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Emphasis ought, therefore. to have been on making investment on technologically advanced machinery or in stimulating workers to accomplish more. in the United States, supply-side economists have con- vinced the government that lower tax rates, aeross-the-board, will cause em- ployees to work harder and special tax htogtlttthets for particular types of savings have been established so that savings will cause investment ultimately stimulating reactivity increases. MaeElaetteeteh-mttheothert-dto lowermarglnaltaxrateshuttocleeea number of so called “loopholes" or “tax 'ty-ttttarm".'.--.- the tax expenditures is to increase the total snout at taxes collected by several Hilton dollars over the next two years. COMMENTARY '"ifirirs""r7iG"""0"rrig't- J. McCready Budget destroys a dream It would appear, however, after the budget speech given by Finance Minister Allan MacEachen, that Canada's current economic malaise is likely to continue. Indeed, his budget is bound to create further malaise in the future since he ignored completely those things which could have stimulated Canada to achieve Laurier’s promise. On several occasions, I have argued that increases in prices would be unnecessary if productivity were stimulated. To achieve a productivity increase. it is necessary either to cause an increase in work effort on the part of labor or to get investment in inventions or teehnologi- cally advanced machinery which will increase the output of employees without any increase in the quantity of work. It is said that Sir Wilfrid Laurier felt that the 20th century was to Canada's. Since then, Canadians have been looking to fulml the destiny which Laurier promised. After all, Canadians have been blessed with large amounts of natural resources, many acres of land, few people per square mile, and a highly educated labor force. Moreover, Canadians have accepted many immigrants who have brought with them both expertise and a desire to achieve. All this should engender a destiny for Canada that would spell success. Therefore, if shoppers realized they could avoid traffic jams along King Street and at Waterloo Square by parking at outlying downtown lots, and still find such parking convenient through shuttle bus system, the sore point might be healed. PAGE 6 -- WATIRLM CHRONOCLE. “ONESDAY, NOVEMBER 26. um The ideaUseins feasible since the root of the downtown parking problem isn't caused by lack of space, but rather by lack} of convenient space for shoppers. Businesses and shoppers have complained about the situation far years, particularly during busy seasons such as Christmas. So it seems Henry's idea might solve the sore point. At Monday's meeting, the alderman proposed that the city initiate a shuttle bus service downtown. According to the plan, the shoppers' shuttle would operate a 15-minute route, covering the Waterloo Square parking lot as well as surrounding city-owned lots such as the Memorial Arena. Hats off to Alderman Robert Henry for suggesting a possible solution to the age-old problem of downtown core parking. Shuttle bus solution established 1 854 published every Wednesday by Fairway Press, a division ot Kitchener-Watertoo Record Ltd., owner 225 Fairway Rd.S.. Kitchener. Ont. mm. correspondence to Waurtoo otnee: I: rang SLSeolh. Wanda). on, 'elePhooe may» a MtatqretoC8troe-Mtetot.tqesa-trtozmtttoorottttqoge Sputum meau-o Per*iritrt"qtt-totW-toosewarrr Open I MooaqtoFrtt-0tittos00srm _ Wm "Gamma-cu 't8-rmum-tst-odFor-Coontoos decreases ttavelittie or no effect on work aMttet. trt-tteq carried out at the Universi- ty or British Columbia mm mm Lauri" t'lteSg,'It", I.” but: new in the Ta Jun-1i show no dice: g- m - In. an. Also. other “(the budget was being presented, I joined five other representatives from various walks of life to describe the changes on a radio panel. 1 was struck by the unanimity of the panel about how MacEachen was doing just the opposite of Reagan in the United States. Except for the decrease in marginal tax rates, MacEachen did everything he could to stop Canadians from becoming more productive and thus ultimately defeating infuttoet. It seems that MacEachen has chosen to avoid policy reponslbllity and allow the United States to pull us along through their recession and the reatimultr tion of their economy. The question then is. what should MacBachen have done? in Canada, the Amongst the tax expenditures that were eliminated or reduced, the dividend tax credit will undoubtedly make company financing through equity issues more expensive. Moreover, firms hiring execu- tives to handle investment (Equipment) will find costs rising as the executives scramble to make up for lost perks in equivalent tax real income. And, there is no doubt that executives are able to effect such an increase in salaries since they have the advantage of high education, knowledge about what goes on in other countries, and a relatively inelastic supply which will cause them to be mobile if they cannot capture the equivalent after tax real income here in Canada. Finally, entrepreneurs undertak. ing to place venture capital are going to be subject to smaller depreciation in the first year, again a significantly smaller incen- tive to increase productivity. In other words, the tax expenditures that have been closed operate against new venture invest- ments. Publisher: Paul Winkler Manager: Bill Karges ltitt_(lijiiiit? 1Wtitt6trttttiiteS? WM? Development Bonda could have been manned beyond the and of no: with ”has {inns being able to borrow to mete capital expenditures and interest rate. for lenders that were tan exempt. Finally. the region of Canada which is 'mt_tottrmr.at_eethetaret productivity theme“ could be accoun- Some other symbolic items could also lead to greater investment in venture capital. For instance, the Small Business For instance, currently there is a $1.000 interest, dividend, and capital gain deduc- tion. The government chose to leave this alone. although if the government had opted to leave the 81,000 deduction for dividends and capital gains only, the amount of venture capital that would have resulted would be greater and the de- crease in short term funds would have been significant. Also, instead of subject- ing investment in new technologically advanced capital to a smaller depreciation rate, they ought to have increased the rate of depreciation if technological advance- ment was present. The government could have provided incentives for ventme capital out of which enterprises could have financed innova- tion and/or technological advancement. The latter study does show that govern- ment policy has little effect on contractual or discretionary savings although more contractual savings is protected by tax law - pension plan deductions, RRSP, and RHOSP. The result is that much of the money contractually saved goes into non-risk deposit in short term capital from which government draws much of its debt financing but which does not finance venture enterprises. savings. The government in a report by its long range and structural analysis division of the Ministry of Finance attributes changes in the savings rate to inflation. In a more complete analysis by lnformetrica, savings which adds to investment comes in two forms, contractual and discretionary. It is discretionary investment that permits private capital investment and it has been discretionary investment which has been curtailed in recent years. deco-ante- AgrtttAtiGrGk ’dimémy tg""'"""""""'"'"'"-"'- y. the world by the yin m. We Have resources. we have the capattttitiess, hm we gig coutantly being WM around by I would We to urge the Liberal govern» ment in Ottawa to carefully reconsider the team of Trudeau and MacEachen and to urge the replacement of those two individ- uals with individuals who would move towards a madam-Canada policy so that Canada can fulttll Laurier's dream, a dream of the most aigrtlfktattt country in An example of the latter was given my MacEachen himself in his speech. The announcement that Brunswick Mining and Smelting Corporation Limited will build a new zinc reduction plant in Northern New Brunswick with the help of $300 million in government funds was made during the budget speech. That $300 million is to create 400 full-time jobs. Admittedly, the north shore of New Brunswick can benefit from increased investment but more than 400 jobs could be created in Ontario or in the West with $300 million. Indeed, the cost effectiveness of the government invest- ment ought to be looked at much more closely since you and 1 as taxpayers ought to be concerned about the ultimate return that we get on our tax dollars. While it may seem cruel in the short run, it would be better for Canada as a whole, in the longer run, to invest in those areas where expansion will lead to higher productivity, and to help those people in the poor areas to move to the areas where productivity increases are possible. That would have a greater benefit in that more goods would be produced to be shared by all of us than would the benefit of creating jobs in the less productive areas of Can- ada. plished, is the West. Yet, MacEachen decreased the Western Development fund and spread it out over a longer period of time. Both moves are guaranteed to decrease the amount of productivity in- creases within Canada. pi. leCmndy I: an associate GNT 9/758 t