Why the big stink over BHP Billiton's takeover of Potash Corp of Saskatchewan?
On Oct. 31, 2006 the Government of Canada announced revisions to the Income Trust legislation because of supposed "tax leakage" issues. This triggered the largest stock market losses in the history of our country. Ordinary, hardworking Canadians, young and old, like you and I lost $35 billion of their life savings. Income trust company stocks cratered, and were significantly devalued by the market. This caused numerous (51 at last count) takeovers by foreign companies, particularly in the oil industry (the latest one being Harvest Energy Trust takeover by the Korean National Oil company).
This has resulted in huge tax losses to the Government of Canada to the tune of $1.5 billion annually. It is now a matter of public record that there were no tax loopholes to start with, and no tax leakage.
All of the income from income trusts is 'taxed.' Some Canadians (38 per cent) held their income trust stock in mutual funds, common stock, etc. The remaining income trust stock (62 per cent) was held in individual portfolios and taxed at the holders tax rate, which in most cases was significantly greater than corporate dividends or corporate tax rates.
The Government of Canada justified this decision by providing the Finance department's "Investment Analysis Report," with 18 pages blacked out. How's that for transparency?
On Feb. 26, 2010 I asked our member of Parliament, Brent Rathgeber, for an explanation of the blacked-out documents. His response was, and I quote: "I believe our Government's transparency is evidenced by the comprehensive 'Accountability Act.' I do not believe disclosing military secrets such as troop movements does anything to enhance transparency; what it does is jeopardize the safety and security of our deployed troops."
Wow. Then I asked Mr. Rathgeber to explain the connection between the 18 blacked-out pages of the "Investment Analysis Report" and "troop movements and military operations."
To date I've received zero response.
Why is it okay to lose billions of dollars of oil trust investment and subsequent tax revenue to foreign investors, but Saskatchewan Premier Brad Wall gets in a big huff over the loss of Saskatchewan Potash?
Maybe Premier Wall has it right!
Stan P. Kolomyjec, St. Albert
