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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - September 5, 1973, Lethbridge, Alberta Tax Column Taxes, inflation closely related By I. H. ASPER One cf the most beneficial re- sults of the political debate over tax reform during the past few years is that there is a growing awareness amongst the public of the very close relationship between taxes and inflation. The result is that governments have become more concerned about the effect of their tax pol- icies on encouraging further in- flation. The subject is on the tip of everyone's tongue these days as the western world is struggling to combat a higher than usual rate of inflation. Indeed, quite apart from the fiscal policies all governments are applying to the problem, it is probable that one of the contributing factors to price increases in Canada is the inflation psychology that seems to have taken root. That is, business, in pricing its goods, labor, in making its wage demands, and the con- sumer in his spending attitudes, seem to have adopted the view that further price increases and cost rises are inevitable and they conduct themselves ac- cordingly, and to some extent feed the fires of inflation. The tax system itself is not innocent in this regard. While it is true that governments also suffer from is, their cost of operation of pro- gram increases each year be- cause of increasing wages and increasing benefits in social it is becoming more and more publi- cly recognized that govern- ments contribute mightily to in- flation, and are also the main beneficiaries of inflation. BIGGEST PURCHASER Because government has be- come the biggest purchaser of services and the biggest con- sumer of goods, as well as the largest employer in the society, it's spending habits in effect dictate wat kind of an econ- omy we're going to have. Thus, the massive increases in gov- ernment spending, to the extent that these increases have not been ,used to render cash pay- ments to individuals within the country, have contributed sig- nificantly to price and wage in- creases. On the other hand, as prices and wages go up, so do the profits on business increase, and, as well, wages increase, so that the tax take by govern- ment increases. This is true both at the federal and provin- cial levels. For example, one's wages may rise by 5 per cent, suf- ficient to offset the increase in the cost of living, but the full 5 per cent increase in wages is taxed, so that the standard of living of the earner will drop. This is even more dramatically seen at the level of provincial taxes, particularly where con- sumption taxes are concerned. Take the sales tax, for ex- ample. Assuming a 5 per cent sales tax rate, a coat that cost in 1969, would cost the taxpayer an additional for sales tax. If, by 1974 that same coat is selling for not only is the cost increased by the price in- crease, but the sales tax, even though the rate of tax hasn't changed, would now be In effect, there has been a signifi- cant tax increase, even though the tax rate hasn't changed. A look at provincial budgets where the tax rates on retail sales has stayed constant and population has stayed constant is most revealing. In Manitoba, for example, the population has stayed constant since 1957 when a 5 per cent sales tax was in- troduced, and the rate has not been changed. Yet in six years the amount of sales tax col- lected by the government has doubled. ACTION TAKEN Because of the acute public concern over inflation, the fed- eral government acted last year to introduce, for the first time in Canadian history, an anti-in- flation factor in the tax system. As well as arranging for those on fixed income to an- nual pension increases based on the cost of living changes, Fi- nance Minister Turner in- troduced effective for the cur- rent year, a provision which says, in effect, for the wage earner in Canada who received a wage increase less than the increase in the cost of living, the wage increase will not be permitted to move him into a higher tax bracket. This has of- ten happened, particularly in tbs lower income groups, be- cause of the marginal rate tax system. Canada is not the first coun- try to have built an anti-in- flation factor into its tax sys- tem. Denmark, the Nether- lands, Israel, and several other western nations have introduced even more bold programs, mainly because their rate of in- flation is very considerably higher than Canada's, Several Hundreds of thou- sands of Canadian taxpayers who probably still aren't aware of the Turner amendment, will find next April that the federal government's anti-inflation amendment to the tax law this year will be of some benefit to them. Surely it has now become relevant to ask provincial gov- ernments to eliminate con- sumption taxes on a much broader range of items which constitute, in current terms, the necessities, of life. AH govern- ments should look closely at building into their sales tax structures, both at the retail lever and at the manufacturing level, a tax de-escalation in- dexing system which would re- move the tax from the part of the purchase price which was an increase over, say, the 1972 base year level for that com-j modity. Wednesday, September 5, 1973 THE LETHBRIDGE HEXAID 13 Give your home a new look! Save money at the same time' FIESTA PAINTS Full range of finishes, hundreds of custom tinted colours. Stock up withi FLAT WAIL PAINT- for walls and ceilings. Latex or Alkyd Base. Reg. Prices 2.59 qt. ond 8.97 .72 ENAMEL NOW 1.94 qt. SEMI AND HIGH GLOSS ENAMELS- Indoor semi-gloss available in Alkyd or Latex base. Tough high gloss may be used indoors or out for long-lastinn scrubbable finish. Reg. Prices 3.29 qt. and 9.97 gol. NOW GoV 2.46 qt, FLOOR ENAMELS- 8 colours in latex and 4 in oil-bass floor encmel. Reg. Price 2.99 qt. ond 9.47 gal. MO 7 Our huge selection includes the latest 'mod' shades and dazz- ling fluorescents. Large econo- mical 14-oz. can makes this easy-to-apply enamel ideal for many small decorating projects. Reg. 1.47 each. 14-or. can only FIESTA ANTIQUING W00DGRAINING KITS Antique or woodgrain anything painlable! Apply base accord- ing to directions, let dry, then wipe on toning glaze. No need 1o remove old finish. Covers 60-sq. ft. Reg. price 3.97 each. Good quality Fiesta wallpaper that's ready pasted and wash- able. Shop early for best selec- tion. Great value at this low price! Double rolls only. Reg. 2.98 double roll. double roll Self-adhesive vinyl. Chooss from many beautiful Fiesta pat- terns. Easy-to-use. Just peel off backing and apply to any smooth surfoce. 3-yd. x 18" pkg. NOW H 2.24 qt. bases slightly underfilled to allow for colourant. complete kit pkg. Open Daily 9 a.m. to 6 p.m. Thursday and Friday 9 a.m. to 9 p.m COLLEGE SHOPPING MALL 2025 Mayor Magrath Wo Reserve the Right to Limit Quantities DEPARTMENT STORES A DIVISION OF THE WOOLWOKTH CO. UkMTfD J ft REGULAR DEPAfRtWIEMt No budget in offing Turner OTTAWA (CP) The gov- ernment at present has no in- tention of introducing any type of budget, Finance Minister John Turner told the Commons Tuesday. He was replying to Opposition Leader Robert Stanfield, who asked if the government in- tended to eliminate its sales tax on building materials and chil- clothes in a new budget. After the battle Daniel F. Walker is es- corted to a sheriffs car after being booked at a North Lindenhurst, N.Y., police station on charges of attempted murder and assault. Walker held more than 20 policemen at bay in a two-hour gun battle, using his three children as shields. He 10 officers, one of them ser- iously, before surrender- ing. Cost Less top grade duck canvas sneakers cost less at Woolco! They feature durable gum crepe soles, arch cushion for support and a Blue vamp, Red tongue and Cartoon quarter. 4-12 sizes. Sahara-Style .for Men ChiSds' Track Shoe Moulded sole with protective bum- per tip and canvas uppers. 2 while stripes on Blue or jaBfe flQ Gold suedine. 5-10 and JTO Ever-popular super comfort boot wilh suede uppers ond plantation crepe sole. Sand only. 7-12. W Pa" 11-3 even. Assorted Size Sneakers Men's, Boys' and Youths footwear wish padded collar and crepe sole. Navy and Black. Youths' 11-3, pi MA Boys' 1-6 and Men's 7-12. pair Women's Fashion Shoe Canadian made fall two-tones with 4-eye tie and leather uppers. Skin fit lining, Urethane Sole and heel. 5Vi-9 full and half sizes. PAIR Pigskin Casuals Men's moccasin vamp lace-up with comfort-able foam sole. Sand or Dark Brown in 7-12 full sizes. Cy? pair Open Daily 9 a.m. fo 6 p.m. Thursday and Friday 9 a.m. to 9 p.m. reserve the right to limit quantities. COLLEGE SHOPPING MALL 2025 Mayor Magrath Drivt DEPARTMENT STORES A DIVISION Or THE MK. ITOOLireRTH CO. UMTIDl YOU'VE GOT A STORE ;