canadian income trusts to be taxed

[Wetton]

Quote from TrendSailor:

Well all I know for certain is Canada essentially just declared war on a good part of average Americans who trusted generally "friendly" foreigners with a good part of their wealth. This will anger many Americans and damage relationships. The US gov will be forced to get involved politically behind closed doors to balance it out with trade agreements or something. Just watch. This will sour some political relations as well. With Canada already swinging major oil deals with China rather than its natural trading partner (the US) and now this Robin Hood thievery Canada just intentionally alienated itself from many Americans. Previously good relations could now become socially and politically very hostile or at least tepid. That will also have an economic cost.

I was planning to go take a few extended holiday vacations in Canada. But now, after this, right now I am in NO mood to spend much money on my next Canadian ski trip (coming up soon). In fact if it was not already paid for I'd cancel just out of general principal and outrage.

Government's need to understand that when they are unfair to people and do not permit a grandfathering of prior agreements/understandings or a way to phase out programs due to policy change that the effected parties will always find some way to "get even". People who's trust has been betrayed will think in terms of how family wealth was stolen by a foreign government. My prediction is this foreign tax will backfire with severe, at least 300%, negative economic consequence in some way or another over the next 10 years.

TS

Whoa, I hope you're not serious about "not spending as much money" on your next ski trip in Canada. There goes the budget.
We need that money for our universal healthcare and social programs. We depend on you.

And the correct terminology from our finance minister was jihad. He stood up in parliament today and I quote "Today I declare jihad on a good part of average Americans who trusted us". And so on.

 

[FanOfFridays]

Quote from TrendSailor:

The amazing economic opportunity that Canada was about to reap over the next decade is now going to be blown all to hell by a bunch of greedy politicians that will expand government to consume every penny of tax it can levy and create co-dependencies that will doom economic expansion. While Canada goes down the ruinous path of even more social programs she will get what she deserves.

Isn't it interesting that this is a comment on a Conservative government!!

It's unfortunate that today's action cost some people a big chunk, but I agree with those who feel it's a good idea longer term. The writing was on the wall when rumours began to circulate that a couple of the Big 5 chartered banks here were contemplating the conversion to income trusts.

With regard to Canada's actions today vis-a-vis our trading relationship with the US... to tell the honest to God truth, there's still a bad taste in my mouth over the shamefully protectionist and bullying behaviour of the US over the softwood lumber issue for me to feel that bad about it. Yesterday we heard that the US is unilaterally claiming that our sovereign territory, the NorthWest Passage, is now somehow US territory. So Canada has no monopoly on bad behaviour towards our nearest neighbour.

Quote from TrendSailor:
Well all I know for certain is Canada essentially just declared war on a good part of average Americans who trusted generally "friendly" foreigners with a good part of their wealth. This will anger many Americans and damage relationships.

This decision was an internal one that affected speculators in the US and elsewhere. I don't really think that this affects that many 'average Americans'.

I'm pretty sure that this isn't going to prove to be the basis for an ongoing dispute with the US.

 

[FanOfFridays]

Quote from Wetton:
The Liberals are drooling over themselves with glee that they won't have to address this problem if they get re-elected.

You know, I just have this sneaking suspicion that this issue won't provide that much ammo for the Liberals. I mean, it should, given the unequivocal Conservative election promise to leave the income trusts alone, but I just think most people will understand that this was something that needed to be done.

Wouldn't it be ironic if this proved to be a positive for the Tories?

 

[TrendSailor]

Comments embedded.

Quote from traderNik:

Isn't it interesting that this is a comment on a Conservative government!!
TS: Conservative by Canadian standards perhaps. But God help you all if you get anything more liberal that this in power. Take that back - God help the US since everyone will be fleeing the burden of gov and illegally entering the US from the north to escape the imposition of "help" by its government. Nothing like being forced to get services for things you don't want and then paying high prices for the inefficiencies of a government run program...

It's unfortunate that today's action cost some people a big chunk, but I agree with those who feel it's a good idea longer term. The writing was on the wall when rumours began to circulate that a couple of the Big 5 chartered banks here were contemplating the conversion to income trusts.

TS: The "fair" thing to do would be to declare another class of trust so those forming new trusts were subject to the tax. That would be a major disincentive to go this route in the first place and vividly demonstrate the "cost" of tax on the corporate operations

With regard to Canada's actions today vis-a-vis our trading relationship with the US... to tell the honest to God truth, there's still a bad taste in my mouth over the shamefully protectionist and bullying behaviour of the US over the softwood lumber issue for me to feel that bad about it. Yesterday we heard that the US is unilaterally claiming that our sovereign territory, the NorthWest Passage, is now somehow US territory. So Canada has no monopoly on bad behaviour towards our nearest neighbour.
I know only a little about the old timber issue. But I am frankly surprised that the US has not taken or purchased a sliver of land up along your western boarder to make sovereign US territory to link Alaska to the lower 50 states. As I said before - eventually Canada is destined to be part of a "North American" nation and after that it will be "The Americas" as we just cave in to the illegal Mexicans and are forced to take that country over to create jobs and keep then south. Venezuela's Chavez's insane rantings will force us to eventually go all the way south. The next 10 years are going to be very interesting...

This decision was an internal one that affected speculators in the US and elsewhere. I don't really think that this affects that many 'average Americans'.
TS: You have NO idea how many lil old retirees sit around and study the markets to find the highest yields they can find to get an income check each month. That use to be Canada. Trust me - by the end of this week the phones will be ringing off the hooks as the senior citizens call up their political action committees (AARP) and their representatives and senators to complain. Too much wealth just "evaporated" for people to just suck it up and ignore it. I tell you this is going to be HUGE.

I'm pretty sure that this isn't going to prove to be the basis for an ongoing dispute with the US. TS: Time will tell.

 

[FanOfFridays]

Quote from TrendSailor:

TS: Conservative by Canadian standards perhaps. But God help you all if you get anything more liberal that this in power. Take that back - God help the US since everyone will be fleeing the burden of gov and illegally entering the US from the north to escape the imposition of "help" by its government.

I'll assume that this is sort of meant as a joke. If it isn't, you know little about the attitude of Canadians to our valued trading partner to the South. We love to trade with you but most of us wouldn't dream of living down there. It's too nice up here in Paradise, even with a liberal government

Quote from TrendSailor:
The "fair" thing to do would be to declare another class of trust so those forming new trusts were subject to the tax. That would be a major disincentive to go this route in the first place and vividly demonstrate the "cost" of tax on the corporate operations

That sounds like a fair criticism to me

Quote from TrendSailor:
I know only a little about the old timber issue. But I am frankly surprised that the US has not taken a sliver of land up along your western boarder [sic]

I assume that this is a serious suggestion...10 years ago I would have said that no one in their right mind could suggest that the US should 'take' a piece of Canadian sovereign territory, but I know better now.

Quote from TrendSailor:
As I said before - eventually Canada is destined to be part of a "North American"...The next 10 years are going to be very interesting...

I hope your investment skills are better than your poli-sci theory

Add 290 years to that and then we can talk.

Quote from TrendSailor:
I tell you this is going to be HUGE.

I say this will be forgotten within a month or two

As you said, time will tell...in the meantime, I truly am sorry that you lost a chunk on a semi-black swan event originated by a Canadian pol. Maybe you can play the vol in the next week or so and make it up. Trading in Telus (TSE-T) should be interesting in the next few days.

 

[Wetton]

Quote from traderNik:

You know, I just have this sneaking suspicion that this issue won't provide that much ammo for the Liberals. I mean, it should, given the unequivocal Conservative election promise to leave the income trusts alone, but I just think most people will understand that this was something that needed to be done.

Wouldn't it be ironic if this proved to be a positive for the Tories?

I think you're right. The Liberals are very tight lipped when they're asked if the Conservatives made the right move. They defer on the question and instead talk about the poor implementation of the policy. I think it took a lot of balls to do this and I have some new found respect for the Flaherty and the Conservatives.

I think the Liberals are just glad someone else did the dirty work that they should have done originally.

This is only part one. Wait till the next budget comes down. They are going to cut personal income taxes and eliminate the capital gains tax. The income trust issue will be long forgotten by then. Johnny paycheque will be happy with the personal tax cut and Bay Street will LOVE the capital gains tax. I think the tradeoff has been struck.

 

[FanOfFridays]

Quote from Wetton:

Wait till the next budget comes down. They are going to cut personal income taxes and eliminate the capital gains tax. I think the tradeoff has been struck.

Agree, and the Liberals, with their not-ready-for-Prime-Time cast of leadership candidates, are going to be hard pressed to give the Tories a decent run for their money, IMO. I just can't see Ignatieff running the country at this point. Bob Rae? Maybe but... too many sour memories here in Ontario. He's actually taking the soundest approach to the problem of his political history by coming right out and saying that he screwed up and that he knows better now.

I'm no economist but I am going to spend the rest of the night trying to figure out what the Canadian Dollar 'should' do after this news so that if it doesn't do it, I can identify a tradeable divergence. I presume that this should be mildly bearish for the $CAN so if it holds fairly strong...

EDIT: for those who follow the politics up here with one eye on the markets, the Afghanistan situation may be one of the main issue in the next election (presuming that they will be forced to call one within the next year...)

 

[trend_guy]

it should of never been allowed anyway... how is it fair that people pay taxes on all other forms of income... it was never gonna last and hopefully will create room for a capital gains tax reduction.

 

[stock777]

wow, vid of a trust investor when he got the news this am.

I think hes saying something about the Prime Minister

 

[99atlantic]

Quote from TrendSailor:

You have NO idea how many lil old retirees sit around and study the markets to find the highest yields they can find to get an income check each month. That use to be Canada. Trust me - by the end of this week the phones will be ringing off the hooks as the senior citizens call up their political action committees (AARP) and their representatives and senators to complain. Too much wealth just "evaporated" for people to just suck it up and ignore it. I tell you this is going to be HUGE.

Who cares if some retirees loose money - they're old and going to die soon. If they can't do their own DD and just go 'Ooooo, 15% yield, 100% return of capital, yipieeeeeeeee', they get what's coming.

In the long run, this should be a good thing for the economy.