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Taxes will be going down, but some other costs are up for now

Canadians are anticipating a tax break this year, but for now they'll be paying out more to the government.

Canada Pension Plan premiums will increase by about $60 for the average worker over the year. The premiums, now at 6 percent of pensionable earnings, will continue to climb annually until contributions reach 9.8 percent for the years 2003 and thereafter.

Also effective Jan. 1, the cost of mailing a first-class letter within Canada increased by one cent to 46 cents. The rate to the United States went up three cents to 55 cents while the international rate is up five cents to 95 cents.

Health Minister Allan Rock has hinted that tobacco taxes will rise again early this year, similar to an increase a year ago.

The government moved to lower one tax as employment insurance premiums have dropped up to $59 a year.

Toronto Dominion Bank chief economist Ruth Getter says the government should cut taxes because economic growth is slowing.

"Faced with record high debt burdens and little improvement in after-tax incomes, Canadian consumers will likely put the brakes on spending in 1999," she said.

Income-tax relief would boost consumer spending, which accounts for 60 percent of the economy, she added.

Promise keepers

Canada's Liberal government is getting better at keeping its promises.

A year-end check shows Prime Minister Jean Chretien's party has kept 22 of 40 election promises while work has begun on 13 others.

The main promise kept by the government in its second term was to eliminate the spending deficit.

As a result, Canada will have its first balanced budget in decades and a $10-billion (Canadian) surplus.

Unkept promises when the Liberals were first elected six years ago were big _ not scrapping free trade with the United States or eliminating the 7 percent Goods and Services Tax, both implemented by the previous Conservative government.

In brief

Police are checking DNA samples to determine if David Leigh MacLeod, a convicted pedophile and former Hollywood producer found dead in Montreal, is linked to sex crimes in Canada. MacLeod, 54, a cousin to actors Warren Beatty and Shirley MacLaine, was wanted by the FBI in prostitution cases involving teenage boys.

Canada had its only police-shooting death of 1998 Monday night near Sunderland, Ontario. Tony Romagnuolo, 44, was shot three times during a struggle with police who came to his rural home to investigate a traffic incident. A police officer and Romagnuolo's son, Rocco, 17, were wounded.

Talks are under way in Montreal to settle a violent firefighter labor dispute that has led to vandalized equipment and sabotaged operations. Provincial mediator Fernand Matteau is hearing demands by the firefighters for more staff and equipment and pension improvements.

Facts & figures

Canada's dollar advanced to end the year at 65.22 U.S. cents, while a U.S. dollar was $1.5332 Canadian before exchange fees.

There's no change in the Bank of Canada key interest rate of 5.25 percent or the 6.75 percent prime lending rate.

The Toronto Stock Exchange was higher at 6,485 points, while Montreal was 3,333 points, Alberta 1,762 points and Vancouver, 396 points.

Lotto 6-49: (Wednesday) 10, 13, 16, 19, 25 and 31; bonus 23. (Dec. 26) 2, 8, 10, 14, 18 and 44; bonus 23.

Regional briefs

Much of Canada is in an Arctic deep freeze, with temperatures in the Toronto area plunging 25 degrees to 8 degrees Fahrenheit in two hours Tuesday night. Drivers had to cope with frozen door locks, icy windshields and slippery highways. Toronto's chief health officer issued an extreme cold alert that opened additional shelters for the homeless.

Alberta Premier Ralph Klein will be the main speaker at a conference next month aimed at uniting Reform and Conservative party supporters. Organizers believe a coalition of the right-wing parties can better challenge the Liberals in the next election.

Nova Scotia is getting deeper in the red. Finance Minister Don Downe said the province's annual deficit has reached $108.6-million (Canadian). Downe blames the lower-valued Canadian dollar that has added $55.4-million in interest on a U.S.-held debt.

Canada will have a new territory in April as the existing Northwest Territories is divided. The eastern Arctic will be known as Nunavut, while the west will keep the Northwest Territories name.