Abu Dhabi To Become Oilpatch Major

This is just one of the unintended consequences of the Orwellianly labeled "Tax Fairness Plan" (TFP), a plan that is neither fair nor tax efficient. <p>After the TFP was announced a year ago the market value of Prime West Energy Trust's units fell from $29 to $20. Now, the Abu Dhabi National Energy Company is buying the enterprise for $5 billion, which is $26.75 per unit. <p>As an investor I am very grateful to Abu Dhabi Energy for enabling me to recover some of the capital I lost because of the TFP. As a stakeholder in Canada's economic sovereignty and the soundness of its tax base I am appalled at how this boneheaded, counterproductive and destructive policy is playing out. It is generating massive tax losses instead of preventing them, and to make matters worse it is encouraging the foreign takeover of enterprises that were Canadian owned and controlled. Make no mistake; <b>if the TFP had not been enacted this sale would never have happened.</b> <p>The distributions paid by Prime West in 2007 will generate over $100 million in tax receipts for Canada. The operating company that replaces it, burdened with the interest expense on the $5 billion that funded the buyout, will pay no tax. Nor will Canada collect any tax on the interest paid since it is going to foreign investors and is exempt from withholding tax. So Canada will lose $100 million in tax receipts per year indefinitely. <p>Unhappily, Prime West is just an example of what is happening. The total of completed and pending income trust buyouts is now over 60 and the annual associated loss of income tax is <b>$2 BILLION!</b> The Tory solution to the perceived problem of $500 million in tax leakage is to replace it with a tax hemorrhage four times as big. And destined to get even bigger unless the act is rescinded. <p>One last point. To the NDP and associated detractors who dismiss income trusts as overpriced Ponzi schemes, consider that Abu Dhabi Energy paid essentially what the market valued Prime West at prior to the TFP. I think we can assume they would not spend $5 billion without doing a professional and thorough due diligence. Do you really think they could possibly have been taken in by a Ponzi scheme? <p>Regards <p>EhBC