The tip of...

THERE IS MORE TO THIS THAN MEETS THE EYE
A Commentary on the Canadians for Fair and Equal Tax (CFET)
Organization -- by Victor Drummond ©
March 2008

The incentive -- for Canadians victimized by outrageous “Income” taxes levied on them
above and beyond any real “Income” they received – to become organized and fight for true and fair taxation is clearly explained in the preceding series of Victor Drummond postings.

Things that may leave non-victims wondering are questions such as:- who is making an issue of this unjust tax? And why now?

If the problem with outrageous taxation became obvious seven years ago – why wasn’t the fight for fair taxation settled long ago?

And why should Canadians need to fight for a fair deal in the first place?

That last question, above, is the core question. And according to the image Canada’s Government presents to us – and to the rest of the world -- no Canadian should ever need to fight for fair and equal taxation.

A hidden defect in the taxable benefit legislation did not become apparent while the stock markets were running normally -- with corporation shares fluctuating within the normal range of plus or minus a few percentage points each trading day.

In fact between the years 1995 to 2000 the shares of many high tech corporations were experiencing growth of 100% , and greater, from one year to the next.

Investors in the shares of most Hi-tech corporations were having a field day -- with whopping profits -- and laughing all the way to the bank.

This included a few corporate employees who had purchased their employer’s shares through Employee Shares Purchase Plans, (ESPP’s) and/or Employee Shares Options Plans, (ESO’s)

But not all. Many, possibly most, were blind-sided by an obscure flaw in the taxable benefit legislation.

Be aware – most of the people caught in this trap are not market savvy individuals.
They are assembly line workers, clerks, secretaries, -- ordinary people who were encouraged by their bosses and co-workers to participate in the employers ESPP and/or ESO stock plans.

People, who acquired their shares via an ESPP and/or an ESO, plan were a bit more handicapped than ordinary stock market investors/speculators due to restrictions integral to the plans.

While ordinary investors could buy, hold, sell and even short sell their chosen stocks -- on a minute to minute basis -- shareholders who purchased shares via an ESPP/ESO often had to wait up to a year before receiving their shares and were additionally handicapped by plan blackout periods during which they could neither buy nor sell shares.

Regular investor speculators had a well defined cost of acquisition, per share, and a well defined selling price, per share, from which real gains or losses could be determined accurately.

Taxes levied on regular investors were applied equally, and fairly, based upon any real gain, or any real loss that could then be applied to previously taxed gains -- and/or future profit.

These investors only paid tax when the shares were sold and the tax levied was then applied at the inclusion percentage for that specific year.

There would be no problem IF shareholders were all treated alike. But they are not.

Many shareholders -- who acquired their shares by way of an ESPP/ESO -- are taxed on the basis of unfounded assumptions and a calculated Fair Market Value, (FMV).

The generated FMV may not be anywhere near the actual value of the shares when bought and/or sold.

Even though the taxable benefit legislation operated to generate taxation in such a hit and miss manner ESPP/ESO shareholders -- who ended up with real gains -- were not too badly abused as they had tangible profits from which they could pay the taxes levied.

That is until the year 2000 when an overdue -- stock market -- correction hit Hi-tech stocks, around the world -- with a vengeance.

Suddenly ESPP/ESO shareholders were levied taxes on potential profit – a gain THEY MIGHT HAVE REALIZED -- IF -- they had an opportunity to sell their shares at the moment they took control over them. A nebulous – non-existent -- pie-in-the-sky profit.

Those who did not -- or could not -- sell their ESPP/ESO shares on the date of delivery
were ASSUMED – by the Canada Revenue Agency, (CRA) -- to have made a deliberate decision to play the markets – at their own risk -- in the hope of making even more profit.

The Treasury Board and CRA – based upon the unfounded assumption further assumed the right to tax ESPP/ESO shareholders as though they had somehow actually received income equal to those unrealized gains.

Any logic inherent to that sequence of events totally escapes me – as I am sure it also escapes any reasonable, intelligent person.

Based on an unproven assumptions the CRA then levied taxes on a further ASSUMED FMV per share which by tax time 2001 was well above the real value per share of the stocks held.

The end result being that thousands of conscientious, hard-working, Canadians were taxed on money they never received and many were left in severe financial distress.

Many victims had their retirement bank account(s) – built up over decades of savings – wiped out in an instant.

Others had to sell, or mortgage their homes, and still could not pay-off the taxes levied against them.

The government of the day recognized there was some kind of problem and offered a patch-up fix by way of allowing -- up to $100,000 dollars worth of shares purchased (per year) -- to have the outrageous tax levied -- deferred until the shares were sold, traded or the taxpayer moved out of Canada -- or better still -- died.

Just thinking about the kind, considerate, compassionate attitude of the authors/operators of this punitive, abusive tax operation just chokes me all up.

Those in a position to correct this monstrous miscarriage of justice successfully resisted doing the right and decent thing for the next six years.

No wonder there was a change of government in 2006.

Victims of this outrageous tax -- appealed, went to court, hired lawyers to represent them – all to no avail.

Individually they had no power and the government authorities knew that – so they did nothing to correct the problem.

It mattered not to those -- who could provide relief -- what distress this insidious tax imposed upon its victims. Apparently all that mattered to them was MONEY. They had conjured up a ridiculous rationale to bleed taxpayers dry and they were using it to its full capacity.

So what is different now? There has been a change of government and the new team has opened the door for possible correction of the previous administrations taxpayer abuse.

First – prior to the 2006 federal election -- the Conservative Party put forward an election platform that included a commitment to provide fair taxation.

Second – Shortly after winning a minority government position the new government provided -- a few victims in British Columbia – some improvement in their tax situation – by having a Tax Remission Order, (TRO) implemented.

The TRO gave some substance to the conservative’s pre-election commitment of fair taxation and other victims were given further encouragement by statements of Fair taxation for all Canadians contained in several different speeches made by high ranking conservative members.

Jamie Golombek -- a journalist for the National Post newspaper published an article on January 13 2007 with the title:- “What about the rest of us?” which brought this whole issue back to the public’s attention.

Victims and other interested people contacted Jamie to find out what the public reaction was to his article. One victim went so far as to leave his name, address, telephone number and E-mail address with Jamie and requested him to give out his contact information to everyone who inquired about the article.

Seeds of the present group:- “Canadians for Fair and Equal Taxes”, (CFET) were planted at that moment. First there was one person. Within a week there were three -- which quickly grew to six.

Then there was a long interval – possibly 6 months when the group had no new members.
Member’s they did have, however, became active in searching for additional victims and/or supporters.

One member found a reference to blogscanada.ca in an old issue of Readers Digest and began exploring this blog web page. He found a listing for a group titled:- “E-Group” Political Punditry and decided to contact the administrator – Jim Elve.

Jim was very accommodating and assisted with the posting of several articles on the E-group blog page under the pen-name Victor Drummond.

Victor’s articles had a singular focus – fix the defective taxable benefit legislation and compensate those already victimized.

Articles all having the same focus were not really a good fit with the E-group blog page so it shortly came to pass that Jim suggested Victor should open his own blog page.

Victor took Jim’s advice and opened a blog page under the title:-
Buyerbeware--caveatemptor.blogspot.com -- and proceeded to write and post a series of articles – all oriented toward informing readers of the insidious, unfair, unwarranted, punitive, abusive qualities of the current taxable benefit legislation.

Furthermore Victor’s articles implored readers to contact their friends and for everyone to contact their elected representatives in Canada’s Parliament and demand this outrageous legislation be amended and all victims to-date properly compensated.

Victor posted over 60 articles between the blog page start-up in April and December 31 2007. Articles are still being posted as of March 11 2008.

A new blog page with the title:- “letter-to-the-editor.blogspot.com” has also been created recently to store template:- “letters to the editor” articles – in preparation for a media blitz if there is no indication that anyone in government intends to take action on this tax issue by the time a federal election gets under way.

One of the organizations contacted -- in mid 2007 -- for advice and support in dealing with the government -- suggested our victims group hold a press conference in the Parliament Hill Press Theatre – to bring this issue to the public’s attention.

In January 2008 contact was made with the Ottawa Press Club to begin proceedings for such a conference. It turns out there are some requirements to be met before a group can book the Parliament Hill Press Theatre.

For one -- the group must have a recognized title. Second a maximum of seven members of a group may actually be present at the conference.

Another requirement being that the purpose of the meeting, agenda etc. must be submitted in advance in the form of a press information kit.

It took over a month to set up the place, date and time of the conference – but it finally took place at 11h00 – 11h45 on Thursday morning February 21 2008. At that moment the group:- “Canadians for Fair and Equal Taxes” (CFET) was born.

One of the very first questions asked of the CFET members at the press conference was:- How large is your organization? How many members do you have?

In terms of geographic size the CFET members attending this meeting come from places as far apart as Victoria British Columbia and Ottawa Ontario.

That space also includes members -- not in attendance – living in other places such as Toronto, Brampton Ontario, Calgary Alberta and Vancouver British Columbia.

Our membership is actually intangible. We are here today to speak on behalf of every Canadian that has been levied taxes on non-existent income.

We can name a dozen or two such victims who have come forward and allowed themselves to be publicly identified.

We are also in contact with another half-dozen victims that do not wish to be publicly identified for fear of possible government reprisal.

As to how many actual members do we have? We know of the members who have actually contacted us and we know they are just the tip of the iceberg.

It doesn’t make sense that any Canadian taxpayer is not in favour of “Fair, Just, Equal” taxes so we speak on behalf of those Canadians – both victimized – and not victimized – but who support our taxation policy.

Our membership iceberg is less than 1% visible – at the moment. There much more to the CFET than meets the eye.

Victor Drummond ©