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Lethbridge Herald, The (Newspaper) - November 19, 1974, Lethbridge, Alberta 8 THE LETHBRIDGE HERALD Tuesday, Novembar 19, 1974 Budget questions and answers By STEWART MacLEOD OTTAWA (CP) Questions you might be asking about the budget delivered Monday. say you are married with two children and you earn How will the budget affect your income? federal share of personal income taxes was dropping by five per cent in 1974, to a maximum reduction of and a minimum of This budget increases that minimum to Then, next year, that five- per-cent reduction will be increased to eight per cent, with a maximum reduction of and a minimum of So at the salary level, after-tax pay rises to in 1975 from this your provincial government has a higher- than-average tax rate. This increase compares with a increase for some- body earning And the increase is for somebody making a year. much can you earn oefore you begin to pay taxes? you're married with two children, you now begin to pay taxes when you earn 830 a year. But in 1975, this figure will rise to you have more money to spend. How does the budget affect your shopping? immediate impact will not be great for the aver- age buyer. Food, for instance, is not affected. The budget does reaffirm the removal of the 12-per-cent sales tax from clothing and footwear, and if you're one of the 1.3 million Canadians expected to buy a bicycle this year, the 12-per- cen tax is coming off these vehicles too. The handyman, for ex- ample, will get a bit of a break when he goes to his building supplies store. The federal sales tax on building materials, now 11 to 12 per cent, is being reduced to five per cent. Tourists visiting the United States now can return, after a 48-hour absence, with worth of duty-free goods every three months. The previous limit was And once a year, after a seven-day absence instead of the previous 12, you can bring in worth of such goods in- stead of worth. the budget increase some prices? Higher excise duties, as originally proposed last May, will increase the price of a 25-ounce bot- tle of liquor by 24 cents. Wine will go up about 6.5 cents a bottle; cigarettes will increase by two cents for a pack of 20; a one-pound tin of tobacco will go up by 15 cents and cigars will cost about three-per-cent more. about motoring? untouched unless you buy a car weighing -more than pounds, which is the medium-size North American Budget Dollar PERSONAL INCOME TAX COtP- ORATION TAX 19< MEAITH AND WELFARE 3U Putt 1C DERT He X DEVELOPMENT DfFlNCt EXCISE CUSTOMS DUTIES TftANSFE PAYMENT 1974 1975 EXPENDITURE Government dollar Graph shows where federal government will get each cent and where it will be spent during the fiscal year ending March 31, 1975. Other revenue includes 10 cents from sources other than taxes. Other expenditure includes three cents education assistance and three on culture and recreation Ailing housing industry to get shot in the arm OTTAWA (CP) Faced with a ''substantially poorer'' outlook in housing construc- tion next year. Finance Minister John Turner proposes to cut building- materials sales taxes and take other measures to stimulate building activity. Long opposed to removing the 11-per-cent tax on building materials, he announced in his budget speech Monday night that the tax will be cut to five per cent, costing the federal government million a year in revenue. Circum- stances have changed, he said. The government also will give temporary tax relief to doctors, lawyers and others who own rental units as a secondary source of income. Between budget night and Dec. 3 next year, they will be allowed to claim capital costs on newly-begun rental housing. Left-over housing items from Mr. Turner's defeated May 6 budget were dusted off again in his new one. These include removing the 12-per-cent sales tax on con- struction equipment and in- troducing a registered-home- ownership-savings plan. The savings plan would allow a person saving to buy his first home to put up to a year tax-free into a saving plan. The lifetime limit would be Mr. Turner said he is trou- bled by projected weakness in the house-building market next year. The Conference Board of Canada, a private group of economists, has estimated housing starts next year will total down sharply from the 1973 record of more than The finance minister said he hopes his proposals, combined with better mortgage rates and more mortgage money, will stem the decline and result in at least 200.000 starts next year. Finance department ex- perts estimate that the sales- tax reduction will mean an average saving of about on a three-bedroom bungalow. Mr. Turner said he previously rejected lifting or reducing the materials tax because it would increase de- mand for housing, but prospects are different now. Demand for single-family homes has dropped dramati- cally in recent months as mortgage rates rose and the supply of mortgage money tightened. The minister said he is step- ping back from his May re- quest to lenders to provide low-down-payment mortgage loans for moderately-priced housing rather than for ex- pensive homes. He had made the proposal when there was a shortage of monev, materials and labor. model. If you do, you'll pay a special excise tax of on the first additional 100 pounds of car, ori the next 100 pounds and on each subsequent 100 pounds. You can buy pounds of station wagon before you begin paying these rates. the budget affect your housing problems? could. The budget esti- mates that the reduction of the sales tax on building materials will reduce the construction costs of an average house by about MORE APARTMENTS Then there is the program under which the owners of multiple-unit residential buildings, started between now and Dec. 31, 1975, can claim capital cost allowances against all sources of income. It's designed to encourage more apartment buildings. For the same reason, people holding land for development will no longer be able to write off carrying costs against other income. There is also the return of the Registered Home Ownership Savings Plan under which all taxpayers over 18 who don't own a home will be able to save, tax free, up to a year for 10 years toward purchasing a home. This tax-free saving can also be applied to essential appliances and furnishings for the house. an elderly tax- payer. What's in the budget for you? of all, effective Jan. 1, there will be an ad- ditional deduction for pension income, which means your basic exemptions can be raised by this amount. Then there is that special age ex- emption of up to which taxpayers over 65 now can claim against income. If the taxpayer doesn't need this exemption, he or she can transfer it to a spouse. The budget gives an exam- ple of how a couple over 65 can have an income of a year before beginning to pay tax. will the budget affect a handicapped person? list of deductible medical expenses is being broadened to include devices to assist breathing, monitor the heart, and other in-home equipment. Orthopedic shoes can also be deducted. DOG DEDUCTIONS The cost of buying and maintaining guide dogs for blind taxpayers can also be deducted. And, for tax deduc- tion purposes, the definition of institutions for the han- dicapped has been broadened. there anything in the budget for the small business- man? like many other measures reintroduced from the May 6 budget, there is one giving Canadian-controlled private corporations the benefit of a special 25-per-cent tax on the first of in- come. The low-rate ceiling now is what's in it for the small investor? this year, in- dividuals can deduct up to 000 of their net interest in- come in computing taxable in- come. And next year, this will be broadened to include Cana- dian dividends, or any com- bination of dividends and interest. Tourists may bring back in goods OTTAWA (CP) Tourists can bring back more duty-free goods and American visitors will have an easier time locat- ing tax-free gifts under budget proposals outlined in the Com- mons Monday by Finance Minister John Turner. He said provision is being madei for duty-and tax-free at border points, in addition to those that operate at air and seaports. This would mainly benefit return- ing U.S. tourists, or Canadians taking gifts to U.S. points. At the same time, duty and tax exemptions will be raised on goods brought back from trips abroad. This was origi- nally proposed in Mr. Turner's May 6 budget. Tourists would be allowed to bring back worth of goods rather than the current ev- ery three months after a 48- hour trip outside Canada. The annual exemption would be boosted to from after a seven-day absence com- pared with the existing 12-day period. The flat rate of 25-per-cent duty on the first of non- exempt goods will be extended to and the automatic ex- emption of available if other exemptions are not used will be doubled to Tourists will qualify for both after 48-hour trips. BENEFIT CANADIANS Mr. Turner said the more generous exemptions "will be of considerable value to Canadians who travel outside the country each year and will also be welcomed by our trading partners." The U.S. has been pressing for changes as a means of in- creasing its exports. Measure protects pensions OTTAWA (CP) A new tax ex- emption on private pension benefits and a revised income-tax exemption for older married couples are among measures that Finance Minister John Turner says will help protect pensioners against inflation. An exemption of up to will be applied, effective in 1975, to income from superannuation or pension funds, ex- cluding the old-age security benefit, its supplement and Canada and Quebec Pen- sion Plan payments. The age exemption for persons 65 and older will be raised in 1975 to from through cost-of-living indexing and a revision made so a married couple can take advantage of two exemptions even if one of them receives no income. At present each spouse can take advan- tage of the old-age exemption only if each has enough income to be taxable. Married couples 65 or older who earn interest or dividends, receive a private pension and each in old-age security have a potential maximum tax-free in- come of of the changes, Mr. Turner said. That maximum exemption includes basic exemptions, full age deductions of each for the husband and wife, an exemption on interest and dividends of up to a pension deduction of up to 000 tax cuts and the standard medical or charitable deduction. Mr. Turner said a proposed interest- dividend exemption of would help those who save privately but leave unpro- tected those who depend on private pen- sion plans. The private-pension ex- emption will directly assist pensioners, he added. Savings go to taxpayer under income tax plan OTTAWA (CP) A married taxpayer with two children earning a year would take home an ex- tra a week next year un- der personal income tax changes proposed Monday by Finance Minister John Turner. In his budget address to the Commons, he described tax reductions that would slice million from the federal tax bill next year as a "signifi- cant contribution to the sup- port of people's real in- comes." Two-thirds of the savings would go to taxpayers earning less than a year, he said. Under the changes, personal taxes would drop by five per cent this year and by eight per cent in 1975. But the minimum reduction is this year and next year. The maximum cut is this year and in 1975. In 1975, the tax rate on the first of taxable income would be reduced to nine per cent from 12 per cent. And tax exemptions and brackets would be adjusted to compen- sate for inflation. In the end, a married wage earner with two children un- der 16 would pay no federal tax next year if he earned 871 or less. This year, the top amount he could earn without paying tax is The following tables show how the changes will affect the income tax of sample tax- pavers. Married- Two Children under 16 Take-Home Pay Inc. Income 1974 1975 214 229 250 271 291 459 540 622 Take-Home Pay Inc. Income 1974 1975 183 196 10.000 2U 226 288 435 488 651 The increased take-home pay shown represents the sav- ing after federal and provin- cial taxes have been deducted, using the lowest provincial tax and British Co- lumbia. The personal income tax rate in those by Ot- 30.5 per cent of fed- eral tax, compared with 36 per cent in Alberta, Prince Edward Island and New- foundland, 38.5 per cent in Nova Scotia, 40 per cent in Saskatchewan, 41.5 in New Brunswick, 42.5 in Manitoba. Quebec collects its own. Unemployment insurance and Canada Pension Plan payments, calculated at pre- sent rates, are included in the totals. Finance department officials said they were reluc- tant to provide figures simply showing the reduction in in- come tax because they said they would be "easily dis- torted." Taxpayers in the tables are assumed to be under 65 and to be receiving only earned in- come. Smokers cough up more money OTTAWA (CP) For con- sumers, Finance Minister John Turner's budget Monday resurrected higher costs for smoking, drinking and driving big cars. The changes are effective immediately, though it may be some time before increas- ed taxes on the wholesale cost of the goods are passed on to consumers. When they are, smokers can expect to pay an extra two cents a package for 20 ciga- rettes and drinkers another 24 cents for a 25-ounce bottle of liquor. Wine will rise an esti- mated 6Vz cents a 25-ounce bottle. Mr. Turner also warned dur- ing his budget speech in the Commons that food prices would continue to rise. These increases, however, will be offset partly by tax cuts which may reduce the cost of bicycles, city buses, day-care centre equipment aids for handicapped people. In all but a few cases, the tax increases and cuts were the same as those introduced in Mr. Turner's last budget May 6, which was defeated. Increased taxes on tobacco, alcohol and for cars, motor- boats, motorcycles and private planes would bring in an estimated million in government revenue annually. But the government ex- pected to lose much more than that through tax cuts on heavy transportation equipment, construction material, day- care centre and other clinic equipment, tariff changes and new tourist exemptions. One of the few changes was an increase in the amount of excise tax slapped on heavy cars, such as big Mercuries, Buicks, Oldsmobiles and Chryslers. In May, the govern- ment proposed a special tax that would cost consumers for each 100 pounds of car they bought weighing more than 4.- 500 pounds. Monday, Mr. Turner said he would increase that amount to on the first 100 pounds, on the next 100 pounds and on each additional 100. Station wagons would be subject to the same tax, but the minimum weight would be rather than pounds. Roughly 85 per cent of the estimated one million cars sold in Canada this year will be under the weight limits. The finance minister also resurrected plans to slap a new excise tax on motorcycles with engines larger than 250 cubic centimeters, on private- ly owned airplanes, on boat motors generating more than 20 horsepower and on boats designed to hold such motors. In May, however, he said the tax would be three per cent. Monday, he said it would be increased to five per cent on motorcycles and to 10 per cent on planes and boats. Together, the tax on the gas- guzzling machines would add about million a year to the federal treasury. Drinkers and smokers are expected to cough up the greatest amount of extra million an- increased taxes on liquor, wine and all forms of tobacco. Mr. Turner said the excise duty on a gallon of spirits would rise to from enough to increase the cost ,of a 25-ounce bottle by 24 cents. The tax on table wine would go up to 95 cents a gallon from 55 and increase the cost of a 25ounce bottle by cents. The consumer price for sparkling wine would increase by a similar amount. 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