Hats off to Brent Fullard — but vote for Jim
One of the things that always annoys people in the political world is the frequency with which Canadians criticize their politicians, but rarely dane to throw their hats into the ring themselves. The news that Brent Fullard, a former Nesbitt Burns investment banker, is going to challenge federal Finance Minister Jim Flaherty should be applauded, then, even if it is the charge of the light brigade.
Mr. Fullard and I worked together at Nesbitt in the 90s. He was one of those smart fellows who could tell you everything you needed to know about cumulative non-redeemable non-retractable preferred shares. In other words, a bit of a propellor head when it came to capital markets structures. A great guy to have in any firm. And nice with the young folks, too, when we came by with our usual naive questions.
On Bay Street, his name became synonymous with the fight to save the income trust structure after Minister Flaherty made his announcement on October 31, 2006 (see prior post “Halloween shock” October 31-06). Shuttering the income trust boondoggle was the right thing to do, even if it wasn’t a vote-getter (see prior post “Drip, drip, drip” October 11-06). Minister Flaherty’s decision is one of the reasons bonuses are down at the larger Bay Street investment banks (see prior posts “Bay Street Bonus Anxiety” December 11-07 and “An i-bankers survival guide” July 9-08).
For reasons that I’ve never quite understood, Mr. Fullard always seemed to be one of the last Canadians who would accept that the federal government was right to stop the income trust party when they did. His email blasts on the topic are the stuff of legend. Some days he was able to get five out the door. Sometimes venomous, but always knee-deep in facts.
Which makes the announcement of his candidacy for the Liberals of Whitby-Oshawa such a wonderful bit of mini-theatre in this federal election. According to his bio, Mr. Fullard once worked for General Motors in Oshawa, something that will play better with the locals that the vision of a “million-dollar-a-year Toronto i-banker in red suspenders” looking for a career change. Rather than merely criticize the government, he’s going to offer himself up instead.
As Mr. Fullard will quickly learn, he’ll no longer be able to focus his agile mind solely on the 2006 income trust decision. The issues in most elections transend what you as a candidate might want to talk about on the doorstep. He’ll need to be au courant with the Green Shift, the war in Afganistan, hospital wait times, ownership of the local port, how tax points work between the various levels of government, CBC funding levels, public transit funding, pine beetles, food inspection, etc.
And he’ll need to explain to the voters why his support of the preservation of income trusts isn’t also a vote in favour of the abolition of corporate taxes. Canadians, as a rule, believe that corporations should pay some level of tax, which of course doesn’t happen when it comes to corporates that are structured as income trusts.
Welcome to The Show, Brent. Giant-killing is tough to do in any political race, and Minister Flaherty deserves to be re-elected, but we all can admire your decision to put your neck on the line.
MRM
Mark:
How nice of you to write this piece. Your sentiments reflect well on you as a person. Wished I could say the same about the “writers” at the Globe.
One thing however, as your former mentor of sorts, you are obviously unaware that Falherty’s tax leakage argument is a total artifice, a fraud, a mere canard backed by nonsense, as evidenced by 18 pages of blacked out documents issued under the Access to Information Act…that in an Act of Panic, Flaherty demanded be returned????
How smart is that? Like returning to the scene of the crime smart, I would say.
Flaherty is far too lame to realize that a tax leakage analysis is not so much about the numbers (all blacked out), but more about the methodology as revealled by the column and row headings (not blacked out).
The man is truly out of his depth….professionally and ethically.
All the best and thanks. Brent
And any hint as to when MRM might throw his PC stetson into the ring? 😉
As much as I dislike Jim Flaherty’s attitude I feel sorry for all Liberals for having Dion as their leader. He turns me off.
“…and Minister Flaherty deserves to be re-elected…”
Why? No, really, why?
Mark; You state the following:
“Canadians, as a rule, believe that corporations should pay some level of tax, which of course doesn’t happen when it comes to corporates that are structured as income trusts”.
Are you not aware that with Income Trusts,the unit holders are the owners of the company and that they must pay income tax on the distributions they receive.
Also,the unit holders pay income tax at a much higher rate then most corporations. As a result,the Government ends up with more tax revenue from an Income Trust structured corporation then the other structures.
Gerry
Gerry
If you could tell me that 100% of Income Trusts were held in accounts where tax would be paid in the current year, you’d be right. But, the lion’s share of investments of this nature of most Canadians are in tax-sheltered and tax-deferred accounts.
MRM
In my case, the “lions share” is held in accounts where taxes are paid annually. And what is in my tax sheltered account (RRSP)is taxed by my mandarory withdrawl requirements.
The Government gets all of it,s taxes in the end.
Gerry
If most of your invested capital is in taxable accounts, I can understand your view on tax. Most Canadians aren’t in that situation however.
As to your sheltered RRSP investments, paying tax 10, 20 or 30 years from now has a very different present value to a government than the tax that Bell Canada or Telus would have paid in the current calendar year. After 20 years, for example, a dollar of current tax is worth about 60 cents (assuming 2.5% inflation).
But I didn’t mean for this site to turn into the new Alamo for the Income Trust crowd. Unless you also want to engage on the “grassy knoll”. Now there’s a beaten-to-death issue that deserves resuscitation!
MRM