years ago (has it really been that long?) and it hasn’t changed. If anything, it’s only gotten worse. I also know it’s called “Question Period”, not “Answer Period” but for crying out loud, you ask legitimate questions that deserve straight answers. The fact that he keeps bringing up the “you oughta resign” thing gets really lame after awhile. It should not matter WHO asks the questions, they all deserve at least some semblance of an answer. Regardless of your political stripe (and I’m still in mourning that you got bounced from CPC caucus after I helped elect you), you deserve real answers on behalf of your constituents.
Pretty low brow YouTube video.
More a reflection upon who prepared it.
By Old enough to remember on 05.06.07 9:33 pm
…it is, after all, Mr. Harper’s sound bite.. and Flaherty’s blacked out documents..
Tory minister logs $149,389 of undeclared flights
Labour Minister Jean-Pierre Blackburn’s office denies he is trying to hide expenses.
Prime Minister Harper has appointed three former lobbyists to Cabinet: Gordon O’Connor, Lawrence Cannon, and Jean-Pierre Blackburn,â€
Not only do these actions appear to contravene the Lobbyist Registration Act as well as the 2006 Conflict of Interest and Post-Employment Code for Public Office Holders, but they also violated the proposed Federal Accountability Act –the very cornerstone of the Conservatives’ election platform.
http://trustbreaker.blogspot.com/2007/04/some-of-stephen-harpers-broken-promises_05.html
correction:
“…and don’t want corporations to turn away from R & D or not pay their fair share of taxes.â€
I doubt that the average Canadian walks down the street mumbling this mantra, but I bet you do.
“Pretty low brow YouTube video.
More a reflection upon who prepared it.”
Actually it’s a more damning comment on those who made the video possible. The twin brothers of capital decimation and falsified claims of lost tax revenue…be careful of what you wish for….these two clowns are actually causing tax leakage an not stopping it. Actually stopping it was an impossible task, since tax leakage never existed in the first place. My heroes. Slayers of mythical dragons!
James – Chatham says: Will Elections Canada allow this to be aired during the election? Probably not as its political advertising by an outside organisation.
Try to stop it. Try to suppress the uncomfortable truth.
Did you see the latest spin from the NDP-CON Super-girls in the Hill Times?
Front Page Page 15
I’ll give you the short version: CAITI is just one guy named Brent Fullard so if he goes away the problem goes away.
Right….If only it were true Judy and Diane. Sorry to break your hearts but this Income Trust thing is going to spin the CONs into the ground.
Ask Jason Kenny if he felt the love of his grateful constituents.
Question to CON lurkers and I know you’re out there. How much of your party resources do you want to spend trying to sell Flaherty and his policies to an intelligent Canadian public? Do you have that much money?
Investors will remember Harpers promise that turned out to be a lie. And they will vote (not) for Harper.
This is my favorite ad. Hope you like it too.
I think this CAITI add is somewhat mellow. I love some of the ads that Brent made up in print and bill boards.
Good stuff Garth. Its great that you make this sight. You never would have been able to do this blog with Harper.
Keep up the good work! (and give John McCallum a pat on the back!)
I am a bus rider and see these ads by CAITI frequently posted on bus shelters. And when you are waiting for a bus, you read what is there in the shelter. So this company must be spending millions on advertising this way.
I loved it. That ad was perfect. Informative, non-confrontational. Just exactly what the truth is.
Cons will have a hard time accepting this one though. To much truth hurts their cause.
…how about this article… is this “pretty low” brow too?
Continuous Tory fumbling of corporate file has big firms on edge
Deirdre McMurdy
The Ottawa Citizen
Monday, May 07, 2007
It’s not something that can often be said about politicians, but pretty much the worst thing Jim Flaherty can do is to keep a promise he has made.
The federal finance minister recently said that within the first few weeks of May, he would release the details of new legislation that would prohibit Canadian companies from deducting the interest on money borrowed to expand or to acquire business operations outside Canada.
That move, which abruptly surfaced in the 2007 budget, has caused such an uproar in corporate and finance circles that Mr. Flaherty — who only began broad consultations after announcing the policy change — was pressured to declare that while “the principle is sound, we can always talk about process.”
But instead of just tinkering around the edges and trying to patch up a deeply flawed initiative, business interests which have sounded the alarm — including many CEOs, the Canadian Chamber of Commerce, the Canadian Council of Chief Executives, Deloitte and Ogilvy Renault — are lobbying the minister to review the entire international tax structure, referring it to the expert advisory panel he pledged to create.
“This is an incredibly complex area that includes 35 years of treaties with other countries,” notes Len Farber, the former director of tax policy who now works as a senior adviser with Ogilvy Renault. “You can’t just isolate one element of this structure and take it away from that broader context. There’s no such thing as ‘pure’ tax policy.”
While the budget says it has made the move to “crack down” on companies that use “tax havens” to “avoid paying their fair share” — language that has a nice populist ring to it — Mr. Farber says it was really done to try and claw back some of the money given away by the agreement to eliminate the withholding tax on cross-border interest payments under an expanded Canada-U.S. tax treaty.
Nevertheless, it’s hard to grasp how a government that pays lip service to issues such as improving productivity, competing globally and creating Canadian business champions, could simultaneously move to increase the after-tax cost of capital for domestic firms that want to grow beyond national borders.
That means that in a bidding war against other multinationals, Canadian companies would be hobbled from competing because of a tax liability imposed by their own government. So much for Advantage Canada.
In a post-budget letter to Mr. Flaherty, the Canadian Council of Chief Executives notes that “it may seriously undermine the competitiveness of Canada’s homegrown champions” and it may “damage Canada’s standing as an international centre for financial services.”
After all, raising capital and managing finances is a core head-office responsibility. And if it can’t be done efficiently in the country where a head office is located, there’s one less reason for it — and the related high-end jobs — to be there.
It’s all the more baffling given that the Tories’ own stance on income trusts — along with the rise in power of private equity groups and pension funds — is hollowing out Canadian ownership in the business sector. Since Mr. Flaherty announced changes to the tax status of income trusts last Oct. 31, at least a dozen income trusts have shifted into foreign hands.
And perhaps the ultimate irony on that score is that the government moved on the income trust issue in part to pre-empt BCE from becoming a trust and stanch the loss of tax revenues, that company is now facing a possible takeover from pension funds, which will not pay tax on their profits anyway. So if anything, the federal government has lost ground and not gained a penny on the revenue side.
But what’s most remarkable is how frequently the Conservative government has fumbled the corporate file since taking power.
Perhaps reflecting its populist appeal and Reform roots, it has done well with the issues advanced by the small business sector, such as lowering income tax rates for small business owners, reducing the paper burden by a targeted 20 per cent and helping to improve succession planning by changing capital gains rules.
“We’ve been very pleased by our access and by the impact our efforts have had,” says Garth Whyte, executive vice-president of the Canadian Federation of Independent Business. “The Tories have been very responsive.”
Some observers say that part of the problem with the more complex corporate issues is that the Tories have been wary of trusting the established bureaucracy and have therefore reduced the size of their circle — eliminating vast amounts of experience and institutional memory from the decision-making process.
Others say it’s all a function of an inexperienced crew scrambling to find its feet and a leader who isn’t predisposed to be inclusive and consultative at even the best of times.
But as time passes, the corporate community has quickly lost interest in the reasons. And learned to fear the results.
© The Ottawa Citizen 2007
http://www.canada.com/ottawacitizen/news/story.html?id=1b697b21-7572-48f7-9233-86e5380242c8
‘Besieged’ Flaherty to rework plan to cut tax break
http://www.theglobeandmail.com/servlet/story/LAC.20070507.RFLAHERTY07/TPStory/Business
Flim-Flam Dim-Jim Flaherty gonna burn.
….Along with ALL Ontrio CPC incumbents
Mikey Wallace will be back to selling windows/doors on referrals. Get your cereal bowl out, Mikey. Flim-Flam Dim-Jim Flaherty said, “Let Mikey and all the rest eat it!” They are going to ‘eat it’ come election time.
http://www.youtube.com/watch?v=X93q2a4t9AA
“So this company must be spending millions on advertising this way.”
Let’s assume they have spent a million dollars. That works out to less than one dollar for every one of the one million plus (some say 2.5 million) income trust investors. That’s less than the price of a postage stamp. Now granted letters to MPs are postage free….but do they ever actually read these letters?….do they ever repsond to them?…do they ever act on them? With some notable excepetions like Garth, the answer is a resounding NO. Some even resort to telling their constituents to “get a life” (Conservative MP Bruce Stanton’s office).Therefore this money that CAITI is spending is a cheap investment, particularly when each investor on average has lost some $20,000 plus dollars of their life’s savings. Would you spend a buck to recover $20,000? Would you spend a buck to protect democracy?transparency/accountability? Would you spend a buck to give Harper to royal boot and the “it’s not my fault” Finance Minister a lesson in the Peter principle in reverse? It’s time Flaherty descended to hos level of incompetence after a career of ascending to his level of incompetence. Any openings in the House of Commons for a snarky janitor?
CPC a government on training wheels!
I think the bike is too big to learn on.
http://news.yahoo.com/s/nm/20070505/wl_canada_nm/canada_politics_col;_ylt=AtcubXljnHcQFLSmrYlXLzPwrGIF
Fear du jour,
Well! Who knew that Tim’s was part of CSIS?
That’s right according to today’s Star article on the American defense contractors who were ’sure’ that the Canadian Poppy Quarters contained Nano Thechology and were, in fact, spy devices carefully planted into their pockets.
‘Spy coin’ was poppy quarter
That is about all the paranoid silliness I can take this Monday morning. LMAO!
The odd-looking – but harmless – “poppy coin” was so unfamiliar to suspicious U.S. Army contractors traveling in Canada that they filed confidential espionage accounts about them. The worried contractors described the coins as “anomalous” and “filled with something man-made that looked like nano-technology,” according to once-classified U.S. government reports and e-mails obtained by the AP.
Good grief! I guess that means we better not air drop beavers down south because that would be the ‘damdest’ thing we could possibly do, eh? Yeppers, they be WMD’s (Wood Munching Damsters) for sure!
The CPC [formerly CRAP..STILL CRAP] needs to remember only TWO THINGS.
They’re not tough to remember.
FURY … DESIRE FOR REVENGE!
’nuff said!
By Geoffrey Laxton on 05.06.07 11:07 pm
…it is, after all, Mr. Harper’s sound bite.. and Flaherty’s blacked out documents..
I guess they edited out the shadowy b&w pictures of seniors eating dog food…
Maybe someone can ask Brent Fullard at the next meeting what BMO is doing about ABM and bank service fees for seniors, the group he seems most concerned about.
Or ask him about what sort of potential huge IT conversion fees he and his Bay St group cohorts have lost due to the closing of this tax loophole.
Funny, they don’t show that part.
I’m kind of ‘meh’ with respect to CAITI. You have to remember that a lot of the old income trust crowd in Calgary, where the income trust loophole was born, really did support the Conservative party, and in a big way.
Part of me wants to say “When you give your vote to the same party all the time — do you really expect them to value your loyalty? Hell no, they’re going to take you for granted…so, you reap what you sow.”
On the other hand, it wasn’t just Calgary that got hit.
Still, happy to see their money go towards negative ads than into the Conservative War Room, sponsored by CAPP.
Pyotr,
They will not remember, because that requires a mind! There is no KISS principle simple enough for their addled
brains, er, neural nodule.(Garth, I think you missed this comment?)
One more topper for the morning and then I am gone until lunch.
Vengeful elevator snags vandals
Yeppers! They are definite candidates for the 2007 Darwin Awards!
Here is another “low brow” article:
Will fears of a hollowing out save income trusts?
By David Clarke
May 7, 2007
OTTAWA — Recent research indicates that those who fear a “hollowing out†of the Canadian economy through foreign takeovers of domestic companies (InvestmentNews, Nov. 6) may have good reason.
An April 5 report from CIBC World Markets Inc., part of the Toronto-based Canadian Imperial Bank of Commerce, counted 13 takeovers involving income trusts with a combined enterprise value of more than $7.2 billion (U.S.) since Oct. 31, when the taxation of income trusts was announced. Three more income trusts received offers April 16.
Income trusts, investments similar in structure to U.S. real estate investment trusts, pay little or no income tax but instead pay out almost all their cash to unit holders, who are taxed individually.
The minority Conservative government, faced with the possibility of an election, signaled last month that it might be backing off its stance of disallowing tax deductions for all income trusts.
It isn’t takeovers of income trusts alone that raise the specter of jobs and decision-making power leaving the country, however. Algoma Steel Inc. of Sault Ste. Marie, Ontario, agreed April 18 to be acquired by Mumbai, India-based Essar Global Ltd. for $1.65 billion.
BCE Inc., a Montreal-based telecommunications giant, also is in play.
For years, such takeovers of Canadian companies were offset, or even outweighed, by Canadian firms making purchases abroad.
That no longer is the case. During the past 10 years, foreign companies have acquired more of corporate Canada than Canadian companies bought of foreign companies.
“Canada needs to find policies appropriate to a free-trade world but which don’t make Canada an easy mark for corporate giants created under the protection of their own governments,†Kenneth Smith, a Toronto-based managing partner with SECOR Consulting Inc. of Montreal, wrote in a March 30 op-ed article in the Financial Post, a national newspaper published in Toronto.
“The sky is not falling,†he wrote.
“The Canadian economy is strong, we have a boom in the West, and companies from around the world are investing in Canada,†Mr. Smith added. “However, the nature of the economy will change fundamentally if we continue to be the seller rather than the buyer in globally restructuring industries.â€
Some put the onus on Finance Minister Jim Flaherty.
In response to the recent wave of announced acquisitions of income trusts, he said on April 2 that “trust buyouts are not my fault.â€
“Mr. Flaherty brings a new low to the concept of being accountable for one’s actions, be it in government or in any walk of life,†Brent Fullard, president and chief executive of the Ottawa-based Canadian Association of Income Trust Investors, said in a statement the following day.
“Not only does Mr. Flaherty not understand the concept of ‘duty of care,’ he does not understand the concept of ‘duty of office.’ His actions are reckless,†Mr. Fullard said.
The upshot of the income trust taxation decision and the removal of restrictions covering the ability of individuals to move the tax-
sheltered retirement savings abroad will be “… a general decline in domestic-equity holdings by Canadians,†Peter Haynes, index analyst with TD Securities Inc., a subsidiary of The Toronto-Dominion Bank, wrote in a recent research report.
“It’s Wall Street that will reap the benefits at the expense of Canadian jobs and Canadian families,†Stéphane Dion, leader of the opposition Liberal party, said in an April 16 speech, accusing the minority Conservative government of accelerating the process of hollowing out.
“We are here today to condemn two destructive Conservative policies that prevent economic growth and leave Canadian businesses vulnerable to foreign takeovers,†he said.
“First is the Budget 2007 decision to end the deductibility of interest on loans taken out by Canadian companies to finance overseas expansion. Second is the Conservative decision to break their election promise and tax income trusts at
a punitive rate of 31% … This is the single biggest change to the corporate-tax system in 30 years, and the Conservatives failed to consult anybody about it and failed to calculate its cost to Canadian business.†Mr. Dion said.
Although Mr. Flaherty said that the income trust tax will stay as long as the Conservatives remain in power, he signaled last month that he may be ready to narrow the deduction measure — so that it captures only those corporations seeking to evade Canadian taxes.
“The goal has always been to get at the tax havens and the double dipping, as it’s called — the double deduction of interest,†Mr. Flaherty said during an April 2 webcast.
That may be good for Canadian companies. But income trust investors will have to wait for the next election, which some political pundits think is imminent, to see a change in policies.
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070507/FREE/70502020/1009/TOC
By Bill-Muskoka on 05.07.07 10:17 am
I ALWAYS KEEP MY PROMISES, Bill. Let me assure you, they WILL REMEMBER!
Hey “meh” what’s with this:
” where the income trust loophole was born” Let’s assume that there even is a loophole in the first place. If so why is every other tax flow through entity known to man including the private limited partnership of Flaherty’s former law practice allowed to continue on unabated and untaxed? How about every accounting firm in the country? How about private trusts and the pension plans like the Department of Finance’s own Public Sector Pension Investment Board who just picked off Thunder energy trust for a song? How about the big stink surrounding deductibility of interest on foreign acquisitions? Think about it for a moment, this is just another long standing way to get pretax earnings into the hands of investors…it’s called corporate debt. Except in this case most of these pretax earnings are going to foreigners free of tax and totally free of withholding tax.(thanks to a recent provision by Flaherty in the last budget) In that respect it’s different than income trusts whose distributions are all taxable, by Canadians AND foreigners. Give your head a shake…Flaherty is screwing the average Canadian retail investor at the behest of some of the most powerful, and one might say nefarious, groups inside and outside the country. Whether he knows it or not is another question. A question not worth pondering since we’ve already figured it out for him and afterall “it’s not his fault” Not his fault I guess that he’s stupid….stupid to the extreme. Doesn’t mean you have to follow his lead.
By Geoffrey Laxton on 05.06.07 11:07 pm
…it is, after all, Mr. Harper’s sound bite.. and Flaherty’s blacked out documents..
I guess they edited out the shadowy b&w pictures of seniors eating dog food…
Maybe someone can ask Brent Fullard at the next meeting what BMO is doing about ABM and bank service fees for seniors, the group he seems most concerned about.
Or ask him about what sort of potential huge IT conversion fees he and his Bay St group cohorts have lost due to the closing of this tax loophole.
Funny, they don’t show that part.
By Old enough to remember on 05.07.07 9:46 am
You are obfuscating the issue with your rhetoric.
The issue is that income trusts have existed for at least 20 years in Canada and you or Stephen Harper, promised to “NEVER” tax them to gain votes for your neo-conservative ends.
Your assumptions were either flawed or utilized subterfuge:
-BCE pays no tax as a corporation and will likely be bought out by tax exempt entities.
-Tax leakage was only derived by not including taxes paid on deregistration or payout of funds from RRSP/RRIF accounts.
-The CPC promised to “NEVER” tax income trusts, because they recognized the as valuable investments for seniors and then turned around and broke this campaign election promise
This is Flaherty’s testimony at the Public Hearings on January 30, 2007:
“Chart A shows clearly this trend in income trust conversions and the path we were all on. As you can see on the chart from ‘03 to ‘06 the huge increase in 2006 in the first 10 months only of 2006. This represented a clear and present danger to our tax system and our economic structure. Evidence was mounting that we were running a real risk of turning into an income trust economy, an economy where tax avoidance drove business investment decisions and foreign investors stood to make significant gains at the expense of Canadian taxpayers.â€
I have one question, where is Chart B?
“Chart B shows clearly this trend in income trust takeovers and the path we are all on, As you can see on the chart from Oct ‘06 to May ‘07 the huge increase in the first 6 months since Halloween. This represents a clear and present danger to our tax system and our economic structure. Evidence is mounting that we are running a real risk of turning into a foreign private equity economy, an economy where tax avoidance drives business ownership decisions and foreign investors stand to make significant gains at the expense of Canadian taxpayers†(read: $35 billion)
I couldn’t have said it better myself. Chart B is attached for anyone wishing to acknowledge this version of reality. As we all know, Flaherty is better at fear mongering in the name of job security than he is at truth acknowledgement and factual disclosure, therefore this is information not so freely available from the Department of Finance but rather from the private sector which has to cope with flawed government policies.
Announced Acquired Ticker Buyer Value Buyer Info
Jan 15, 2007 Sunrise Senior Living REIT SZR.UN Ventas, Inc. (NYSE: VTR)* 2,280 US based REIT
Nov 6, 2006 Halterm Income Fund HAL.UN Macquarie Infrastructure Partners 173 New York based infrastructure inv firm (US$30B), parent company Aus
Feb 4, 2007 Great Lakes Carbon Income Fund GLC.UN Oxbow Carbon & Minerals Holdings Inc. 786 part of the Oxbow Group, a private energy company based in US (Florida)
Feb 9, 2007 Norcast Income Fund NCF.UN Pala Investment Holdings Ltd 87 UK (Jersey), international alternative investment fund
Feb 1, 2007 Lakeport Brewing Income Fund TFR.UN Labatt Brewing Company Ltd 210 Labatt is owned by InBev (Belgium)
Dec 20, 2006 Calpine Power Income Fund CF.UN Harbinger Capital Partners 880 US (Alabama) Private equity/real estate/distress situations
Feb 14, 2007 Entertainment One Income Fund EOF.UN Marwyn 177 UK based investment firm (PE, MBOs, etc)
Feb 16, 2007 Amtelecom Income Fund AMT.UN Bragg Communications Inc 129 Bragg owns Eastlink, a private telecom competitor based in the Maritimes
Dec 4, 2006 Alexis Nihon REIT AN.UN Homburg Invest Inc. 919 Investment firm with lots of properties (Based in NS, Canada)
Feb 26, 2007 Clean Power Income Fund CLE.UN Macquarie Power Income Fund (MPT.UN) 419 Canada based Income Trust
Mar 18, 2007 Associated Brands Income Fund ABF.UN TorQuest Partners 43 Canada based private equity firm
Apr 1, 2007 KCP Income Fund KCP.UN Caxton-Iseman Capital Inc. 804 New York-based private equity firm
Apr 3, 2007 Gateway Casino Income Fund GCI.UN New World Gaming Partners 886 JV of Publishing and Broadcasting Limited (PBL) and Macquarie (both Australian)
Apr 10, 2007 Liquor Barn Income Fund LBN.UN Liquor Stores Income Fund (LIQ.UN) 158 Competitor, Canada based Income Trust
Apr 16, 2007 VOXCOM Income Fund VOX.UN UE Waterheater Income Fund (UWH.UN) 109 Canada based Income Trust
Apr 16, 2007 UE Waterheater Income Fund UWH.UN Alinda Capital Partners LLC 1,740 US (NY) based private equity firm
Apr 24, 2007 Thunder Energy Trust THY.UN PSPIB/Overlord Financial 406 Public Sector Pension Investment Board (Canadian PP)
Apr 30, 2007 Custom Direct Income Fund CDI.UN EdgeStone Capital Partners 237 Canadian based P/E
May 4, 2007 Canada Cartage TRK.UN Nautic Partners 252 US based Private Equity (group of buyers)
Bill, are you on a government, union or private sector pension? Just askin’.
LOH_NUMA – you said
…”where the income trust loophole was born”…
Canadian Businesses which have chosen the perfectly legal Income Trust structure under which to operate their businesses are mandated by law to flow their Net Income to shareholders who then pay tax on this OTHER INCOME at their personal tax rate which is generally MUCH HIGHER than the average corp tax rate of 6.9%.
Businesses choosing the Income Trust structure do generate piles of Tax Money to government…it is just collected in a different way. Many businesses structured as Income Trusts do not pay corporate taxes directly to government, but do we really care how the government gets it’s tax money from business as long as it gets it? There is no loophole, never was,but the Cons have successfully made it SOUND like there is one and gullible Canadians are of course falling for yet another BIG LIE by the Conservatives. You are likely very well aware of this. But hey, let’s just spew out the Cons BS as if it’s gospel, eh.
I can tell you right now, with all the Income Trusts being bought up by foreigners and private equity, Canadian governments are going to get far far less tax money, if any, from them than they got from Canadian shareholders when the business was structured as a Canadian trust. So, Obviously, Income Taxes to average working Canadians are going to have to be raised due to publicly traded Canadian Income Trusts being bought out at fire sale prices. Because when the Trusts are gone, so is $BILLIONS of dollars in taxable revenue to government. The Cons, with their poorly thought out Income Trust policy, are actually going to cause tax leakage and Canadian workers will have to make up for this.
marte
By Geoffrey L. on 05.07.07 10:45 am
You are obfuscating the issue with your rhetoric.
I don’t think I am. All I originally said was that the YouTube video was lowbrow. If you and others think this sort of message furthers your cause, well, all the power to you.
Frankly, from my perspective, this sort of rabid discussion reminds me of Rush Limbaugh and his “dittoheads”.
Frankly, from my perspective, this sort of rabid discussion reminds me of Rush Limbaugh and his “dittoheadsâ€.
By Old enough to remember on 05.07.07 11:46 am
I agree..
Hey old enough to remember, it’s good of you to acknowledge the power of TRUTH in your statement that:”If you and others think this sort of message furthers your cause, well, all the power to you” Are you old enough to remember when the truth mattered?
To the extent that you have any factual difference of opinion with the content of this You Tube, we’d love to hear it from you. Don’t want to be accused of being a “dittohead”. Whatever that is and whoever Rush Limbaugh is.
Hold it – I thought bank fees were dropped when a person becomes a senior. My husband’s fees were dropped when he turned 60 – he’ll be 65 this coming Saturday. I will be 60 in June and I understand that my bank fees will be dropped.
Just-Thinking,
Bill, are you on a government, union or private sector pension?
None of the above! In fact, what pension? I am self-employed and work every day to earn my money. Now, I must ask were you ‘Just-Thinking’ or trolling?
If I had to rely on a government pension I would be eating that contaminated pet food!
By Cousin It on 05.07.07 12:11 pm
To the extent that you have any factual difference of opinion with the content of this You Tube, we’d love to hear it from you.
OK. On the video it shows a billboard claiming $35 billion lost. Garth Turner has repeatedly claimed $25 billion on this blog, just recently a week ago.
At that time, I looked at the S&P/TSX Income Trust Index (RTCM-I), I found the index had recovered significantly, averaging only 8% down.
See this blog:
http://www.garth.ca/weblog/2007/04/22/owed-in-oakville/#comments
When I asked Garth who his experts were who told him that investors had lost $25 billion, he declined to reply.
So, in a video entitled “Lie. Conceal. Fabricate.”, I guess I have three questions:
1)Who is doing the lieing?
2)Who is doing the concealing?
3)And who is doing the fabricating?
How old do you have to be to remember?
When a person lies to you about money or investments, you normally find that pretty hard to forget unless of course it doesn’t bother you or you think like the BUFFOON leaders of the CPC.
Oh, this is good. Just a plethora of disclosures today in the news.
Air costs put minister on the spot
What was that BS about open and transparent harper was spouting? Hidden charter air fares by one of his ministers? What? $150,000 of OUR money blown away.
Van Loan says the government remains committed to its accountability agenda and denies there is any lack of transparency on expenses. Why of course he does. Dumpling Boy always has an excuse, no matter how big a LIE it may be.
Pyotr,
No, I meant the Harper menagerie of delusional LIARS!
We will definitely remember, but the list has grown so long now it requires a database.
If someone had done the things Harper had done a few centuries ago, he would be tied to a pillar in the public square and horsewhipped…at the very least.
I still think erecting Madame Guillotine at the entrance to Parliament is a great idea. Call it a reminder, eh?
Ah, 1 hour and 10 minutes until the Comedy Hour begins…again! How many times will Van Loonie ask Garth ‘When are you going to resign?’
Oh, and another Canadian company is headed for American hostile takeover…
ALCOA (Aluminum Company of America)is going after ALCAN.
Another Canadian resource processor being swallowed up by the Yanks and where is our government?
So why is it that the CONs govt was so worried about canadian companies converting to Income Trusts that it took drastic action to stop them.
Why is it that the CONs govt is not worried about Canadian companies converting to American companies, or converting to foreign companies for that matter?
When will the CONs govt stand up for Canadian, and put a stop to these conversions?
Garth, do you know why?
BMU,
Buy the lie matee, drink the Kool Aid while its cold.
By Captain George on 05.06.07 8:24 pm
Captain George….BMU is right on the money. Here is a great chance for you Matey and your party to stock up on Kool Aid and help your party out at the same time. There will be several Kool Aid stands in operation this week end by Martha Hall Findlay so make sure you attend and help your party raise some much needed funds. Captaine George, can you tell me how much Martha made last weekend with her slumber party? Wonder what their dreams were about.
Oh dear, it is so difficult for liberals to understand they are not in power any more and won’t be for a long, long time.
Now its time Matey, you have lost your cutlass and “walking the plank” won’t be happening again soon. Make sure there is lots of moth balls because ye ship will be in dry dock for many years to come Matey.
Larry,
I will tell you why. The plan was conceived on a bagle wrapper at a timmy’s somewhere in Durham Region. The creator was one of the CPC GoodFellas , the one about as big as Joe Pesci.
Ah it is spring and the Neo-Cons have sprung!
The fertilizer is working, it has the Harpodites growing and festering on this blog. It is human nature after all and maybe even clairvoyant for the doomed to see the future and it ain’t pretty.
Hey Old enough to remember, are you old enough to count? Perhaps you should be old enough to do your own research rather than relying on politician to spoon feed it to you. This is from http://www.caiti.info. Please indicate where you disagree with this:
Calculation of $35 billion loss:
The income trust market closed on October 31, 2006 at 164.86 as measured by the S&P/TSX
Income Trust Index.
On the evening of that same day, Finance Minister Jim Flaherty announced that he would
introduce a 31.5% tax on income trusts. Two days later the index was at 138.21. This represents
a loss of 16.2% which on a $200 billion market represents a loss of $32.5 billion. Two weeks later
the index was at 135.51 representing a loss of 17.8% or $35.6 billion.
It is for this reason that we calculate the loss to be about $35 billion. To the extent that the
Income Trust index has subsequently risen to higher levels does not diminish this “lossâ€. This is
for two reasons. First, some investors may have sold immediately following this devastating
announcement. Second, the subsequent increase in the index may itself be as a result of the
effectiveness of advocacy against the trust taxation and therefore the market will have rebounded
to reflect this degree of optimism. To the extent that this tax policy is actually enacted, this
positive anticipation will dissipate and the index will drop to reflect this new reality. Second, there
are an infinite number of variables that affect markets that would have intervened in the meantime
that make it impossible to isolate the ongoing amount of the loss associated strictly with this
policy. Those who cite loss numbers less than $35 billion are making the false assumption that
the market, absent Flaherty’s devastating tax, would not currently be at a higher level than it was
on October 31, 2006, namely 164.86. Their loss analyses incorrectly make this assumption. The
correct loss figure is $35 billion.
HE HAD NO CLUE!!!!!!!
I repeat…NO CLUE!!! Has anyone ever seen anybody so critized on a daily basis by Corporate Canada?
http://www.canada.com/nationalpost/financialpost/story.html?id=e6af6bb1-c9fd-4dca-8072-138cc614ea29&k=10349
BAM! Another Income Trust gone!
http://www.globeinvestor.com/servlet/story/CNW.20070502.C4269/GIStory/
“Its crimes: Lying, deceiving and fabricating.”
Now THERE’s the pot calling the kettle… Red?
By THE SHADOW KNOWS on 05.07.07 2:02 pm
Whistle LOUDLY … You’re in a graveyard where Seniors’ self-sufficiency was wiped out with ONE DECREE.
Destruction by DECREE COVERS IT!
‘Bye ‘Bye Wallace, Dykstra, Del Mastro, and Ablonczy to name but a few.
By Cousin It on 05.07.07 3:13 pm
Perhaps you should be old enough to do your own research rather than relying on politician to spoon feed it to you.
Then he goes on to do a cut and paste job from a special interest group, fronted by a Bay St guy.
In other words, Cousin It confirms his stature as a Dittohead.
By Cousin It on 05.07.07 3:13 pm
Perhaps you should be old enough to do your own research rather than relying on politicians to spoon feed it to you.
Then he goes on to do a cut and paste job from a special interest group, fronted by a Bay St guy.
In other words, Cousin It confirms his stature as a Dittohead.
By Old enough to remember on 05.07.07 4:56 pm
I’ll bite my tongue on this one… I guess it is hard to tell the dittoheads from the Real Thing..
That is the problem with tags..
It reminds me of wrestlers wearing masks.. like we don’t know who they are!
Old enough… what do you think of Canadian company after company being bought up by foreign leveraged buyout and tax exempt entities such as the Canada Public Sector Pension Fund?
Do you not see a connection between tax leakage and these buyouts?
Do you not see a connection between these buyouts and the policies of “Canada’s New Government” and the “Tax Fairness Plan” and the interest deductibility closure?
By Geoffrey Laxton on 05.07.07 5:29 pm
By Geoffrey Laxton on 05.07.07 5:32 pm
I think I was being accused by Cousin It of not doing my own research. However, if Cousin It had followed the link I provided earlier, he would have indeed seen that I had done my own research in the comments section of Garth’s earlier blog, two weeks ago.
As to your other questions, I tend to agree with Eric Reguly, G&M columnist. I know you can quote (as you have many times) other columnists who support your position. I don’t agree.
Reguly was recently (Apr 26) awarded the prestigious Hyman Solomon Award for Excellence in Public Policy Journalism by the Public Policy Forum.
Go here to read the description of the 20th Annual Testimonial Dinner & Awards.
http://www.ppforum.ca/en/testimonialdinner/
There is a link to his speech beside his name there. You should read it. I agree completely with his positions.
This is partly what he said to the “well over a thousand leaders from all sectors of society”:
So let me offer two reasons why this ["hollowing out" of Canada] is happening. One is greed. I have lived and worked in four countries and have never seen greedier investors than in Canada. The concept of investing in this country has lost it traditional meaning. Investors now require instant gratification – sell now, don’t worry about the consequences. And if you don’t
believe that, look at how hard Canadians pushed to have companies turn into income trusts and how enraged they became when the Tories shut down that market. Trust companies by nature are not growth machines. They are just tax avoidance stunts. In the worst cases, companies that were global leaders were dismantled and turned into nogrowth
domestic bores so they could become trusts. Precision Drilling comes to mind.
I wish Garth and others would take up some of the forward looking issues he suggests in the rest of his speech, rather than going through this endless navel gazing exercise.
Just my view.
Hey old enough to know, are you old enough to think? How’s this for a fact based argument om your part?
Then he goes on to do a cut and paste job from a special interest group, fronted by a Bay St guy.
In other words, Cousin It confirms his stature as a Dittohead.
Facts are facts and morons are morons. Never the twain shall meet
Apparently the CAITI orgaqnization consists mostly of a few industry players who routinely do mass emailings and attack journalists who disagree with them ;hardly a broad-based bunch of retirees. Interestingly being a “Concerned Canadian” allows membership.
Sounds like the Conservative Party. — Garth
By Old enough to remember on 05.07.07 5:55 pm
Then I am sure that you will agree with Mr. Reguly when he said on BNN that Mr. Flaherty’s policies are a disaster for Canada.
By Cousin It on 05.07.07 6:06 pm
Facts are facts and morons are morons. Never the twain shall meet
That’s why there are laws against marrying cousins.
By Geoffrey Laxton on 05.07.07 6:21 pm
Then I am sure that you will agree with Mr. Reguly when he said on BNN that Mr. Flaherty’s policies are a disaster for Canada.
I watched that clip. I believe what he said is “That this [purchase of some ITs] is a disaster for Jim Flaherty, the Finance Minister”.
I believe he was talking about a POLITICAL disaster for Flaherty, not that the policy was wrong for Canada, as IT proponents like CAITI and you suggest.
If there was any question as to what he meant, his subsequent speech, noted above, definitively clarified his position.
Nice try.
That’s why there are laws against marrying cousins.
Tell your parents…or were they not old enough to remember?
By Cousin It on 05.07.07 10:16 pm
Tell your parents…or were they not old enough to remember?
No, they remember when your parents were just “kissing cousins”, until grade 4 when the older one learned how to do “It”.
Nice try.
By Old enough to remember on 05.07.07 6:53 pm
Pour yourself a scotch and have a re-listen… you missed what he said!
…so according to Eric Reguly and Old Enough to Remember, corporate Canada is being sold out to foreign private equity and tax exempt entities because, well, Canadians are lazy slobs! Inco and HBC sold to foreigners? You lazy slobs! You should have worked harder! I know that most seniors have sat on their asses their entire lives and miraculously came up with a nest egg which they invested to help themselves to be self-sustaining in their retirement… interesting how Eric Reguly escaped to Europe to get away from lazy Canadians!
By Geoffrey Laxton on 05.08.07 7:25 am
Here’s what You said:
…so according to Eric Reguly and Old Enough to Remember, corporate Canada is being sold out to foreign private equity and tax exempt entities because, well, Canadians are lazy slobs!
Here’s what Reguly actually said:
Here’s the other reason: CEOs and directors in this country either don’t know how to compete or don’t want to compete. I think this an even bigger factor than greed. For decades, Canadian companies had capital handed to them, first by the British, then by the Americans. Now that Canada’s companies face a global fight for capital, the CEOs are taking the easy way out and selling. Maybe they’re wimps or maybe they’re conservative to a fault, which is another way of saying they lack confidence and ambition. Why is the Royal Bank of Scotland the world’s fifth biggest bank and the biggest Canadian bank, the Royal Bank of Canada, about 25th in the world. There is no law, no regulation, that prevented the Canadian banks from doing what Scotland did, which was to decide it wanted to be an international financial services centre. So let’s blame the CEOs.
You have no credibility.
Old enough to remember on 05.08.07 11:05 am
Here is an article published by Mr. Reguly attacking income trusts, where he says:
“At best, a trust is lazy capitalism. At worst, it is the opposite of capitalism, [an unbelievable statement, I am starting to shake with the stupidity of this article!!!!! GL] in the sense that a trust converts capital into income; normal companies turn income into capital so they can spend it on growth.”
***
Capitalism for slobs
Income trusts are turning Canadian CEOs and investors into coupon-clipping couch potatoes
Income trusts are the glazed doughnuts of the financial world, and the investors who gorge on them are becoming fat and happy. Soon, they will become lethargic, their arteries and brains clogged with trust lard. And what’s bad for investors is also bad for corporate Canada. [If income trusts were such a great thing for corporations to avoid tax how does Mr. Reguly say they are bad for corporate Canada? GL]
It’s not that the trusts are about to blow up, although some could. If interest rates soar, investors with a penchant for yield will naturally gravitate back toward lower-risk yield investments, such as Treasuries and GICs. But the real danger is that the proliferation of trusts is creating a nation of feckless, coupon-clipping dullards-investors [that would be Canadian Seniors Mr. Reguly? GL] and executives alike- who are are obsessed with regular dividend streams, not growth.[you hate mature stable businesses that pay dividends?] The rapid proliferation of trusts has the potential to alter the entire risk profile of our country, for the worse. [lets make the Canadian Capital Markets even riskier with little reward? GL]
Five or six years ago, when dot-com stocks were still the rage, the trust market outside of the traditional oil and gas royalty trusts and the real estate investment trusts (REITs) barely existed. Now trusts of the “business” variety are ubiquitous. As of January, 175 income trusts traded on the Toronto Stock Exchange. Their collective market value was about $120 billion, representing 8% of the TSX’s value. In the summer, Standard & Poor’s will add trusts to the benchmark S&P/TSX Composite Index. [and that was bad? GL] In various quarters over the past two years, trusts have accounted for 80% or more of initial public offerings. In 2004, there were 148 trust deals-IPOs and secondary offerings-worth $14.6 billion.
There are air-cargo trusts, sardine trusts and film-distribution trusts. There are newspaper, liquor-store and sugar trusts. There are trusts that sell hothouse tomatoes, doors, water heaters and peat moss. A handful have suspended distributions, but relatively few. If you’ve missed the income trust bonanza, you’ve missed one of the great portfolio-puffing opportunities of recent decades.
The temptation among CEOs to convert their businesses into income trusts can be overwhelming. Since trusts are structured to minimize paying tax themselves, and because they pay out almost all of their cash flow to the unitholders (who pay tax on the distributions), [...and this is bad because? GL] trusts trade at higher price-to-earnings multiples than comparable listed companies with conventional shares.
What’s more, Canadian investment bankers love them. [are you an anti-capitalist Mr. Reguly? ...so they must be bad? GL] They’re aimed at the retail crowd [those stinking unwashed masses of disgusting seniors? GL] and tend to be easier to sell than traditional initial public offerings [like non dividend paying companies who end up going bust? GL] which live or die on the whims of cynical and sophisticated institutional buyers. Selling trusts also appeals to the Bay Street suits for competitive reasons: American dealers, who lack retail distribution networks in Canada, are virtual nonentities in the trust underwriting game. Nothing could make Canadian dealers happier.
The Bay Street machine, in other words, is increasingly geared to promoting trusts. Investors, especially older investors who favour income over capital gains, are increasingly geared to buying them. [how dare those seniors tick off an investment objective of income on their client application form, how could you, you lazy good for nothings!] The size of the trust market could easily double in the next couple of years, especially since the federal government recently backed down on measures to limit pension-fund exposure to the sector (one of the many victories of the extraordinarily powerful Canadian Association of Income Funds, a lobby group that was formed just three years ago).
So what’s not to like. A lot, if you care about corporate and national competitiveness. Trusts exist to pay out their profits. Their management teams aren’t thinking about conquering new markets, because the capital they would need to plow back into the business is being funnelled wholesale to investors. They don’t think about expanding outside the country, because of the complications of repatriating foreign income into a tax-exempt vehicle. Some of the traditional management pursuits-mergers and acquisitions, strategy, dreaming of greatness and glory over a bottle of Scotch- [they have killed the Reguly dream! No Scotch, this is outrageous!!!! GL] don’t play as big a role at a trust. Young entrepreneurs with MBAs and visions of taking over the world need not apply [how horrible is this!!!! GL]
At best, a trust is lazy capitalism. At worst, it is the opposite of capitalism, [an unbelievable statement, I am starting to shake with the stupidity of this article!!!!! GL] in the sense that a trust converts capital into income; normal companies turn income into capital so they can spend it on growth.
Canadian business has always lived under the stigma of being overly conservative. Canadian investors, investment bankers and CEOs bemoan the rarity of Canadian corporate champions-the companies, like Magna International and Research in Motion, that take the risks to create the products that generate wealth, jobs and prestige. [for whom? oh right those Scotch drinking young entrepreneurs with MBAs and visions of taking over the world GL] At the same time, they can’t get enough of income trusts. Something is wrong with this picture. [I suggest that what is wrong with this picture is Mr. Reguly failing to tell us what is wrong with income trusts!!!!!! GL]
How do I have no credibility?
By Geoffrey Laxton on 05.08.07 11:31 am
How do I have no credibility?
No further comment. I know too much of your background from countless postings. I may post something that I will regret in the future.
You asked my opinion, and I gave it. That’s all.
Cheers
By Old enough to remember on 05.08.07 12:05 pm
It is interesting that you keep a dossier on me. My only question is, what do I have to do with Flaherty’s policies? I am not the issue.
Old enough.. what is your opinion of this article?
Federal tax ‘loophole’ makes trusts tasty targets
U.S. players expected to capitalize
Shaun Polczer
Calgary Herald
Tuesday, May 08, 2007
A loophole in federal trust taxation policies will make Canadian energy trusts plump takeover targets for U.S. hedge funds and private pension plans, industry observers warned Monday.
That’s because private trusts and large pensions like the Ontario Teachers won’t be subject to a 31.5 per cent tax on distributions when the changes come into effect in 2011.
John Brussa, a partner with Calgary oilpatch lawyers Burnet, Duckworth and Palmer, said he expects to see the emergence of new corporate structures designed specifically to exploit that advantage — including acquisitions of existing trusts by Canadian pensions and speculative American hedge funds.
“That tax represents a big inviting target for people that can eliminate it,” he said on the sidelines of a Conference Board of Canada meeting at the Telus Convention Centre.
“If you see a $20 bill on the ground you tend to want to bend down and pick it up. And those people will be pension funds, they’ll be U.S. private equity guys . . . those are the folks who see that as a tempting target.”
Although he doesn’t expect to see a wholesale takeover of the Canadian energy trust sector before 2011, Brussa — who previously prepared tax opinions for companies considering trust conversions — said the mould has been set with Thunder Energy Trust.
In April, Thunder was taken over by a consortium that included Overlord Financial Inc., the Public Sector Pension Investment Board (PSPIB) and a numbered Alberta company for $200 million.
The Ottawa-based PSPIB is a Crown corporation charged with overseeing the pension assets of the federal public service, the Canadian Forces and the Royal Canadian Mounted Police.
John Dielwart, president of ARC Resources Trust, described the exemption of private trusts as an “egregious omission” to the new rules that were announced Oct. 31.
“By excluding private trusts, big private equity funds, big pension funds can still play this game the way they always have. Individual Canadians, either retired or saving for retirement, are basically being thrown under the bus. It’s intolerable, in my view.”
Bill Andrew, president and CEO of Penn West Energy Trust, said all the big trusts –including Penn West — will be looking at alternative corporate structures as the tax deadline draws near.
Andrew said “vulture funds” in the form of ultra-speculative hedge investors are already looking to Canada as fertile ground for speculative assets ahead of what they see as looming consolidation in the sector.
“(Hedge funds) are in it for the short haul; they’re in it for the flip.”
Finance minister Jim Flaherty was scheduled to address the gathering, but was a no-show.
Gordon Tait, managing director of income and royalty trust research with BMO Capital Markets, said one impact of the federal government’s decision has been to reduce the number of initial public offerings of energy companies and increase foreign ownership of the trust sector.
Before he became a research analyst, Tait was Enerplus Resources Fund’s chief financial officer.
He said the government’s “tax fairness plan” creates a two-tiered investment landscape that favours large institutional investors over ordinary Canadians.
“If it’s good enough for the Ontario Teachers’ fund, why not my RSPs?” he asked.
Although he doesn’t expect the trust sector to disappear, he predicted a greater number of trust buyouts as 2011 draws closer.
“As we get closer to that 2011 deadline you’ll start to hear the knock on the door,” he said.
ARC’s Dielwart, who is also co-chair of the Canadian Coalition of Energy Trusts, agreed that the present government is unlikely to reconsider its stance.
But he also vowed to carry on the fight in the absence of an election to topple the ruling Conservatives.
“We will not quit, we will not stop fighting this ill-advised policy,” he said. “Until such a time as there is no life left in our bodies, we will not give up.”
spolczer@theherald.canwest.com
© The Calgary Herald 2007
By Geoffrey Laxton on 05.08.07 4:13 pm
Geoffrey, honestly, I don’t know who is more gullible – you, the reporter, or the politicians (ahem) who take up this cause.
“John Dielwart, president of ARC Resources Trust,” “is also co-chair of the Canadian Coalition of Energy Trusts”.
“John Brussa, a partner with Calgary oilpatch lawyers Burnet, Duckworth and Palmer” is the legal counsel for Arc Energy Trust. See Arc Energy Trust Annual Report,2006, page 88.
http://www.arcresources.com/NR/rdonlyres/55DE8F1B-FFEC-4685-9469-E2F68EDDB145/0/ARC06.pdf
I know you are familiar with the stock market. Go and analyse John Dielwart’s stock options and bonuses since ARC Energy became a trust. They have mainly grown through acquisition – converting tax paying oil and gas companies, to non-tax paying trusts, and pocketing huge management fees as a result, notwithstanding their management stock options.
You and other investors are small potatoes in the grand scheme of things. Don’t be duped.
Research. learn, and move on. Please.
Direct your fine energies to something more productive for Canada. This constant navel gazing is only dragging us down!
“If you’re not part of the solution, then you’re part of the problem.”
A recent cabinet meeting:
Stephen Harper: “Based on the accounts I have received on the Town Hall meetings in Calgary that were hosted by Diane Ablonczy and Jason Kenney, we have a major problem with our core supporters in Alberta. This income trust issue isn’t going away any time soon and we desperately need to protect our base.â€
Jason Kenney: “You’re right Stephen, I tried to split the issue by having two meetings in the same day, but in different locations, one at 8:00 am for the income trust issue and one at 10:00 am for the Town Hall itself. These people are like rabid dogs. Something about a broken promise and losing their life’s savings. I tried to tell them to “get a life†as best as I could but they weren’t buying it. There wasn’t much sympathy in the crowd when I tried to tell them that it was a difficult decision for us to make. Good thing that I arranged to have the police thereâ€
Diane Ablonczy: “Alberta votes used to just fall into our laps. This time I don’t think we can take them for granted. At my meeting, I tried to tell them that the possible takeover of BCE and Telus by foreign private equity was an alarmist’s view of what was going to happen, some of them seemed to buy that line. However this morning I read in the Globe that KKR is going to take a hostile run at BCE. Who the hell is KKR? Whose riding are they in? That must be Bay Street?
Jim Flaherty: “ Diane, you have to get out more often, KKR is in New York. I had lunch with Henry Kravis right after the budget, when I went to the Economic Club of New York to pitch Budget 2007. Henry was pretty happy about our elimination of withholding tax on leveraged buyout loans. Actually he was ecstatic. I got to give the credit to Mark Carney on that one. He sure knows his former clients at Goldman Sachs really well. Kravis was one happy camper. The other Henry was pretty pleased too, you know, Henry Paulson. He actually proposed a toast to meâ€
Jim Prentice: “ That’s great for you Jim, I am sure the people in Whitby would be impressed, but it does nothing for me. I actually want to get re-elected. This income trust thing is the worst headache I’ve got. These people are pissed. How are we going to protect our base in Alberta?â€
John Baird: “Look guys, its simple. I was talking with Rick George of Suncor the other day. He said it’s simple. Just give the oil patch a free ride on the environment. We’ll simply carve out the oil sands. The income trusts only control 20% of Canada’s oil production and most of its infrastructure, but we’ve still got the other 80% to make happy.â€
Stephen Harper: “This is why I love this guy. Solutions. John Baird. Play the 20% off the 80%. Brilliant. Almost like carbon credits…..except all in one province.â€
Stockwell Day: “I think it’s a great idea. I know Dick Cheney is going to love it. This guy is all over me on the tar sands. He doesn’t want the flow of oil to be constrained by crazy environmental concerns. He thinks Kyoto is some socialist plot to destroy the USâ€.
Kevin Lynch: “Works for me. Shall we put it to a vote Mr. Prime Minister?â€
Stephen Harper: “Love it….let’s put it to vote…….All in favour?
By Geoffrey Laxton on 05.09.07 7:01 am
Cute.
I’m sure you read this article in today’s G&M Distribution-killing cycle churns on at PrimeWest
http://www.reportonbusiness.com/servlet/story/RTGAM.20070509.wrvox09/BNStory/SpecialEvents2/home
Energy Trusts are just another form of a Ponzi Scheme. Energy assets deplete over time (some gas fields at 20%/yr).
So, to keep up the cash flow and dist’ns, ITs need to constantly acquire new assets. Typically, this is financed through more Trust Units being issued.
In Alberta, conventional oil and gas production is in the decline. The fields are mature – and there is less and less new oil and gas being discovered (principally by juniors)that could be purchased by more and more ITs.
Eventually, the whole thing will collapse – supply won’t meet demand – and it’s the seniors holding the Energy Trust Units that will see the dist’ns dry up, and the units decline in value.
The IT managers will have been suitably enriched, and will move on to some other more lucrative endeavour.
The ride up was good. This report on PrimeWest is a bad omen of things to come, that is independent of Flaherty’s tax move (although the management of the IT companies will take every opportunity to blame everyone else but themselves for a flawed business model).
That’s why they feed you stuff like what you posted above, and why they have now started to wave the flag.
They want individuals like you to do their bidding.
I’ve been pissed off at the Federal Government since 2005 about the way income trusts have been handled. I came before CAITI. One could argue that our entire financial system is one big ponzi scheme, banks use a fractional reserve system, interest is charged on money they never had to loan to begin with! Credit card companies charge 10 – 30% interest! Half our salaries go taxes and the other half goes to pay banks interest, no wonder us worker slaves never ever get ahead in this rat maze. Whatever you say about income trusts, you could say about just about anything in our economy. The difference is, income trusts paid out monthly distributions, and unless corporations do this, people will prefer income trusts. Unfortunately, the corporate and wealthy elite in this country would rather hoard corporate profits to their own ends and control companies and cash flows through the use of multiple voting shares. I understand how people protect their financial interests. The Thompson family and Goldman Sachs and Jim Flaherty can try and control this all they want, but I will fight this taxation slave economic system until the end. I am merely protecting my own selfish interests, whilst at the same time pointing out how this system is a giant ponzi scheme that requires slaves to do its bidding.
By Geoffrey Laxton on 05.09.07 2:23 pm
Sounds like you should have invested in banks then, rather than ITs.
Isn’t this timely. Eric Reguly had referred to Precision Drilling’s conversion to a IT in his speech noted earlier: In the worst cases, companies that were global leaders were dismantled and turned into nogrowth
domestic bores so they could become trusts. Precision Drilling comes to mind.
Today’s G&M refered to Precision Drilling IT searching for a new CEO. Apparently, the previous CEO cashed out:
http://www.theglobeandmail.com/servlet/story/LAC.20070509.RPRECISION09/TPStory/?query=precision+drilling
CALGARY — Precision Drilling Trust, Canada’s largest drilling firm, said yesterday it will begin its hunt for a chief executive officer to replace Hank Swartout, the outgoing founder of the company…
Precision also said yesterday that Mr. Swartout will retire from his position as executive chairman later this year, although he will remain until a CEO is found.
Mr. Swartout was Canada’s highest earning executive in 2005, taking home $74.8-million, $55-million of which was realized when he exercised 2.2 million stock options as part of the conversion. “Investors would prefer a senior manager who is more inclined to purchase Precision units than sell them,” said Andrew Bradford, a Calgary-based analyst at Canaccord Adams, in a report.
When a company converts to an IT, huge bonuses and stock options are cashed in by the deal makers – and taken out of the entity.
People who purchase IT units are left with an asset that is not sustainable.
Bad for Canada, and for post conversion investors, in the long term.
Would love it if someone would please ask Flaherty exactly when did mutual funds become “tax loopholes� He constantly says that income trusts are tax loopholes. He fails to understand that income trusts are mutual fund trusts. And all mutual funds are “pass through†vehicles. Mutual fund trusts (mutual funds) are widely used structures in the investment world as we all know. It would be interesting to challenge his lack of understanding of even this basic finance concept.
Old Enough
Mr. Swartout was Canada’s highest earning executive in 2005, taking home $74.8-million, $55-million of which was realized when he exercised 2.2 million stock options as part of the conversion. “Investors would prefer a senior manager who is more inclined to purchase Precision units than sell them,†said Andrew Bradford, a Calgary-based analyst at Canaccord Adams, in a report.
Looks like Canaccord is doing the work of stock analysts. We don’t need Flaherty to shut down the entire structure. With this rationale, the equity structure should have been shut down after Bre-X, Eaton’s, Stelco, Air Canada, Worldcom, Enron, etc.. destroyed their shares. You can site examples of bad trusts. Also, it sounds like Mr. Swartout is following your advice and diversifying his wealth from being concentrated in one place. Oh, and the other thing that I wanted to mention is that I own bank shares through a registered plan ESOP.
To be fair a number of factors are at play with Precision Drilling:
“Like other Canadian oil field service firms, Precision has endured a bleak few months recently, as weaker natural gas prices caused many producers to divert their cash flows away from exploration, a problem compounded by unfavourable weather conditions and the government’s October announcement that it plans to tax income trusts. The weak sector outlook appears to have left companies vulnerable to takeover, with Precision itself saying last month that it saw opportunities for consolidation in the sector.”
“When a company converts to an IT, huge bonuses and stock options are cashed in by the deal makers – and taken out of the entity.”
Just look at the stock options for Encana and BCE as corporations. Same thing.
“People who purchase IT units are left with an asset that is not sustainable.”
Perhaps some are unsustainable as are a lot of traditional corporate equities. There are many strong sustainable trusts that have been bought out by foreign and tax exempt entities that will now pay their pre-tax cash flows with no tax going to CRA.