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under the title "preliminary expenditure". A note in the accounts will explain what proportion of this expenditure represents tangible assets.
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Taxes and Rates. There is no reference in the bill re- garding the Corporation's liabilities towards taxes and rates. It has been suggested that the Corporation should be exempted at least from property tax and rates, for not to do so -
(a) might have a serious adverse effect on the project's cash flow, which might, in turn,
(b) have implications for the fare structure; and
(c) render the project less attractive to potential
lenders because the break-even year would be delayed.
There are, however, no over-riding reasons to justify exemption from tax and rates and liabilities, except as a matter of expediency, i. e. to help the Corporation to overcome its initial cash flow diffi- culties. Indeed, to exempt any enterprise on this basis would be most inadvisable because it would erode the Government's fiscal policies. Exemption from tax liabilities would mean that the Corporation would enjoy all general and specific public services without having to pay tax and rates; to exempt the Corporation only on the grounds of helping it with its initial cash flow difficulties would create an undesirable precedent for other developing enterprises. In the circumstances, it is thought that the Corporation should not be exempted from taxes and rates in any way, but that the Government could help the Corporation to overcome its initial cash flow difficulties by allowing the Corporation to discharge its liabilities in the form of additional equity issues. This device would also strengthen the Government's controlling interest in the Corporation, particularly if and when the latter's equity is made available to the general public. The intention is to maintain this device until such time as the Cor- poration is able to meet its liabilities in cash. To put these arrange- ments into practice will require the appropriation of funds from General Revenue.
General and Transitional Provisions: Subsidiary Legislation
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The general and transitional provisions are contained in Parts IV and VI of the bill, while the provisions of Part V empower the Governor in Council and the Corporation to enact regulations and by-laws respectively.
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