Canada Publishing Corp. has sold 49 per cent of its shares to IDG Books Worldwide of California for $2.6 million. The deal, which includes the Macmillan Canada line, slips under a federal restriction on the sale of Canadian-owned publishing firms. Canada Publishing president Ron Besse said the union could be a model for other deals-“provided we can convince Americans to be happy with a 49-percent share.”
YBM CLASS ACTION
A Canadian class-action lawsuit was filed in the YBM Magnex International Inc. scandal following at least two lawsuits in the United States. The new suit names auditors Deloitte & Touche and YBM’s former directors, including former Ontario premier David Peterson and Owen Mitchell, a vice-president of First Marathon Securities Ltd.
The former Midland Walwyn Capital Corp. was fined $155,000 by the New York Stock Exchange for a series of violations, including failure to maintain adequate capital reserves in 1996 and 1997. The infractions occurred at the U.S. arm of Midland Walwyn Capital Inc. of Toronto before it was purchased by Merrill Lynch & Co. last summer and renamed Merrill Lynch Canada Inc.
An affiliate of R. J. Reynolds Tobacco International agreed to pay $23 million in fines and forfeitures for helping smugglers illegally slip Canadian export cigarettes back into Canada. U.S. Attorney Thomas Maroney said Northern Brands International admitted its role in diverting 26 tractor-trailer loads of Export A and Vantage cigarettes back into Canada without paying U.S. excise taxes.
Internet stocks soared into the new year on news that online holiday shopping in the United States proved even more robust than expected. The inflight retailer SkyMall Inc. surged on the Nasdaq stock market after reporting Internet sales had more than tripled in the fourth quarter to $1.6 million, up from $465,000 a year ago. The Dow Jones industrial average, which three months ago had sunk into the 7,000s, finished 1998 at a healthy 9,181.43.
Overhauling the wheat board
Along-awaited report recommends sweeping changes to the Canadian Wheat Board, an institution that is already battling to improve its image. After a year of study, retired Supreme Court judge Willard Estey has proposed that the board—which co-ordinates the movement of grain to ports—transfer that role to private grain companies. The board’s role would be confined to sales and marketing, the report says, with “no operational or commercial role in the handling and transportation of grain.” In effect, the report recommends that the move-
ment of grain be deregulated and that farmers play a much larger role in deciding when and how their produce moves to market. Farmers would sell their grain to the company that offers them the highest price. The companies would have the power to take competitive bids from railways for the shipment of grain. Estey also recommended that the cap on grain freight rates be eliminated and that no grain should be shipped until it is sold. The study was commissioned in late 1997 after farmers suffered massive losses because of delayed shipments.
Freezing temperatures blasted through California’s San Joaquin Valley, destroying about 50 per cent of the state’s orange harvest and driving up Canadian prices for citrus fruit.The wholesale price for a box of 72 midsize oranges jumped from $26 to between $38 and $54. Prices for lemons and other affected crops, including cauliflower, also shot upward.
Closing a loophole
Finance Minister Paul Martin quietly announced that Canada plans to alter its laws to prevent wealthy taxpayers from moving family trust assets out of the country without paying capital gains tax. Martin originally signalled his plans two years ago, after the Bronfman family of Montreal transferred $2 billion in Seagram
Co. Ltd. shares to the United States. The new law, which will be retroactive to Oct. 1,1996, if it is passed, will prevent Canadians from accumulating wealth in Canada and then transferring it out of the country without paying tax. A $25,000 exemption will apply to avoid penalizing lower and middle-class taxpayers. The Bronfman family move was singled out for attention in 1996 by federal Auditor General Denis Desautels.
Canadians awoke from their New Year’s Eve celebrations to find that, once again, Ottawa has altered the financial landscape. Employment Insurance premiums will drop slightly. But that will be more than offset by a hike in Canada Pension Plan premiums. Correspondence will also cost more.
In addition to a one-cent increase—to 46 cents—for basic letters to Canadian destinations, it will now cost 55 cents to mail a letter to the United States, a three-cent jump. The international rate goes to 95 cents, up five cents.
There was some good news, however. Provincial tax rates will drop for those in New Brunswick, Ontario, Manitoba, Saskatchewan and British Co-
lumbia. There will be no change in other provinces. Taxpayers will also get a break as the federal government makes good on a promise in last year’s budget to reduce or eliminate the three-per-cent general surtax. Those earning $50,000 or less will pay no surtax, while those earning up to $65,000 will see a reduction. Finance Minister Paul Martin is considering further measures to reduce or eliminate the surtax for all taxpayers in his next budget. The tax was introduced in 1986 to reduce the deficit.
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