Thursday, November 2, 2006

Canada's Income Trust Fallout - Who Ya Gonna Call?

Trust Busters!

Am sure you know how that tune goes - catchy, corny, but apropos for this post.

Income Trusts are a different type of trust-busting, but that's what happened in Canada today - both figuratively and literally.

Our Income Trusts were literally broken up today, as the Federal government mandated an end to the dominant trend in Canada's high finance world. These trusts have been all the rage this year, and are rapidly spreading to all kinds of sectors as the tax benefits are simply too attractive to pass up for big corporations. As usual, money is at the root of the problem, as these trusts are diverting tax revenues away from government coffers, and it's simply getting too expensive for them to let it continue - despite the fact that our government is posting healthy surpluses. I digress...

Telecom isn't really the main player here, but it was the catalyst that brought in the change yesterday. Our two biggest telcos, Bell and Telus have been very public about their Income Trust conversion plans, and with their pending conversions coming back to back, it looks like this is what pushed the Feds over the edge, and they now stand to break one of their election promises to not tax the trusts.

So, that's the figurative angle to the story. The Feds have busted the trust of taxpayers/investors, who are now fuming about how much wealth they've just lost on paper in the last 24 hours. Talk about burning your bridges at both ends with voters and corporate Canada. Everybody is angry, but you know what - they have probably done the right thing. I'm not going to expand on this here - tune in to next week's podcast, when I talk with Mark Goldberg about this story.

A big concern for the government was a need to stem the tide before it becomes unstoppable. Telus - and especially Bell - are arguably Canada's shining corporate icons - and if they go trust, the next mega sector - oil and gas - will be next - at least those that haven't gone trust already. It's bit like a Coach's Challenge in the NFL. The Feds feel that Telus and Bell's plans are a bad idea, and they need to throw out the red flag before the telcos can get the ball back in play to negate the challenge.

I didn't see any U.S. coverage on this, but I'm not that surprised. It's not really a telecom story, but it's a HUGE story for Telus and Bell. There are many ramifications and angles to explore, and to give you a taste, here's a bit of the coverage in today's Globe & Mail. To get a feel for the vox populi, I urge you to review the reader comments where provided.

Quick sidebar - one of the hot stories these days is how print media is dying and journalists are finding other things to do (fellow bloggers Om Malik and Mark Evans are perfect examples). Well, you can't get reader comments immediately after the papers come out, but you get them in the online edition. There's a whole layer there of rich commentary that the print edition readers never see, which is too bad. Anyhow, have a read if you want to see what all the fuss is about, and what this means for Bell and, here, here, and here.

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ipcom said...

Posted by: chris mack

If doing the "right thing" is to screw possibly millions of people out of their hard earned savings, what would be the wrong thing to do?
If the govt wanted to fix what they perceived to be a problem, they could have just stated that their would not allow any new income trusts.
This bloodbath is going to cause repercussions. The Conservatives are toast. I always voted Conservative. I will never vote for them again and tell everyone why.
I am a hardworking guy with almost all of my RRSP's in income trusts. My financial planner told me that I could get 7 to 8% at very low risk. The Liberals had been toying with the idea of getting rid of them but Harper said that he wouldn't touch them. Well Harper is a liar.
No pension plan, no sick pay, no holiday pay for the last 23 years, no new cars, no new furniture, just savings so that I could retire at 58 on a modest income from my investments. My wife was always asking me for new furniture, new cars,etc. She said we should do a little enjoying now. I said no. We are going to save our money so that we don't have to eat cat food with the rest of the people that failed to plan.
Well, it looks like we'll either work forever or/and still eat cat food.
This is no joking matter. Harper and the boys are liars. We lose 30 billion and counting collectively in 2 days and Harper throws us some other tax relief bones. What a joke! What a jerk! How stupid does he think we are? The law needs to be changed /repealed. and right now! These people need to be thrown out on their ears. They are yet to understand the ire of the people on this issue. Millions of people lost billions of dollars in 2 days. Money for most of us represents blood, sweat, and tears. I have always had to work hard for my money like millions of other common people. I have never had a bloodsucking leeching so-called job in parliament with all the perks and with all the pigs.
I wonder how much Harper and his band of goofs lost on income trusts?
The Martin Liberals were way too liberal for me. I didn't like their social adgenda. What I did like was Martin's fiscal management. What is more important to me, my hard earned savings or my conservative values? I'll take my hard earned money in a heartbeat. I would vote for Hedy Fry or even Belinda for PM if it meant getting my money back.
I meet a lot of people in my line of work and many say that all politicians are scum. I begged to disagree. I have said on many occasions that this Harper guy seems like a decent guy and a straight shooter. It took 55 years to end my naivete. He is a liar and just another scumbag.
My financial planner told me that if I wanted to "sleep at night" I needed conservative investments. I'm not doing any sleeping at all.
I am one of the silent majority who doesn't call politicians, or radio stations, or newspapers, or join activist groups. In the last 24 hours, I have called 2 radio stations, Emailed Harper and Flarity, called an action group representing the income trusts, and am going to join with anyone else willing to take these bums out.

Chris Mack , badly screwed taxpayer

ipcom said...

Posted by: Me

I think what is needed is a class action lawsuit by all those that have lost money in this un believeable fiasco. They lied to us... we put our money in ... and then they did exactly what they said they would not.

My name is not posted because I do not trust the government any more. They are likely to sick the tax man on us that stand up.

ipcom said...

Posted by: jim dugger

Jon, please provide me some updates you might have pertaining to the TRUST changes that might occur in 2011. thanks for your time--Jim