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Page THE HERALD OUTLOOK Saturday December 1989 the HERALD Outlook OUTLOOK is published each Saturday by the HILLS HERALD Home Newspaper of Halton Hills A Division of Canadian Newspapers Company LimiteoVat Street Georgetown Ontario L7G 877 8822 2201 PUBLISHER David A Beattie EDITOR Brian MacLeod AD MANAGER Dan Taylor Second Class Mail Registered Number STAFF WRITERS Donna Kelt Ben SPORTS EDITOR Colin Gibson ACCOUNTING Diane Smith CLASSIFIED ADVERTISING Joan Mannall ADVERTISING SALES JeanmneValois Craig Teeter Stacie Roberts PRODUCTION DEPARTMENT Dave Hastings Supt Annie Olsen Gilson Susanne Wilson CIRCULATION DEPT Marie Shadbolt Year end analysis SNAFU by Bruce Beattie Any stocks up for sale Diane Maley Business With year end approaching it is time to look over your stock port folio and decide if there is anything you would like to sell Increases in capital gains tax in 1990 may make it worthwhile for you to sell a stock before 1989 ends This only makes sense if you are thinking of selling anyway says Gordon Bonn tax planning specialist with Wood Gundy Mr Bonn does not advise you to sell your stock just to take advantage of the lower tax rate After all the stock may do well over the next year so that the gains far outstrip the tax increase Beginning next year three quarters of capital gains must be taken into income This year two- thirds of capital gains are taxable This means you will be paying about per cent more federal tax on your capital gains next year The tax change will affect only those who have used up their lifetime 100 000 capital gains ex Otherwise you need worry about capital gains tax TO SELL OR NOT In terms of strategy if you are going to sell a stock it is probably better to sell it in December rather than January Mr Bonn says You should not sell just because of the tax rate As always there are people for whom some other strategy might be better he notes For example taxes on capital gains do not to be paid until April On the other side of the equation you may want to sell your money losing stocks so you can apply your capital losses against any capital gains tax you have to pay Capital losses can only be used to offset capital gains Mr Bonn notes But he points out that an argu ment can also be made for your losses until next year to offset the higher capital gains tax Ifyou Jo decide to sell for tax loss purposes you cannot buy the stock back for 30 days If you sell to lock in a capital gain you can buy the stock back immediately Either way you must sell he stock by Dec 20 so that settlement will take place before year end Stocks traded after that day will be settled in the Toronto Stock Exchange says THOUGHTS Although you have until March 1 to make changes to your registered retirement savings plans Mr Bonn points out that this will be the last year that taxpayers will be allowed to roll all of their income from company pension plans Into an tax free Also 1989 is the first year tax payers can roll of pension in come into a spousal RRSP This tax splitting measure will suit peo ple whose spouse will be paying lower income in retirement Another note on The plan to raise the amount taxpayers can contribute to has been put off once again Berrys World Sometimes I wish wed never GOTTEN a fax machine Special interest groups get more money BE yxst Rejecting Meech Lake would hurt the economy Ottawa Bureau Hun Don take to the lifeboats yet but Canadians should consider seriously the argument that rejec tion of the Meech Lake constitu tional agreement woidd hurt the economy That the view of a group of 300 Quebec business leaders both French and English speaking who warn that Canada and Quebec will suffer if is spurned The group is led by Claude Castonguay a former provincial Liberal cabinet minister who now is chairman of Group Corp one of Quebec s largest firms Castonguay said a recent trip to Europe persuaded him that foreign investors are nervous about Canada future Money flies very rapidly when investors fear there is a chance of instability he told reporters This of course fits in neatly with the vision of Prime Minister Brian who choreographed the Meech Lake deal and would like to leave it to posterity as his tion to nation building But the past suggests there is substance to Castonguay claim While many opponents of Meech fed up with years of wrangling feel it might be better if Canada and Quebec go separate ways foreigners would view political in stability in the country in a light Indeed its doubtful the opinions of outsiders have changed much since the first con shakeup occurred in 1978 ELECTION SCARE What happened in the late 1970s to justify this view In November 1976 the Canadian dollar was coasting along at a value of US But then came the stunning election of Rene Parti Immediately as foreigners lost confidence in Canada s future the dollar tumbled It was the start of a freefall that lasted for years until the Canabuck bottomed out in 1986 at around 69 cents S Currency experts insisted in that the dollar was over valued At it t doing wonders for our exports So a downward revi sion was due but it s doubtful it would have fallen so far and so fast without the political element As the dollar plunged what hap pened In the late 70s the govern ment spent billions of its foreign currency reserves to ease the helter skelter retreat For the first time in a decade Ot tawa had to borrow money from of to build up depleted reserves In the 79 fiscal year perhaps the worst time the federal government borrowed 2 billion It also arranged huge standby credits with international banks which could be tapped if necessary Putting this in perspective in 1977 78 foreign bor rowing was million The record prior to that was million INFLATION HIGHER By mid the dollar had fallen to a low point unequalled since the worst days of the Great Depression With its dramatic fall the cost of imported goods soared as foreign made products became more expensive That pushed up the inflation rate Partly to clamp down on lnfla and partly to restore con in the Canadian dollar the Bank of Canada raised interest rates Meanwhile unemployment rose sharply in and 1978 before dropping off to more reasonable levels in 1979 And in 1977 78 the national debt ballooned per cent a oneyear rise not matched since It can happen again you say The economy is too strong Everyone is getting acclimatized to the idea that Meech Lake will be rejected Maybe But Canada is teetering on the edge of recession Invest dollars are flowing to Europe Asia and other places where the economic future looks brighter This week an economist has sug the dollar is over valued by eight cents A fall could be coming Perhaps the spurning of Meech will be the trigger There s a trend nowadays for government to give money to special interest groups so those groups can then intervene usually against what the govern ment is doing Such intervener funding as it is known is given on the grounds that financing such groups enhances public participation But does if Critics suggest that by tion intervener funding is biased a political shell game where some win and some lose depending on ar criteria In this regard there s been an in teresting test case the past couple of years It appears to confirm many of the critics suspicions The grants are tied to what is officially known as the class en vironmental assessment for timber management on crown lands In plain English the Natural Resources ministry appears before a threemember panel and tells them about now it plans and carries out timber management in the 70 per cent of Ontario that is crown timber land Basically this is most of the Canadian Shield country in eastern and northern Ontario up to the tree line It includes diverse aspects of log ging from building roads to harvesting regeneration and fighting bugs and disease Once assessed and approved the ministry plan will become the blueprint for all future timber management and harvesting pro jects in Ontario since all projects of that class will have therefore been approved This being the age of public in put groups that wished to par ticipate by cross examining ministry witnesses or by presen ting their own experts were registered as The assessment board was given to divide up any way it wanted to help the do their job This was months ago About 20 groups appealed for more than million in funding Only nine got cash with the biggest chunk of going to Forests for Tomorrow a coalition of five en organizations in eluding the Federa tion of Ontario Naturalists Three Indian Metis lobby groups ed almost One of those turned down for fun ding was the Ontario Federation of Anglers and Hunters with its 67 000 members and a deep in terest In multiple use of forests The hearings were held in Thunder Bay of course which both upped the cost and made it difficult for a lot of to attend on a daily basis Nor did anyone expect the assessment to take so long that the hearings are still on going today Thus cabinet authorized another in intervener funding in May this year again leaving it up to the board to decide who got what the kitty