Ok here is some more evidence of ponzi nature of the Income Trusts and why they are dangerous for Canadian business as well as Canadian workers and even investors, but good for owners and market managers.
While the Liberals talk about defending Canadian soveriegnty they did nothing to stop the sell off one of Canada's major Oil Field supply companies, Precision Drilling. Which in Alberta should have been as big a scandal as the Terasen sell off in B.C. which the NDP slammed the Feds for. But the silence has been deafing. When Alberta is dominated by Conservatives what did you expect. Whats good for America is good for Alberta......
When Precision Drilling converted to a trust, it spelled the demise of a great Canadian world player
Here's what Weatherford boss Bernard Duroc-Danner said about Precision when he bought it: "Frankly, we could not duplicate what they did, and we need it."
At that point, Goodale and his senior policy wonks cringed, though they made their concerns known only privately at the time. Here was one of Canada's few global champions, led by one of the industry's most respected entrepreneurs, shredding its growth playbook and unloading many in the team of senior executives who had helped build the company—for no other reason than to avoid paying tax. That much was known. Shortly after the Weatherford sale, Swartout said he had no choice but to convert "because the multiple of the trust is so overwhelming," even though he admitted the trust proliferation "is not the best thing for Canada."
The truth is that Canada's most successful companies, and the ones that attract the best and the brightest professionals—Manulife, Bombardier, Scotiabank, Magna and Alcan, among them—have one thing in common: They're players on the international stage. Canada needs more of them. When ambitious companies like Precision suddenly call it quits to exploit a tax loophole, you know you've got a problem.
Labour-sponsored love lost
With tax breaks disappearing, the cliff is fast approaching for labour-sponsored investment funds
And another victim of the Income Trust Tax Break that Goodale has introduced is the union based Labour Funds. Bad enough McGuinty in Ontario was reducing the tax credits avaiable for these funds, now with the tax credit from Goodale for corporate investment and no tax on the Income Trusts, that is the final nail in the coffin of these funds. While they gained little in investment dividends for their investors who are all average working stiffs they gave the average person a very real annual tax break with higher tax credits than a regular RRSP investment.
And they were as easy to buy as an RRSP for the average person, with a 25-50% tax break. And now they too will go the way of the dodo while the rich get tax breaks on thier high end RRSP investments and their coupon clipping corporate investments.
3 comments:
So if LSIF's are so wonky expalin this a major Ottawa venture capital fundin merging with one of the largest LSIF's in English Canada. Let alone the success of the Solidarity Fund in Quebec. While the eight year investment term is excessive the idea was to keep the money in place to stop the invest and run on the funds. You could do worse in a mutual fund, and NOT get the tax credit. It always amazes me that you right wingers want tax breaks for investors and tax credits for the rich but despise tax credits for the little guy. Which is why Alberta does not have Labour Sponosred Funds not because they were not a good investment, but because they would have cost the government tax credits to the average joe.
You and I are going to continue to disagree but the point is moot, LSIF's are doomed thanks to McGuinty killing the Ontario tax credit and Goodale giving a tax holiday to regular investment dividents. So I will challenge you to tell me what kind of secure average jane or joe investment fund could we create. I suggest using the following capital base; union pension funds (these aremostly private sector unions with their own membership funded pensions), plus public sector pensions, done through credit unions and invested in ethical funds. With the same tax credit for the average investor as LSIF but with the security of the credit unions deposit insurance on the ethical investment funds. What say you?
Good cause I agree with you about LSIF being dogs, except in Quebec...and lets continue this profitable discussion about an alternative investment economics for the working class, because our money should be productive capital not just coupon clipping dividend capital. Which is why so many companies make a profit but do not reinvest. Also we need to look at shareholder control over investments, and again I look at credit unions and say how could we reform their investment structures to reflect increased investor democracy.
As well as putting workers and investors on the boards of companies....a new model of peoples capitalism ala Prodhoun.
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