The Nome Nugget

Canada Revokes Tax Concessions To Foreigners

OTTAWA (P) - The Canadian government has wiped out all special tax concessions for foreign investors in an effort to slow down foreign investment in Canada.

In a special budget message to the House of Commons last night, Finance Minister Donald Fleming decreed a raise from 5 to 15 per cent tax on all dividends paid to U. S. and other foreign owners of stock in Canadian companies or Canadian government bonds.

U. S. investors will be hit particularly by the new regulations.

The U. S. Commerce Department on Dec. 11 estimated that Americans invest $2 billion annually in overseas branches, subsidiaries and affiliates. More than one-third of this goes to Canada, the department said.

In Washington, U. S. Treasury officials said the Canadian move might prompt similar steps by the United States against Canadian investments here, but added it was too early to make any definite statement.

Officially, the Treasury took the position that the matter was an internal affair of Canada's and the U. S. Government would have no comment.

Flemming said industrial development in Canada has been accelerated by foreign investment but the time has come to help the Canadian economy achieve an improved equilibrium with the outside world.

As a result of special concessions for foreign capital, he said, "non-residents profiting from investment in Canada do not always bear their fair share of the general costs of government and administration, although they benefit in full measure from them."

Canada faces a $286-million budget deficit for the fiscal year ending March 31. instead of the $12 million surplus he predicted last March, Flemming said.