Thursday, November 02, 2006

Income Trusts

1. Income trusts were a tax loophole that needed to be closed. The Harperos did the right thing.

2. A lot of investors are losing money because of this new tax. Harper gave some tax relief to retirees and he softened the impact with a gradated implementation. It is still a going to be a financial loss for a lot of people.

3. There would not be this big a loss if Paul Martin had done something about income trusts back in the fall of 2005. Had he done this then, there wouldn't be such a mess now.

4. The stock market is a risky, risky place. Increasingly in recent years we have been sold the line that we should rely on the stock market (including mutual funds) to save for our retirement. We don't have a lot of options now that pensions are a luxury enjoyed mostly by civil servants. We need to revisit this whole area and start to think of regulations to help non-rich people who need a secure retirement fund.

5. Good government does not mean blindly following every campaign promise. Situations change (in this case, a flood of companies moving into the tax loophole of income trusts); people learn new facts (especially when they move from opposition to government); and opinions evolve. Good governance means being pragmatic and open-minded.

3 comments:

Scrubs & Shines said...

Wow! I have never never never supported the Conservative Government in Canada...never! I'm reconsidering this position now.

tom s. said...

Agreed on all 5.

1. is a big surprise, but you are right, they did do the right thing.

4. is a message that people need to know. Reading the paper this morning, there were outraged people who had banked on the tories keeping to their original word even in the light of BCE and Telus. Sorry, but that's what happens when you gamble.

As for secure retirements, well I guess we can dream...

Yappa said...

To Shrubs&Shines - I don't think it's such a big surprise that Tories did something good... or that (to my mind) the Liberals made a mistake on this. All governments have some successes and some failures. I think the main difference between Martin's decision and Harper's decision is timing: the flood of big companies moving to income trusts over the last year, which made public support for them wane and which was starting to cause a tax crisis.