Gold inches down, US data calms economic concerns

Gold edged down in thin trade on Thursday after encouraging U.S. jobless claims data calmed some worries about economic growth, but concerns over tensions on the Korean peninsula could present some support.

Bullion barely reacted to news that Vietnam's central bank has granted additional quotas for domestic companies to import gold between now and the year end, but dealers noted buying on plunges from consumers in Asia.

Spot gold eased $4.42 to $1,369.29 an ounce by 0240 GMT - well below a lifetime high around $1,424 struck in early November. It had hit an intraday low around $1,367 an ounce. U.S. gold futures fell $4.5 to $1,368.5 an ounce. U.S. markets are shut on Thursday for the Thanksgiving holiday.

"I would say emotions are still bullish. The conflict between North and South Korea is not going be solved within a short period of time," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"It will take a bit of time. There may be more buying at below $1,370." North Korea warned of additional military attacks if South Korea makes "reckless military provocations again," its official media said on Thursday.

The United States says it considers North Korea's actions were an isolated act tied to leadership changes in Pyongyang, and many experts say the North carried out the shelling to burnish the image of the inexperienced and little-known younger Kim.

U.S. crude futures firmed on Thursday, extending a rally from the day before on optimism about the U.S. economic recovery, but the Thanksgiving holiday in the United States and concerns over tensions on the Korean peninsula may limit further gains.

BC government call off 15 per cent income tax reduction

The proverbial carrot that Premier Gordon Campbell hangs in front of millions of British Columbians has been suddenly yanked away.
Two weeks after Gordon Campbell announced he was stepping down as Premier, the provincial government has decided to hang the 15 per cent reduction in personal income tax rates for the first $72,000 of personal income that was promised in Campbell's televised address last month.

Campbell says this is not the time when he or cabinet should be tying the hands of the future leader. "They will still have the chance where they can bring in the tax cut retroactively January 1, if they decide to do that."

But Finance Minister Colin Hansen says they can't say when or if the tax cut would be re-instated. "The choice as to whether or not to proceed with that should be made by the new premier in conjunction with the cabinet at that time."

NDP Leader Carole James says she was against the tax reduction to start with, but this is a whole new Pandora's Box, "To pull back on that tax cut now, it shows that the government is completely focused on damage control, on their own problems, and sadly it's British Columbians who are hurting because of that."

Brian Bonney with the Canadian Federation for Independent Business says taking away this tax benefit is a big fault. "You give people hope correct before Christmas that they're going to have some extra money to pay off a few bills in the new year, and in one foul pounce that seems to be taken away from us."

He says this is yet another box when politics has trumped good public policy and created unnecessary uncertainty for businesses.

The tax reduction would have taken effect January 1 of next year, provided it received legislative endorsement. It would have become the second largest personal income tax relief gauge in BC's history.

The government will still roll out a throne speech and budget in early February, but won't proclaim any programs until a new party leader is chosen later that month. There will also be what the Executive Council calls a "status quo" budget, with no new proposals beyond what is statutorily required.

Kan. gov.-elect against revoking sales tax hike

Gov.-elect Sam Brownback said Thursday that he opposes a quick revoke of this year's Kansas sales tax increase, an idea circulating among Republican legislators. The incoming GOP governor did leave room for him to back the idea in upcoming years. Brownback already has said he wants to amend the state's tax system to promote economic growth. But Brownback said the Legislature shouldn't revoke the sales tax increase next year because of the budget problems. He takes office and the Legislature assembles its annual session Jan. 10.

"We're short of capital for the state, and I don't think it's something that we should be doing at this time," Brownback told reporters after a Veterans Day ceremony in Topeka. "Our economic situation is not even." Rep. Owen Donohoe, a Republican from the Kansas City-area suburb of Shawnee, suggested in a recent letter to colleagues that GOP House members make the revoke a top priority. He acknowledged in an interview that he hadn't spoken with Brownback about it.

In his letter, Donohoe called on colleagues to commit to a conventional agenda, noting Republicans' big election gains. The GOP picked up 16 House seats, giving those 92 to Democrats' 33. "With the sweeping consent of the Kansas voters, we have a rare opportunity to effect substantial legislation that reflects fiscal and family values in the next session," he wrote.

House Speaker Mike O'Neal, a Hutchinson Republican who, like Donohoe, opposed the tax increase, said it's fair to debate revoking it. However, he also said legislators may want take a longer-term look at tax policy and consider plummeting individual and corporate income taxes to spur growth. Brownback said last week that he'd liked to cut individual income taxes.

"I think that all comes into the discuss that we certainly will have," O'Neal said. The sales tax rose from 5.3 percent to 6.3 percent in July. Outgoing Gov. Mark Parkinson, a Democrat, had pushed for the increase, saying it was necessary to keep away from crippling cuts in education funding and social services. The tax increase is expected to provide $314 million for state programs during the current fiscal year and more than $370 million during the fiscal year that begins in July 2011.
For the first three years, a small portion of the revenues will help support a 10-year, $8.2 billion transportation program that legislators approved this year, also at Parkinson's urging. The sales tax is due to drop to 5.7 percent in July 2013, with all funds raised by the last 0.4 percent going to transportation. O'Neal acknowledged that revoking the increase next year could "hamstring" the program.

"There's a lot of moving parts here," he said. Parkinson and other supporters of the sales tax increase dispute that it stabilized the state's finances. But the state also used federal stimulus funds to bolster aid to public schools and spending on social programs.

Kansas officials expect no additional incentive funds, leaving a $492 million gap in the next fiscal year's budget. "We've got to balance our budget," Brownback said, adding that his goal is to chapter out accounting moves the state has used in previous years to help paper over some problems.

But the governor-elect also refused to portray the sales tax increase as good. "When you raise taxes, you send a signal to the rest of the country (that) you're a high tax state," he said. "We've been a high tax state in this district, so the way to grow is not that way."