CANADA'S ECONOMY

Otago Daily Times, Issue 27038, 24 March 1949, Page 7

CANADA'S ECONOMY

FINANCIALLY SOUND BUDGET SURPLUS DISCLOSED NZPA—Copyright Rec. 9.26 p.m. OTTAWA, Mar. 22. The Canadian Finance Minister, Mr Douglas Abbott, reported a 575,000,000 dollar surplus for the 1948-49 fiscal year in his Budget speech in Parliament to-night. He said he expected a surplus of 410,000,000 dollars in 1949-50. Mr Abbott made these points: First, post-war price inflation appeared to have run its course; secondly, Canadians were unlikely to see any significant increase in the cost of living this year; thirdly, he did not expect in the near future any serious decline in the high level expenditures in North America on which Canada’s current prosperity was based. Mr Abbott said there was a need to maintain and extend overseas markets. He rejected suggestions that Canada enter barter trading deals, and paid a tribute to the United States European Recovery Programme. He said Canada’s debit balance with the United States had been reduced by 635,000,000 dollars and that the credit balance with all other countries had been reduced by 400,000,000 dollars. Canada’s reserves of gold and United States dollars had risen to 1,065,000,000 dollars from 998,000,000 dollars on December 31, 1948. He said the change in Canada’s reserve position had been remarkable. The most encouraging feature was the increase in Canadian exports to the United States to more than 1,500,000,000 dollars from 1,000,000,000 dollars in 1947. Much of this was due to the improved Canadian ability to produce for and sell to the United States market and to the reductions in tariffs obtained in the Geneva Trade Agreement. Tax Reduction The Minister announced that personal income taxes would be reduced on an average of 32 per cent, retrospective to January 1. He also revealed that company taxes would be reduced by two-thirds for the first 10,000 dollars of income but raised on incomes over 10.000 dollars. The luxury tax on jewellery would be cut from 25 per cent, to 10 per cent., and taxes on soft drinks, confectionery, transportation and communications abolished. Mr Abbott said there would be no changes in liquor and tobacco taxes and in succession duties He stated that the increases in personal income tax exemptions would take 750,000 taxpayers off the tax rolls. The cuts in income taxes ranged from a 5 per cent, reduction in the upper brackets, to 86 per cent, in the lower brackets. The Minister also announced the lifting of import restrictions on a wide range of commodities going to the housing industry. The war-time Prices and Trade Board has announced that price ceilings would be removed to-day on flour, bread, butter, sugar, and certain fruits and vegetables. The subsidy of 46£ cents a bushel now being paid by the Government on wheat going into domestic consumption would be discontinued. Mr Abbott disclosed that the temporary suspension of all tariffs on United Kingdom cotton and rayon goods and the reduction of tariffs on similar goods from other countries would not be extended beyond July 1949. They were suspended in the 1948-49 Budget last May as a means of assisting British efforts to recapture her place m the Canadian textile market. Mr Abbott said no extension was being made, due to pending tariff negotiations at Annecy, in France, and the fact that Parliament would be asked to ratify the Geneva trade agreements later in 1949 Trade With Commonwealth Commenting on trade relations with Britain and the Commonwealth, Mr Abbott said: “The Government of Canada has made repeated requests at the very highest level that the authorities in the United Kingdom and other Commonwealth countries do all they can to take advantage of the opportunities which Canada has offered for their exports. The Canadian Government has also made it clear that it does not look with favour on purchasing arrangements or bilateral trade deals which tend to divert away from Canada either British or colonial products which otherwise could be sent here, particularly in cases where we have established and are maintaining substantial tariff preferences in favour of such goods “The Government will continue ail feasible steps to encourage the expansion o'f British trade with Canada. We have provided the opportunities. It is up to British exporters and British authorities to take advantage of these and see that goods are made available at prices which our consumers can afford to pay.”