WHAT WILL IT..

WHAT WILL IT TAKE ?
What level of incompetence, indifference, lack of integrity, honesty, decency,
and/or lack of voter representation will it take before the average Canadian voter says: “No-more.”? “Deliver what you’re being paid to do – or you’re gone.”

When will the average Canadian voter stand up and say: “I demand at least an acceptable level of representation and performance for the billions of tax dollars obviously wasted on a gang of bungling incompetents.”

A commentary on the dismal performance of Canada’s government since the year 2000.
by Victor Drummond ©
November 2009 – during Veteran’s Week.

Back in the year 2003 when I first discovered that thousands of honest, hard-working, Canadians were being taxed into financial ruin -- on the pretext their employer had bestowed upon them a tangible taxable benefit – I was initially mildly disappointed.

My initial thoughts being that Canadians had the best government in the world and as soon as this very un-Canadian abuse of taxpayers could be brought to the attention of our tax administrators the problem would be history.

Then I discovered that not only had the problem been drawn to the attention of federal government authorities -- all the way up to the Prime Minister – ( The Right Honourable Paul Martin) not once, or twice but at least a dozen times – with the same bafflegab response each time. “Not my problem will refer to someone else…”

Mild disappointment progressed to absolute disdain for those who would deliberately misuse their power to enforce a tax policy that was so obviously nothing more than an extortionist type money-grab based upon a defective, self-serving, tax rationale.

It doesn’t take a rocket scientist to reach the conclusion that applying a devastating tax against an unrealized, intangible, income does not compute, is not justified, and amounts to nothing more or less than legal extortion.

There is no excuse, or justification, for pretending there is a difference in the transactions when one person buys shares in corporation AB from a broker, and another buys the same type and quantity of shares from their employer? The key word is “BUYS”. A purchase is NEITHER A GIFT NOR AN AWARD.

It makes no tangible difference if the purchase cost to the buyer is at the market high of the day or the market low of the day, or at a discount from the deemed FMV, at the time the shares are purchased. Until an item PURCHASED is sold, or traded, for something of greater value there is no tangible (taxable) gain.

All the buyer has to show for their spent, after tax, dollars is a block of shares in corporation AB and there is no material difference if the shares are purchased directly from a broker or from an employer.

The Canadian Taxable Benefit Legislation, as presented in the document “Employer’s Guide To Taxable Benefits” (T4130 Rev 8 (E)), presents some bafflegab intended to lead the reader to believe an employee has received some form of gift or award when they are given an opportunity to participate in their employer’s “Employee Shares Purchase Plans” (ESPP’s) or “Employee Share Option” (ESO) agreement(s).

There are also some remarks, in T4130, that imply the ESPP/ESO participating employees receive a benefit, of sorts, when the cost price to the employee is below the “Fair Market Value” (FMV) of the same shares trading on a conventional stock exchange.

This a deliberately misleading implication. The employer has sold the employee shares with no guarantee the shares will have any dollar value when delivered (exercised), or at any time in the future.
It is a straight investment gamble on the part of the employee the same as though the shares were purchased from a conventional stock market broker.

Stock market shares are not a “near-cash” item. The have no face value, they have no assured dollar value – not even by the issuing corporation. All anyone need do to prove that even former blue chip shares are nothing near a cash equivalent is to try and sell their Nortel Network shares – if they have any.

The pattern of taxing fictitious income, set by the federal Liberal government during the years 2000 to 2005, may have inspired the federal conservative party to include tax reform and fair taxation for all Canadians in their “STAND UP FOR CANADA” 2005 -6 pre-election campaign.

In any event the federal liberal party deservedly lost that election due to gross mismanagement of Canadian Financial affairs.

Once the Federal Conservative Party was elected, even with a minority government, The Hon Gary Lunn, CP. MP for the riding of Saanich, Gulf-Islands, British Columbia went right to work to have the devastating taxes levied the fictitious taxable benefit incomes of 37 former employees of the SDL Optics (JDS Uniphase) revoked via a Tax Remission Order (TRO)

This event was widely publicized and comments were attributed to both the Hon Gary Lunn and the Right Honourable Stephen Harper, Prime Minister of Canada to the effect this kind of corrective tax reform would be applied across Canada and all similar victims of taxation on income never seen would be provided similar tax relief.

Obviously the integrity of our Right Honourable Prime Minister has it’s dollar value as Mr Harper has remained tight lipped on this issue ever since.

Canada’s government spends a lot of money on advisors and consultants relating to every aspect of government activity – especially social services such as Health and Welfare and Finance.

Even with the best expert counselling -- that money can buy-- things do jump the track once in a while and the government ends up with egg on their face. When the public can see that their elected representatives have taken reasonable measures to assure a desired outcome they are usually understanding and leave it to the opposition leaders, critics etc. to blow the whistle on the goof-up.

What excuse is their for a Minister of Finance to ignore the advice of the House of Commons (HOC) Standing Committee on finance (FINA) which passed a motion, last August, recommending the appeals of the Canadian Grass-Roots Group, “Canadians for Fair and Equitable Taxation” (CFET) be heard by the MOF?

Recently a member of CFET, who had made several written requests to meet with the MOF as proposed by James Rajotte – chairman of FINA – received a written reply from the office of the MOF stating in no uncertain terms the MOF does not have time to meet with members of CFET – now and at no time in the foreseeable future.

This is the same MOF who declares Canada’s taxable benefit legislation is being applied “fairly” while he is staring the Gary Lunn TRO event right in the eye. He also blithely ignores the fact the U.S. government has declared the taxing of phantom income is definitely unfair and totally unjustified.

This glaring contradiction indicates our MOF has little, or no, concept of “equal treatment under the law” and has no concept of the conventional meaning of the word “fair” and/or no regard for telling the truth.

There is, however much more damming evidence that indicates our MOF is not the competent minister Canadians have a right to expect for the tax dollars he is receiving in salary and perks.

An astute financial person should have recognized the signs of a coming major economic event when the Hi-Tech stock market went in a steep decline in the middle of the year 2000.

Paul Martin, MOF at that time, apparently didn’t see it coming, and neither did his successor the Hon Ralph Goodale.

All they saw was an opportunity to extort after tax dollars from thousands of honest, hard-working employees who had been duped into speculating in the stock market by both their employers and Canada’s federal government.

When Incentive Shares Options (ISO) plans were introduced -- as a means of fighting the loss of key people through the actions of Head-Hunter organizations – both employers and the government made no mention that flash paper gains --whether realized or not – would be taxed at the potential profit the taxpayer might have received IF they had sold their shares at the moment in time they actually received them.

In fact there is evidence some ISO Plan administrators actually assured their co-workers they would only be taxed on the gain, if any, realized at the time they actually sold their shares. That is the tax treatment provided to any other Canadian who invests in conventional stock market equities and IT IS THE ONLY “FAIR” SYSTEM OF TAXING EQUITIES.

How can the Hon James M. Flaherty keep a straight face when he declares: “the policy of taxing phantom income is “fair” because people who hold their ESPP/ESO equities past the date of “exercise” are treated the same as all other investors.”

After they have been levied horrendous taxes on money that never actually existed THEN they are treated the same as all other investors – not before. There is a world of difference in the so-called “fair” and equal treatment under the law Mr. Flaherty – and you know it -- so stop the BS.

Getting back to the astute MOF who failed to see economic disaster looming in the Canadian Corporate Pension laws with the possible bankruptcy of Corporate giants such as Nortel Networks. Apparently there is a myriad of inter-locking laws, rules and policies effecting the priorities of various creditors at the federal, provincial and international levels.

Was our MOF totally ignorant of the risk to Canadian pensioners when corporate giants were allowed to under-fund their employees pensions with the fund administrators? Did he realize the risk but preferred to declare all is well – as with the phantom tax issue – while former employees were being denied pension and separation benefits?

Last but not least – how about the H1N1 performance of our Public Health Agency of Canada? With 30 million, or so, Canadians and nearly a year to prepare what justification is there for the colossal boon-doggle in the supply and delivery of the anti-virus vaccine?

Can there be any justification for depending upon a single source supplier for all of Canada?

Where was our Right Honourable Stephen Harper during this debacle – the PM who said: “we’ll get it resolved”, when questioned about the inequality of the Gary Lunn TRO as compared to all other victims of taxes levied on fictitious income and who then failed to raise a finger to take any further corrective action.

This is exactly the kind of government Canadians deserve, and will get, as long as they do nothing to demand performance from their local candidates seeking election/re-election to Canada’s House of Commons.

My local MP is fully aware he will not have my support in the next federal election unless he commits to supporting the CFET appeals for fair and Equitable Taxation.

If you do not demand performance you will get poor performance – now and for your children as well.

As far as veterans week is concerned – when I see our Right Honourable PM along with our Honourable MOF standing before Canada’s Veterans, with the poppy pinned to their lapel – I feel nothing but disgust and betrayal and I wonder what it will take to get a decent slate of politicians in office to run Canada’s affairs?

See you at the voting polls in Canada’s next federal election – O’Grady.

Victor Drummond ©