CANADA'S BUDGET

Evening Post, Volume CXV, Issue 68, 22 March 1933, Page 7

CANADA'S BUDGET

SURVEY BY MINISTER

POSITION SATISFACTORY

TRADE WITH EMPIRE

United -Press Association—By Electric Telo-

graph—Copyright, (licceived March 21, 1,30 p.m.)

OTTAWA, March 21,

The outstanding announcements of the Minister of Finance (Mr. E. N. Rhodes), in his Budget speech on Tuesday,, were tha^ Canada's deficit on ordinary account for the year was 53,608,000 dollars, the ordinary revenues being 310,817,000 dollars and the ordinary expenditure 364,425,000 dollars, and that the total additions to the debt both for Government operations and the deficits of the Canadaian National were 156,122,000 dollars. The net debt of the Dominion at March 31 is approximately 2,599,089,000 dollars.

The Government proposes to float another conversion' loan to the people of Canada on the basis that it shall keep faith with investors and not in any sense involve repudiation of existing contracts. It is believed that the issue can be made at a rate which will involve a substantial saving to the public and the Treasury.

The Minister did not say when the loan would be floated.

A Royal Commission on banking will be appointed to go fully into the organisation and working of .the entire banking system with a view to the revision of the Bank Act next year. The question of establishing a Central Bank in Canada will be studied. The Government is prepared to co-operate with the chartered banks in lowering interest rates by reducing the rate on postal savings deposits. Mr. Rhodes favoured reduced interest rates in savings bank deposits. "In my judgment," he said, "this reduction is a necessary step, if we are to reduce interest rates on bank loans, mortgages, and long-terra bonds to a level where business recovery may bo most effectively stimulated. Canada can maintain her financial position only by the maintenance of sound financial monetary policies."

DANGER OP INFLATION.

Mr. Bhodes emphasised that much had been heard in recent months about inflation. "Some of < the advantages claimed," he said, "may seem alluring to industries harassed by falling prices and declining turnover, but let the sponsors o* inflation never forget that apart from the other difficulties and dangers involved, one inevitrble result would be a flight from our dollar, the withdrawal on a large scale of capital invested' by foreigners in this country in the form of securities and bank deposits. There is also to be considered internal reactions to any steps which might impair confidence in the country 's currency. Against policies which might lead to such dangers this Government has resolutely set its face."

Optimism characterised the Minister's declaration in respect to Canada's trade. -While announcing a drop of 250,521,000 dollars in foreign trade of Canada for the eleven months ending February 28 last, as compared with the corresponding period of a year ago, he said that it was a matter of satisfaction that Canada's position among the great trading nations had been well maintained. In 1932 Canada won back her position as fifth trading nation of the worldj sho had dropped to seventh in 1931. Morever, he said, the loss in the dollar value of total trade was not so great for Canada as for other important trading countries. For the eleven months just ended the trade amounted to 817,082,000 dollars, of which 373,421,000 was for imports, 437,229,000 domestic exports., and 6,332,000 exports of foreign goods. The favourable trade balance was 70,240,000 dollars, against 25,490,000 in the eloven months of the previous year.

TREND TOWARDS EMPIRE,

The trend towards increased trade with Empire countries as a result of the Empire Economic Conference was noted. Tho tariff agreements from the Conference had, been ineffect only a few months, there had been significant developments of tho utmost importance in' Canada's trade with tho .fcunpire countries, indicated in tho fact that in teu months ended January 31 imports from the Empire were more than 2D per cent, of Canada's total trade, compared with 25.23 per cent, m the previous corresponding period. Exports to Empire countries were 46.34 per cent., compared with 37 84 per cent.

, r W* rcs Pcet to the Canadian dollar, Mr. Ehodes asserted that it had been maintained at ,a moderate discount in terms of the United States dollar having been allowed to find its own level i? I Iv S'? lt lt haa beeil fluctuating about half-way between the United States dollar and the English 'pound. This might be a not unsatisfactory compromise between those of our national interests which would be benefited by close and stable relations with sterling and those which would be serious y harmed by a heavy and flue uatmg daseount in terms of New

,V l'M V stlmates °f the position indicate that exports of -goods, gold, and services were sufficient to'offset the annual charges payable ■ abroad and leave a substantial balance for prinS Payn G1- ts °n account °f ™^ las h P T n? th- e past year Canad* ho,™ • i? fOreign eountrv ab]° t" UnHel Sates? PUMC »«^of the

Jhe Budget is estimated on the basis' ot piesent business conditions to produce in 1933-34 a surplus of ordinary "venue over ordinary 1 expenditures of Uo million dollars. Eevcnues under 011 aro estimated- at -S/,000,000 dollars, and ordinary expenditures are estimated at 369,000,000 dollars. ,lhe deficiency will be met by further reductions in controllable expenditures, amounting to fourteen million oars, and now taxation of seventy millions.

lho taxation changes include a tax on corporations' -incomes raised to l'?i per cent, and the exemption of 2000 dollars is removed. On personal incomes the exemption hitherto of 2400 dollars becomes 2000, and where heretofore it was 1200 it becomes 1000 dependent on children. The lowest exemption is reduced from 500 to 400 dollars.

The new schedule of rates of taxation on^perspnal incomes commences at A percent, on the first 1000 dollars taxable income

The sales tax remains at 6 per cent. Items now at half-rate are subjected to full rate, and a number of other articles are taken from the exemption list. Excise taxes include cosmetics and toilet preparations 10 per cent., automobile tires and tubes 5 per cent, cigarette papers 2 cents per 100 leaves, cigarette tubes 5 conts per 50 tubes sugar 2 conts per pound. The exemption of the 3 cent stamp tax on cheques of 5 dollars or under is removed. The tax on postal notes is raised from 1 to 3 per cent. An excise duty of a dollar per proof gallon is imposed on spirits used, in fortifying native wines.

The pound sterling will be valued for purposes of special or dumping duty at 4.23 dollars instead of 4.40 as at present, this being effective from Wednesday.

Changes in tariff schedules arc relatively few, being confined to less than sixty items. A free entry is provided for Palestine oranges during the months from January to April inclusive.