Wednesday, November 01, 2006

On income trusts

You know, if I'd been advising investors over the last year, I would have informed them of one simple fact: Governments, even conservative ones, don't willingly give up tax revenue they believe they're entitled to. The move for corporations to put up income trusts was a thinly-veiled, partly-sanctioned form of tax evasion, and it wasn't going to last.

The cinder block that broke the camel's back in this case, was BCE's move not too long ago. Flaherty had to move on this, or lose billions in taxes.

And no, there's no inherent contradiction between a government cutting taxes while regulating against tax evasion - it all still reinforces the state's control.

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