Propping Up The Privileged On The Backs Of Average Retirees
Who'd a thunk? The NDP in bed with the most right-wing political party in Canada's history -- allied in a stubborn legislative effort to bring more perks and privileges to the affluent while kicking a vulnerable segment of Canada's seniors while they're down.
Congratulations, Jack Layton. You (and your abrasive NDP finance critic) have enhanced the election prospects for the Liberal and Green Parties for years to come.
So what's the story behind the story of the NDP sell-out to establishment interests? Well, obviously Mr. Layton so strongly fears another election that he foolishly has put the full weight of the NDP behind Stephen Harper's heartless plan to enrich his wealthy allies on the backs of ordinary Canadian retirees, via a non-stop war on income trusts. Not to mention that Mr. Harper's proposed Machiavellian legislation appears designed to impoverish already-vulnerable seniors in order to enrich the most privileged groups of seniors (the uber wealthy in Rosedale and other gilded ghettos of privilege, and retired government employees and politicians receiving their over-generous guaranteed indexed pensions).
Whether by destroying publicly-traded investment trusts as a source of retirement income for ordinary seniors, or by enshrining the "sacred' role of private family trusts for the wealthy, the planned Layton/Harper legislation can only create and perpetuate new social and class divisions among Canada's seniors.
The new order of the day, for the NDP and their Conservative friends, appears to be glaring social and economic inequality among Canada's retired seniors, and perpetuation of the economic dominance of Canada's affluent ruling classes.
Quite a day's work for a political party like the NDP, which still talks the socialist/democratic talk, but now walks the elitist Rosedale/Rockcliffe walk -- thanks to the party's alliance with Jack Layton's newest best friend, Stephen Harper.
Imagine what the dynamic duo have planned for Canada's environment once they're done with income trusts. Perhaps Mr. Layton would consider appointing Rhona Ambrose as his deputy leader for this next big push.
In the meantime, please read on for more unpleasant truths about the social inequality being promoted by Canada's most deceitful politicians, in the name of "fairness":
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NDP'S BLIND ADHERENCE TO CONSERVATIVE'S INCOME TRUST AGENDA PROMOTES FURTHER INEQUITY IN CANADA'S TWO TIERED PENSION SYSTEM, SO SAYS CAITI
TORONTO, Jan. 23 /CNW/ - The Income Trust issue is one that profoundly affects the ability of senior Canadians to provide for retirement income. It materially affects Canadian's standard of living during their retirement years.
The Conservative's Income Trust agenda is being advanced for the benefit of narrow corporate interests. It is being falsely advanced on unproven assertions of tax leakage and other unproven, yet quantifiable, assertions contained in the Notice of and Means Motion to Amend the Income Tax Act. These measures will eliminate this popular retirement investment choice for the average Canadian.
This policy eliminates important retirement investment choices for Canadians, both now and in the future. To make this very same point, Stephen Harper himself quoted CARP (Canadian Association of Retired Persons) in his opinion editorial which appeared in the National Post on October 25, 2005: "Seniors are actually enraged frightened and panicked about potentially losing retirement savings that they count on for the essentials of daily living."
Of course, during the autumn of 2005, Mr. Harper was promising to "protect seniors" and to "NOT tax income trusts." Would you buy a used car from this politician?
Well, perhaps NDP leader Jack Layton would. After all, by blindly adhering to the Conservative's newly-minted policy to eliminate income trusts as a means to provide retirement income, the NDP is helping foster financial uncertainty and unnecessary hardship on those of retirement age and the most vulnerable members of Canadian society -- namely seniors.
Many long standing NDP supporters are bewildered by this unholy alliance between the NDP and the Conservatives on this issue: "We are shocked that the NDP has supported the Harper government on its attempts to steal our retirement monies. My parents and relatives helped found the CCF and the NDP. I am sure they are turning over in their graves at what seems to be an illogical political move by the NDP. "
Canada has a two-tiered retirement system, which is evolving into an unanticipated underpinning of new social and class divisions in the senior years (in other words, new social and economic inequities).
30% of Canadians are members of defined benefit pension plans [generous guaranteed pensions], whereas 70% are not. Those who are in the first privileged category include our elected representatives in Ottawa and the 280,000 members of the public civil service in Ottawa whose pension assets are managed by the Public Sector Pension Investment Board. These generous pension arrangements are accorded to all Members of Parliament, regardless of their political party affiliation.
The other 70% must provide for their retirement through payouts from RSP-style savings plans (what they receive will depend upon how much they were able to save).
At present, Canadians are generally acceptant of this seeming disparity in the manner in which certain Canadians' financial security is assured, while other's financial security is based on virtual self reliance. Others consider it an inequity.
The Conservatives' Income Trust policy, and the NDP's adherence to it, dramatically exacerbates this inequity in the minds of the many Canadians who are members of the 70% majority who do not have a guaranteed pension. That is because, on the Income Trust issue, the majority is now being treated like a minority.
Under the proposed Tory/NDP trust tax legislation, important choices will be taken from the majority and be preserved and enhanced for the privileged minority.
Unlike the changes contemplated a year ago by the Liberals, the Conservatives have implemented a subtle yet profound change to their proposed trust tax policy. Mr. Flaherty's brand of so-called tax fairness "carves out" the ability of Canada's largest pension funds to replicate the current tax-free benefits of income trusts (for the trusts themselves, not their investors who pay tax) by holding private trusts in their private equity portfolios.
So the 70% majority (the rest of us) will no longer be able to invest in the original beneficial "flow-through" trust tax structure. But privileged politicians and bureaucrats still will be able to enjoy the benefits this "flow-through" structure via the private trusts that their pension plans create and invest in.
Our question to the Stephen Harper and Jack Layton: "How can something that is being denied the average Canadian, on the basis of its presumed negative effect on Ottawa's tax base, be allowed to persist for the benefit of those in our public civil service and others so advantaged?"
Not being slow to take advantage of this "carve out", the Public Sector Pension Investment Board (PSP) is already making good use of this exception through the recently announced purchase of Telesat Canada from BCE Inc for $3.4 billion. Telesat will be the financial equivalent of an income trust and will be held in the public-sector pension plan's growing private equity portfolio.
Talk about tax leakage, tax unfairness and political inequities. PSP's investment in Telesat will not be taxed in the manner that Flaherty would tax such an investment in an individual Canadian's RRSP.
This is a gross inequity that only serves to exacerbate the two tired pension system in Canada, making things harder for the marginalized 70% and better for the privileged 30%.
Consequently, The Canadian Association of Income Trusts Investors (CAITI) calls upon the NDP to fundamentally rethink its irrational adherence to Finance Minister Flaherty's inherently unfair and unjustified legislative proposal to erode ordinary Canadians' ability to fund their retirements, while enhancing the options available to Canada's most privileged seniors.
Not to mention the Conservative government's decision to continue to permit private tax-advantaged family trusts for the wealthy, while denying similar benefits to those who most desperately need such tax relief in their senior years. -- Excerpted from a press release from CAITI
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FEDERAL TRUST TAX PROPOSALS: TAX UNFAIRNESS
Dirk Lever, et al
RBC Dominion Securities
January 23, 2007
We believe the Federal Government’s trust tax proposals do not meet its own goal: tax fairness. The proposals only address 1 of 4 tax fairness tests. There is a better way!
A Summary Of This Report
Double Taxing Pension Benefits – Canadian corporate dividends received by Canadian pensioners through a pension plan or fund are taxed twice; once at the corporate level and again in the pensioners’ hands. Yet interest from a Canadian corporation or government is only taxed once. We believe it is not fair to tax Canadian corporate dividends a second time. The trust tax proposals tax Canadian corporate dividends twice. [More tax unfairness]
U.S. Investors in Canadian Trusts Benefiting -- Currently, U.S. investors in Canadian trusts obtain preferential tax treatment when compared to Canadian investors in equivalent U.S. investments (U.S. investors pay approximately half of what Canadians pay the U.S.)
The trust tax proposals will lower the benefits derived by U.S. investors and put them on similar footing to Canadians investing in U.S.trust-like investments. [The one example of fairness in the new trust tax legislation]
Some Canadian Pension Funds More Equal Than Others – We believe Canadian pension funds should be able to invest in the pre-tax cash flows (interest income is such an investment) of a business, regardless of the size of the pension fund. The tax trust proposals would eliminate the ability of small pension plans (including RRSPs) to invest in business pre-tax cash flows, yet large pension funds would be allowed to continue in certain industries. Tax fairness should mean equality for all, regardless of size. [More Tax Unfairness]
Canadians Stripped of Private Equity Financing Techniques – With the Federal Government’s trust tax proposals, small Canadian taxpayers (who have paid their fair share of taxes) would be stripped of their ability to structure a Canadian business in a manner that Foreign Private Equity investors will likely utilize to fund the take-over of Canadian trust businesses. How can a proposal that puts Canadian taxpayers at a disadvantage to Foreign Private Equity investors be considered “fair”? [Even more tax unfairness]
Confusing Expedience with Fair – We believe that merely adding the words “fair” to the Federal trust tax proposals does not make them “fair”. It is a form of false advertising that is being foisted on the Canadian public for the sake of expedience. There are better alternatives.
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