40 - Sunday, November 1, 1987 - North Shore News

Accountants question

tax reform proposa

PROPOSALS BY the federal gov-
ernment to reform the nation’s tax
system are difficult to analyse
because the magnitude of the sales
tax bite scheduled under stage two
of tax reform is unknown.

At best the current round of
reform proposals can be said to be
a mixed bag of minuses and pluses,
according to an analysis prepared
by a special task force representing
Canada’s 37,000 certified general
accountants (CGA) and students.

The CGA-Canada task force
concluded that ‘the past practice
of increasing tax revenue by raising
tax rates and taxing new bases is
no longer feasible.’’ It emphasized
that tax reform in the 1980s and
1990s should reduce tax rates to
levels competitive with other
jurisdictions.

Government should then rely on
increased economic growth and
development to increase the size of
the existing tax bases, the CGA
report said.

In turn, this means rearranging
the existing tax bases and exemp-
tions by shifting the tax burden
away from employment, invest-
Ment income and dividends
towards consumption activities in
order to make the tax system more
compatible with growth and
development; the report said.

. In responding ‘to the . personal

FOCOZRNK
ZURICH/GENEVA
FOREIGN COMMERCE BANK

tax proposals, the report concludes
that the reform measures ‘‘are
moves in the right direction,
towards a system that is more rea-
sonable, fair and progressive.”

However, the new system will be
much more complex than the old
one, especially since there seems to
be no rational division between
personal deductions that remain
deductions from income and other
persona! deductions that under the
new system are subject only to
limited tax credits.

It also said that tax reform
should re-acdress the family unit
income concept.

The task force’s report labels
“inherently unfair’? the disparity
between taxes paid on income tax-
ed in two separate returns for a
family unit and the tax on the
same total income taxed in one
return as many self-employed or
business owners do.

There is a real danger that after
integration with sales tax reform,
the current income tax rate reduc-
tions may do little to increase per-
sonal savings, foster increased
productivity or provide incentives.

The brief also notes that the phi-
losophy behind the new an-
ti-avoidance initiatives is a direct
challenge to taxpayer rights.

Along with other professional
accountants’ in Canada, CGAs
strongly disapprove of the propos-

'

ed enactment of a general, broadly
worded anti-avoidance provision
apparently designed to impair
tax-motivated transactions and,
thereby, severely limit the benefits
of tax planning.

In order to promote growth and
productivity, capital cost
allowance rates should be restored
to current levels, instead of reduc-
ed as proposed. Similarly, planned
reductions in incentives to research
and development and_ resource
development will impact nega-
tively.

The CGA-Canada report also
finds it alarming that the gov-
ernment has not addressed the
urgent need to curtail government
spending to help reduce the na-
tional deficit. ‘‘On the expenditure
side, we do not want to see debt
service costs impair the ability to
fund other government programs
and services,’’ it says. ‘‘As for the
deficit, it is inseparable from the
chronic spectre of inflation,’’ the
report Says.

922-9100

thst coe.

or

evade

Erni2 Schmidt

at
ERNIE SCHMIDT INC.

AUTOPLAN ¢ HOME ¢ RECREATIONAL
TENANT CONDO ¢ TRAVEL ¢ PERSONAL
BUSINESS (Commercial & Industrial Insurance}

26 years of experience serving the
Insurance Buyers of B.C.

OPEN 7 DAYS A WEEK
CAULFEILD VILLAGE
WEST VANCOUVER

984-3095

Hae,

THE ONLY SWISS BANK
WITH
A NORTH. SHORE PRESENCE

“After 14 years we still

believe our customers of

deserve what we value... :
HONESTY * QUALITY ¢ SERVICE.” §

Freestone
TRACTION TIRE
iSeAc]lLe-E 3

| BRING IN THIS AD AND.
| YOU’LE RECEIVE $6 _—

| CASH BACK ON EACH

| TIRE PURCHASE.

: BRAKES ° OIL & LUBE * BATTERIES © TIRES. |

Comprehensive — Confidential — Convenient

Contact our North American Representative
office for information on investment counsel-
ling, portfolio management and trading in:

* Precious metals * Gold coins
* Foreign currencies * Securities

* Options & futures *. Commodities
* Mutual funds

Representative office for North America:

Adrian Hartmann
585 16th Street, Suite 202
West Vancouver, B.C.
V7V 482
Tel. 604/925-3551

_Head office:
Foreign Commerce Bank
Bellariastrasse 82
8038 Zurich, Switzerland
Tel. 41-1/482-6688

For information
on how the
YMCAcan
improve your
lifestyle call:
681-0221

| 1830 MARINE DRIVE
| NORTH VANCOUVER

(across from International Plaza)