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New Corporation Tax Effective Next Month By JAMES NELSON OTTAWA (CP)--The tax de-| partment will be ready to-col-) lect the new five-per-cent re-| ~"findable corporation tax when} it goes into effect next month--| even if Parliament hasn't en- acted it. 'The tax is expected to yieid about $250,000,000 a year. Ex- perts say if large parts of this lare deposited in the govern- |ment's account in the Bank of |Canada, money will be scarcer. A finance department official Says: If the government de-| Revenue department officials | posits a company's tax payment! said Tuesday forms to accom-'cheque in a chartered bank, pany remittance of the tax will|funds are merely transferred go out to the department's 26/from one bank account to an- district tax offices well in ad-jother. This has no effect on the vance of the first due date,|Canadian dollar deposit liabili- May 31. The fine points of the new tax! may not be decided until Par-| liament translates Finance Min- ister Sharp's budget proposal into law. That won't stop the tax collectors. Adjustments can be made later. The tax, calculated on a com- plicated formula to get at cor- poration cash profits, is to be| collected for 18 months and then repaid to the corporations, with interest at five per cent, in the following 18 months, depending! on the state of the economy. It's a novel federal venture into taxation as a dampener on over-heating of the economy. DISCOURAGES EXPANSION Finance department officials say the money collected prob- ably will be deposited initially in federal government accounts in the chartered banks. This won't have much effect on the money supply at the start but it will encourage companies to postpone reinvestment of their profits in new plant expansion. Later, if the government fee)s the economy needs more tight- money treatment to curtail spending, it can deposit the tax | ties. }some interest. cash jties of the chartered banks as a group. But if the same cheque were | deposited by the government in its central bank account, the Bank of Canada then would present it for payment to the | chartered bank holding the com- pany's account. Possibly the| jchartered bank's account with the Bank of Canada would be| drawn down as a result. MUST KEEP DEPOSIT The chartered banks are re- quired to keep money in their tills and on deposit with the} Bank of Canada amounting to, at least eight per cent of their Canadian dollar deposit liabili- These are their cash re- serves. In addition, by agreement among the banks and with the Bank of Canada, an additional seven per cent is retained in cash, Government of Canada treasury bills, and day-to-day loans--assets that can be con- verted quickly to cash, but earn Combined- with reserves these are the banks' liquid assets. The official said in times of easy money, when the char- funds in its. account in the Bank|tered banks have money more of Canada, officials say. This| | freely available for loans, their will not only draw money out of|liquid assets may run as high the spending stream but reduce|as 20 per cent or more of their the chartered banks' cash re-|Canadian dollar deposit liabili- serves, forcing them. to cut back/ties. For the whole of 1961 the the money supply. \ daily average was 18.1 per cent. 1 | || the beginning of last a the liquid asset ratio was down to 17.6 per cent, and in the first half of this month it was 16.57 per cent, represent- ing a drop towards the agreed 15 per cent minimum. | SPEAK OF RESERVES their deposit liabilities to ex- pand to 12% times their cash reserves. In an Ottawa story April 4 The Canadian Press erroneously said the Banks can increase their loan assets by 814 times = Canadian deposit liabili- ties Bankers are quick to em- phagize the eight-per-cent cash reserve requirement doesn't mean a bank can loan 92 cents for every dollar of cash it holds. Nor does the 15-per-cent agreed reserve mean it can loan 85 \cents of dollar. Laymen speak handily of the) They say a bank can lend eight per cent cash reserves\only about 60 cents of each requirement as meaning that|dollar it takes in after meeting the chartered banks can allow'reserve requirements and lay- CITY OF TWO TRAFFIC OSHAWA CLERKS No. 2 SALARY RANGE--$4,348.00 to $4,943.00 (361% hour week) Te set vo an results cf "rotfic studies, assist in mo'niain street inventory records, process ond record obtaining and mainta ning T affic data, pavement width, Condition of road surface, structures, street lighting facilities, traffic control pertaining to traffic and amendme Full High School. Required to hove standin, Apply % writi only ving full 5:00 ig 966, p.m., April 26th, devices, accident records, 'by- laws nts to 'by-low: 1966 Chauffeur's Licence in good personal date, education, etc. by PERSONNEL OFFICER CITY ely gos Before you buy any 'Piano or Organ 79 Simcoe St. North 728-2921 REPEATED BY POPULAR DEMAND ' Tropical Punch BEST BUY! Save 9c! 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BAND-AID Plastic Strips Johnson's J-CLOTH All Purpose Towels 39; 2% to 3 Ib. average Tender - Tasty - Choice Portion Cut - Chicken LEGS or BREASTS lb. 63 For a Pleasant Change - POT ROAST Boneless Ib. 69 Shopsy's "Aloro PIZZA PIES Small Pepperoni Save 10c! AJAX Liquid Cleaner 89 Brand" Shopsy's - Tender - Tasty Ro! each 69¢ CORNED BEEF per mv. 79¢ Mild Cured 2 to 2% Ib. avg. Giant Size | Save 10c! 3c Off Pack Giant Tins Ajax Cleanser 255. Reg. 49c! Banana Weston or Sunbeam Guest Cake .... Frozen Foods! Save 4c! Old South 6-oz. Tins FLORIDA ORANGE JUICE .... 2 for 43¢ 45c Supreme Brand Fancy Peas __ 2-Th. bag 53e SPROULE'S "Red and White Corner Simcoe at Mill WILSON 'FOODMASTER' Red and White Wilson Rd. S. Shopping Plaza Red and White BROWN'S | MAPLE GROVE Red and White Brooklin, Ont, Maple Grove, Ont. ing a prudent base of invest- ment in government bonds and other securities. y|AREN'T SURE Revenue department officials are not sure how many compa- nies will be affected by the new tax but are estimates about 16,000, Latest available statis- ties show that-135,000-companies paid taxes in 1962 and that 57,- 000 others were not taxed be- cause they operated at a loss. Not affected by the new tax are companies whose cash prof- its amount to less than $30,000 a year. Initially, companies will have to estimate their tax liability and pay on that basis. Later, when they close their books on the year and are able to arrive at their precise tax liability, the amounts wili be adjusted, The initial effect of the tax on the economy now is being felt, officials say. Many corpo- rations are reassessing their ex- pansion plans in the light of the requirement that they start pay- ing the tax next month. U.S. Commander Is Contradicted WASHINGTON (AP)--The de- fence department contradicted a U.S. naval commander today and said an_ electronically equipped Soviet trawler kept watch for two weeks during U.S. efforts to recover a missing hydrogen bomb off Spain. In response to questions, the Pentagon said the trawler re- mained in the sea search area THE OSHAWA TIMES, Wednesdey, April 20, 1966 JF" , near Palomares Beach, Spain, until March 2, about two weeks before recovery of the American bomb. been no Soviet trawler or other. ship in the search area at any time since we began our work." This disclosure contradicted a statement madc by the com- mander of the naval force a few hours after the weapon was re- trieved April 7. 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