From gasoline tax hike to defense cuts, Canada tightens its belt

Canadians started paying more for gasoline this week, but so far the loudest grumbles are from politicians and newspaper editors. One reason there was little public outcry to higher gas prices was that gasoline price wars over the past year have moved the price of a liter of gasoline up or down 10 cents in a single day.

The official price hike of about 2 cents a liter or 9 cents an imperial gallon came as a result of Canada abrubtly moving to world oil prices after a major economic statement by Minister of Finance Michael Wilson.

Government ministers cut their own paychecks as the new Progressive Conservative government set out to trim the federal budget deficit by cutting government spending by $4.2 billion Canadian ($3.2 billion US) in fiscal year 1985-86 which begins next April, freezing the size of the federal service, selling off government-owned companies, cutting back on overseas embassies, and cutting back on defense spending. The $154 million reduction in defense spending reverses a campaign promise to increase it by 6 percent after inflation.

Prime Minister Brian Mulroney's $130,000 salary will be cut by about $6,900 a year, and Cabinet ministers will lose some $3,100 a year from a salary and benefit package of $110,000 a year.

''At a time when Canadians are being asked to accept reductions in government programs and services, it is appropriate that Cabinet and Parliament also contribute,'' Mr. Wilson said.

These cuts will not reduce the federal deficit. It will rise from $34.5 billion this year to $37.1 billion next year.

''This package is only a first step,'' said Treasury Board president Robert de Cotret. He and Finance Minister Wilson plan to chop $20 billion to $30 billion in projected spending by 1990.

''That's a pretty tough message for the unemployed in this country,'' said Liberal leader - and former prime minister - John Turner, in a reference to Wilson's prediction that unemployment will be 11 percent next year and will not come down to 7 percent until 1990.

The leader of the New Democratic Party, Ed Broad-bent, described the cuts as ''cruel'' and said they would mean a loss of 50,000 to 100,000 jobs.

Wilson wants private industry to create jobs. ''We never said the jobs would be created by the federal government.''

In his statement to the House of Commons, Wilson said foreign investment would be welcome in Canada. This week the federal Cabinet acted on those words, approving 19 applications that came before the Foreign Investment Review Agency.

Business has liked this economic statement - it is as close to a budget as one can get, but it is not officially a budget. Wilson, a former executive with a brokerage house, made one proposal to stave off criticism that he is soft on the rich and hard on the poor.

''We are concerned about the few high income earners who are paying little or no personal income tax,'' Wilson said. He plans to make sure that even if rich people are using tax shelters, they still pay a minimum tax.

Many federal programs have been scrapped altogether. There will be no more $ 800 payments for switching a home heating system from oil to gas; no more grants to insulate houses; no more summer employment program for students.

The cuts are big and small. Just about everyone in Canada has a plastic card with a social insurance number on it. Now if the card is lost, replacing it will cost $1. It's not much - just a symbol that the Tories want Canadian taxpayers to start paying their way.