Flaherty makes the worst tax decision in history:
The Federal Government announced that they are changing the rules regarding Income trusts and these entities will be required to pay tax at the same rate as corporations. The credibility loss from this decision will have long term ramifications for the Canadian capital markets.
The Government has proven that they can not be trusted, investors can not be confident when they make a decision to invest in Canada that the rules will not be changed, even when the Government has stated emphatically that they would not make any changes. Capital will be very hesitant to flow into Canada and that will restrict economic growth over the longer term.
I believe that one of the over riding reasons for this change is the fear by the Federal Government that the Provincial Governments would end up with a larger share of the tax revenue if a large number of companies were to convert to a trust structure. This announcement is all about the fear of sharing power when power goes to the Government with the largest share of the tax pie.
The Government has just handed individual investors who are investing for income a 15% reduction in the value of their investments and a potential 50% reduction in their incomes. The tax grab by the Federal Government is an over reaction to the potential revenue loss due to conversions by corporations to trusts.
The smoke and mirrors of a change to the income splitting rules for those with pension income will not appease anyone who is seeing their income drop by as much as 50%.
The Government is likely to fall victim to the “law of unintended consciences” with the change on income splitting. I would be amazed if a tax lawyer and a constitutional lawyer do not get together and challenge this rule as unconstitutional on the basis of age discrimination (which it is). When they are successful then every married taxpayer will be able to file jointly and the Government will be in the position to see revenue drop dramatically as a result.
The political fall out will be dramatic as investors of all ages react with disgust to these changes, realizing that their standard of living will be effected and their plans forever changed and not for the better.
The conservative government has just assured itself of a defeat in the next election (and so they should) and will go down in history as one of the shortest terms in office. The reaction will be swift and severe the next time Canadians go to the polls, which is now likely sooner rather than later.
What a stupid move, you would think that with all the high priced help they have available Stephen Harper and Jim Flaherty would be able to make better long term decisions.
For more information go to www.campbellreport.com
The Government has proven that they can not be trusted, investors can not be confident when they make a decision to invest in Canada that the rules will not be changed, even when the Government has stated emphatically that they would not make any changes. Capital will be very hesitant to flow into Canada and that will restrict economic growth over the longer term.
I believe that one of the over riding reasons for this change is the fear by the Federal Government that the Provincial Governments would end up with a larger share of the tax revenue if a large number of companies were to convert to a trust structure. This announcement is all about the fear of sharing power when power goes to the Government with the largest share of the tax pie.
The Government has just handed individual investors who are investing for income a 15% reduction in the value of their investments and a potential 50% reduction in their incomes. The tax grab by the Federal Government is an over reaction to the potential revenue loss due to conversions by corporations to trusts.
The smoke and mirrors of a change to the income splitting rules for those with pension income will not appease anyone who is seeing their income drop by as much as 50%.
The Government is likely to fall victim to the “law of unintended consciences” with the change on income splitting. I would be amazed if a tax lawyer and a constitutional lawyer do not get together and challenge this rule as unconstitutional on the basis of age discrimination (which it is). When they are successful then every married taxpayer will be able to file jointly and the Government will be in the position to see revenue drop dramatically as a result.
The political fall out will be dramatic as investors of all ages react with disgust to these changes, realizing that their standard of living will be effected and their plans forever changed and not for the better.
The conservative government has just assured itself of a defeat in the next election (and so they should) and will go down in history as one of the shortest terms in office. The reaction will be swift and severe the next time Canadians go to the polls, which is now likely sooner rather than later.
What a stupid move, you would think that with all the high priced help they have available Stephen Harper and Jim Flaherty would be able to make better long term decisions.
For more information go to www.campbellreport.com
posted by Grant | 1:07 PM
0 Comments:
Post a Comment
<< Home