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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (846)	9/24/2005 8:40:54 PM
From: Taikun	Read Replies (1) \| Respond to of 217560

TJ, Well, for example my Dad is NOT selling anything as he thinks Alberta might do something, but he's not sure what they could do. This is only speculation: "I see it as VERY unlikely that existing trusts will have any rules changed." The Canadian Finance Ministry seems intent on collecting $300m-$600m in taxes, and they miss the big picture (overall business growth). The taxes paid in total by trusts are much more than this $300-600m. The way gov't works in Ottawa is Goodale is not in control, the civil servants are. This has happened time and time again in previous gov'ts. The election promises are made and then the politician tries to implement and comes up against the civil servants who have been in the Ministry (ie Finance MInistry) time eternal. The Minister MUST have the support of the civil servants to get anything done. So, the civil servants look at any proposal to see if it benefits them. Will they be able to engage in more 'empire building'? Will there be more jobs for family and friends? If no, the election promise dies. The civil servants then read the Minister the riot act, and cite precedent (well you can't do that because of this prior case or that relationship there) and they kill the proposal. Right now I guarantee you there is a civil servant in the FM salivating over taxing trusts so they can employ family and friends in cushy jobs at taxpayers expense, and all the while trusts and the trust sector are not organized enough to fend off this attack. Our family's Vancouver accountant's daughter works for CRA (Canada 's IRS) and she only works from 11-3 each day (yes, a full-time job) and in her division the head is spending most of his time each day trying to grow their division through extra tax revenue, he does it 24/7, all financed by taxpayers, and when extra revenue comes in he hires friends and family. Where is any representation of a countering force to this evident in the trust market? “Using Finance's sensitivity analysis, the cost has already leaped to $600-million per year,” Mr. Drummond wrote yesterday in a note. globeinvestor.com Face it, the gov't is MUCH better at spin than the trusts. FDG paid an INCREASE ONLY of C$49m in Q3 2005 alone on taxes and royalties. How much is the annual spend? Then there is the new withholding taxes in sheltered accts. I calculate approx C$10-15m/yr in withholding taxes on foreign distributions to sheletered accts that wasn't collected before 05 just from FDG alone (Total C$135m/qtr, 50% foreign, 1/3 sheltered). Why isn't this counted? Across 200 trusts this would be in the hundreds of millions. There are companies going public that would still be private if not for the sector. How much tax do they pay when they use the currency of their trust units to expand to the US and Australia and pay taxes in Canada? (TDG, PVX, VET, SQE and many others) I would really like to see a comparison of gross gov't taxes from the Canadian corporate sector pre-trust (1985) compared to post-trust (2005, now) and lets see which number is bigger. Why aren't the trusts throwing gobs of money at PR countering these lies? Why isn't Bay St throwing gobs of money at PR countering these lies? Where are the TV ads with the retirees claiming they need trust income? Where are the single moms? Where are the trust CEOs defending their employees and businesses? Nonexistent! I agree with the CIBC's analysis (below). This sector is too complacent. The US has a much better ability to counter gov't spin and to look out for the interests of shareholders. All I see is the Canadian trusts taking whatever the gov't dishes out. They are unorganized, they have no rapport with Ottawa, they have no lobby spend, they exhibit no ability to create spin on the same level as gov't, they have little research supporting the broader pictures of economic creation, increases inward investment flow, and overall increases in the taxes and royalties trusts do spend. So, why should I think the trusts will prevail? I would only reconsider if an external event occurs like Alberta pressures Ottawa or the trusts get organized. David CIBC 9/21: Fed statements over the past year have stressed tax leakage concerns, especially as tax-exempt ownership increases. The decision to put rulings on hold merely reiterated these concerns; the market's sudden negative reaction suggests overly-complacent attitudes on this issue.

To: TobagoJack who wrote (846)	9/24/2005 8:59:04 PM
From: Taikun	Respond to of 217560

TJ, I am thinking we can speculate all we want about whether the gov'ts actions will be relatively benign or not, but what matters most is the reaction of investors. Friday (9/23) the $RTEN index showed a thick black candle: heavy selling all day at every price all the way down, and a very short tail at the bottom. The spin off effects will drag down the Loonie also and I wouldn't be surprised to see a 5% cut there to 0.81. A $3bn loss of trust mkt cap last week will include some foreign investors liquidating and unless they buy other CDN stocks or cash, that will have a depressing effect on CAD further exacerbating losses for foreign long trust investors. D Message 21734637