Canadian Income Tax Cut; Cigarettes Cheaper

Press, Volume LXXXIX, Issue 26971, 21 February 1953, Page 7

Canadian Income Tax Cut; Cigarettes Cheaper

(N.Z. Press Association—Copyright)

(Rec. 8.30 p.m.)

OTTAWA, February 19.

The Minister of Finance (Mr Douglas Abbott) tonight cut Canada’s income tax, eliminated the radio licence, and ushered back the 35-cent cigarette packet in what was generally believed to be the pre-election Budget. The Minister announced a personal income tax reduction by an average of 11 per cent., beginning on July 1. The excise tax on cigarettes was reduced by four cents on a package of 20, effective immediately. The Minister said the two dollars 50 cents radio licence would be removed after March 31, and there would be no licence fee for television sets.

Corporation taxes, apart from the social security tax, would be cut by 6 per cent, for large companies and 10 per cent, for small companies, the Minister said. The “nuisance” stamp tax on cheques and similar documents would be repealed immediately. The “floor” on medical expenses deductible from personal taxable income would be lowered to 3 per cent, from the present 4 per cent, immediately, and the 10 per cent, sales tax on books, newsprint and magazines would be removed. Mr Abbott Budgeted for an 11.000,000-dollar surplus for the financial year of 1’953-54, against an estimated 48,000,000 dollars surplus for the current year. Expenditure for the financial year 1953-54 is estimated at the peace-time record of 4,462,000.000 dollars, and revenue at a record of 4,472,000,000 dollars. Tariff deductions amounting to about 1,000,000 dollars are proposed to help miners, fishermen and soldiers returning home after a year abroad. The tax cuts do not touch the 15 per cent, excise tax on luxury items, and make no change in the sales tax

rate of 10 per cent., with only a few items lifted out of the sales tax category. The Canadian Broadcasting Corporation will be financed through revenue collected from the current 15 per cent, excise tax on radios, television sets and tubes now imposed at the manufacturer’s level.

The Minister said the tax reductions, expected to amount to 250,000,000 dollars, had been made possible by increased production, efficiency and plain hard work on the part of the united Canadian people.

He said that some of the reasons why Canada enjoyed a good year and finished with a surplus were its record wheat crop, a 12 per cent, increase in salaries and wages, a 7 per cent, drop in wholesale prices, a sharp increase in consumer buying, unabated investment, and record-breaking foreign trade. z He'listed the United States embargo on Canadian meat and livestock resulting from an outbreak of foot- and mouth disease as one of two main factors that had worked against the Canadian economy during the last year. The other had been the slump in textile demands.

Mr Abbott said the threat of world inflation was lessening. Although international economic relations were far from satisfactory, he said he hoped forthcoming talks in Washington Between the British Foreign Secretary (Mr R. A. Eden), the Chancellor of the Exchequer (Mr R. A. Butler), and State Department officials would lead to constructive action toward forming a joint United States-Commonwealth approach to trade and currency problems.