FEW WOULD DARE OFFER SO LITTLE
Chretien gambles with a sputtering economy
An analysis by DON McGILLIVRAY Southnm Nows Services
OTTAWA - Jean Chretien’s budget is a gamble that the sputtering Canadian economy needs no more than a touch on the gas pedal to send it roaring away into a full recovery on its own power.
And it is also a gamble that the voters need little budgetary encouragement to return the Trudeau government to power.
Few finance ministers would have dared to stand as pat in a pre-election budget.
And fewer still would dare offer as little stimulus to an economy going through its fifth straight year of below-par performance with nearly 20 per cent of factory capacity standing idle and one worker in 12 on the dole.
The pinch-penny nature of Chretien's stimulus should i mpress the international financiers with his "soundness” and “responsibility” in refusing proposals which would have been, in his words, "popular politically but unwise economically.”
He has managed to make as big a show as possible by
The
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Citize
Tuesday, April 11, 1978 Vol. 22; No. 70
Prince George. British Columbia
getting most of the provinces to help with a cut in the retail sales tax. This breaks new ground in federal-provincial budgeting and stretches Chretien’s meagre $800 million sales tax cut to nearly SI.2 billion.
It may be enough to get the Liberals past the election. It will have its effect on inflation, as measured by the consumer price index, almost immediately.
And the opinion polls suggest that Canadians are more worried by inflation than by unemployment.
But is Chretien’s budget really a piece of economic wisdom?
Ft depends on whether or not the economy needs more than a little jolt of fast, fast, temporary relief.
The idea of a federal-provincial cut in the retail sales tax was first put forward by Judith Maxwell of Montreal’s C. 1). Howe Research Institute.
But Mrs. Maxwell said in her latest policy review that "the appropriate form of fiscal stimulus should be permanent tax
reductions. These will create a larger deficit in the short run and will have to be offset over the medium term by cuts in the growth of government spending ... the tax reductions should be focused on sales taxes.”
The tax cut Chretien has worked out with the provinces is anything but permanent. Sales taxes will go up again in the fall. If Ontario’s 1975 experience with a temporary sales tax cut means anything, the main effect may be a change in the timing of big-ticket buying. A person planning to buy a car, for example, will make sure he buys it when the sales tax cut is in effect. But the total number of cars sold may not increase very much. A reduction in sales tax would not persuade many people to buy a car they did not intend to buy before the tax cut.
Nor is it likely to have much effect on employment. Looking ahead to the slump in sales which will come when the sales tax goes up again, employers will be unlikely to add permanent staff or invest in new productive facilities, to take care of a strictly temporary increase in sales.
If theCanadian economy is almost due for a take-off, such a tax cut might be enough. But is it? There are few signs of it.
FEDERAL, B.C.
Two budgets to digest . . .
Two budgets affecting Hritish Columbians wore presented Monday.
First cnmc to the B.C. budget, presented by provincial Finance Minister Evan Wolfe. Three hours later, federal Finance Minister Jean Chretien presented his blueprint for Canada's financial future.
The main thrust of both budgets was a cut in sales tax in an effort to encourage consumer spending. The finance ministers believe this will give a needed push to a sluggish economy.
The sales tax cuts w ill he underwritten partly by the federal government for a specified period, although the B.C. Government says its decrease — from seven per cent to five per cent on everything hut liquor — will be permanent.
The B.C. government also doubled its tobacco tax.
More details on the provincial budget are on page 2, while the federal budget is broken down on page 7.
If you cut down on smoking and drinking, you might have a little more |Hicket money this year.
Direct benefits seen in region
Citizen Staff Reporters
Monday’s federal and provincial budgets will have many direct effects on Prince George and district residents, say local officials and politi-cans.
These effects include:
# The average homeowner will pay $25-30 less than expected on his school taxes, says School District 57 secretary-treasurer Mac Carpenter. This is because the provincial budget boosted the basic levy for schools by only 2.25 mills instead of the five mills announced’earlier.
# Changes to municipal programs in the provincial budget benefitted Prince George by more than $400,000 in added revenue and will help keep city taxes down.
# Assistant treasurer Chuck Shilberg said the increased revenues were taken into account in the provisional city budget adopted last month.
Local property taxes rose little this year.
Increases in the revenue sharing grant added $388,000 to city coffers, while increased grants in lieu of property taxes on provincial buidlings increased revenues by $49,000.
Shilberg said the impact of the two per cent sales tax is difficult to analyse but affects all city purchases.
• Loggers could save thousands of dollars in sales tax, says Fort George MLA Howard Lloyd. He says loggers won’t have to pay sales tax when they buy a new logging or a bulldozer because a provision in the provincial budget removes the sales tax for one year from new and repair production machinery bought by small businesses.
# thepriceofcigarettesisup over $1 for a pack of 25 in some stores today and will go over $1 in all stores by about Thursday. This is because of an additional 12-cent tax on cigarettes and proportionate increaseson other tobacco products.
Housing aid useful here
tf The $2,500 grant for firsttime home buyers with children should be especially useful in Prince George because of the availability of low cost housing, says Lloyd.
• Loggers and other construction workers living in work camps away from home will be able to deduct living out allowances from income tax, says Skeena MP Iona Cam-pagnolo. The Liberal MP and minister for Fitness and amateur sport said previously income taxes had to be paid as if such allowances were part ol income.
• Farmers will also benefit from the federal budget because they can now pass on agricultural quota and other assets to family members without paying federal taxeson the value, said Campagnolo.
0 Retired people, along with farmers and loggers, are the main recipients of the goodies in the federal budget, said Campagnolo. Retirees will gain more opportunity for tax free retirement savings funds, she said.
• The two per cent cut in B.C. sales tax that is partly underwritten by the federal government will not only save Prince George and area residents money out of their pockets but will also encourage more spending and bolster the economy, said Campagnolo.
However, not all local officials had praise for the federal and provincial budgets.
Prince George mayor Harold Moffat, said the federal budget doesn’t do a thing to improve the economic situation.
‘‘It’s the normal deficit budget,” he said, ‘‘When are we going to pay for it?”“11’s like buying groceries on time. One day you have to pay for them.”
Frank Oberle, Prince George-Peace River, MP, said the budget brought down by the Liberal government Monday is a ‘‘very skillful election” tool and he hopes that people will be able to see it as such.
"It is, as usual for the government, a Band-aid approach,” Oberle said. He said the budget will do nothing for unemployment and inflation.
The Conservatives would have rather seen a cut of some $2.2 billion in personal income tax instead of the reduction in provincial sales taxes.
photo bv Tim Swutiky
Speedy ride
Skateboarding on city streets didn’t offer these youngsters enough challenge, so they built this ramp to provide additional thrills. Keith Fraser, 12, tries out the ramp while Dean Law checks out his style.
ROSEDALE SLAYINGS
Kidnap scheme alleged
Sex shop
settlement
rejected
VANCOUVER (CP) - The killing of four Fraser Valley teen-agers last summer was part of a $2 million scheme to kidnap a member of one of four prominent Vancouver area families, a murder trial jury was told Monday.
The ransom plan is described in statements allegedly made to police by Walter Murray Madsen, accused of first-degree murder in the rifle slaying of three youths and a girl at a Fraser River recreation spot near Rosedale.
In one statement Crown witnesses said is in Madsen’s handwriting, he says he shot the teen-agers to get the fast car or truck he needed for the kidnapping. ’
The families named in the statement are James Sinclair, former federal cabinet minister and grandfather to the three sons of Prime Minister Trudeau, J. V. Clyne, a retired forest company tycoon, C. W. Woodward of Woodward's department stores, or the Rogers, apparently referring to the founders of B.C. Sugar Refining Co. Ltd.
The statement was introduced as evidence by CpI. Allan Ellard, Madsen’s cousin and one of scores of RCMP officers active in the six-week investigation leading to Mad-
sen’s arrest at his home in Chilliwack last Aug. 30, six weeks after the killings.
EHard said Madsen, 24, wrote the statement after a 30-minute, tape-recorded conversation with his brother, John Madsen, in Chilliwack shortly after midnight Aug. 31.
After the brothers’ session, Walter wrote the statement on two sheets of foolscap, Kllard testified.
Madsen has pleaded not guilty to the slaying of Evert Den Ilertog, 19, his brother Jan, 16, Bert Menger, 19, and Leola Guliker, 16, last July 18.
In the written statement, Madsen is alleged to have said that he drove to the island in his van and unloaded a 30.06 rifle, ammunition, a tent,
sleeping bag. compass, canned food, extra clothes, gloves and “kidnap notes.”
Then, the statement says, he concealed the outfit under bushes, drove back to his parents’ home in Chilliwack a few miles away and returned on a bicycle, smoked and drank three bottles of beer.
“I loaded my rifle and waited.... What 1 wanted was a fast car or.truck. 1 didn’t want to leave any witnesses.” The court was told earlier that the shooting victims and a fifth teen-ager, who escaped by running along the river bank, had driven to Ferry Island in Evert Den Hertog’s pickup truck. ^ r..
The trial continues.
Extinction feared
BURNS LAKE, B.C. (CP) -A University of Victoria professor says there are fewer than 13,000 caribou left in British Columbia.
Dr. Tom Bergerud, quoting results of a one-year study which was to be presented today to the provincial fish and wildlife branch, said Friday that he believes bears and wolves are killing most of the caribou calves in northern
B.C. within a month of the calves’ births.
‘‘I think there are no hunt-able caribou in the province and I am quite pessimistic about their future,” he told a convention of the Western Guides and Outfitters Association.
Bergerud said there were between 20,000 and 25,000 caribou in B.C. as recently as 1970, but now there are only 10,500 to 13,000.
The city will refuse to pay sex shop owner Joe Payne $30,000 for damages he says were caused when council refused a business licence for his "sex aid” shop four years ago.
Payne won a four-year court battle with the city over the licence refusal. The Supreme Court of Canada ruled the city fathers should stay out of the bedrooms of the community.
Payne is now threatening legal action if the city doesn’t pay him for lost business.
City solicitor Bob Dick recommended council reject the $30,000 demand and take Payne into court to settle, if necessary.
Although the court ruling was made May 17, no "adult boutique" has opened here.
Dick has been empowered to hire an outside counsel to represent the city in court. Meanwhile however, he will make a counter offer of settlement to Payne.
In a letter to Dick forwarded to council last month Payne’s lawyer admitted it would be difficult for Payne to prove lost revenue since the proposed store never opened.
The court battle over the licence cost the city more than $25,000 in legal fees and court costs.
Tax cuts main thrust of budget
OTTAWA (CP) - Retail sales taxes will be reduced in most provinces under a deal with provincial kgov-emments announced Monday night by Finance Minister Jean Chretien in a federal pre-election budget.
The finance minister also proposed more tax benefits for oil companies, railways and corporations that undertake more research and development in Canada.
Several provinces announced short-term reductions of two or three percentage points in over-the-counter sales taxes will take effect immediately. British Columbia said its two-point cut would continue indefinitely.
Apart from the unprecedented deal with the provinces for lower retail sales taxes —Quebec, which has a budget Tuesday, has yet to fall in line— there were no other income tax reductions for individuals. «
Chretien told the Commons that he refused to make ‘‘irresponsible promises” in a budget just before a general election expected in June.
At a news conference later, he said, “I did not want to buy my way into an election."
Sinclair Stevens, Progressive Conservative finance critic, said more than one million unemployed are being "sacrificed on the altar of political expediency.”
HIGHLIGHTS
Retail sales tuxes to be reduced shortly in most regions for six or nine months by arrangement with the provinces.
About $50 million a year in tax concessions offered to industry to encourage research and development.
Tax benefits for oil industry increased to encourage development of the Alberta oil sands and heavy oil deposits in the west.
Railways offered tax allowances to speed modernization.
Rules governing disposition of retirement savings plans reformed to make investment more flexible.
Projected federal deficit increased by 35 per cent to $11.5 billion on total outlays of $52.1 billion and income of $40.6 billion, excluding transactions in support of the dollar.
He also said the government was forced into a budget because it may soon be forced to borrow more money abroad to prop up the Canadian dollar’s value. Foreign bankers demanded an accounting of the country’s financial position, Stevens said.
Ed Broadbent, New Democratic Party leader, called it a ‘‘half-way, half-year measure” — a reference to the fact that the sales tax cut wili last for six months in most regions. Commons debate on the budget opens Wednesday. Prime Minister Trudeau has already said that if the opposition is playing politics with the budget, he will dissolve Parliament and call a general election.
In his budget speech, Chretien said the main requirement is "hard work, imagination, determination and discipline” to restore economic health.
Jobless
figure
growing
OTTAWA (CP) - Unemployment continued to climb in March as another 38,000 were added to the jobless rolls for an actual total of 1,045,000, Statistics Canada reported today.
The unemployment rate, adjusted for seasonal changes, rose to 8.6 per cent of the work force from 8.3 per cent out of work in February.
The news about rising unemployment comes only one day after a federal budget, in which Finance Minister Jean Chretien said unenployment now is at unacceptable levels.
The March unemployment figures show that in the last year the actual number of unemployed has swelled by 101,000.
The actual unemployment rate last month was 9.7 per cent, an increase from 9.5 per cent in February.
There were 10,726,000 in the work force in March and
9.680.000 had jobs. In February, the work force was
10.584.000 and 9,577,000 were employed.
Alberta had a decline in its unemployment rate last month, to 4.5 per cent from 4.7 per cent in February.
But the rate rose in Saskatchewan to 5.7 per cent in March from 5.1 per cent in the previous month, and in British Columbia unemployment was up to 8.5 per cent of the work force from 8.4 per cent in February.
TODAY
the
FEATURED INSIDE
The record-setting Montreal Canadiens have a rest as Stanley Cup playoffs begin tonight. Page 13.
• The Mohawks will have some stiff competition this week. Page 14.
Kntertaiiuiient...... ......28-30
Business............. .................8 Family................... ............27
City, B.C.............. ............2, 3 Horoscopes............ ............29
Classified........... ..........ltt-22
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Crossword......... ...............18 Sport*..................... ......13-15
Kditoriul.............. .................4 Television..............
THE WEATHER
A ridge of high pressure across the Central Interior is expected to bring Prince George mainly sunny skies with a chance of rain showers today and Wednesday. Both days are expected to have cool temperatures The forecast high today is 7, the low -3. The high Monday was 8, the low 0, with7.1 mm of rain. On this date last year the high was 9, the low -2.
'What you need is plenty of fresh air and exercise/'
NOW HEAR THIS
0 Members of the Dusty Trail Riders had a special reason Sunday for a garbage pickup along the trails they ride in the Blackwater-Haldi Road area. One of their members had to destroy a horse last year after it was badly cut on a piece of broken glass. About 36 club members turned out and picked up three truckloads of everything from glass to barbed wire.
• Expect a federal election "any day”, says Skeena MP Iona Campagnolo. She said today she expects to be back in northern B.C. "very soon” and said area Liberals should be ready in a few weeks for an election.
• Mayor Harold Moffat suggested seriously that the p. oposed location of a neighborhood store in a development plan was lacking in planning foresight. “See," he said, “right across from that church is not a good idea.” Grin ning, he answered the inevitable question why: "Because the kids will spend all their collection money on candy."