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These are stories Report on Business is following Wednesday, May 25. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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B.C. pledges to cut HST British Columbians are lucky. They get to vote on whether to keep the harmonized sales tax. And if they do vote to keep it, their government will cut the rate by two percentage points, to 10 per cent, over three years.

The government of Premier Christy Clark - who may, coincidentally, face a fall election - pledged today to cut the HST in a "bold, responsive and balanced" answer to the controversy. Such a move would mean B.C. families are better off, but still ensure the government can meet its fiscal targets, according to Finance Minister Kevin Falcon.

Under the proposal, the HST would fall to 10 per cent from 12 per cent in two steps, The Globe and Mail's Justine Hunter reports from Victoria. The province's portion of the tax would be cut by one point to 6 per cent on July 1, 2012, and a further point two years later.

"To help offset the costs of the HST before the rate reduction in 2012, one-time transition cheques of $175 per child would be issued to families with children under 18 years old," the government added.

"In addition, low- and modest-income seniors will receive a one-time transition cheque of $175. The cost of the transition cheques is expected to be $200-million, and they will be issued by the end of the year."

Noting that an independent panel has found that "while consumers are paying more, businesses are saving money," the government said it would boost the general corporate income tax rate to 12 per cent from 10 per cent and delay a planned cut to the small business tax rate. Those measures would be temporary as B.C. strives for a balanced budget in its 2013-2014 fiscal year.

That's if the people decide in a mail-in referendum this summer to keep the HST and live with a lower rate, rather than revert to the old system.

(I live in Ontario, where I hope Premier Dalton McGuinty and his finance minister have taken note. They also face a fall election.)

Roll up the CEO: A loss for Tim Hortons as chief leaves Suddenly, and with little explanation, Don Schroeder is no longer the chief executive officer of Tim Hortons Inc. .

The coffee and doughnut chain said today that it has appointed former CEO Paul House as the interim chief and that "Don Schroeder no longer serves as president and CEO of the corporation."

The company noted that Mr. Schroeder made a big contribution during 20 years at Tim Hortons, leaving many questions unanswered.

"The board has been engaged in a comprehensive succession planning and review process in parallel with the company's strategic planning work," said director Frank Iacobucci.

"With a solid strategic foundation in place, the board has made the determination that the current timing under all circumstances is best-suited to transition CEO leadership."

Earlier this month, Tim Hortons missed expectations on its first-quarter results, citing the impact of hefty prize redemptions from its Roll Up the Rim to Win promotion.

Investors knocked down the stock immediately after the announcement today, but the shares regained some ground later. Still, analyst Keith Howlett said the move was negative for the company, and he praised Mr. Schroeder's abilities.

Mr Schroeder has over 25 years of executive experience with Tim Hortons and has also been a Tim Hortons franchisee. He has been deeply involved in the company's coffee bean sourcing programs, and in maintaining the taste profile of the poured coffee in his capacity as a trained coffee taster. Mr Schroeder was a key player in the phenomenal growth of Tim Hortons, first during its years as a private company, and then under Wendy's ownership. Trained and experienced as a lawyer, Mr Schroeder is highly familiar with franchising arrangements and law, and has performed well in the role of spokesperson to public shareholders.

"Our view has been that Mr Schroeder was underpaid relative to his CEO peer group in the North American restaurant industry ... This was especially the case given the company's track record of continuous success," Mr. Howlett said.

"Canada is the only market worldwide, to our knowledge, where McDonald's had leadership and was overtaken (Tim Hortons system sales are over 60 per cent larger in Canada than those of McDonald's)."

Mr. Howlett said in a research note that the board's succession plans "appear to have precipated" Mr. Schroeder's departure, adding that "if it ain't broke, don't fix it."

Mr. Howlett cited four main internal candidates for the job: Chief marketing officer Bill Moir, chief financial officer Cynthia Devine, chief of U.S. operations Davic Clanachan, and chief of Canadian operations Roland Walton.

Martha Stewart in play Martha Stewart Living Omnimedia Inc. put itself in play today, announcing it has hired an investment firm to study its options amid interest from "various parties" in a partnership or investment.

Its stocks surged as the company founded by Martha Stewart hired Blackstone Advisory Partners, which it said would also explore "other opportunities."

"As the founder and largest stockholder, I fully support this initiative to take our business and iconic brand to the next level," Ms. Stewart said in a statement.

The company also named Lisa Gersh, a co-founder of Oxygen Media, as president and chief operating officer, saying it has now created a succession plan and expects Ms. Gersh will become chief executive officer within 12 to 20 months.

Flaherty budget June 6 Finance Minister Jim Flaherty will re-introduce his 2011 budget on Monday, June 6, The Globe and Mail's Bill Curry reports today from Ottawa.

The budget will only include "minor tweaks and adjustments" from the one introduced in March, which failed to win the support of the minority House of Commons.

Now that the Conservatives have been re-elected with a majority government, there is nothing the opposition can do to block parliamentary approval of this budget.

BMO profit climbs Bank of Montreal kicked off Canadian bank earnings today with a jump in second-quarter profit, beating analysts' estimates amid "signs of a business-led recovery" in Canada and the United States.

BMO earned $800-million or $1.34 a share in the quarter, up from $745-million or $1.26 a year earlier. Revenue climbed to $3.22-billion from $3.05-billion. Adjusted earnings per share came in at $1.35.

The increase was driven mostly by lower loan-loss provisions in Canada, as fewer customers fell behind on their loan payments, Globe and Mail banking writer Grant Robertson reports.

"We are encouraged by the generally improving trend we are seeing with respect to loan losses and our rising return on equity, which reached 16.7 per cent in the quarter on a very strong capital base," said chief executive officer Bill Downe.

The bank held its third-quarter dividend to 70 cents a share.

"As we see the signs of a business-led recovery in both Canada and the United States, we believe that banks like ours have a unique institutional responsibility to play in that recovery," Mr. Downe said in a statement.

"Our consistent approach to lending, in good times and more challenging times, continues to pay off with ongoing strength in P&C Canada commercial loans balances and market share, while maintaining our disciplined approach to risk management."

Home prices climb Home prices in Canada climbed 0.6 per cent in March, the fourth consecutive monthly increase, according to the Teranet-National Bank house price index released today.

"March saw the largest monthly increase in home prices in Canada in nine months, and the fourth consecutive one after a sequence of three drops in a row," said National Bank economist Marc Pinsonneault.

"This should calm those who were fearing a severe downward price correction. On the other hand, we do not think that the acceleration of home price inflation in March represents the start of a lasting trend."

Prices climbed in five of the six cities measured, according to the index, rising 1.2 per cent in Montreal, 0.6 per cent in Toronto and Vancouver, 0.4 per cent in Ottawa and 0.3 per cent in Halifax. Prices dipped 0.1 per cent in Calgary.

So far this year, prices are up 4.1 per cent.

"In April, the number of homes sold at the national level declined 4.4 per cent from March, and market conditions remained balanced," Mr. Pinsonneault said.

"... We therefore see the market in a consolidation process. This will allow household income and rents to gradually realign on their long term relationship with house prices, a welcomed development at a time where there is no more significant upside in the homeownership rate."

National upgrades Bombardier National Bank of Canada has boosted its price target on shares of Bombardier Inc. by 50 cents in advance of the plane and train maker's June 1 earnings report.

Analyst Cameron Doerksen hiked his target to $8.50 and held his rating at "outperform," projecting earnings per share of 7 cents and revenue of $4.2-billion for the first quarter.

"A key part of our positive thesis on Bombardier is an ongoing rebound in the business jet market," Mr. Doerksen said. "Conditions in the segment continue to improve."

Lagarde seeks top IMF job Christine Lagarde kicked off her campaign for the International Monetary Fund's top job amid squabbling over whether Europe should keep its lock on the key position.

The highly regarded French finance minister, who led her country through the financial crisis and recession, told reporters she approaches the challenge with "humility" and with hopes of "achieving the broadest possible consensus.

As Globe and Mail Washington correspondent Kevin Carmichael reports, emerging market nations are questioning why the position must go to a European, as has always been the case.

Yesterday, IMF executive directors from Brazil, China, India, Russia and South Africa issued a joint statement in which they called for an end to that "obsolete unwritten convention."

Gold now 'coin of the realm' Gold may be "overbought," but it's nothing like a bubble, Dennis Gartman says.

Indeed, the publisher of The Gartman Letter said today, gold has become more than a "mere commodity" and is now a "reservable currency" during Europe's debt crisis. Bullion, he said, has become the "preferred coin of the realm" as the continent's debt troubles mount by the day.

"That is as it should be, for in the present environment what investor/saver would not wish to have some of his/her savings in gold rather than in [euros]whose value is wasting each day," Mr. Gartman said.

"Dollars are a reasonable alternative, and increasingly the Swiss franc is one also. But the 'trump card' currency of choice is gold and in all likelihood it shall become even more readily embraced, not less so in the days and weeks ahead as Europe's problems worsen rather than turn for the better."

Gold is "certainly" overbought, but it's far from a bubble "and this may become rather astoundingly more overbought in the days and weeks ahead."

Jobless levels a scourge: OECD Unemployment remains a blight on the global economy, the Organization for Economic Co-operation and Development said today, warning governments they must act lest high jobless levels become a longer-term scourge.

"Historically high unemployment remains among the most pressing legacies of the crisis," the 34-member OECD said in releasing its latest economic outlook.

"It should prompt countries to improve labour market policies that boost job creation and prevent today's high joblessness from becoming permanent."

Widespread unemployment is affecting more than 50 million people in the OECD countries, the group said.

"Governments must ensure that employment services and training programs actually match the unemployed to jobs," the OECD urged.

"They should also rebalance employment protection towards temporary workers; consider reducing taxes on labour via targeted subsidies for low paid jobs; and promote work-sharing arrangements that can minimize employment losses during downturns."

Only yesterday, Toronto-Dominion bank economists warned that Canada's jobless rate will run at or above 7 per cent through 2014.

As The Globe and Mail's Kevin Carmichael reports, the OECD projects that Canada's economy will expand by 3 per cent this year and 2.8 per cent in 2012.

Japanese exports plunge The earthquake, tsunami and nuclear crisis that devastated Japan sparked a plunge in the country's exports in April and led to its first trade deficit in several months.

Exports plunged 12.5 per cent, while imports climbed almost 9 per cent. The government noted that it was the first deficit for an April in about three decades, though that was to be expected given the massive disruption from the mid-March earthquake.

"Japan's trade position swung toward a deficit in April, albeit one that wasn't as bad as consensus estimates feared," said Scotia Capital economists Karen Cordes Woods and Derek Holt.

"Exports retreated in line with expectations by posting a 12.5-per-cent year over year decline, but imports cooled more than consensus estimated. Thus, the country's trade deficit reflected disrupted supply chain effects on both the export and import sides."

Officials pressure U.S. banks U.S. officials are putting the heat on major banks to settle allegations related to flawed foreclosures, The Wall Street Journal reports today.

State and federal officials met yesterday with some of the country's biggest banks, warning they could face at least $17-billion in civil suits if there's no settlement, the report said.

Banks, in turn, have proposed a settlement of $5-billion.

The banks have said that few homeowners, if any, were subject to flawed foreclosures, and the problems were generally technical in nature, The Wall Street Journal said.

Consumer spending changing Hefty debts and high gas prices are changing the spending habits of Canadians.

Research today from BMO Nesbitt Burns shows retail sales fell in volume terms in March from a year earlier, for the first dip since early in the post-recession rebound, although partly because of cold temperatures and a late Easter.

Spending on discretionary items, meanwhile, have declined at a faster pace, and for four months in a row. That takes in segments such as sporting goods, hobbies, books and music.

"After powering the economic recovery in the past two years, Canadian consumers are showing signs of wear in the face of elevated debts and high gas prices," said economist Sal Guatieri. " ... The new frugality bodes well for long-term sustainable growth, provided it's not taken to the extreme."

As The Globe and Mail's global energy writer Shawn McCarthy reports today, consumers should expect another run-up in oil prices , which means more money diverted from other spending.

Globe and Mail retail writer Marina Strauss reported earlier this week that Canadians are cutting back in the face of high debts, continuing the frugality they learned in the recession.

(See the accompanying infographic or click here to see how sales compare.)

Separately today, BMO economist Robert Kavcic noted how much better the Prairies are doing in terms of retail sales than the rest of the country. Note the introduction of the HST in British Columbia and Ontario.

"The Prairies are a happy place for retailers right now, with retail sales in Alberta, Saskatchewan and Manitoba up a combined 4.5 per cent year over year in March," Mr. Kavcic said.

"That compares to the remaining seven provinces which have seen sales about flat in the past year - HST introductions (B.C. and Ontario), sales tax increases (Quebec and Nova Scotia) and higher jobless rates are all likely hurting consumers outside the prairies."

(See the accompanying infographic or click here for Mr. Kavcic's breakdown.)

In International Business today

While the rest of us worry about things like Europe's debt woes, Middle East oil risks and the waning of the commodity boom, Washington has chosen to dredge up another old favourite: The nuclear ambitions of Iran, North Korea and Syria and efforts to thwart them through sanctions. Brian Milner reports.

In Personal Finance today

Home Cents blogger Dianne Nice offers tips for keeping your first mortgage from leaving you cash poor.

In this excerpt from the MoneySense Guide to Buying and Selling Your Home, tips for finding a mortgage on terms that work for you.

Here are a few business tricks that you can apply to your own budget, and start saving.

From today's Report on Business

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/03/24 4:00pm EDT.

SymbolName% changeLast
BMO-N
Bank of Montreal
+0.43%96.38
BMO-T
Bank of Montreal
+0.32%130.77
NA-T
National Bank of Canada
+0.74%114.57

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