Residents of British Columbia who make their investment decisions later this year will have an unlikely partner—the provincial government. Faced with continuing high unemployment and an economy that lags behind the rest of Canada in its recovery, the government of Premier William Bennett two months ago followed the lead of Quebec and Alberta and developed a plan to attract fresh funds to the province’s private sector. Under the $100-million Equity Investment Plan, B.C. residents will be eligible for interest-free loans if they buy newly issued shares in companies that trade on the Vancouver Stock Exchange (VSE). The plan, said B.C. Finance Minister Hugh Curtis, has “significant potential to inject new vigor into the economy of this province.”
Beginning this month, each resident who buys new shares can qualify for a loan for 25 per cent of the purchase price, to a maximum of $2,500 per year. If the investor makes a profit, the government recovers its loan. If the investor suffers a loss, the government settles for 25 per cent of the selling price.
The Equity Investment Plan is the latest attempt to copy the Quebec Stock Savings Plan (QSSP), which has enticed more than 200,000 Quebecers to invest in local companies since it was introduced in 1979. Last year residents could deduct from their taxable income 50 to 150 per cent of the money
they invested. Since the plan’s inception about $2 billion in new capital has been raised.
The first province to imitate the QSSP was Alberta. Last fall the Conservative government of former premier Peter Lougheed devised a $10million tax credit system that takes effect this month. Residents will receive tax credits—limited to $3,000 this year—of 10 to 40 per cent for each investment in Alberta Stock Exchange companies. Inspired by those programs, the Toronto Stock Exchange asked the provincial Liberal government last fall to consider an Ontario Junior Equity Plan to provide grants for investors in small companies. But TSE officials admit that the Ontario government is skeptical about the proposal, because it could benefit high-income taxpayers.
In British Columbia some economists point out that because speculative companies dominate the VSE, investors may find the selection limited. Richard Allen, the chief economist with the B.C. Central Credit Union, said that he doubts a 25-per-cent interest-free loan will attract many new investors into the marketplace. Still, the Social Credit government has pinned part of its recovery program on the hope that its citizens will be adventurous enough to do just that.
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