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Quebec premier says returns will fly high with $30-million airship investment – Lethbridge News Now

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Airships disappeared from the skies in the 20th century for the same reason electric cars and windmills never took off during the same time period: fossil fuels. Jets took over the passenger airships, gas-powered vehicles dominated the roads, and coal-fired plants sprung up around the world, Prentice said.

But now electric cars and wind turbines are back, said Prentice. “The airships are just the next technology to follow the same pattern. But we aren’t looking to transport passengers. Now we’re talking about cargo.”

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Economy Minister Pierre Fitzgibbon of the current Coalition Avenir Québec government announced in November 2019 a $30-million investment in the French company, Flying Whales, as well as its Quebec subsidiary. The company, which also has Chinese backers, is hoping to use the airships to transport up to 60 tonnes of material at a time over regions that are difficult to access by road, such as the province’s northern region.

Successive provincial governments have been trying to spark investment in Quebec’s north to take advantage of its massive natural resources.

But on Tuesday, the Journal de Montreal reported the previous Liberal government didn’t think the project would take off. And the paper cited anonymous experts who questioned how the aircraft would be supplied with the necessary ballast after dropping off its load in order to stabilize it and prevent it from flying away.

Prentice said water could be used as ballast — even though Quebec’s far north is frigid most of the year.

“The transcontinental railways were all steam engines,” Prentice said. “And we built those to go across the country in the 1880s. And they had to stop every hundred miles to take on water. Somehow we kept the water from freezing all winter long.”

Fitzgibbon told reporters the French company’s project was more advanced than it was when presented to the Liberals, adding he expected the airships to start flying by 2022-23.

But that didn’t stop the opposition from trying to burst the government’s bubble.

“I don’t know if someone was inhaling helium … but (the project) just doesn’t make any sense,” said Quebec solidaire’s Vincent Marissal.

Legault said the critics would be proven wrong. The Flying Whales project is “brilliant,” the premier told reporters Tuesday, adding it presented a modern way of transporting goods in the far north.

“If we don’t take risks,” Legault said, “we don’t go anywhere.”

But professor Robert Gagne, director of the Center for Productivity and Prosperity at HEC, Universite de Montreal’s business school, said Quebec’s Flying Whales adventure is another sign of the government’s “excessive” intervention in the market.

“When governments invest in something, you have to ask yourself, why aren’t the bankers interested?” he asked in an interview Wednesday. Governments can generally take bigger risks than companies can, he said, because they don’t have shareholders and spread the risk over the entire population.

He said Legault was elected to manage the province, “and he wants to take risks with our money. And we need to give him our blessing to play casino with our money. It’s not the role of government … it’s not to become a major player in the market.”

Prentice, however, said the Quebec government is correct to invest in the airship project.

“It’s worth the risk to try,” he said. “We’re not talking about an anti-gravity device — this is a technology that was proven 100 years ago and we know it worked, just like wind turbines and electric cars.”

This report by The Canadian Press was first published on Feb. 5, 2020.

Giuseppe Valiante, The Canadian Press

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Taxes should not wag the tail of the investment dog, but that's what Trudeau wants – Financial Post

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Kim Moody: Ottawa is encouraging people to crystallize their gains and pay tax. That’s a hell of a fiscal plan

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The Canadian federal budget has been out for a week, which is plenty of time to absorb just how terrible it is.

The problems start with weak fiscal policy, excessive spending and growing public-debt charges estimated to be $54.1 billion for the upcoming year. That is more than $1 billion per week that Canadians are paying for things that have no societal benefit.

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Next, the budget clearly illustrates this government’s continued weak taxation policies, two of which it apparently believes  are good for entrepreneurs. But the proposed $2-million Canadian Entrepreneurs Incentive (CEI) and $10-million capital gains exemption for transfers to an employee ownership trust (EOT) are both laughable.

Why? Well, for the CEI, virtually every entrepreneurial industry (except technology) is not eligible. If you happen to be in an industry that qualifies, the $2-million exemption comes with a long, stringent list of criteria (which will be very difficult for most entrepreneurs to qualify for) and it is phased in over a 10-year period of $200,000 per year.

For transfers to EOTs, an entrepreneur must give up complete legal and factual control to be eligible for the $10-million exemption, even though the EOT will likely pay the entrepreneur out of future profits. The commercial risk associated with such a transfer is likely too great for most entrepreneurs to accept.

Capital gains tax hike

But the budget’s highlight proposal was the capital gains inclusion rate increase to 66.7 per cent from 50 per cent for dispositions effective after June 24, 2024. The proposal includes a 50 per cent inclusion rate on the first $250,000 of annual capital gains for individuals, but not for corporations and trusts. Oh, those evil corporations and trusts.

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There is a lot wrong with this proposed policy. The first is that by not putting individuals, corporations and trusts on the same taxation footing for capital gains taxation, the foundational principle of integration (the idea that the corporate and individual tax systems should be indifferent to whether an investment is held in a corporation or directly by the taxpayer) is completely thrown out the window. This is wrong.

Some economists have come out in strong favour of the proposal, mainly because of equity arguments (a buck is a buck), but such arguments ignore the real world of investing where investors look at overall risk, liquidity and the time value of money.

If capital gains are taxed at a rate approaching wage taxation rates, why would entrepreneurs and investors want to risk their capital when such investments might be illiquid for a long period of time and be highly risky?

They will seek greener pastures for their investment dollars and they already are. I’ve been fielding a tremendous number of questions from investors over the past week and I’d invite those academics and economists who support the increased inclusion rate to come live in my shoes for a day to see how the theoretical world of equity and behaviour collide. It’s not good and it certainly does nothing to help Canada’s obvious productivity challenges.

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Of course, there has been the usual chatter encouraging such people to leave (“don’t let the door hit you on the way out,” some say) from those who don’t understand basic economics and taxation policy, but these cheerleaders should be careful what they wish for. The loss of successful Canadians and their investment dollars affects all of us in a very negative way.

The government messaging around this tax proposal has many people upset, including me. Specifically, it is the following paragraph in the budget documents that many supporters are parroting that is upsetting:

“Next year, 28.5 million Canadians are not expected to have any capital gains income, and 3 million are expected to earn capital gains below the $250,000 annual threshold. Only 0.13 per cent of Canadians with an average income of $1.4 million are expected to pay more personal income tax on their capital gains in any given year. As a result of this, for 99.87 per cent of Canadians, personal income taxes on capital gains will not increase.” (This is supposedly about 40,000 taxpayers.)

Bluntly, this is garbage. It outright ignores several facts.

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For one thing, there are hundreds of thousands of private corporations owned and controlled by Canadian resident individuals. Those corporations will be subject to the increased capital gains inclusion rate with no $250,000 annual phase-in. Because of the way passive income is taxed in these Canadian-controlled private corporations, the increased tax load on realized capital gains will be felt by individual shareholders on the dividend distribution required to recover certain refundable corporate taxes.

Furthermore, public corporations that have capital gains will pay tax at a higher inclusion rate and this results in higher corporate tax, which means decreased amounts are available to be paid out as dividends to individual shareholders (including those held by individuals’ pensions).

The budget documents simply measured the number of corporations that reported capital gains in recent years and said it is 12.6 per cent of all corporations. That measurement is shallow and not the whole story, as described above.

Tax hit for cottages

There are also millions of Canadians who hold a second real estate property, either a cottage-type and/or rental property. Those properties will eventually be sold, with the probability that the gain will exceed the $250,000 threshold.

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Upon death, an individual will often have their largest capital gains realized as a result of deemed dispositions that occur immediately prior to death. This will have the distinct possibility of capital gains that exceed $250,000.

And people who become non-residents of Canada — and that is increasing rapidly — have deemed dispositions of their assets (with some exceptions). They will face the distinct possibility that such gains will be more than $250,000.

The politics around the capital gains inclusion rate increase are pretty obvious. The government is planning for Canadian taxpayers to crystallize their inherent gains prior to the implementation date, especially corporations that will not have a $250,000 annual lower inclusion rate. For the current year, the government is projecting a $4.9-billion tax take. But next year, it dramatically drops to an estimated $1.3 billion.

This is a ridiculous way to shield the government’s tremendous spending and try to make them look like they are holding the line on their out-of-control deficits. The government is encouraging people to crystallize their gains and pay tax. That’s a hell of a fiscal plan.

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Recommended from Editorial

  1. The federal Liberal government will release a new budget on Tuesday.

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  3. CRA on Thursday announced that bare trusts will be exempt from trust reporting requirements for 2023.

    Bare trust debacle shows CRA needs to respect taxpayers

There’s an old saying that tax should not wag the tail of the investment dog, but that is exactly what the government is encouraging Canadians to do in the name of raising short-term taxation revenues. It is simply wrong.

I hope the government has some second sober thoughts about the capital gains proposal, but I’m not holding my breath.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimmoody.

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Everton search for investment to complete 777 deal – BBC.com

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Everton are searching for third-party investment in order to push through a protracted takeover by 777 Partners.

The Miami-based firm agreed a deal to buy the Toffees from majority owner Farhad Moshiri in September, but are yet to gain approval from the Premier League.

On Monday, Bloomberg reported the club’s main financial adviser Deloitte has been seeking fresh funding from sports-focused investors and lenders to get 777’s deal over the line.

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BBC Sport has been told this is “standard practice contingency planning” and the process may identify other potential lenders to 777.

Sources close to British-Iranian businessman Moshiri have told BBC Sport they remain “working on completing the deal with 777”.

It is understood there are no other parties waiting in the wings to takeover should the takeover fall through and the focus is fully on 777.

The Americans have so far loaned £180m to Everton for day-to-day operational costs, which will be turned into equity once the deal is completed, but repaying money owed to MSP Sports Capital, whose deal collapsed in August, remains a stumbling block.

777 says it can stump up the £158m that is owed to MSP Sports Capital and once that is settled, it is felt the deal should be completed soon after.

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Warren Buffett Predicts 'Bad Ending' for Bitcoin — Is It a Doomed Investment? – Yahoo Finance

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Currently sitting in sixth on Forbes’ Real-Time Billionaires List, Berkshire Hathaway co-founder, chairman and CEO Warren Buffett is a first-rate example of an investor who stuck to his core financial beliefs early in life to become not only a success but a once-in-a-lifetime inspiration to those who followed in his footsteps.

One of the most trusted investors for decades, the 93-year-old Buffett isn’t shy to pontificate on his investment philosophy, which is centered around value investing, buying stocks at less than their intrinsic value and holding them for the long term.

Read Next: Warren Buffett: 6 Best Pieces of Money Advice for the Middle Class
Find Out: 5 Genius Things All Wealthy People Do With Their Money

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He’s also quite vocal on investments he deems worthless. And one of those is Bitcoin.

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Buffett’s Take on Bitcoin

Over the past decade, it’s been clear that the crypto craze isn’t something Buffett wants any part of. He described Bitcoin as “probably rat poison squared” back in 2018.

“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said in 2018. And his stance hasn’t wavered since. According to Benzinga, Buffett believes that cryptocurrencies aren’t a viable or valuable investment.

“Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” Buffett said at the Berkshire Hathaway annual shareholder meeting in 2022.

Although the Oracle of Omaha has his misgivings about the unpredictable investment, does that mean crypto is doomed as an investment? Not necessarily.

For You: 10 Valuable Stocks That Could Be the Next Apple or Amazon

Is Buffett Wrong About Bitcoin?

Bitcoin bulls argue that while it’s not government-issued, cryptocurrency is as fungible, divisible, secure and portable as fiat currency and gold. Because they occupy a digital space, cryptocurrencies are decentralized, scarce and durable. They can last as long as they can be stored.

Crypto boosters continue to predict massive growth in the coin’s value. Earlier this year, SkyBridge Capital founder and former White House director of communications Anthony Scaramucci told reporters that Bitcoin could exceed $170,000 by mid-2025, and Ark Invest CEO Cathie Wood predicts Bitcoin will hit $1.48 million by 2030, according to Fortune.

“They really don’t understand the concept and the whole history of money,” Scaramucci said of crypto critics like Buffett on a recent episode of Jason Raznick’s “The Raz Report.” Because we place a value on “traditional” currency, it is essentially worthless compared with the transparent and trustworthy digital Bitcoin, Scaramucci said.

Currently trading around the $66,000 mark, Bitcoin is up nearly 50% in 2024. This means it’s massively outperforming most indexes this year, including the S&P 500, which is up about 6% in 2024.

Although Berkshire Hathaway has invested heavily in Bitcoin-related Brazilian fintech company Nu Holdings, which has its own cryptocurrency called Nucoin, it’s possible Buffett will never come around fully to crypto, despite its recent surge in value. It’s contrary to the reliable investment strategy that has served him very well for decades.

“The urge to participate in something where it looks like easy money is a human instinct which has been unleashed,” Buffett said. “People love the idea of getting rich quick, and I don’t blame them … It’s so human, and once unleashed you can’t put it back in the bottle.”

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This article originally appeared on GOBankingRates.com: Warren Buffett Predicts ‘Bad Ending’ for Bitcoin — Is It a Doomed Investment?

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