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FrankB reports that yet another Canadian icon has been sold following the income trusts fiasco:
"ED Smith is being sold... This company traces it's roots back to the 1880s and if you are unaware who they are, check out the strawberry jam you spread on your toast in the morning. Truly an iconic Canadian company. Company CEO, Mr. Bruce Smith, stated the reason the company sold to a US firm... INCOME TRUSTS!. There have been 20 such publicly traded trusts sold since the infamous Halloween announcement. ED Smith has 800 employees and 3 manufacturing facilities in this country... or should I say ‘had'.
Another one bites the dust, Mr. Flaherty."
Posted On Jun 26 07:40PM
You all know my position on taxing income trusts. As an Investor, I have no complaint about the descision of the government because it did not cost me any money. I think it is fair that all businesses pay tax, just like all working people. The trust concept was developed to provide an incentive for the developement of resources. When the resources start to make money then they should pay their share of tax. Just to verify my predjudice I looked at the oil and gas stocks I have owned.
I believe one of the first "Trusts" was Canadian Oil Sands Trust (COS.UN). It was averaging about $30 per share October 31, it is now averaging about $31.50 per share. The dividend has increased to 5%.
Look at Pengrowth (PGF.UN). It was worth $26.50 a year ago. It droped to less than $21 on October 1. It appeared to be crossing the $20 line on October 31. It hit botton about November 10. It is now worth $21. The dividend has been cot from 14% to 10%.
Enervest is probably to best indicator of oil and gas trusts because it is heavily weighted towards the industry. It has trasitionally purchased the more risky trusts which I do not usually buy. The price was averaging $7.00 October 31. It bottomed out November 15, so I doubled my holdings. It is now worth $6.67 and is still paying 12.5% dividend. By doubling my investment I made a nice profit.
It was not good politics for the government to break it's promise., so why did they do it. Was it to maintain right wing ideology? No, quit the opposite. Was it done as part of a deal with some other group? No, nobody even knew they were planning the change. Did they do it because they could see that in the near future they would be forced to act and by playing politics they would just coumpound the problem. Yes. I think they took the hard decision. There was nothing sinster in their motives. Unfortunately some marginal businesses that are trying to exist in a booming market could not survive.
Its time to face the facts and get on with it. It was a bad political decision to tax income trusts but probably the right thing to do in the long run. It would be even worse political decision to chang it back. After all it didn' make a lot of difference. Some companies can not make it in a hot market. The price of steel and labour has doubles.
Posted On Jun 26 04:22PM
Posted On Jun 26 07:39AM
Alberta's energy trusts are continuing to protest against measures to make them pay corporate tax like regular companies, launching a new campaign yesterday to "demand greater accountability and honesty from the federal government."
The Coalition of Canadian Energy Trusts said:
"Stopping these conversions is one thing; effectively eliminating the trust structure is another. Retroactively changing the rules creates uncertainty and damages our reputation in the capital markets, making it harder for Canada to be competitive."
The group said oil and gas trusts were critical to the Canadian economy and the country's ability to compete as a global energy provider.
In the last five years, trusts have invested $10 billion in oil and gas development and they make up roughly 20 per cent of Canadian crude oil and natural gas output.
Drop by the I Expect More website to find out why this affects you and sign a letter to the PM. http://www.iexpectmore.ca
Posted On Jun 25 11:11PM