APPEALS TO REASON ..

APPEALS TO REASON – Part 12
A series of letters and E-mail messages from Canadian victims
of taxes on phantom income to Canadian Government Authorities, at all levels,
appealing for fair treatment and the, often idiotic, replies they received.

Read: Appeals To Reason Part – 1 (preamble) & Parts – 2, to 11 for more background information.
By Victor Drummond ©
May 2009

Synopsis of the events to the present

Part 8: Excerpts from additional published articles that could explain what happened to disillusion former Minister of National Revenue, the Honourable Carol Skelton and possibly the reason she decided not to run for office in the 2008 federal election.

Part 9: Letters to Carol Skelton from other Members of Canada’s 39th Parliament pressuring her to take action to have all Canadian victims of phantom income tax treated fairly.

Part 9 closes part way through reporting on the events following the announcement on May 28 2007 by the Honourable Carol Skelton, Minister of National Revenue and the Honourable James Flaherty, Minister of Finance, of two new government initiatives proclaimed to bring fair taxation to all Canadians.

Part 10 Reveals a possible reason why both Prime Minister Paul Martin and Prime Minister Stephen Harper reneged on their public commitments to “fix” and/or “resolve” the phantom Income tax fiasco.

Part 11 Reveals a sample of letters being sent to the Hon Jim Flaherty describing the distress being caused to honest, hard-working Canadians by the defective taxable benefit legislation and the Canada Revenue Agency (CRA) policy in applying that legislation to tax phantom income.

Now read excerpts (below) from the Hon. Mr. Flaherty’s speech to the House of Commons Standing Committee on Finance, where he preaches “Tax Fairness” for all Canadians
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January 30, 2007

Remarks by the Honourable Jim Flaherty, Minister of Finance, to the House of Commons Standing Committee on Finance

Introduction

Good morning.

Mister Chairman and members of the committee, I want to thank you for the opportunity to be here today.

You have received a briefing book with a copy of my statement, a document outlining our revenue estimates and calculations, and a series of charts illustrating the growing trend towards trust conversions and foreign ownership.

I insisted on being the first witness to remind this committee directly of the critical importance of moving forward with our income trust policy and our Tax Fairness Plan.

Make no mistake; the decision that was taken on October 31st is all about fairness.

Fairness for Canadian taxpayers and their families who would be asked to pay more and more;

Fairness within the corporate sector, where the current rules give income trusts a tax advantage and distort investment decisions;

Fairness for Canadian taxpayers, who are seeing tax dollars sent out of the country to foreign investors; and
Fairness for all Canadian governments, federal and provincial, who are experiencing a significant loss of tax revenue.

I want to take the next few minutes to: Quickly outline the Tax Fairness Plan;

Walk the committee through the numbers and our methodology. As I indicated in the fall, we estimate the federal revenue loss was about $500 million in 2006 and growing, and this is a conservative estimate.

I will also point out the hundreds of millions of dollars in tax loss to the provinces.

I will talk about the fact that the landscape had changed dramatically with almost $70 billion in trust conversions taking place or being announced in the first 10 months of 2006.

I will also explain why it would be a mistake to carve out the energy sector and provide them with a permanent tax holiday.

And finally, I want touch on the need to maintain a four-year transition period in order to avoid billions more in revenue loss.

Tax Fairness Plan

I want to say from the outset that it is regrettable that some investors suffered financial losses. Although it was a very difficult decision, it was an absolutely necessary decision for the country and for future generations of Canadians, our children and grandchildren.

Our Tax Fairness Plan achieves two critically important goals. It restores balance and fairness in the tax system and strengthens the Canadian economy, now and into the future.

The Tax Fairness Plan achieves these goals through:

A distribution tax on distributions from publicly traded income trusts with a four-year transition period for existing trusts;
An additional reduction in the general corporate income tax rate of half a percentage point in 2011;
An increase in the age credit amount by $1,000 to benefit low- and middle-income seniors; and
The ability for pensioners to split income beginning this year. Pension income splitting is a major positive change in tax policy for pensioners and seniors. It significantly enhances the incentives to save and invest for family retirement security.
I want to be clear with the members of this committee and with all Canadians. I have no intention of altering the substance of the government's decision, including the four-year transition period for existing trusts.

Canadians are looking for fairness and for certainty. And our Tax Fairness Plan provides both.

An Unfair Burden

I've said it repeatedly as Finance Minister: Canadians pay too much tax. And this government has already taken steps to reduce their tax burden.

Simply ignoring this issue would have resulted in Canadians paying more tax, not less, today and for years to come.

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(Note:- The next dozen paragraphs, or so were devoted to justifying changing the tax rules regarding income trusts. and have been omitted from this APPEALS TO REASON article.)
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Conclusion

A few finals thoughts to conclude.

In the end, our government was faced with a hard choice, and now this Parliament is faced with a big decision: to make the Tax Fairness Plan a reality.

We chose not only to recognize a growing problem occurring in Canada's tax system, but to fix that problem.

We made our decision based not on political calculations, as did the previous government, but on principles of tax fairness, balancing the needs of individual investors with the interests of taxpayers and their families.

And we acted responsibly and decisively.

It is not tax fairness if it is only for a few.

And it is not strengthening the economy if the playing field is not level for all businesses.

And committee members should recognize that they can't turn the clock back. There has been a substantial change of ownership in trusts since October 31, 2006-for a number of trusts, up to one quarter of the shares have changed hands.
Where there was once speculation as more and more large corporations opted to become income trusts, today there is certainty.

Businesses are making their own choices to grow this economy. They're moving on.
It's time we all move on in the interests of all Canadians.

The result of our decision is clear: a tax system that is fairer for Canadians and that will help make our economy more productive, efficient and dynamic today and for years to come.

I would now be pleased to answer any questions you may have.

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Readers may read Jim Flaherty’s entire speech by visiting:- http://www.fin.gc.ca/n08/08-033_1-eng.asp

I wish I had been at that meeting for I have a few questions I would like to ask the Hon. Mr. Flaherty such as:

How do you correlate your statement: “We made our decision based not on political calculations, as did the previous government, but on principles of tax fairness, balancing the needs of individual investors with the interests of taxpayers and their families.” when you oppose amending the Canadian taxable benefit legislation that has, and is, causing honest, hard-working Canadian taxpayers financial ruin, broken families and/or loss of retirement savings, and/or loss of education funds and even in some cases loss of homes?

How do you correlate your statement: "It is not tax fairness if it is only for a few." when you oppose extending the fairer tax treatment -- provided to a very few victims of taxes levied on phantom income via the Gary Lunn Tax Remission Order (TRO) – to all Canadians victimized by the same defective legislation and abusive tax application policy?

Can you stand up and say with a straight face: “Canadians are looking for fairness and for certainty. And our Tax Fairness Plan provides both.” while totally ignoring dozens of letters from honest, hard-working Canadians, appealing for “fair” and "equal treatment under the law.” as you promised in your updated “Taxpayers Bill of Rights”. (See APPEALS TO REASON – Part 11 for a typical letter of appeal.)

In the portions of your address to the HOC standing Committee on Finance, presented above you used the word “fairness” relative to taxing Canadians, individuals and business no less than 15 times.

Yet your actions, toward actually providing a level playing field and a fair policy of personal taxation, have been and still are directly opposed to providing equal treatment and are anything but fair.

My Mennonite maternal Grandmother had very appropriate titles for people who looked you in the eye and made fine statements totally lacking in credibility, truth or honesty.

And in comparing your speeches, to your related actions, the first of granny’s titles that comes to mind is “Flannel Mouth” (FM). And the second title to come to mind is “Snake Oil Peddler” (SOP).

In my opinion your performance, to date, entitles you to both titles. However I’ll settle for: “Flannel Mouth Flaherty” (FMF) which has a nice ring to it and tells it like it really is.

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Now how about your true attitude regarding providing Canadian taxpayers "a fair deal and a level playing field".

Reference: “JDS deal dangerous precedent, Ottawa told.” in APPEALS TO REASON – Part 9

The “senior bureaucrats” that turned Prime Minister Harper away from fulfilling his commitment to “resolving the tax on phantom income issue” are still laughing all the way to the bank with their ill-gotten loot.

The article then reports on the SDL Optics/JDSU Tax Remission Order and the commitment made by the Right Honourable Stephen Harper to “resolve this problem” an action that has yet to be attempted by any “senior bureaucrat” in the Canadian government.

To my knowledge the SDL Optics victims are the only Canadian taxpayers, so far, that have had their tax on phantom income revoked and received anything like “fair” treatment as promised in the bogus updated "Taxpayers Bill of Rights". How does that situation exist in the same universe with your statement: “It is not tax fairness if it is only for a few.”

Perhaps you have the definition of the word “favouritism” confused with the true meaning of the word “fairness”.

When Canadians become aware of the scam that FMF and his gang of “senior bureaucrats” have worked on them they should be absolutely outraged because it is becoming increasingly clear that FMF considers the average Canadian to be a mentally challenged dupe that would not recognize, and/or take any action, when they have been played for fools.

From now until FMF begins to tell it like it is, and he starts keeping his commitment(s) to the Canadian people then anyone who votes for him is exactly what he thinks they are.

Victor Drummond ©