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Page THE HERALD OUTLOOK Salurda September the HERALD Outlook Less spending yet more borrowing What gives OUTLOOK is published Saturday by the II ALTON MILLS IlKltALI Home Newspaper of Hills A Division of Canadian Newspapers Company Limited at 15 Street Georgetown Ontario Second Class Mall Diane Maley Something strangely mysterious is going on out there and ordinary people hold the key Consumer spending is down housing starts are- falling and auto sales have scieeched to a halt Yet people are borrowing money hand over fist Persona loans are growing at an annual rate of per cent recent banking numbers show Mortgage loans are growing at a rate of 20 per cent Where is the money go ing Consumers are borrowing like theres no tomorrow says David Marshall chief economist at International a financial market information service Yet borrow ing is not showing up in buying at least not by Statistics Canada Its a mystery one that appears to have John Crow the vernor of the Bank of Canada spellbound Mr CroVi is keeping interest rates in Canada much higher than they are in the United States because credit growth is so strong Yet growth m credit is not begetting growth in sales or production Berrys World ISM by Inc I So one day decided to get into a field where there arent many women Registered Number own STAFF That credit demand is booming is not widely known Mr Marshall says But John Crow has these numbers in Iront him every week Indeed banking numbers are the best indicators of the economy because they are a week old he points out Governmi statistics can be months old by the time they are released Strong growth in credit demand could mean even higher interest rates in the months to come Mr Marshall says This is bad news for borrowers Strong growth in business bor rowing is easier to explain Businesses are impor machinery and equipment to upgrade their plants in Canada Such imporis do not show up in domestic output or retail sales But consumer spending on im ports is included in retail sales Part of the problem may be the numbers themselves Mr Mar shall says Surveys of consumer spending intentions may be wrong and retail sales numbers may be revised later Besides St at scan numbers an oldfashioned notion of consumption concentrating as they do on cars furniture ap pliances clothing and other goods Many services are not included For example strong growth in per sonal care services health clubs estheticians diet clubs may not be reflected in retail sales numbers Spending in the underground economy which would nut show up in retail sales also goes unseen PUBLISHER David A Beattie EDITOR MacLeod AD MANAGER Dan Taylor Donna Kelt Hen Iniimmtt spouts Colin Gibson June Juan Mini Suit SNAFU by Bruce Beattie Je Valois Teeter Static Itoberts PRODUCTION Dave Hastings Annie OLsen Wilson CIRCULATION Marie Brian ASSISTANT Todd Aikmun Tories are violating Election Act Always resourceful Fred uses a bathroom plunger to get a bald friend home Provinces could gain from sales tax Vic Parsons Ottawa Bureau By golly its awfully decent of those provincial premiers to stand up for the taxpayer and give the old onetwo to Finance Minister Michael Wilsons planned salestax grab Isnt After all it must be pretty temp ting for the leaders of th pro vinces who have to pay their own bills to take advantage of potential windfall revenues by piggybacking their retail taxes on the proposed Goods and Services Tax GST This is a possibility that shouldnt be discounted if the GST comes into effect The provinces stand to make millions of extra dollars from consumers at the cash registers if provincial tax owed is calculated on the cost of goods and services where applitable plus the federal tax Ottawa declared in its recent technical paper that you wont pay federal sales tax on provincial tax In instances where a sale is sub ject to the general provincial sales tax as well as the GST the GST will be levied on the price ex clusive of the provincial lax the paper said No such comforting declaration has been issued by the provinces Rather the premiers have dismissed Wilsons pride ami joy as unacceptable without offer ing alternatives or saying what they will do The closest theyve come is the suggestion by Gary of Manitoba that the pro posed nlnepercent rate be lowered lo some unspecified level WIDESPREAD IDEA idea is not a brainstorm of bis own making Commons finance committee chairman Don Blenkarri and the Consumers Association of Canada are among others to voice the same idea Wilson however says the rate is pretty firm Bui lets get back to the nobility of the premiers attack on the GST The fact is that they appear will ing to forgo the chance of some ex tra cash to defend their heretofore exclusivity in the realm of bales taxes paid at the cash register There are good reasons for their stance For one thing the premiers are aware that they will have to take at least a healthy share of the heat when consumers find themselves in paying total retail sales taxes in the order of 17 or per cent That holds for the majority of the provinces In some of the- poorer ones itll be even higher The ex ception is Alberta which because does not have a provincial sales tax presents its own problems Premier Don Getty is not keen on seeing a new tax of that type in his province and he is compelled to oppose It at leasi for public rela tions purposes A combined sales tax of that will make it more dif ficult for political reasons for the provinces to raise their own retail tax rates Sales taxes have been a prime revenue source for the junior level of government but the premiers recognize perhaps bet than Ottawa that there is a limit to taxpayers patience There is also the question- of jurisdiction While it seems unlike ly anyone will legally challenge federal authority to levy the GST in practice the provinces had been left alone in the retail salestax field This is about to change and un doubtedly the provinces notably the feistler defenders of provincial rights such as Quebec resent the federal intrusion With the arrival of the feds on the scene it will complicat some of the tailormade tax moves various provinces have developed Quebec for instance helps its important textile and furniture industries by exempting their products from retail taxes A federal tax would erode some of this support by in creasing the consumer cost of such goods- Ontario Progressive Conser vatives are breaking the law And nobody knows what to do about it Thats mainly because no one can come up with a better alter native than to let things go on as they are And if there is no solution the Liberals and NDP will be in the same fix someday It is all because of one section of the Election Finances Act that became law in a section that deals with leadership races The Ontario Tories are gearing up for a leadership contest that will climax in a partywide vote pro bably next May A modified oneman onevote system it will mean everyone who takes out a PC membership card will have some influence on who gets to be the next party leader ortunateh the current cam paign which has been unofficially under way for months is against the law According to the finances act no one can donate money to or spend money on a leadership campaign until the candidate registers himself with the Election Ex penses Commission Thats the provincial body head ed by former leader Donald Macdonald that looks after the financial aspects of political elec tions Partly as a reaction to the huge sums spent in the Tory leader ship race there was a feeling that all donations in such campaigns should be made public just as they are for general elections It was also felt it required the power of government to enforce it Mind you this meant allowing the government to dabble in the in ternal affairs of a political party even though there are no tax receipts for donations to leader ship candidates nor are there any government grants It is strictly money from supporters of the can didates that is at stake Yet the end result of the desire for controls was a law that said no one can raise money or for that matter use their until a leadership race is officially declared And that cant be done until the official call for a vote goes out giv ing the date fixed for the leader ship vote SIX MONTHS In the case of the Tories the resolution that brought them a- one- man onevote system said the leadership campaign should be no longer than six months At the earliest that means a November declaration So what is going on in the mean time Are the potential candidates sitting at home quietly waiting for word for when they can cross the start line Not likely The key of putting together an organization and testing the waters for support have been tackled already