When is a tax increase not a tax increase?

So let's get this straight. All though out 2007 and 2008, the federal and provincial Cons chided the government of Ontario to reduce corporate taxes because without the reduction, business would move out of, or not locate in Ontario. "Lower corporate taxes are essential," spewed Flaherty. He being a former Ontario Minister of Finance made his word ring with truth (chuckle).

So lowering taxes on profit is a good thing. As a small business guy I like paying lower taxes... if now I could only make a profit!

So here we are in 2009, the Cons finally figured out that the economy is in the toilet and after 3 years of seven percent program spending growth, maybe, just maybe, they have to do something about the deficit which will be $50b-75b in 2009 depending on who does the math.

One of the problems for the government is that they are collecting a lower tax rate on less profit. The perfect storm! So what to do?

Raise the EI premiums paid by business! According to Cons it is not a tax increase. Tell that to the people who have to pay it!

The reality is that they gave tax breaks to big corporations making huge profits (read: banks and investment firms) and now they want to ding the smaller guys with a higher bill for EI. These are the same small firms that are not making a profit to take advantage of the tax-rate reduction. Will they have to lay of people to pay the EI... um... tax increase? Or will they just have to do without new employees?

Either way it is dumb.

Flaherty to be hit by 2x4 (made in china)

I cannot even fathom the news out of China today.  It seems that FinMin Flaherty has decided to sell Canada to the Chinese in exchange for having a ScotiaBank branch across the street from Mao's tomb.

I have spent a great deal of time in China, I have done business in China and I have been screwed by Official China more times than I know what to do with.

If Flaherty imagines that Canadian banks are going to be welcome to operate as equals in China, I like some of what he is smoking.  The truth is that in a manged economy where ALL spending flows from a central point, being a prestigious Canadian bank, no matter how well run, will be a pimple on an elephants ass in China.  If your goal in life is to cash travelller's checks and operate an ATM, then China is for you.  If you want to get into the auto and home financing business in China -- good luck.

Canadians need to learn a whole lot more about the world outside of North America if they want to compete.

It's Saturday in Ottawa

There are two ways to tell if it is Saturday in the Nation's capital.

The first is to look at the sky. If it is raining, it's Saturday.

The second is to look at page A6 of the local newsrag. Sure enough on A6 of today's bird cage liner is an innocuous article touting FinMin Flaherty saying that Canada's has turned the corner on the recession -- green shoots are showing -- things are looking rosy. Buried in the article is a toss away line stating that the deficit for 2009 has been pegged at a measly $75 billion.

What?

Flaherty told us a few weeks ago that the deficit would be about $50 billion., Now it is 50% higher at $75 billion? Can't this guy count? Or is he just a serial liar?

In the space of 10 months, Flaherty and the Con government have gone from predicting surpluses to small deficits to large deficits to, now, a humongous deficit. And I wager to say that he is not finished yet.

In his last update, before this one, Flaherty touted that the deficit would only be $85 billion over the next 5 years. He poopooed the bank economist who said it will be more like $156 billion. Now he is up to $75 billion in the first of the 5 years and there is no end in site.

Is that what you want from a government?

The contradiction of being Flaherty

Less than two weeks after we learn the Canada Revenue Agency gave a former PM a 50% break, on taxes not paid, on cash income not claimed, to the tune of $62,500 comes the statement by our inimitable FinMin that, "The tax laws apply to us all equally."  Well. la-de-da, ain't you consistent.

What is good enough for a former Con PM is too good for average Joes who are getting stung big time with tax bill on income they never received.  These include Canadians now on pensions who were caught up the burst high tech bubble who exercised stock options.  Some of these Canadians owe tens of thousands of dollars to which Flaherty says, tough noogies.

This Con government is heartless in its view of Canadians, unless you, of course, vote for them or lead their party.

There must be a compromise here to keep these citizens from selling their homes or having to declare bankruptcy.  Find it Jim, cause I know that Micheal can.

Whoops, he did it again.

Note to Jim Flaherty:  Hey, JF, I went past a place called the Mathatarium the other day.   They teach math to grades 2-12.  Maybe you should check it out for some help.

The Con FinMin released his economic update yesterday.  In essence he said, "Oops that $34 billion deficit is really going to be over $50 billion."

Apparently the economy is worse than he expected in March and a whole worse that when he projected four surpluses in a row in his last November burp.

Flaherty is the same guy who was Ontario's FinMin in 2002 when he told voters that Ontario's budget was balanced.  We found out a few weeks later that Jim lied.  The budget was $5.8 billion in deficit.  Now he is doing the same at the federal level.

When will we ever learn?

And, by the way, the key thing to remember about Jimmy's update is the phrase, "over $50 billion".

Time to take your lumps!

A bunch of years ago, I was a VP of a high tech company in Montreal.  We had a banner year the second year that I was there based on major deals in the UK and California.  (I have to admit here that I was not being a true Canadian, according to Harpo, since for almost two years I lived in both the UK and the US doing these deals.) The management team was awarded pretty fair bonuses based on the year's accomplishments.  The next year was bit leaner.  We still made a profit but, since no new major deals were announced of the size the year before, the bonuses were skinnier.  In the third year there was chaos in the market and sales dropped off dramatically (by this time I was VP Strategic Planning and focused on product strategy for the future).  There were no bonuses in year three.  By year four things had turned around a bit and we began getting new significant business .  Bonuses resumed based on results.

Why am I telling you this?  Because the ideas of risk reward have been thrown out the corporate window in favour of nest-feathering by executives. 

Read today's Ottawa Citizen on the situation at CPP where they lost over $23,000,000,000 in the past year.  But according to FinMin Flaherty in an interview, since CPP has a good track record over time (read that, when things are going well), the CPP executives deserve their bonuses.

Got two questions for Flaherty and CPP.  One, where is the incentive for CPP executives to do better when they are rewarded for losing big time?  And second, where was Flaherty when my bonuses disappeared those many years ago?

Lisa - the old-line politician

Lisa McLeod, the MPP for Nepean Carleton just couldn't wait to pounce all over the new provincial budget. From her safe chair at Queen's Park where the government is not likely to call an election if the opposition does not support them (contrast that to Ottawa, Lisa), the mighty mouth from Barrhaven chooses to bad mouth everything that moves - but not moos, that would upset her rural vote.

But let's not just centre on poor young Lisa. Her interim boss at Queen's Park, some guy named Runciman or something, has called the budget worthless. He says that the harmonization of the PST with the GST is the right thing to do but giving rebates (to offset the cost) to families under $160,000 per year is a bribe. Is he actually saying that the government should NOT give the rebates. Will he stand in front of a microphone and say that? I doubt it.

But there is another Con, a potential leader of the provincial party, that has a bit of a problem. Christine Elliott MPP is the wife of federal FinMin Jimmy Flaherty. Jim is in favour of the budget. Chrissy hates it. Want to be a fly on the wall in that master bedroom?

Is the provincial budget good? Given the times... yes. Can it be improved? Yes. Is the harmonization a good thing? Yes. Will it reduce costs in Ontario? Yes. It will reduce manufacturing costs and marginal tax rates for business, and will encourage companies to establish and expand in Ontario.

And that is a good thing.

Remember these words on election day.

“There will be some mistakes made. But it's worth that risk to help the majority of Canadians during what is a serious recession.”

These are the words of Hon James Flaherty, Minister of managing our money.  He said this in an interview on Feb 24, 2009.  This is Jim's way of saying that he and his fellow Cons are no better money managers that anyone else and if there is a Stimulus-gate scandal that it is not his fault.

A brilliant preemptive strike against his critics.

Cons forever. With them in power we will never have another Royal Commission of Judicial Inquiry. The Cons will warn us in advance and then say, "See! I told you so!"

Feeling sorry for Jimmy

You have to feel sorry for Jim Flaherty, our wonderful Federal FinMin.

He got into Ontario politics in 1995, back in the days of NDP Premier Bob Rae.  Rae was fighting a recession in Ontario and started to spend the budget into the red, resulting in a deficit of about $12 billion.  Driven to the point of madness by the free spending Rae and convinced that he could do better, Jimmy joined Mike Harris in becoming FinMin in the Ontario Commonsense Revolution that led the government to downloading programs and costs to municipalities and a claim to have balanced their budget only to have it revealed that they left a $5.8 billion deficit after they lost power.

That's the guy you want during a crisis!

So here we are, 14 years later and the Feds are facing the same set of circumstances that faced Rae.  What does Flaherty do that was better than Rae to address the situation?  Nothing!

He does the same as did Rae - but he does it, according to him - under duress.  "I didn't want to go into deficit," spouts Jimmy.  It's not his fault that he is a poor minister of finance.  It is the Peter Principle in action.

There are a lot of smart asses out there that are convinced that the sun rises and sets up their butts.  Take for example David "As God is my Witness" Warren.  His Sunday column in the Ottawa Citizen tells the story of three "punks" who tried to jump onto the back door of a Toronto trolley without paying.  The driver confronted the punks by yelling "I am not a liberal."  The punks rapidly departed.  Warren declares that this statement told the punks that the driver was not going to be intimidated by them.  Fair enough.  But it is also possible that the punks interpreted this declaration as a statement that the driver was carrying a gun and was ready to shoot.  Of course Warren, a staunch Conservative and friend to all those who can further his career (like Conrad Black),  would never think of that.

Perfect timing for Harper and Flaherty

It seems that earlier this year, while the Con government was telling us that the economy was rosy and there was no chance for a deficit... ever, they were selling $14 billion in T-bills to offset the loss in revenue from their GST cuts.  Well, it also seems that if the government does not pay off those bills before the end of 2008, they will be classified as debt and add to the deficit that they are planning to run up.

This is the result of a blatant lie and deliberate deceit by a government that touts responsibility and transparency.

What a joke.  And the joke is on all Canadians... not just the ones who voted to put them back in.

So the responsible and transparent Con government is about to use the excuse of the world-wide financial crisis to cover up their incompetence by adding that $14 billion to their planned deficit.

Buried in reports from the Finance Department are these statements:

"With a budgetary surplus of $2.9 billion and a requirement of $23.2 billion from non-budgetary transactions, there was a financial requirement of $20.3 billion in the April to July 2008 period, compared to a financial source of $6.8 billion in the same period last year. This difference reflects the financial requirement associated with loans to major Crown corporations which were announced in Budget 2007, as well as higher refunds related to the 2007 tax year."

and

"The Government financed this financial requirement of $20.3 billion by increasing market debt by $14.2 billion and reducing cash balances by $6.1 billion. The increase in market debt was achieved largely through the issuance of treasury bills."

See: http://www.fin.gc.ca/FISCMON/2008-07e.html

We are truly saps and they are truly criminals.

What's up with a deficit, Steve. There is a way to avoid it.

So the PM and his mighty midget, the FinMin, are musing that "Canada's Formerly-greatest GovernmentTM (CFG) may have to drop us into deficit to "help out the world".  Flaherty suggests that we might be able to sell off the CN Tower in Toronto to help ourselves out.  Sell at at time when prices are low?  Sounds a bit like a Lehman executive doesn't it?

I have a suggestion for you Steve.  How about admitting that you made an error when you lowered the GST by 2%.  It had almost no impact of Canadians but it cost you $12 billion in revenues.  Reverse your blunder and raise the GST up by at least one or even the two percentage points and keep up solvent.

It not like you have never broken a promise before.  Remember the taxing of Income Trusts?

The problem with deficits is that they are charged interest and that interest multiplies with time.  So keep from going into more debt by simply saying that you made an error.  You might even find that Canadians will commiserate with you.

Flaherty's slip sliding away. But not fast enough!

Jim Flaherty is the poster boy for the consistently bozo-types. Here is a FinMin telling us that he will not force a surplus on the backs of Canadians. What to hell does that mean? Is he so inept that he does not understand that there is only one taxpayer in Canada. The corporation pass their taxes on to the public through their prices. We, the citizens, pay their taxes! It is only us, the people of Canada, who pay taxes. Get it Jimmy? YOU GET IT?

Flaherty fled Queens Park to Parliament Hill in 2004 leaving behind a $5.8 billion deficit, all the while claiming that Ontario was in surplus. That cost the taxpayer of Ontario billions to fix and forced the Libs to re-introduce the health levy.

Flaherty was no sooner on Parliament Hill as FinMin in 2006 when broke a solemn Con promise and taxed Income Trusts, costing pension plans of retirees tens of billions of dollars.

In 2008 he began a one man crusade to destroy the economy of Ontario by telling anyone who would listen that Ontario was the last place he would invest.

He continued sniping at Ontario by claiming they were the only jurisdiction that did not reduce corporate taxes when he wanted them to. That would have been a tax reduction for profitable companies at the expense of Ontario's real taxpayers, Jimmy.

Now. Jim-Bob wants us to believe him when he says that deficits are not bad things - even if two weeks ago he and his boss, PM Harper, were telling us that the economy is strong and that there would be NO deficit in the future.

He won't even consider canceling or reducing the $5 billion in subsidies that go to the (mostly foreign) oil companies. That would keep us in surplus but, of course, that would anger his constituents in the oil patch and on Bay Street (and I don't mean the voting constituents).

Remind me, will you? Why was this government returned?

Con FinMIn in panic mode

Shortly after declaring that the Canadian banking system is sound, the Cons interim government bought up $25 billion in marginal mortgages from the Canadian banks. 

Can you say bail-out?

Now, after our tiny perfect Finance Minster Flaherty ran around the country parroting King Steve that the economy is strong, comes news that Flaherty wants to move more quickly with billions of dollars in infrastructure programs. “We need to get those projects expedited because they will have a beneficial effect in the economy,” Mr. Flaherty said in an interview in Washington.

Can you say panic?

And just in case you have forgotten, the feds only contribute one-third of the amount needed for infrastructure projects, except for that bridge in Montreal that they are ponying up the full $1 billion.  That means that to coincide with their panic, they need the provinces and the municipalities to come up with matching amounts.

Can you say tax increase?

Flaherty blows chunks at Ontario... again

The Federal Minister of Pissing-Ontarians-Off, is at it again. He took a bit of a hiatus in his McGuinty bashing but is back to re-establish his place as the Con dope of Harperville.

A TD economist has postulated that Ontario will be a have-not province under Canada's Equalization Payments system by 2010. The current program of making poor people as unhappy as rich folks, was rejigged in 2006 by the then Con Minister of Finance by the name of... err...Flaherty. Now Flabberty figures that someone broke his system because Ontario's current industrial infrastructure problems and Alberta and Newfoundland's oil money has shown some flaws in his logic.

The real flaws are in his brain.

The real story behind this Equalization brew-ha-ha is that the artificially heightened price of oil has boosted the tax resources of the provinces that mine for fermented dinosaurs and reduced the taxing power of those provinces with a industrial base.

So what does Flabberty say about this? "Action needs to be taken by the Province of Ontario to join us, to partner with us to encourage economic growth in that province." Is the way he talks about Ontario and its Premier the way to encourage partnership? The action that Flabberty wants Ontario to take is to reduce corporate taxes. That is an utterly stupid thing to say on two fronts. First, reducing corporate taxes only helps corporations who make a profit, like the banks and oil companies, who fund the Con party. It is interesting to note that if the Ontario government were to reduce corporate taxes they would move towards have not status even faster.

So what is a government to do? If Ontario is classified as have-not then they will get funding from the Equalization pool, a pool that they contribute $20 billion per year to. Essentially they would be funding themselves. Not good.

The alternative is the wipe out Equalization completely, let Ontario keep its $20 billion and use it to cut tax rates. But, I hear the cry now, that would not be fair to Quebec and PEI, two of the most parasitic parts of Canada. Guess what? Who cares. It is time for Ontario to quit being the whipping boy for Flabberty and his fellow Cons.

The only winner in this battle between Ontario and the Feds is the people of Ontario. Owing to his big foul mouth, there is no way that Flabberty will ever become the leader of the provincial Cons or Premier of Ontario.

By the way, a word to the wise about economists. It is said that if you ask 20 economists a question you will be 21 answers.

Oh, oh. We are in trouble now!

The Minster of Finance, the Honourable James Flaherty, told a group of American citizens (lawyers and potential investors) at the tony New York Yacht Club that, "Canada is not an island." Pretty good so far. He got his geography right. He then went on to say that Canada is fiscally well positioned to "weather the storm" of an American recession. That is a good positive statement meant to impart confidence. Hear, hear, Jimmy.

Then the wheels fell off.

Jimmy pledged that he will deliver a balanced budget. Oops. Many Canadians, especially Ontarians, will remember that Jimmy used the same words during a provincial election when he was Minister of Finance for Ontario. Unfortunately Jimmy's idea of a balance budget differed from eveyone else. He left Ontario with a "balanced" $5 billion deficit.

The current Liberal government in Ontario has eliminated that deficit, delivered REAL balanced budgets and started the uploading of services from the cities that Jimmy downloaded while balancing his budgets.

So does Jimmy applaud the government of Ontario? Nope. Not his style. He has carried out a relentless attack on Ontario over corporate taxes. Alberta, which is rolling in cash has reduced its corporate tax rate. So has Manitoba and New Brunswick and many other provinces. Ontario is the lone hold-out. Fair enough, but let's look at the facts behind the rhetoric.

Question? What do all provinces (except Alberta), who have lowered their corporate tax rates have in common?

Answer? Equalization payments which distributes funds gleaned from the only two "Have " provinces, Alberta and Ontario, to the "Have-nots", which is the rest of the provinces.

Is it safe to assume that, if Equalization did not exist, "Have not" provinces would not be able to reduce tax rates and that Ontario could have? I think so.

So Jimmy is saying to US lawyers and investors, over shrimp and Johnny Walker Blue at the NYYC, that Canada is a great place to invest. I wonder if he is also reiterating his off-mentioned slam that Ontario is the last place in Canada he would invest?

The Hon. James Flaherty, Minister of self-promotion and slight-of-hand.

"Perfect PP" is back and in fine form

Pierre "Perfect PP" Poilievre, the mighty mouse MP for Nepean Carleton has resurfaced in the news after a long absence. Rumour has it that he went back to his native Alberta to recharge his batteries and to ask his Mama for permission to continue his mission to spew invectives in the East.

Permission was granted so PP flew back to his temporary office on Parliament Hill and got back to work. Earlier this week the RCMP raided the Cons Ottawa HQ, looking for evidence with respect to the 2006 election In and Out financing tactics of the Cons. The press was in attendance, as was a liberal worker with a camera.

Perfect PP went ballistic. "Somebody should ask who in Elections Canada invited the Liberal party to make a home video out of the visit to our headquarters," he said.

I know you are just a young pup with only 5 years toward your gold plated pension so I will let you in on a little secret about political Ottawa. THERE ARE NO SECRETS IN OTTAWA. There are only some people who try to keep secrets. If you want to know how people knew in advance about the raid, just watch the dreaded CBC once in a while, not just those days you star on Don Newman's Politics show. Tear your focus away from the spiritual channel just long enough to know what is really happening around you.

While we are on the case of petty politicians, let's hear what the Minister of Impending Deficits, Jim Flaherty, has to say on this scandalous behaviour. "I do find it odd, when I look at a photograph this morning and I see someone knocking on the door with cameras, with news cameras present." I listened to what Jimmy said and I waited with bated breath for him to blame this on the corporate tax policies of the Ontario government. No mention. I guess that scandal is over... for now.

When you promote yourselves as a squeaky clean government, any bit of dirt will show. PM Harper, Minister Flaherty and Perfect PP... you are all past your best-before date.

Ontario Cons in Contradiction

Lisa MacLeod, Con MPP for Nepean-Carleton, and John Tory, lame-duck leader (pending the resurrection of some guy named Flaherty who will soon become the one true leader) of the Ontario Con party, had better put their heads together to create the semblance of a coherent message.

On page B1 of Ottawa's premiere news rag, April 1, 2008, MacLeod wants the Liberal government to be investigated to determine if they interfered with the 2006 Ottawa civic election by stating, in the answer to a media question, that any change to the approved transit plan in Ottawa would need to be evaluated by the Provincial government, which was putting $200 million into the plan. The answer was correct according to the terms of the provincial/municipal agreement, but MacLeod calls it political interference.

Her comments were in no way timed to match the April 1 appearance of John "the Screamer" Baird in front of a parliamentary committee; he being accused of hijacking the municipal election by leaking confidential contract documents of the transit deal and then pulling the federal funding from the project He is also answering questions about an alleged meeting with the new mayor of Ottawa who has been charged with trying to buy off another mayoralty candidate with money and a promise of a federal job, such job being one of the many doled out by Baird.

Do, dah. Do, dah.

Ms MacLeod, methinks that you doth complain too much.

But what of John (Help me, I need the job.) Tory. On page B3 of the same news rag, Tory complains that the Ontario Liberals did not put strings on a recent $14.6 million grant to Ottawa, earmarked for infrastructure repair. The city decided to use $10 million of it to overcome its budget deficit. Tory thinks that the city needs to be micromanaged a whole lot more by Queen's Park.

So MacLeod complains that the Ont Libs are interfering in civic affairs while Tory complains that they are not interfering enough.

That's a pretty balanced view, I suppose.

Poilievre, The New Screamer, screws up another attack

Pierre Poilievre, the MP for Nepean-Carleton, is getting to be more and more of an embarrassment for Canada and Canadians. He skips in the Commons and cusses like a sailor; but he does it in a tailored suit so that no-one will possibly notice.

He acts like a jack-ass with an IQ of a dung-beetle.

On the day that the Ontario government released its latest budget, the "Perfect PP" travelled to Toronto to be the mouthpiece of Harpers latest slagging of the Ontario government. I guess that "Pretty-boy" Flaherty, the federal Minister of Money, who got the ball started on this slag-fest, decided that maybe he was hurting his image in Ontario (as he tries to wrest the provincial Tory leadership from John Tory) so Harper assigned a disposable Ontario MP, Perfect PP, to carry on the attacks.

So Perfect PP gets to Toronto and offers to be 12 lines above the fold to any journalist he could find.

McGuinty is a dope, Perfect PP yells. Ontario is the last place in Canada anyone would want to invest, he screams. God will smite the non-Conservatives in this province of heathens. He finishes with, That's just my personal opinion, of course.

He then strays a bit from the PMO-prepared script and, boy, is he in trouble now!

In a post-budget press conference McGuinty was asked about the Federal Immigration proposal currently being force-fed in Ottawa. A descendant of Irish famine-era immigrants, his response was that, "...we were [unskilled but] looking for opportunity and we brought with us a solid work ethic."

The door was open for Perfect PP to pounce and he jumped in with all five appendages but... unfortunately his brain was not in sync with his mouth.

"The Premier had no business commenting on immigration," blurts Perfect PP. He went on to describe immigration as an exclusively federal jurisdiction. Guess he didn't fully read his illustrated copy of the Constitution Act of 1867 that states that immigration is a federal responsibility but also states that provinces can set immigration policy. In fact Quebec has a major say in immigration and other provinces are trying to get the same concession from Ottawa.

What was his come-back to this mis-speak... Aahhh, what time does my government jet leave for Ottawa?

Where, you might ask, was the other major CON from Ottawa and why was he not volunteered to go to Toronto instead of the PP? Well, it seems that John "the Screamer" Baird was busy setting up a date to a dog show or something with the PM's missus.

Canadian book industry is dying

Unless Canada's Greatest Government (TM: PM Harper) steps up to the plate with some ideas, the Canadian Book Industry is going to die a painful death.

Just today Raincoast Books announced that they will get out the book publishing business. The high dollar and disappearing margins can only be experienced for so long before you give up the ghost, I guess. They are not the first publisher to quit recently and they will not be the last.

The whole writing industry in the final throws due to government action and inaction.

When the dollar rose to parity and beyond, what did CGG Minister Flaherty do? Rather than finding out where the discrepancy in cross border pricing was, he demanded that Canadian retailers slash their prices, regardless of their cost! Silly Minister.

The problem with book pricing is at the publisher level of the chain.

I am a writer. I have a number of books in print. I do not control the selling price of the books, the publisher does that. I know that the retailer gets a 40% discount from the publisher and that I get about 10% for doing all the real work so that leaves 50% for the publisher. But here is where the problem arises.

The publisher sets the retail price at whatever he thinks the market will bear. He could sell my book to a retailer in New York for $10 but turn around and sell the same book in Ontario for $14. Doesn't sound like a problem until you factor in the margins for retailers. The US retailer can sell the book for $14 but the Canadian retailer must sell it for $18 just to make the same $4 as the US counterpart. If you demand, as did Flaherty that the Canadian retailer reduce his price to match the US retailer then the Canadian retailer just lost his margins and will probably go out of business or make up the lost margins selling X-rated videos (which I am led to understand have great margins and the government steers away from talking about them).

The dollar is a sh*tkicker for Canadian exporters but when you combine it with bonehead statements from Ottawa, it can hurt importers also, especially in an industry like publishing, where regulation is a joke.

But let's not stop there. Tomorrow we will take a look at how the media industry is killing the news.