BRITISH COI UMBIA ~

Two recent announcements coming
out of Ottawa reveal very clearly whose
interests are being served by the federal
government. One concerns $2.8 billion in
resesarch credits handed out to scores of
companies. The other concerns a deci-
sion to save $200 million by cutting thou-
sands of people off unemployment
insurance.

The $2.8 billion in research grants was
ostensibly to assist Canadian companies
doing research in the national interest.
Under this scheme companies would get
$50 in tax credits for every $100 spent on
research.

But when the government at the same
time allowed those companies to make a
“quick flip”, that is, to immediately sell
their tax credits to still other companies,
it became an open invitation to fraud.
What many companies apparently did
(and often they were new companies set
up just to get in this racket) was to submit
lists of expenses for money never really
spent on actual research — lists that ran
into millions of dollars. They then app-
lied for and received tax credits.

Next, the tax credits were sold at a

Harry
Rankin

slightly reduced rate to any company
that could use them. Then they pocketed
the proceeds. Now it is revealed that at
least $925 million in tax credits was given
to companies that never did any
research. The money is not recoverable.

Everyone knew what was going on.
The papers were full of it, but the excuse
of the finance department was: “What
finance officials didn’t know was that
there were so many dishonest Canadi-
ans.” This is really stretching credulity to
the breaking point.

Finance officials now also admit that
in many cases the tax credits were used to
“buy office buildings that have never
been used for research” and that money
was “diverted to expensive homes and
expensive cars.” The research tax credits
were to be given only to Canadian com-
panies but American con-artists quickly
got into the act toc setting up dummy
Canadian companies with Canadians as
presidents.

The owners of some of the companies
that were set up to get tax research credits
didn’t only enrich themselves by buying
office buildings, fine cars and fine homes.
They also paid themselves huge salaries

_Let’s end myths about
tax breaks and jobs

and salted away their profits in other
countries where they can’t be touched.

In Vancouver, one recipient of these
generous government tax credits used
the proceeds not only to buy an office
building but also a shipyard which he
promptly closed down and from which
he laid off 250 workers!

What will happen to the people who
used this scheme to defraud the govern-
ment? A few may be charged, but it
appears that the government is prepared
simply to write off a billion or so dollars
as a bad investment.

The research tax credits prove once
again that tax concessions and subsidies
to business do not help Canada or create
new jobs. All they do is enable individu-
als and companies to get rich at public
expense.

In sharp contrast to the lenient atti-
tude of the government to business
defrauders is its decision to call in
650,000 people on unemployment insu-
rance to demand an explanation from
them as to why they haven’t secured a
job. The government expects that by
using this method it will be able to cut

thousands of people off unemployment
insurance and save at least $200 million.

This time the scam and fraud is being
used by the government against the
unemployed. It is blaming the victims for
its own failure to create jobs.

Hiring and training officious ferrets to
interrogate people on UI won’t create
new jobs. The 650,000 unemployed
could not be blamed if instead of subject-
ing themselves to this insulting interroga-
tion, they decided to go to Ottawa in a
body to demand that Prime Minister
Mulroney carry out his election promise
of “jobs, jobs, jobs.”

There is plenty of work that needs to
be done in this country. We need a refo-
restation program, and a housing pro-
gram. We need to establish wood
products industries and other industries
to process our resources at home instead
of outside our country. Every city needs
to renew its sewers and pollution remo-
val facilities.

But these jobs will only be done if the
government initiates them. That is the
way to take people off unemployment
insurance.

Just 10 days lef

A glance at the figures below shows we’ve edged over the half-way mark inol

1986 financial drive.

Sterling effort by our supporters has raised $57,117 towards the target of
$95,000. But it doesn’t take a genius to recognize we still face the big hurdle.
Let’s make that extra effort and bring the drive to a successful conclusion

June 21. “
GREATER VANCOUVER
Quota Achieved
Bill Bennett 700 904
Burnaby 6,000 3,946
Coquitlam 2,700 1,978
Effie Jones 2,500 2,408
Kingsway 6,500 3,668
New West. 2,500 2,907
Nigel Morgan 2,200 433
North Van. 2,900 2,228
Olgin 700 470
Richmond 1,600 767
Van. East 9,500 POV3
Van. Fishermen 800 120
West Side 4,800 3,504
FRASER VALLEY
Delta 850 628
Fraser Valley 300 277
Langley 700 1,028
Maple Ridge 2,800 25229
Surrey 5,000 1,908
White Rock 1,400 546
KAMLOOPS-SHUSWAP
Kamloops 950 885
Shuswap 750 51

~

as Tories favor business |

Vancouver area non-profit agencies are
being forced to eliminate student and youth
jobs, cut back on services to underprivileged
children and hike fees for summer activities
due to Socred-style cutbacks in the federal
government’s Challenge 86 program.

That’s because more of the summer job-
creation program’s funds are being chan-
nelled into the private sector, despite the
government’s own study which showed that
such uses of the funds “were a waste of
money,” according to Hal Gray.

Gray, executive director of Vancouver’s
Little Mountain Neighborhood House, said
the picture is the same across the country,
and said a national coalition of non-profit
agencies has been formed to fight the cut-
backs.

“In the last three years, we’ve had to
drastically cut back on all our services,” said
Gray in an interview.

The reduction in funds for non-profit
agencies under the “Challenge” programs
has been extensive, with Little Mountain
receiving only $10,000 this year, compared
to $27,000 it was granted last year to run
three services.

The severity of the cutbacks has meant
the elimination of two services — the agen-
cy’s Teen Outreach program for parks and
the Canoe Camp program — while the
Day Camp program has been scaled down
and fees to parents have been raised to meet
the shortfall, said Gray.

Even the amount granted the society
under Challenge 85 was a reduction from
the previous year’s figure, he said, noting a
general erosion in the program — termed,
under the former Liberal government,
“Summer Canada.”

But, while grants to the non-profit sector
have been decreased drastically, money
allotted to private corporations has more
than tripled, said Gray, who plays a key role
in the national coalition.

Grants to the private sector total $34
million across the country compared to last
year’s $10-million grant. And this is despite
the fact that a study by Employment and

OKANAGAN
Penticton 750
Vernon 1,500 1,

'_N. COAST/INTERIOR —

Correspondence 2,000 2,3
Creston 400 5

Fernie 250
Powell River 600
Prince George 200
Prince Rupert 250
Sunshine Coast 800
Terrace 50
Trail 800

Campbell River 2,000
Comox Valley 1,500
Nanaimo 2,800
North Island 400
Port Alberni 1,500
Victoria 3,200
Miscellaneous 2,000
TOTAL: 77,150

Immigration Canada found that the P™
sector meets none of the criteria for ©,
ity under the Challenge program,
reported. a

“The government reports said tt '
waste of money: the grants to the PM
sector created no new jobs, and the}
did fund likely would have been “
anyway.

“Even among the private sector wv
some opposition, because the grants PY
unfair competitive advantage to some
nesses,”’ he said. Ao

Gray said grants to the public °
(which does not include non-pro
cies) increased marginally in 1986, but
the key recipients were government 4b
such as Census Canada, the De
Defence, the RCMP and post-se™
educational institutions. j

Locally, some $600,000 of public”
funds went to Expo 86. Gray said th¢
tion is uncertain of what the funds i
but notes “they’d pay for about ™
camps. a

“The thing is, that is all public ™
And the $34 million for busines
straight out of the pockets of small
medium sized non-profit agen,
deliver services for youth and senio®:

Gray was among other comm
ers who recently — with the aid ofa
ing grant from Vancouver city © oh
travelled to Ottawa to meet with aa fly
ment and Immigration Ministef
Macdonald.

“We got absolutely nothing out
meeting. It was as if she’d said, ‘D0
fuse me with the facts, my political 4 st
set.’ I got a feeling of deja vu, ot
reminded me of the time I was in (7 4
B.C. human resources ministef,
McCarthy’s office and got the
response,” said Gray. Be sie

Gray said the Save Our Summet and!
tion, which has about 300 member
growing may hold a cross-country ©
stration in the summer. But it is ¢®7,
staying together for the future, he S4°

of