Winnipeg Free Press

Winnipeg Free Press (Newspaper) - November 06, 1976, Winnipeg, Manitoba Winnipeg free press business finance november 1976 economic analysis business leaders feeling uneasy by Hobart Rowen the Washington Post Washington across the United states a spot Check by this reporter shows the business Community is the Many executives traded in an unspectacular but predictable Jerry Ford for an untested Jimmy Carter whose future economic policies Are despite the fact that Carter has promised a balanced budget for fiscal they suspect that the Peanut Farmer from will be a free Wheeling big spender like the gentleman Farmer from new York Franklin the Bottom line of this business Nightmare is a new raging spelling recession and curtailed there is As that Carter May re sort to wage and Price and might tamper with the so called Independence of the Federal re serve i can sympathize with All of these be cause the Campaign oratory has produced contradictory Carter has held out Hope of a balanced a restoration of full new social programs and an end to what the Public Hast perceived and this May disappoint some of Carters More aggressive lib eral supporters is that the millennium int scheduled to arrive overnight As would be True in the Case of any president about to take the nation cant be sure of the exact direction of Carters or to past performance Doest count for who would have predicted that Richard Nixon would instal wage and Price controls in for example with the that it is dangerous to jump to i think attention might be focused on a Little publicized Carter commitment to hold Federal spending to to 21 per cent of the Gross National this is a Shade less than the current relationship around 22 per cent because of anti races Sion continued on what Jimmy Carter promised the Washington Post unemployment and inflation the first priority must be a rapid reduction of unemployment for the near economic policy should be expansionary submission in june to democratic platform my own belief is that we can get the adult unemployment rate Down to three per or the Overall rate Down to per without any Adverse effect on Infra business week interview in by the end of the first four years of the next we could have the unemployment rate Down to three per cent adult Unzem which is about four per cent Overall to first Federal budget i would Cut Back on the rate of implementation of new pro Grams in order to accommodate a balanced budget by fiscal year which is the last year of the next term we will have a balanced budget by fiscal year 1981 which begins 1980 if i am elected i keep my promises to the american people first taxes its time for a Complete overhaul of our in come tax i still Tell you its disgrace to the human All my life i have heard promises of tax but it never quite with your we Are finally going to make it and you can depend on nomination acceptance july i would not make any substantive changes in our tax or propose any As until at least a full year of very careful Analy new York luncheon july instincts due instant test by Peter Milius the Washington pout Washington part of the time on his Way to the White House Jimmy Carter sounded like a traditional Democrat on economic part of the time like a conservative the result is a degree of uncertainty about which Way he will on the one Carter has said his first priority As president will be to pump up the Economy and drive Down now per for the near economic policy should be sex he told the democratic platform commit tee in he is also on record As favouring major new Federal spending programs National health in welfare counter cyclical or anti recession Aid to yet Carter also said during his Campaign that he would balance the Federal budget by fiscal four years from now that he would defer new spend ing programs if that was the Only Way to achieve a balanced budget and that he intended to keep Federal spending at about 21 per cent of Gross National product which is about where it is he let the Federal government grow relative to the Economy As a he Carter can keep All these seemingly contradictory promises Only if the Economy recovers and grows much faster than it recently he is counting on such economic expansion to generate the extra government revenues he needs to carry out his spend ing his economic advisers have told him this growth dividend could be As High As billion by meaning he could increase spending that much Over presently projected or Cut and still have a balanced that traditional democratic emphasis on involves Carter in another potential con he says it is possible to have sustained and rapid growth without renewed he Doest say How he might make that his advisers say there is Little immediate risk of renewed inflation because demand for goods and labor still is As to the somewhat longer Carter endorsed the idea of standby wage and Price controls in the but quickly my guess is that i would never use a number of leading democratic economists have suggested another possible approach a kind of pact with under which the government would Cut taxes and in would reduce its wage de Carter himself Hast mentioned the president elects economic instincts will be put to an almost instant test when he takes the organization of Petroleum exporting coun tries open is scheduled to meet 15 in the per Sian Gulf Sheik Dom of Qatar to decide when and How much to raise the world Price of experts think the decision will probably be a 10 per cent in crease effective an Oil Price increase of that if it will plainly add to the rate of now about per cent in this continued on Page workers Bales of flax Straw a completed stack is in the to build huge stacks near background with another half for and cigarettes finished stack in the background by Gerry Cilins by Ralph Bagley what do cigarettes and bibles have in common both Are made with Fine paper which is made from flax and a lot of that Fibre May be coining from the Farmers in Mani the flax Fibre division of Kimberly Stark o f Annada at about 45 Miles Southwest of win has operated an sex p a n u i n g business in flax Straw in Manitoba since 1958 with several major gathering Points across the though Carman is head quarters for Marcel supervisor in charge of buy ing the flax Straw from the company also maintains stocks of the Straw at such other Manitoba Points As Deloraine and ilm actual pulping Plant which turns the flax Fibre into Fine paper is located at spots new but the company maintains a portable Mill in Manitoba which separates the usable Fibre from the flax Straw to eliminate much of the waste in u smaller Mill which travels to individual farms to separate la Hurt said the larger Mill does about two thirds of the work in with the Mill handling about one the Manitoba operation consists of buying the flux Straw from Farmers and stockpiling in huge stacks at the various Lahure said he usually has enough Straw on hand for a full years operation of the portable for about 25 stacks of flax Straw Bales have been set up near car Man this but it probably wont be processed at that location until next each of the big stacks con Tain about Bales of about 3m the Straw Bales Are shipped to the centres by then piled in House like the local milling process separates the usable Fibre which is then Reba Letl for shipment by rail to the new Jersey Plant for pulping into the final paper Lahure said tons of flax Straw would be processed in Manitoba this producing about tons of Fibre to be shipped what happens to the waste Lahure said the remaining flax Straw makes excellent bedding for live a feed lot at Carman uses most of the waste from the Carman local Farmers use much of the god Straw for the other though the final processing is done in the United Lahure stressed that Only canadians Are employed in the Manitoba at the new Jersey the finished products major Market is with tobacco companies for cigarette second largest Market for the Fine paper is for printing there were other uses in smaller including some types of Carbon our business has been expanding in Manitoba we started in Lahure and were also providing extra income for Manitoba flax Farmers by buying their rules Deal body blow foreign investor is turning away by Peter held Peter s partner with Dunwoody and chartered is consultant to members of the West German government on the Germa Canadian tax and consultant on foreign investment to private groups in Holland and South he former accounting counsel to the Ontario government select committee an company foreign investment in Canada has been dealt such a Cru Cial body blow by constrictive government regulations during the past 12 months that the deteriorating condition May Well prove to be the fact that foreign investment in Canada has slowed to a virtual trickle should come As a Surprise to no one with the possible exception of our Federal the danger signals were there for All to but Ottawa either failed to recognize or simply chose to ignore in Ontario Premier William Davis who firmly supported Federal ant inflation guidelines visited Frankfurt and London in an Effort to revive flagging investor interest the premiers retinue included minister of Industry and Claude who was also wooing Swiss businessmen in there is no question that restrictive regulations such As the Aib the foreign investment review and the latest 1972 income tax act have All played their part in undermining foreign investor the recent gentle loosening of ant inflation controls on profits by Federal finance minister Donald Macdonald will do if to restore this the climate for foreign investors in and particularly in Ontario and has without doubt been deteriorating drastically since the beginning of the for exam in 1970 foreign investment in this country amounted to More than 5900 by 1974 it was about while for the first three quarters of 1975 it had fallen off to but in the fourth Quarter of 75 which was after controls began investment had plunged to in the first Quarter of this foreign investment has further shrunk Toa Mere and is still what is the reason for this dry up of much needed foreign investment everything would seem to Point to the new Feder Al ant inflation and other controls As the sole but there Are contributory factors continuous government legislation since last year has left the foreign investor disenchanted to the Point where he no longer is looking toward perhaps a More serious outcome has been the withdrawal of moneys which had already been invested economic along with the general Atmo sphere controlling conditions in have also been a decided influencing for is second Only to Italy in the entire world in its record of strikes and labor it is not an appealing picture for the foreign certainly one of the greatest deterrents has been the foreign investment review act Means Ottawa has the Power to or All new foreign business ventures in even if government does approve a venture and it Doest do this readily investors feel that they simply dont want to spend the time and Effort in meeting the rigid requirements imposed on the new income tax which became Law on also penalizes foreign investors in Canadian business by depriving Many of them of special allowances and reserves normally available to Canadian businessmen and in subsequent legislation and amendments to the act have made the position even More untenable for the foreign what May further serve to confound matters is the possibility of increased provincial income taxes in Provin Cial treasurer Darcy Mckeough has recently hinted at such an this if would affect not Only Ontario but also those foreigners receiving in come from a business whether incorporated or not in the As if this were not provincial taxes on capital payable in addition to income taxes Are difficult for Many foreign investors to this cannot be regarded As a discriminatory since Canadian corporations must also pay it As Many provinces Levy succession duties and gift since these taxes Are levied based on the situs Loca Tion of irrespective of the domicile of the deceased a foreigner could find for subject to Ontario provincial succession duties without having treaty exemption in his country of As a he might Well be paying almost the entire value of the asset in succession and death another major hurdle that the Ontario delegation had to Clear on its european Mission was the matter of the Ontario land Transfer this tax amounts to 20 per cent of the Pur Chase Price on land and buildings bought in Ontario by a non Canadian in Quebec it is even there the land Transfer tax is a hefty 33 per these imposts decidedly Are since they Are payable Only by foreigners who May want to Purchase property in either Quebec or ii is open to serious question whether or not such a tax is particularly in the Case of German under the terms of the Canad Germany tax German residents investing in Canada Are assured a certain protect which they obviously no longer this Protection is provided in the 1956 bilateral agreement Between the two which states in part the citizens of one of the contracting states namely Germany shall while residents in the other contracting state namely be subject therein to other or More burdensome taxes than Are the citizens of such other contracting which Are residents in its the term citizens includes All juridical partnerships and associations created or organized under the Laws in Force in the respective contracting cont Raed on Page ;