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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - May 7, 1974, Lethbridge, Alberta Turner proposes tax bites on rising business profits OTTAWA Finance Minister John Turner proposed Monday new tax bites on the rising profits of almost all the Canadian business hitting selected industries with specific tax adjustments and covering most of the others with an across-the-board sur- charge. Small manufac- turers and processors would escape the sweep which would yield an additional million in corporate tax collections for the 1974-75 fiscal year. Mr. Turner rejected as un- sound demands for an excess- profits but proposed in- stead a 10-per-cent surcharge on corporate prof- a wide list of ex- suggested rais- ing tax collection from the oil and gas industries and financial institutions. A finance department spokesman said all the proposals will die if the government is defeated on the budget vote. About one-half of the addi- tional revenue for the new tax- ation year would come from the oil and gas industries through tax changes and a reduction in some existing incentives which Mr. Turner said now more generous than is At the same a large part of the federal tax bite would be rebated to the prov- inces in the form of a new' 're- source profit in recognition of the position of the provinces with respect to the taxation and charges on resources within their Much of the increased federal income would come from structural mainly elimination of provincial government mining taxes and other payments from the com- putation of income. The basic corporate tax rate for production profits from oil and gas would be increased immediately to 50 per up from the present Crowds gather early Crowds gathered early Monday evening in the huge corridors of the Parliament Buildings Centre hoping to get a gallery seat for Finance Minister John Turner's budget. Hundreds were turned away after the galleries were filled well in advance of the budget presentation. Free tax ride on bonds OTTAWA New tax treasures to encourage including a free tax -ide on of interest ncome a year and a cash Donus for Canada savings 3onds were proposed n Finance Minister John Furner's budget Monday light. Both were obvious attempts .0 improve the attractiveness if the bonds as an investment- Borne economists have said at current rates of in- 'lation. holders are losing noney on a short-term basis. Under Mr. Turner's propos- individuals would avoid ncome tax on up to of nterest a year on securities iuch as bank and trust Canada bonds and other bonds. He also proposed registered retirement savings plans changes to allow a working taxpayer to establish a plan For a spouse. A working taxpayer now gets a tax exemption on contributions to a registered retirement saving plan up to certain limits. Those not working or self-em- as a housewife- could not be covered. Mr. Turner proposed that working spouses be allowed to establish a plan for their non- working using that portion of allowable contributions not going into their own plans. The maximums allowed are 000 for self-employed persons and for other employees. Cash bonuses to Canada sav- ings bond holders would raise the yield to maturity to nine per still below tie return available on many high-grade corporate issues. This bonus would be considered as a capi- tal gain for income tax pur- meaning the tax will apply to one-half the bonus only. That's another tax break for the bond holder who until now has paid tax on the total interest received. About billion in Canada savings bonds are outstanding and nearly two million Cana- dians are holders. Under the bonds maturing before Nov. would receive one cash bonus and those maturing after that date would receive two. For the holder of a bond of the 1967-68 series would receive a cash bonus of in and a second bonus of at maturity in 1980. Mr. Turner said all other features of the federal bond including the compound interest will remain unchanged. The current issue will remain on sale and will be eligible for the two cash bonuses. He said the tax-free interest proposal will reduce personal income tax by about million in 1974. 48 per cent. The rate was due to be lowered to 47 per cent in 1975 and 46 per cent in 1976. From there now is a provincial abatement of 20 per cent. With addition of the new resource profit the provinces would get 50 per cent of the tax on mineral profits and 40 per cent of the tax on petroleum profits. The effect of these moves would be to reduce the net fed- eral tax but the added in- come would come from rising corporate profits and the change in the tax base. As part of his corporate tax for mining and petroleum Mr. Turner also proposed a cut in depletion allowances and other incentives. is apparent that the petroleum and mineral resource industries in Canada have reached sufficient maturity that the existing tax incentives are more generous than is needed to encourage continuing Mr. Turner said in his budget speech. He proposed that from now on depletion be claimed only if it is earned and to a maximum rate of 25 per cent of production rather than 33 1-3 per cent. Exploration and development which in the past could be deducted would be amortized at 30 per cent on a diminishing balance basis. Mr. Turner said that with rising resource profits and discontinuance of automatic depletion earning of depletion will be a very effective incentive for encouraging The 10-per-cent corporate tax effective for a year from May comes against a backdrop of sharply higher corporate profits and political criticism. The six major Canadian oil for in- creased their profit 44 per cent during and the four that have reported first- quarter 1974 earnings are up more than 83 per cent. Mr. Turner said collection of corporate tax monthly pay- ments would be adjusted immediately and final tax payments would be due a month giving the government an immediate increased flow of funds. The surcharge would not ap- ply to small business corpo- to the mining and pet- roleum corporations covered by his other or to the profits of manufacturers or processors. A finance depart- ment official estimated that would leave about one-half the country's corporation taxes subject to the surcharge. am attempting to do all I can to encourage the growth of small business which are largely owned and controlled by Mr. Turner said. He proposed increasing the minimum income subject to the corporate small business tax rate to a year from and the upper limit to from The surcharge was not ap- plied to the profits of manufacturing and processing in Canada because is essential to maintain the reduction in the tax burden on that vitally important sector to enable it to strengthen its international competitive Can support By DAVE BLAIKIE OTTAWA Finance Minister John Turner's budget goes part way towards meeting the New Democratic Party price for continued support of the minority Liberal government. But it seems unlikely to be enough if NDP Leader David Lewis means everything he has said in recent weeks. There are major gaps in terms of NDP policy heightening the prospect of a July election. Although studded with pen- sion increases and tax the budget delivered Monday ignores five of nine NDP outlined by Mr. Lewis in a Toronto speech two weeks ago. The remaining four are partially. Rejected or ignored are key NDP demands for a national price control board with broad a six-per-cent ceiling on mortgage interest a two-price 'System for basic old-age and Canada Pension Plan changes to further ease the impact of inflation. A board with some price control authority was proposed in an anti- profiteering bill introduced by the government last week. But the NDP denounced it as badly drafted and worth the paper it's printed The budget makes no second attempt to appease NDP members on this but it does yield some ground on demands for an excess profits tougher treatment for oil and mining generous persoflal income tax cuts and abolition of corporate tax loopholes. Whether this will be enough to hold NDP support and avert an election appears doubtful. Mr. Lewis has indicated that all nine points must be met in full. But the party is faced with a tough decision. To force an election would mean walking away from a series of other politically attractive proposals announced in the budget. Included are tax cuts for lower-income higher veterans allowances and or- phans sales tax cuts on footwear and bi- and a new plan to aid home purchasers. If the government is Liberal candidates might argue that its opponents had put politics ahead of the national welfare and forced a needless election. Mr. Lewis already has tack- led this argument by saying that the government no longer listens to the except for minor last-minute concessions when defeat is imminent. sort of death-bed repentence gets less and less acceptable as time goes he has said. The NDP leader and his 30 Commons colleagues meet to- day to study the budget in de- tail and decide whether it war- rants continued support for the government. A thumbs-down verdict in all mean defeat for the government when the first non-confidence budget vote is probably Wednesday or Thursday. The Conservatives are considered certain to move a non-confidence motion on grounds that the government should be thrown out. The NDP would have the power to tip the vote either way. The unique Mercedes-Benz 450SE Gets up lo 259 better mileage than domestic luxury sedan.v and has a higher resale value. Plus a turning circle equal to the V VV Beetle and 50 signi Ik.i n t safety elements Ask your dealer about the beauti- fully practical 450SF.. and arrange fora test drive. Tourists get break OTTAWA Travellers would be able to bring home considerably more duty-free goods under federal budget proposals outlined in the Commons Monday by Finance Minister John Turner. Tourists would be allowed to bring back worth of goods every three rather than the current if their out-of-country visits lasted at least 48 hours. the annual ex- emption would be raised to from and would be available after a seven-rather than 12-day absence. Flat-rate exemptions of 25 per cent on goods worth up to would be extended to and an automatic exemption of would be increased to Tourists could qualify for both after absences of 48 hours. Mr. Turner said in his budget speech that the quantity of liquor and tobacco allowed brought back by travellers would remain unchanged at 40 ounces and up to 50 200 cigarettes and two pounds of tobacco. he the revenue de- partment had been instructed to ease the administrative requirements at the border. An official explained that travellers no longer would be required to fill out forms listing their exemptions. tax cut in works for low-income group OTTAWA A in- come tax cut for most lower- income earners was proposed in the federal budget Monday night. 'change means lower Income Tax Married Man with Two Children Earn.ng 49 66 67 68 69 70 71 72 73 74 75 Tax goes down Finance Minister John Turner announced reduc- tions that will drop personal income tax to in down from in for the married man with two dependents under 16 earning a year. Big-car buyers hit OTTAWA Big-car who already pay through the hose at the gas would be faced with yet another expense under federal budget measures pro- posed Monday by Finance Minister John Turner. In a move aimed at crack- ing down on gas Mr. Turner suggested slapping a tax on new cars weighing more than pounds. The tax proposed was on ev- ery 100 pounds over the pound limit. Station wagons would have a higher pounds. Mr. Turner estimated reve- nue from the tax at million annually. About 85 per cent of the projected one million cars to be sold this would be under the weight limit. But buyers of big Mer- Chryslers and Cadillacs could expect to pay between and S300 in additional taxes. Veterans to get boost OTTAWA Finance Minister John Turner proposed Monday that an additional million be spent this year on increasing pensions and allowances to veterans and their survivors in line with the cost of living. He suggested in his budget speech effective last such benefits be raised 5.3 per then adjusted upward every three months to keep pace with the consumer price index. He also retroactive to April 1 this increasing to a month from the allowance given to orphans. Under the proposed veterans' an unmarried veteran would receive monthly benefits amounting to compared with a current A married veteran with two children would receive a up from taxes for everyone up to the to income and its benefits are concentrated among income earners receiving less than Finance Minister John Turner said in the Com- mons. He said the effec- tive for the 1974 taxation if the government would remove persons from tax tolls and reduce over-all personal income taxes by about million. Wage deduction tables would be adjusted July 1 give the full benefit of this measure in the second half of this The reduction would be made by altering the five-per- cent tax credit plan an- nounced by Mr. Turner in his budget. Under that taxpayers could deduct a minimum of and a maximum of from the tax they otherwise would pay. The change an- nounced Monday would raise the minimum deduction to Here is how it will affect the income tax of sample tax- The tax shown is the com- bined federal and provincial using the lowest provin- cial tax and British Columbia. Taxpayers are assumed to have claimed the standard charitable- donations exemption and the three-per-cent employment expenses to a max- imum of Other deductions such as child-care expenses and pen- sion contributions are not in- cluded. The taxpayers are as- sumed to be under 65 and to be receiving only earned in- come. MARRIED Two Children Under 16 Income .........NowNew. 72 40 319 269 000 576 526 847 797 SINGLE No Dependents Income ........NowNew. 5 5 118 68 359 309 610 560 884 834 Budget Dollar TtAMSPOtT ECONOMIC DiVtlOFMENT Tt PAYMENT REVENUE 1974 1975 EXCISE CUSTOMS DUTItS EXPENDITURE PRO-MOTORS 1820 2nd AVMHM MNMM afia.8117 Government dollar Graph shows where federal government will get each cent and where it will be spent during the fiscal year ending March 1975. Other revenue includes 10 cents from sources other than taxes. Other expenditure includes two cents on ;