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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - September 30, 1970, Lethbridge, Alberta 30 'HE LETHBRIDGE HERALD Wednoiday, September 30, 1970- Finance Committee Report To Be Tabled Next Week [ajor Revisions In Government's Proposal For Tax Reform Ky VICTOR MACKIE HiTiilil Ollawn Bureau OTTAWA Major revisions in the federal government's proposal for tax reform are in corporaled in the Commons fi ranee committee's report on tin- controversial White Papei tt> be tabled in the house when Ilio Commons resumes its fal fittings Oct. 5. Critical of many of the key suggestions contained in the While Paper for tax changes the Commons commitlce rec ommemls scrapping them and puts forward new proposals While (lie committee disagrees with the details of some of the reform measures it approves in general the objective of the government's tax reform pro- gram. The report of lire Senate com- mittee that hao been studying Hie White Paper is to be made public this week. It is expect cfl to be even more critical ol the government's proposals for changing the tax system. The result will he that when the government finally brings down its one big taxation bil incorporating the tax reform proposals next year, it will be much different than Finance Minister E. J. Benson's original White Paper introduced last fall. Some of the more con- tentious sections will be elim- inated, some altered. Among points emerging from the Commons committee's re- port: (1) Canadians, by submis- sions, have made it clear thai while they favor greater Ux cquily they don't want govern- ment policies to bring it about at the cost of economic depres- sion. The maintenance of an economic climate favorable to growth must be a corner-stone of the country's tax policy. (2) A capital gains tax is supported by the committee, however at a lower rate than proposed in the White Paper. (3) The tax load now car- ried by lower income Cana- dians should be reduced. It ac- cepts the White Paper sugges- tion that personal exemptions be raised to for an in- dividual and for married couples. (4) The committee has not gone along with the White Paper plan for a top tax rate of 50 per cent to apply to per- sonal incomes over It suggests the 50 per cent rate should not apply to taxable in- comes of less than and or It proposes a 60 per cent rate for incomes over that level. (5) The proposed capital gains tax on the sale of a pri- vate house is rejected. (6) The White Paper's plan to ban entertainment expenses as an allowable cost of busi- ness in computing taxable in- come is not accepted. It is ar- gued that expenses incurred legitimately in conducting busi- ness should be deductible. (7) Increased exemptions on estate taxes are suggested. The Commons committee sug- gests to tax until the level and no full tax rate be imposed until the cate- gory is reached. (8) The committee goes along with Ihe White Paper on one very contentious proposal dealing with small businesses. It upholds the suggestion for eliminating the ceiling lor lower tax rates for small business claiming incentives be given in other ways to assist those small businesses that really need help. Unemployment insur- ance payments should be tax exempt but strike pay should be subject to lax, the coilmit- tee found in its report. The commiltiie's findings are Garbagemen On Strike LONDON (AP) A strike by garbagemen, sewage- pumpers, street-sweepers and grave-diggers threatened public health in large parts of London today. Uncollected garbage piled up in 16 of the city's 32 boroughs and pumping station employees were reported on strike at 10 London sewage '.vorks. Union officials said the walk- out would spread outside the capital, involving large num- bers of Britain's munici- pal sanitation workers. Drivers of buses and not-lunch trucks at state schools joined the strike in London, forcing children at 330 schools lo carry sandwiches or go home for lunch. Food supplies were re- ported short at 770 other schools. The strike cut off school bus service fcr handicapped children. Ambulance drivers in some sections accepted only emergency cases. based on more than 500 writ- ten briefs and over loiters it received and considered at 139 coifmittee meclings. Sub- committees of the main com- mittee visited Western Canada and the Atlantic provinces. The committee favors the White Paper process for put- ting forward suggested lax changes. II concludes Hie slucly was well worth the lime and expense involved. The draft report of the com- mitlce which has been under- going study this month and is now being put into final form vvilh few changes, found that the White Paper recommenda- tions that would increase taxes were viewed with genuine con- cern by Canadians appearing before the commillee. Pro- posals lo offset or cut taxes with a few exceptions in- creased exemptions was were viewed with suspicion. The committee approved Ihe proposals for marital exemp- tions and charitable donations, including the suggestion that national nmateur alhlctic as- sociations be added to the el- igible list. The government proposal to raise personal tax exemptions mid maintain Ihe exemption for family allowance payments until the current review of Can- ada's social security and social development programs has been completed, was concur- red in by the committee. II also approved Ihe While Paper suggeslion for child care expenses being allowed as a deduction. Strong Opposition To Taxing Gains On Sale Of Residents Easing Up On Capital Gains Tax Necessary Incentive HERALD OTTAWA BUREAU OTTAWA A strong convic- tion exists in Canada that tax- ing capital gains less heavily lhan ordinary income is a ne- cessary incentive for invest- ment, savings and economic ihe Commons finance committee found after months of hearings on the White Paper for tax reform. W.ith Ihis in mind Ihe com- mittee in i t s report prepared for presentation to the house of Commons next week, proposes several major changes in the White Paper provisions for the taxation of capital gains. Of interest to the average Canadian is the committee's conclusion that the idea of lax- ing capital gain, realized on the sale of the family home, be re- jected. The draft report finds a gen- eral and strong opposition to the suggestion of taxing gains on the sale of residences. This is not confined to Canada, it said. It pointed out that in Britain the profit on sale of an only or main residence, is not sub- ject to capital gains tax. The committee after examining va- rious alternatives suggests that a gain or loss on the sale of principle residence, along with the land surrounding it up lo one acre, not be taken into account for tax purposes. The committee also proposes that personal property be tax exempt except where the item cost more than The White Paper had suggested a 5500 exemption level. The committee report recom- mended that only one-half the capital gains in the sale of shares of both closely and widely held corporations be :axed, and one-half the losses be deductible. The White Pa- jer suggested that gains be [ully taxed and losses fully deductible for closely held cor- porations. For widely held cor- jorations it proposed one half .he gains would be taxable and one half the losses deductible. The committee recommend- ed that the five-year revalua- ;ion of widely held" corporation shares be dropped. It proposed as an alternative lo the five rear recommendation in. the rVhite Paper that there be a deemed realization of capital gains at death in respect of shares of widely held corpora- tions. To avoid double taxation, that is capital gains lax and estate tax exemptions be in- creased. It suggested that no estate of value less than 00 bear tax and that rate brackets be expanded and the maximum rate nol ciil in until value of about is reached. i The committee is also op- to the plan for applying deemed realization to a laxV payer leaving the country. Un- ler the White Paper it would lave treated him as though he lad sold all his assets at fair market value on the day he eft. The committee suggested hat treaty arrangements should be reached belween the countries to consider citizen- ship as the basis for taxation as an adjunct to the residence rule. The While Paper would cal- culate capital gains and losses in the value of the assets at a given day to be known as val- uation day or The committee suggested that the of an asset on V-Day hould be the higher of cost or market where a gain is in- 'Olved and the lower of the wo figures where a loss had aken place. This would be to he benefit of the taxpayer. The committee suggested hat profits from investments ther than shares should be ully laxed and losses fully [eductible. However, it dees not accept the suggestion that 1 the original cost exceeded he value of V-Day, such cost "d be recovered without be- ing treated as income. All as- sets should be treated alike the committee said. Small businesses should be assisted under the country's tax setup the committee con- cluded. At present companies pay corporate income tax at a rale of 21 per cent on the first of income and 50 psr cent on the rest. The White Paper would wipe out the low- er rate. This came in for lot of criticism before the commil- lee. the committee is inclined to go along with the idea of abolishing the lower rate. It found that the weak- ness in the low rate was that it was available to small busi- nesses whether or not the tax saved is used in the business. It recognized the importance of helping small business find capital bill pointed out there was no check on whether the tax saved under the lower rate was used for this purpose. The committee recommend- ed that relief be provided for companies with a taxable in- come up to After that the amount of aid available could be phased out until it dis- appeared when the company earned a taxable income of However, Ihe commit- tee in its draft report had no suggestion as to what form the relief might take. However, it recommended that widely held corporations, their subsidies and foreign controlled compa- nies be excluded from any benefits. On resource industries the committee suggested that ex- penditures on new mine should be deductible from the profits of either. The new or the old mine, not only the new mine. The fasl write-off privilege should be extended to all capi- bringing the mine into produc- tal expendilures involved in lion. For professionals the White Paper wants them to change from a cash to an accrual form of accounting as a basis for paying their taxes. Law- yers and doctors would have to count their accounts receiv- able, inventories and work in progress as income at tax time. The commitlce suggested a compromise that the accrual basis be used for accounts re- ceivable but not for inventory or work in progress, sources said. ANNUAL THROUGH MI3 Truck located at the rear of our store in the alley at 319 7th Street S. ALL MERCHANDISE ON OUR DISPLAY FLOOR GRAIN TAKEN IN TRADE 200 ITEMS TO CHOOSE FROM Brothers Killed In Collision MOOSE JAW (CP) Ray- mond Gamble, 28, and Bud Wayne Gamble, 32, brothers rom Moose Jaw, were killed Tuesday when the car they were in was in collision with truck in the city. George Dale Gamble, 26, a hird brother, was in serious condition in hospital. I I I I I I I 25-INCH DELUXE COLOR TV Walnut Grain Cabinet Automatic Fins Tuning Front Speaker Transistor Signal Syitem Patented Automatic Chroma Control t Danish Styling Automatic Degauiing Control Contro Regular TRUCKLOAD SPECIAL 5-YEAR WARRANTY PLAN ON COLOR PICTURE TUBES PHILCO PHILCO 12-INCH PORTABLE 17-INCH PORTABLE 19-INCH PORTABLE APPLIANCE TV CENTRE 319 7th Street South Phone 328-1673 Bill BAKER ;