HAS CANADA'S LITTLE NAPOLEON MET HIS POLITICAL WATERLOO?

The Liberal Party has stepped up to the plate and hit a political home run with a centrist proposal to clean up the financial and socio-political mess created by Canada's tiny imperfect Finance Minister, Jimmy 'Little Napoleon' Flaherty -- a mess created when he recklessly declared political war on seniors and income trusts last Halloween Eve.

The ball is in Little Jimmy's court now, and the political fate of the recently-greened Big Brother regime of Commandant Harper now hangs in the dissembling Minister's tiny, chubby, incompetent hands.

What's a blustering politico, in way over his head, to do?

A recent blog entry by MP Garth Tuner says it all:


WHAT ABOUT IT, JIM?

by Garth Turner, MP

Dave Marshall is an income trust investor who stood with me in a Parliament Hill media conference two weeks ago, as I tried to bring to Ottawa some of the faces of people whose lives were chewed up by the minister of finance. He and his wife live in a modest brick bung with an ancient Ford pickup out in front, and have not had a holiday in thirty years.

Today Dave found himself back on the Hill, this time in front of a House of Commons committee where he said, in part, “Mr. Harper and his finance minister took a sledge hammer to our savings and income. Overnight we lost over 20% of our retirement savings and a big chunk of our future income.

During the last election campaign, Mr. Harper said and I quote, ‘A Conservative government will protect seniors and not tax income trusts.’ Because of that very statement, I took him at his word and decided to vote for his party. As it turns out, one of the biggest mistakes of our lives was believing in Stephen Harper.”

In case you’re wondering, it is not easy to go in front of 12 MPs, lots of official-looking officials, spectators and TV cameras, and admit you’re in a pickle because you lost a fifth of your retirement savings. The income trust investors – all 15 of them – who came to Ottawa to join me, showed remarkable courage in simply showing up. After all, the media establishment in this country had already written them off.

There has been virtually no editorial support for these people, mostly because they happen to be seniors, and investors in assets most do not understand. You can get a sense of the prevailing sentiment yourself by reading comments on this blog – where trust investors are called “greedy” and pilloried for putting their savings in things now deemed to be “excessively risky.”

But Dave is neither greedy nor a risk-taker. Like most of the people who bought trust units, he was after a living rate of return, and, moreover, he thought Stephen Harper would protect him. That, he now knows, was a very costly mistake. Collectively, these trust investors – the preponderance being Dave’s age, with no chance ever of making this money back – have lost a stunning $25 billion thanks to the bombshell Oct. 31 announcement by Jim Flaherty that Ottawa would tax income trusts. In fact, the news was so draconian that the entire income trust industry was that night dealt a death blow.

In the House of Commons, Flaherty has refused to agree to my demand to somehow compensate these people. He turned down my suggestion to allow a one-time write-off of these losses from taxable income, and rudely ignored my request to even apologize. Listening to him dismiss me in Parliament, I was keenly aware that a Minister of Finance can brush off one independent MP without even breaking stride.

But the tide may have turned a little on Tuesday.

The Liberals have now issued a policy on income trusts – which could return as much as two-thirds of losses to investors. Stephane Dion and finance critic John McCallum unveiled a plan to drop Flaherty’s 31.5% tax on trusts to just 10%, which would be paid by the trust companies, and refunded to Canadian residents. The plan is sound, because while it redresses a wrong to the little guys like Dave, it does not burn down an entire sector. Income trusts would be maintained and capped at their present number. The more modest tax would offset lost government revenues and put trusts on a level tax playing field with conventional corporations.

It’s a sound and simple plan, and Flaherty will be callous indeed if he dismisses it out of hand. The facts, after all, are clear: (a) Thousands of people bought income trusts last year precisely because Stephen Harper had made an election promise not to mess with them and (b) hundreds of companies converted into trusts for exactly the same reason.

As I said last October, and again standing with Dave and the others two weeks ago, the government has a moral responsibility to help these people, and to repair a $15 billion hole in the investment business. Any claim to be accountable to Canadians, while screwing them out of their life savings at the same time, is a farce.

If Jim Flaherty is the honourable man I believe him to be, he will show so on Wednesday.