[Stage Direction]
Fourth report of special committee appointed to consider Bill No. 36, to amend the Bankruptcy Act.-Mr. Haekett.
Fourth report of the select standing committee on miscellaneous private bills.-Mr. Stinson.


Mr. R. C. MATTHEWS (Toronto East Centre):: Mr. Speaker, I beg leave to present the fourth report of the select standing committee on banking and commerce dealing with the price of gasoline. The report is as follows:
The select standing committee on banking and commerce begs leave to submit its fourth report as follows:
Your committee has had under consideration an order of reference, dated February 11, 1932,-
"That, in the opinion of this house, the price of gasoline to the Canadian consumer has for some time past been too high, and that this matter should be referred to the select standing committee on banking and commerce to investigate and report."
Your committee has held 22 meetings, and has taken viva voce evidence on oath of 20 witnesses. Numerous exhibits were filed by witnesses.
The aforementioned witnesses represented the following companies:
Imperial Oil, Limited,
McColl-Frontenac Oil Company, Limited,
British American Oil Company, Limited,
Shell Oil of Canada, Limited,
Eastcrest Oil Company, Limited,
2984	COMMONS
Banking and Commerce-Report
and also included individual importers and distributors, in some cases importing direct from the United States, and in other cases purchasing gasoline from Canadian refiners.
An officer of the White Star Refinery Company, of Detroit, Michigan, also gave evidence concerning the condition of the petroleum industry in the United States.
An official of the customs branch of the National Revenue department gave evidence respecting the appraisal of petroleum imports for duty purposes.
The Clarkson commission report of 1926 to the Ontario government, being a report of an inquiry into the prices of gasoline and oils sold in the province, is incorporated in the evidence taken by your committee.
A committee of the legislature of Saskatchewan was concurrently conducting a similar inquiry to that of your committee, but within the limitations of provincial jurisdiction, and presented a report of its findings and recommendations to the legislature.
The said Saskatchewan committee report is not within the order of reference from the house to your committee and therefore has not been considered by your committee but in view of the recommendations therein contained has been incorporated in the printed proceedings of evidence in order that the house may be informed of its contents.
Pursuant to authorization given by the house, your committee engaged the firm of George A. Touche & Company, chartered accountants. This firm was instructed as follows, namely:-
1.	That the accounts of the Imperial Oil, Limited, be taken for the purpose of establishing the fundamental facts required by the committee.
2.	That a basis of establishing the ascertainment of costs be mutually agreed upon between the auditors and the officers of Imperial Oil, Limited.
3.	That for the purposes of the two preceding paragraphs, the investigation be specifically applied against
(a)	The Sarnia and Halifax refineries as regards the elements entering into production costs as a 'whole and as applicable to proportionate distribution of these total costs against gasoline and other commodities refined from crude.
(b)	The relative wholesale prices of gasoline and other commodities refined from crude in relation to costs of production at the Sarnia and Halifax refineries.
(c)	The elements embodied in the selling, distribution and administration expenses, added to the costs of production, in relation to selling prices for Imperial Oil, Limited, as a whole and as specifically applied in the following marketing divisions-
(d)	That such marketing divisions may be designated by your sub-committee.
4.	That synonymous with this investigation by the auditors into the aforementioned cost and selling factors of the Imperial Oil, Limited, they secure from British American Oil Co., Limited, and from McColl-Prontenac Oil Co., Limited, statements in such form as will render practicable a comparison of the relative costs and selling prices of the three corporations, thus offering means of disclosing any major variations without entailing the additional expense of investigating the smaller oil companies operating in Canada.
IMr. Matthews.}
The auditors were also directed to make an examination and audit of the books of the MeCdll-Frontenae Oil Company with respect to certain operations of that company.
The auditors' report was duly presented to your committee by Mr. 0. A. Matthews, a member of the firm of George A. Touche and Company, who explained in detail the clauses of the report as the same was read at presentation. Mr. Matthews was subsequently recalled, sworn and examined in respect to matters connected with the audit and report. Statements of figures abstracted from the books of the audited companies, and extended in the report, were duly filed.
A summary of the conclusions as set out in the auditors' report is as follows:
(a)	That the company's records relating to 1930 operating costs charged to gasoline showed no evidence of "cost loading" by reason of affiliations in the United States and South America, or because of unfavourable accounting practices, but rather, that the gasoline costs, if anything, were understated because of the company's conservative policies in not loading into costs such matters as fire insurance premiums, depreciation rates, contingency reserve charges and inventory pricing.
(b)	That the total costs for 1930 were free of charges for interest on capital invested, or such as might be related against funded debt or as a charge imposed by a parent company in the form of rental for use and operation of the refineries and marketing stations and equipment. In other words, the financing of Imperial Oil, Limited, has been effected through the sale of capital stock and the investment of a proportion of surplus earnings in extensions of plant and equipment facilities, without any issue of bonds or debentures upon which interest might be charged.
(c)	That the 1930 marketing costs charged to gasoline whilst as a whole legitimate from an accounting point of view, were high in relation to total costs. The high cost of marketing is attributed to territorial and climatic conditions, and extreme competition obtaining in the distribution and marketing of gasoline in Canada. In view of the fact that the territorial and climatic conditions in Canada are not subject to human manipulation and change, a partial solution of the problem would seem to lie in a concerted action on the part of all distributing companies to eliminate as far as possible the present costly system of marketing.
(d)	That variations in gasoline prices in 1929, 1930 and 1931 to consumers were not based directly upon ascertained refinery costs, but largely upon the variations in the market cost of crude oil with fluctuating additional charges for excise tax, sales tax, freight surcharge and exchange. It has not been demonstrated that any grounds exist for any allegations that the company has taken unfair advantage of either the specific or dumping duties in its gasoline prices to consumers during the period under investigation.
(e)	That the reason for the unfavourable comparison at some points between United States competitive prices and those of the Imperial Oil, Limited, is due to the demoralized condition of the gasoline industry in the United States, caused by the over-production of gasoline and various tax evasion "rackets," which, in turn, result in the price of United

Banking and Commerce-Report
States gasoline falling far below the relative movements in crude oil prices and other costs of production and distribution.
(f)	That the zoning basis of establishing gasoline prices results in the spreading of transportation differentials' to the comparative disadvantage of gasoline consumers at centres of trade in proximity to some refineries, whereas the zoning price basis frequently operated to the advantage of gasoline consumers in the territories outlying from the refineries. It was also found that tank wagon gasoline prices are given to farmers and coastal fishermen both east and west.
(g)	That in such outlying districts as have no dealer competition or where any dealer association arrangements exist, the spread between Imperial Oil, Limited, tank wagon prices and the prices to the consumer is entirely in the hands of the independent dealers.
(h)	That apart altogether from the basis used in the establishing of gasoline prices, the spread between such selling prices and the combined costs of refining and marketing showed an average net profit of not exceeding 1-01 cents per imperial gallon of all gasoline sold by Imperial Oil, Limited, in the year 1930.
(i)	That in view of the fact that the investigation of Imperial Oil, Limited, disclosed no improper accounting practices in the matter of costs or unstated profits, and because Imperial Oil, Limited, occupy the leading position in the gasoline industry in Canada, the auditors gave it as their opinion that the expense which would be involved in extending their investigation into the records of the British American Oil Company, Limited, the McColl-Frontenac Oil Company, Limited, and other oil companies in Canada, would not be justified in view of their findings on the average net profit per gallon of gasoline sold by Imperial Oil. Limited, in 1930.
From a consideration of the evidence and the auditors' report, it is the opinion of your committee that the price of gasoline to the Canadian consumer is not unreasonably high, and that the public interest would not be further served by a continuation of this inquiry.
Tabled herewith is a copy of the printed proceedings and evidence.
All of which is respectfully submitted.



UNEMPLOYMENT AND FARM RELIEF

Hon. W. A. GORDON (Minister of Labour):: Mr. Speaker, I beg to lay on the
table of the house orders in council numbers 1121 to 1125, inclusive, and numbers 1128 to 1131, inclusive, passed pursuant to the provisions of the Unemployment and Farm Relief Continuance Act, 1932, all referring to the payment of money.



PRIVILEGE-MR. POULIOT

[Stage Direction]
Mr. JEAN-FRANCOIS POULIOT (Temis-couata):	I rise to a question of privilege
and a point of order. On to-day's order paper I do not see certain questions that I put and I find them on page 2935 of Hansard of yesterday. These are nine questions concerning people who have made complaints or 41761-188
given evidence against postmasters, and as the questions can be answered by yes or no, I wonder why they have been changed to orders for returns at the request of the hon. Secretary of State.
Mr. SPEAKER:: They were changed to
orders for returns at the instance of the minister (Mr. Cahan), as is his privilege so to do, and that is where they will remain.


Mr. POULIOT:: May I ask the Postmaster General if he has any objection to answering them?


Hon. ARTHUR SAUVE (Postmaster General) :: I never had and have no objection.
My answers were and are ready.



BUSINESS OF THE HOUSE


Right Hon. R. B. BENNETT (Prime Minister):: We shall take up order No. 18,
Bill No. 92, to amend the Income War Tax Act. If the ex-Minister of Justice (Mr. Lapointe), in order that he may more adequately discuss the principle of the measure, so desires, a motion will be made to rescind the second reading and we shall proceed with that. If, on the other hand, the hon. gentleman thinks it is possible to discuss the principle of the measure while the house is in committee, we shall proceed in that way. I think the bill was advanced a stage, perhaps through a misunderstanding for which I must assume responsibility, because I said distinctly that my hon. friend would be given the fullest opportunity, regardless of the advance made on the order paper, to discuss the measure.


Hon. ERNEST LAPOINTE (Quebec East):: It will be quite satisfactory to me to discuss the bill in committee, provided that I am at liberty to express my views on the principle.



MORNING SITTINGS TO BEGIN ON THURSDAY, MAY 19

Richard Bedford Bennett: If there is a general disposition to
expedite the business of the house, I would give notice for morning sittings beginning Thursday.


Some hon. MEMBERS:: Hear, hear.


Richard Bedford Bennett: As that appears to be
the general view, I will, with the consent of the house, make the motion now that the house meet on Thursday at eleven o'clock, a.m.


Mr. DUFF:: What about Wednesday night?

Business oj the House


Richard Bedford Bennett: It was not intended to
sit on Wednesday night.


An hon. MEMBER:: What about Saturday?


Richard Bedford Bennett: I shall consult the convenience of the house as to Saturday. It is probable it may be desirable to sit on Saturday, but at present, with the consent of the house, I shall make the motion only that we sit on Thursday morning at eleven o'clock, if that is satisfactory, and also on Friday morning. Then we shall consider as to whether or not we should sit on Saturday. The Senate does not convene again until Monday evening at eight o'clock. Therefore it might not be desirable to sit on Saturday, but I shall look into the matter and consult the convenience of the leaders of the parties as to what action should be taken in that regard.


Pierre Édouard Blondin: Mr. Bennett moves:
That on and after Thursday the 19th inst. until the end of the present session the house shall meet at 11 o'clock in the morning of each sitting day and that, in addition to the usual intermission at six o'clock p.m. there shall also be an intermission every day from one to three o'clock.



PENDING LEGISLATION

Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: May I ask the
Prime Minister if we may assume we have on the order paper practically all the business that is likely to come before us this session?


Richard Bedford Bennett: That was the other matter about which I intended to speak. A bill has been prepared to give effect to the recommendations of the committee dealing with the civil service. That bill is now being finally revised by the Minister of Justice. There is also a bill that has been drafted and that, it is urged in some very responsible quarters, we should pass in order to cope with a possible financial crisis if such should arise on this continent. This bill, which would not come into force except by proclamation, is a very short one, with I think, a single Section. Whether or not it should be introduced we have not finally decided. Outside that, I know of nothing more. There was a bill prepared some weeks ago in connection with a farm marketing board, a subject about which some discussion took place the other day. There are certain technical difficulties that may not be regarded as of such a character as to warrant our not proceeding with the legislation. That has not been finally decided. Outside that, there is nothing I know of at the moment.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Mr. VINCENT DUPUIS (Laprairie-Napier-ville) (Translation):: May I inquire from
the hon. Postmaster General (Mr. Sauve) when he intends to submit again to the house the estimates of his department?


Arthur Sauvé: I have no objection
to discuss immediately the estimates of my department, providing the rules permit it. I shall again submit them to the house when the rules allow me and when I am called upon to do so.


Vincent Dupuis: May I request the hon. Postmaster General, on behalf of the house, to give a more definite answer.
I.	would like to know when the estimates of the Post Office Department will be discussed, if the Postmaster General is in a position to supply the information.



DISARMAMENT CONFERENCE

[Stage Direction]
On the orders of the day:
Ernest Lapointe: May I ask my right hon. friend whether the report in the newspapers is correct that both the hon. member for Argenteuil (Sir George Perley) and Miss Kydd, trvo of the Canadian delegates at the Disarmament conference, are sailing for Canada? If this is true, must we assume that Canada will be represented at that momentous conference only by our worthy Solicitor General (Mr. Dupre)?


Richard Bedford Bennett: As perhaps the hon. gentleman knows, if he has been following the proceedings, the work of committees is proceeding. The committee of which the Solicitor . General is the vice-chairman is continuing its sittings, and we were advised by Sir George Perley this morning that it was the view of all those who are interested in the conference that he might return to Canada at the moment, and Miss Kydd, I believe, is coming on the same ship. I shall have a few observations to make in that regard when one of the items dealing with the League of Nations which was reserved is being considered, especially in view of what was said .last evening by the hon. member for Winnipeg North Centre (Mr. Woodsworth). I shall not anticipate the discussion at this stage beyond saying that the interests of Canada are entirely safeguarded in every sense in view of the present state of that conference by the presence of the Solicitor General.

Income War Tax Act



POST OFFICE ESTIMATES

[Stage Direction]
On the orders of the day:
Vincent Dupuis: A few minutes ago I asked the hon. Postmaster General when he expected to proceed with his estimates. As he seems to be unable to answer I would ask the right hon. the Prime Minister if he is able to tell the house when the Postmaster General will proceed with his estimates.


Richard Bedford Bennett: I do not think, Mr. Speaker, that any good purpose is served by gratuitous, insulting observations addressed to any member of the house. I can only say that the Postmaster General will proceed with his estimates when it is agreeable to him and acceptable to the opposition, as we said the other evening.



INCOME WAR TAX ACT AMENDMENT


[Stage Direction]
The house resumed from Monday, May 16, consideration in committee of Bill No. 92, to amend the Income War Tax Act-Mr. Rhodes. -Mr. LaVergne in the chair.
On section 1-Special income tax on certain salaries.
Ernest Lapointe: I am sorry, Mr. Chairman, that I was not here yesterday, owing to an engagement in my own city, and therefore could not register my opposition to the principle of this measure. I am grateful to the Prime Minister for giving me the opportunity of doing so to-day.
This measure is one of taxation, and according to my views it violates two great principles of British constitutional law with regard to taxation. First, the principle of equality. It is a well-known principle that in matters of taxation there should not be any discrimination. Everybody must be treated in the same way. In this bill there is a discrimination against a class. The judges of Canada, apart from being required to pay the income taxes every citizen of Canada has to do, are singled out for the purpose of levying upon their salaries a special additional tax of ten per cent. This is class legislation; there is no doubt about it. There is no more reason for it and no more justification for an additional income tax on judges than there would be for one on butchers or bakers or on people who happen to have red hair-


Miss MACPHAIL:: Or who are baldheaded.


Ernest Lapointe: Or who are baldheaded, as my hon. friend from Southeast Grey says, or anybody else in a special category or class.
41761-188)
There is no doubt whatever that this measure is certainly opposed to one of the fundamental principles of taxation, that of equality of taxation, and it becomes an arbitrary levy upon a certain class of men. More than that, even in that class there is a discrimination because the bill applies only to the judges who are paid by the Dominion of Canada. The recorders, the provincial judges, the judges of police courts, although some of them have salaries almost as high as the salaries of the members of the high courts, are not taxed. I am sure that everybody upon second thought will agree with me that this is an absolutely vicious principle. Our income tax statutes are based on the theory that the taxes are levied in a certain proportion on the annual gain or annual means of every citizen of Canada. This is a deviation from that principle. Furthermore, Lord Phillimore, in the case of Caron versus the King, which was based on our federal income tax laws, recognized that principle. He said:
They-
Meaning the income tax acts of this dominion:
-are statutes for imposing on all citizens contributions according to their annual means, regardless of, or it may be said, not having regard to, the source from which their annual means are derived.
The tax is levied on the annual gain or means of every citizen; the law does not say where it comes from, and it is not fair, it is against the principle of the legislation that a certain class or a certain profession in the community should have imposed upon it special taxation different from that imposed on any other class. That is one principle that is violated by this bill. But there is another one.


Mr. GARLAND (Bow River):: Would not the reverse also be true with regard to any exemptions from the tax?	*


Ernest Lapointe: Quite right, but the judges are not exempted. They are paying the same tax in proportion . as any other citizen of Canada. This is the change. There was no change before this bill.
The other principle which is violated is the great British principle of no taxation without representation. The judges are not represented in this house. They have no vote here; they have no-


Edward Joseph Garland: Oh, oh.


Ernest Lapointe: My hon. friend says, "oh, oh." The best evidence that they are not represented here is that yesterday there was nobody to say: "Well, you had better
Income War Tax Act

wait and at least have the bill printed and distributed before the second reading is proceeded with." There was nobody here to say that yesterday. If there is any legislation concerning the farmers or the fishermen or the civil servants, or anybody else in Canada there is always a voice or there are a few voices raised in this house on their behalf, but when it comes to the judges they have no representation.


Edward Joseph Garland: They have an excellent advocate in the hon. gentleman, in my opinion.


Ernest Lapointe: They have an ex-Minister of Justice who wants to put himself on record in this house against this principle and against this legislation, but they are not represented in this house by anybody, and that is why things like that happen.


Mr. SPENCER:: We were informed by the Prime Minister that most judges were willing to pay the ten per cent.
Mr, LAPOINTE: I have no concern about that; it is possible they are willing to pay. If so, let them pay voluntarily. My point is that this parliament has no right to impose a special tax on the judges of Canada through the operation of a special bill such as the one now before us. Nobody speaks for them. We have taken away from them not only the right to vote but the right to speak. They cannot defend themselves. They have no right to say anything on public matters, and may I say that the present legislation is not very generous or courageous; it is not sportsmanlike to attack people who have not the right to defend themselves. They can say nothing in their defence. More than that, we have passed legislation prohibiting them entering other gainful occupations. We have prohibited them from deriving any other income or revenue from any sources whatever, as do other people in times of prosperity. Now we are asking them-we are forcing them, in a period of depression, despite the fact that when times were better they had no opportunity to benefit-to pay a special tax.
There is no doubt that the legislation now before us is makeshift, because the government found it could not place them under the bill to reduce salaries. They are doing indirectly what they could not do directly. Judges are not servants of the crown. Since the Act of Settlement that fact has been well established and accepted. They sit in judgment on differences and difficulties arising between the crown and the subjects. They cannot be removed by the crown as can other
[Mr. Lapointe.1
civil servants. After the Act of Settlement another law was passed affecting only the judges and enacting that they are not related, as are other civil servants, to the sovereign; they are not servants of the crown. I quite realize that the government could not have included them in the bill which has now become law. The present legislation, however, is only a subterfuge, and is opposed to the principles of British law. I know the Minister of Justice does not like it; he could not like it. I can remember very well a time when he blamed me for not taking the means to increase judges salaries. I can remember his eloquent words to the effect that judges are not paid adequately, and that in fact they were underpaid. Well, he is doing worse than I did; at least I did not reduce their salaries.
I know that in certain quarters it is stylish to attack judges. As I have already said they cannot defend themselves. The statement has been made that it is easy to find people prepared to accept a position on the bench. That may be so, but the present Minister of Justice knows as well as I do that it is difficult to find the men we would like to appoint to the higher courts of the land. Certainly it is possible to find some men, but let me tell hon. members that there is no doubt a poor servant is always overpaid. Let us suppose that we should apply the same principle to the House of Commons. When I came to parliament the indemnity was only $1,000. It was increased to $1,500, then to $2,500, and now it is $4,000. May I suggest that if it were again $1,000 quite possibly there would be people who would be willing to accept office. That, however, is not a fair basis upon which to decide the amount which should be paid to judges, to members of parliament or to any other servants of the people. I do not desire to say more in this connection except that it is of supreme importance to Canada that we should have an impartial and independent judiciary. I do not think it is right to subject judges to the necessity of looking to parliament to learn whether their salaries or taxes are going to be increased or decreased from year to year. Judges must be altogether independent of parliament; they must be fearless. They have a tremendous responsibility. We exact from them high standards of living, and as I said we exclude them from all other gainful occupations. We are proud of our Canadian bench, and I think we should make it so that our judiciary would be in a position to maintain the prestige with which it has always been surrounded.

Income War Tax Act
Last night when I entered the chamber the estimates of the Minister of National Defence were under review. There was discussion on an item of almost $2,000,000 for the training of the non-permanent militia. Let me tell hon. members that the country might more easily dispense with the training of the nonpermanent militia than impose a special tax on our judges. To please the hon. member for Southeast Grey may I say I would also be quite willing to cut off the amount set aside for cadet training, rather than make a levy on the salaries of judges.
There is another point upon which I should like to say a few words. The government was blamed for not having put a tax, similar to the one now under discussion, on the salaries of lieutenant-governors. Well, this one is bad, but the other one would also be bad. I have heard the suggestion in this house that we could very well dispense with the office of lieutenant-governor in the provinces. Well, my reply to that is that under the British North America Act the lieutenant-governor is part of the constitution; it is part of the legislature of a province. The act says that the legislature of the province of Quebec shall be composed of a lieutenant-governor, a legislative assembly and a legislative council. It states further that the legislature of Ontario shall be composed of a lieutenant-governor and a legislative assembly. Lieutenant-governors form part of legislative bodies. So long as we have autonomous provinces the lieutenant-governors represent the king in those provinces, and no hon. members in this parliament have the right to do away with that office in the provinces.
I am not sure either that the people of the provinces favour this change, and I know in Quebec they would not. In Quebec the office of lieutenant-governor is part of our national life. The home of the lieutenant-governor is the national home of the province. The lieutenant-governor represents the king; he represents law; he represents order; he represents authority. I do not think there would be even a very small minority in the province which would favour doing away with the lieutenant-governorship. Let me say also that the salaries of the lieutenant-governors are perhaps the only ones that have never been increased since confederation. All the other salaries have been increased; the lieutenant-governors are being paid to-day what they were paid in 1867. Is it to be suggested that we should have only wealthy people as representing the crown in the provinces? I am opposed to that suggestion. We have in my own province at the present time a lieutenant-governor whom I would not change for any
millionaire, no matter whence he came in this country; far from it; and he has the esteem, the good will and the affection of every citizen of the province. The salary which is being paid to the representatives of the crown, instead of being too large, in my opinion is much too small.
Those are the considerations I wanted to express to-day, and I am thankful to the Prime Minister for having given me the opportunity of doing so,


Mr. GUTHRIE:: Mr. Chairman, with a
great deal of the speech of my hon. friend from Quebec East (Mr. Lapointe) I am in hearty accord, but with some of the opinions which he has offered to the house I cannot agree. We all realize that it is not a pleasant nor an agreeable thing either on the one hand to impose taxation or on the other to reduce salaries. Measures of this kind are not brought forward unless there is some urgent necessity for them, and it was felt that at the present time there was an urgent necessity in Canada of decreasing expenditures in every direction. It is for that reason that the reduction of salaries in the civil service and extra taxation in regard to the judiciary are proposed. And the proposal is only for a single year.
My hon. friend has based his objections-upon two grounds. First, that it is illegal or unconstitutional to impose taxation upon the judges; secondly, that we are violating * principle in this measure by imposing taxation without representation. Viewed in regard to our strict legal rights, I think the matter is one upon which there cannot be very much division of opinion. We have in this parliament under the British North America Act authority to tax anything we see fit to tax. The powers of this parliament are practically unlimited in that respect; they are to be found in section 91. We are empowered to raise money by any mode or system of taxation. My hon. friend says that in this measure we do not propose a fair or general tax, but that we discriminate. In my humble opinion, we are entitled, if we see fit, to discriminate. That is our legal right.


Ernest Lapointe: I did not say otherwise.


Hugh Guthrie: It is not a question of the right of parliament; but there is a question as to the propriety of our doing certain things.


Ernest Lapointe: Hear, hear.


Hugh Guthrie: In this case we propose
not to discriminate, but to impose taxation upon all the members of a class, and that class consists of those who receive money by way of salary from the treasury of the dominion. My hon. friend points out that in his good

Income War Tax Act
province of Quebec there are a number of individuals who are not, strictly speaking, judges, but who are appointed by the province to administer law as in other provinces magistrates do. They are provincial officers, and we have not sought in any way to interfere with the salaries or emoluments which they receive. But all members of the judiciary who receive money from the federal treasury are under this proposal taxed in respect only of the salary which they receive from that treasury. That is the special tax that is imposed.
Now, on the legality of the proposal I submit there cannot be two opinions. As to the propriety of our doing so there may be a very great difference of opinion. Personally, I do not favour a reduction in judges' salaries, and under other circumstances I would not feel justified in imposing this taxation upon them. I remember the incident which my hon. friend referred to when I did urge in this house an increase in judges' salaries. It was at a time when there was affluence in the country, when our treasury was overflowing-


Mr. MOTHERWELL:: Hear, hear.


Hugh Guthrie: -a time when an increase might have been granted. And why was it not granted? Simply because the temper of the House of Commons was opposed to it; that was the reason. I have not any doubt that my hon. friend himself was in favour of an increase-


Ernest Lapointe: Hear, hear.


Hugh Guthrie: -but the temper of the House of Commons was opposed to it. I think I am not going too far when I say that from anything we have learned during the present session of parliament, the temper of this present House of Commons is not in favour of excluding judges from any contribution to the finances of the dominion for the present year.


Some hon. MEMBERS:: Hear, hear.


Hugh Guthrie: That is the operating
thought in my mind at all events; because in the main I agree with the position which my hon. friend has taken with regard to the judiciary of this country.
On the other branch of his case he submits we are not justified in taking this step because we should not impose taxation where there is no representation. Well, I submit that the judiciary of this country are represented in the House of Commons, not by themselves but by the representatives of the people of the country. If my hon. friend's argument is

correct, we could not impose taxation upon the civil servants, because the civil servants are not represented here except through the members of this house. Many bodies are not represented here; none of the officers of the government practically have a right to sit here or to be heard here. Now, I submit there is no foundation in fact for that objection; that this House of Commons represents the whole dominion, all classes of citizens of this country.
For these reasons I submit we are strictly on legal ground in bringing down this bill. I hope it will be only for a single year. The measure itself is so expressed; it will expire after the present year.
There is not unanimity among the judiciary themselves with regard to the measure. I have received letters supporting the proposal from a number of judges who desire to have this tax imposed upon them, or to make their contribution as others do; on the other hand, I have received communications from other judges objecting to the proposal. As I say, there is no unanimity among the judiciary in that respect. But judging the matter as a whole, reviewing the circumstances as we know them in this house since the bill was introduced, and particularly having regard to the desire on the part of everyone in Canada to reduce expenditure to the minimum, I believe the present bill is justified at this juncture and ought to be adopted.


Mr. STEWART (Edmonton):: Would the minister state why the judges should not have been brought under the general act?


Hugh Guthrie: I think there is a very sound objection on constitutional grounds. I agree with my hon. friend who just spoke that the judges are in a class by themselves. They are not civil servants; they are not the servants of the crown, and the time may come when they will be the buffer between the crown and the people. I do not believe there should be any interference with a contract made with a man when he ascends the bench. We surround him with limitations. He cannot engage in trade; as my hon. friend pointed out, he cannot accept any public office and he cannot sit in the parliament of this country. To a very large extent he is removed from the ordinary people of his locality. He cannot practise the profession for which he has been trained, and to my mind it would be an unfair thing, after he has accepted office and continued therein for a number of years, by force of an act of parliament to say that although we made a bargain with him, now his salary is to be reduced without his consent. To my mind that would be an unconstitutional act.

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We know that an effort was made last autumn to reduce the salaries of judges in Great Britain, and we know that when the matter was discussed and fully inquired into the better opinion, both of lawyers and laymen, was that it would not be proper to reduce the salaries of the judges. Many very able legal opinions were expressed to the effect that it would be unconstitutional to do so. That is my own view, and that is why I would not feel free to support a statutory reduction in the salaries of members of the judiciary.


Charles A. Stewart: I do not
wish to enter into a controversy with my hon. friend, but it seems strange to me that since parliament from time to time has increased the salaries of judges after their appointment, it should not have the authority to reduce them.


Hugh Guthrie: That is to the advantage of the judge. I submit that we are not permitted to do anything to his disadvantage.


Charles A. Stewart: Being only a layman I am not prepared to argue that point with my hon. friend, but it seems to me that parliament has complete authority, and if parliament has the power to increase the salary of a man who my hon. friend argues is under contract, and who accepted the position on the terms of that contract, surely he is also subject to a decrease if one becomes necessary.


Hugh Guthrie: No, he is only obeying the will of parliament in that case.


Mr. POWER:: I do not want to delay the house in connection with this item, but when the Minister of Finance was discussing the bill providing for the reduction in the salaries of civil servants he told us that this reduction was a contribution on the part of those civil servants. If that is the case I fail to see any distinction at all between the contribution made by way of reduction and the contribution made by a special income tax. The argument of the Minister of Justice that these men should not have their salaries reduced because they are precluded, by reason of their position, from taking part in public life or from carrying on the practice of law, to my mind applies equally well to this act. which we are now discussing.


Hugh Guthrie: No, I submit that we have no power to reduce the salaries although, according to the decision of the privy council, we have power to impose a tax.


Charles Gavan Power: But the minister argued on the propriety of the matter, saying that we had no moral right to reduce the salaries of
judges because of their peculiar position. Now he goes ahead and moves that we tax them an additional ten per cent. I confess that, having a mind not capable of drawing fine philosophical distinctions, I cannot see the difference. If I may state the point of view which I hold in this matter, I believe that the salaries of judges should have been subject to the reduction imposed on every other member of the service. I am sorry to disagree in this matter with my colleague from Quebec East (Mr. Lapointe). I believe the same thing should apply to the members of the naval and military forces; I cannot find anywhere in the act any special contract with the members of those forces which would prevent us from reducing their salaries.
I do believe that this legislation is perhaps the most vicious that has ever been introduced into this house, in that it discriminates between different classes of citizens and proposes to penalize certain people because they belong to a certain class. In other legislatures they take that action in connection with people who have become nuisances, such as hucksters, peddlers and people of that sort. We impose a special tax on them. We are now degrading those who should be the leaders in our social structure, the judges, members of the militia, members of the police force and others, to the level of common nuisances, and I protest against that action being taken.


William Duff: Just before the motion is agreed to, in section 1 of the bill I find the following words:
9a. (1) Notwithstanding anything contained in this act or in any other statute or law, the members of the judiciary and the members of the military, naval and air forces of Canada and of the Royal Canadian Mounted Police, other than enlisted men, shall be liable to pay a special income tax of ten per centum upon the salaries paid to them by the Dominion of Canada.
Yesterday when the resolution upon which this bill is based was under consideration I tried to argue that, in my opinion, if this tax was to be imposed on civil servants and judges it should apply also to ex-judges and others who are receiving pensions. At that time I made the statement that one of the lieutenant-governors was also getting a pension. I find that while a pension was paid to that distinguished gentleman in 1931 it is not being paid this year, so in that statement I was slightly mistaken. However, I am still of the opinion that ex-judges drawing pensions should be liable to this tax just as much as anyone else should be. If I understood the argument of the Minister of Justice it was that the judges should not have a reduction of ten per cent under the general act which
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we passed yesterday because they were in a particular class, and were under contract. I think the same thing applies to members of parliament; I believe we are equally under contract, and if we could be brought in under Bill No. 19 I believe the judges should have been included under that measure as well.
I do believe that the ex-judges, who receive pensions totalling about $1,000,000, should come under this act. Looking at the estimates for 1932-33, in the list of those receiving pensions authorized by statute, appearing on page 23 I notice the name of J. D. Hyndman, who receives a pension of $6,000 as an exjudge. I should like to know if this is the same gentleman who is chairman of the pension appeal tribunal and who, in that capacity, receives a salary of some $8,000 or $9,000.


Mr. RHODES:: If my hon. friend will permit me, he does not draw his pension.


William Duff: Does my hon. friend say Mr. Hyndman does not draw his pension?


Edgar Nelson Rhodes: I understand that the
arrangement when he accepted the position was that this pension was to become a portion of his compensation, under his contract.


William Duff: My understanding is that his
salary is $9,000 and that salary has been drawn since his appointment. As I said a moment ago, I hold in my hand the estimates for 1932-33, and in the first column under the heading of "1932-33" appears this gentleman's name with a pension of $6,000 opposite. I cannot understand why a gentleman who takes another position under the government should have his pension taken away. He has earned that pension for performing a certain public duty, just as the lieutenant-governor has earned his, and although it may be legal I cannot understand why the pension should not be paid this year when it was paid up until last year. I contend that these gentlemen who are receiving pensions as ex-judges should be treated in the same way as everyone else and although I will not move an amendment-I will leave it to the good judgment of the minister-I feel that after the word "judiciary" in the third line of section 9A there should be added the words "and ex-members of the judiciary to whom pensions are paid."


Mr. RAYMOND (Translation):: Mr. Chairman, I wish to state that I entirely agree with the views expressed a short while ago by the hon. member for Quebec East (Mr. Lapointe). Judges have been placed in a special class, they have been deprived of numerous privileges that the humblest citizen of this country enjoys. To-day the 
government wish to levy a special tax on them. It is absolutely unjust and I think that the comments of the hon. member for Quebec East are quite to the point.
May I add a few words to the remarks made by the hon. Minister of Justice (Mr. Guthrie) to justify this measure. He stated that the need for additional revenue had necessitated this action. I wonder whether he is levying this special tax on the judges to enable him to meet the $2,000 increase which he granted to himself and his colleagues last year. To think that, in a crisis, when the revenues of Canada are not adequate to meeting the expenditures for administration, members of the government thought fit to vote themselves a salary increase of $2,000, and that, to-day, they state in the house that further revenue is required and a special tax of 10 per cent must be levied on judges to meet expenditure. If the government are sincere I would suggest to them to add to clause 9A of Bill 92, the names of the ministers of the crown, on whom an additional tax of 10 per cent would thus be levied on their salaries, as on that of the judges.


Mr. BOURASSA (Translation):: Hear, hear. I entirely agree with the last remark of my hon. friend from Beauharnois (Mr. Raymond). As a matter of fact, when, last summer, at the end of the session, the ministers voted themselves a salary increase, I was the only one to protest. Not one Liberal rose to protest.


Donat Raymond: I was not in the house.


Joseph Henri Napoléon Bourassa: Was it because they had only shortly dropped out of power, or because they expected soon to be in power again; however, the fact is that my weak voice was the only one to protest against this increase.


Donat Raymond: The government chose a moment when no Liberal member was in the house.


Joseph Henri Napoléon Bourassa: Pardon
me, there were quite a number of them. The hon. member was absent, but others were here.
As to the tax levied on judges, let us be fair. One may calmly comment on judges' salaries, however, for the same reason which the hon. member for Beauharnois has just pointed out, under present circumstances, I contend that it is neither fair to the judges, nor to the army and navy officers, nor to any class whatsoever of the community, to

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state that, in the present crisis, they should be exempt from shouldering their share of the public burden. If we wish to guard against the feelings of public hatred and distrust spreading against the leading classes, it behooves us not to advertise in our legislation and budget that we exempted certain classes on account of the position they occupy.
One hears: Judges are deprived of the right to exercise their franchise. Is it to penalize them that they are so deprived? Quite the contrary, it is to more clearly bring out the importance of the duties they discharge and shield them from the criticism of public opinion, it is to place them, so to speak, on a higher plane than the masses. It is not a punishment but an acknowledgment of the importance of their duties and the impartiality they are expected to show towards everybody.
Judges, at times, are called upon to decide on political cases. Take for instance the Controverted Elections Act, by which parliament desists from its inherent and constitutional right to decide upon legislative functions. It has transferred to the courts the exclusive right of passing judgment on all controverted election matters or the obtaining of a parliamentary mandate by corrupt or other underhand means. Why was this done? So as to make it clear that the intention was to defer to an absolutely unbiased mind, the duty of carrying out a legislative mandate.
And in order to enable judges to discharge impartially this all important duty, which, to some extent, is linked with the parliamentary mandate, they were removed from the seat of political strife. That is why they do not exercise their right to the franchise. I think it would be a mistake to look upon this loss, by which judges are disfranchised, as belittling their office. Quite the contrary it is an acknowledgment-how shall I express it-it is a recognition of the importance of their office, it is a mark of respect extended to them. However, to conclude from this that, in a country-Whether one likes it or not-in a democratic country a particular class of public servants-I use the word in its broadest sense-a particular class of public servants- whether they be lieutenant-governoi's, who are after all officials appointed by the Dominion government, or judges designated to their post by the Dominion government to carry out duties which are assigned to them by pai'liament, or again whether they are army or navy officers, who are so delegated by parliament to maintain peace or defend their country, why, I wonder, under the present circumstances, should we exempt them
from contributing their quota to the public exchequer? Again do I say that the hon. member for Beauharnois was perfectly justified in stating that it was highly improper on the part of the ministers of the crown to grant themselves a salary increase, and it was a very improper thing for parliament to unanimously endorse this increase. But the fact of having blundered last year in this connection, is not a reason to blunder to-day and proclaim to the country, when thousands of needy people are unable to find food for their everyday subsistence, that a certain class of people who happen to be wearing a three-cornered hat, or sit on the bench will be exempted or that another class of people who parade the streets with decorations on their breast, or again others who are travelling on ships either on the Atlantic or the Pacific, paid by the government to idle away the time, must be exempted from carrying their share of the burden. No, the time has come when all classes must shoulder their share of the burden.
As to the aim of this measure, I entirely approve what the government has stated or rather what it is doing to-day. It is possible that they are doing so to cover their retreat, that they are presenting it under the guise of income tax, instead of doing what would have been the right thing, namely: reduce the salaries of judges and officers like those of other civil servants. However, there is an old English proverb which applies to all public administrations: "Let them down easy." The moment they perform a worthy act I have no fault to find whether they slip out by the side door instead of coming through the front door. The fact that the result attained is the same, that all classes of the community contribute to the public fund, to the liabilities of the state, gives us sufficient ground to approve them and, for my part, I do it heartily.


Mr. DURANLEAU (Translation):: I do
not deem it necessary to repeat the arguments put forth by the hon. Minister of Justice (Mr. Guthrie) in support of the bill under consideration. Moreover, we have just had the approval of the hon. member for Labelle (Mr. Bourassa) who stated that he would support this measure.
I think it only fair to reply to the statements of the hon. members for Beauharnois and Labelle, when they say: It was very improper, when, last year, the ministers of the crown voted themselves a salary increase.


The CHAIRMAN (Translation):: The ministers' salary increase cannot be discussed, because the question has no reference to the
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present debate. I might allow the hon. Minister of Marine to reply to the remarks of the hon. members for Beauharnois and Labelle, however, I do not wish to allow a discussion contrary to the rules.


Alfred Duranleau: Mr. Chairman, the question came up because it was contended that the ministers of the crown should be taxed to-day on this $2,000. I think that the hon. members did not actually understand the measure adopted last year. If the two hon. members who preceded me in this debate had taken the trouble to examine the public accounts in order to ascertain the expenditure in connection with ministers' motor cars, under the Liberal regime, they would have found that instead of a sum of $2,000 per year, each minister had expended, up to the time the Conservative party assumed power, $3,000, $4,000 and even $5,000 per year for salaries of chauffeurs, gasoline, repairs, purchase of motor cars, etc., etc.


Joseph Henri Napoléon Bourassa: That depended on the ministers.


Alfred Duranleau: This
measure was adopted, last year, with the view of economizing, and nothing else. Instead of making an outlay between $80,000 and $100,000 per year for motor cars in the service of ministers of the crown, we fixed an amount of about $40,000 per year, or to be more exact of $38,000 which means a saving of about 75 to 100 per cent. That is all that was done. I think that hon. members should allow their leader, the hon. leader of the opposition (Mr. Mackenzie King) to do the criticizing, for when the measure, was adopted-


Joseph Henri Napoléon Bourassa: He is not
my leader.	[DOT]


Alfred Duranleau: -if my memory serves me right, the hon. leader of the opposition was present in the house, and no opposition was registered, because everybody seemed to understand that the government was cutting down expenditure by introducing this measure.


Jean-François Pouliot: Mr. Chairman, I closely followed the remarks made by the hon. Minister of Marine (Mr. Duranleau). I am rather amazed that he did not reply to certain comments made by the hon. member for Labelle (Mr. Bourassa), with reference to people who slip on a gown and sit on the bench. It is perhaps somewhat a disrespectful way of speaking of the judges of Quebec and Canada. I can well understand
[The Chairman.]
that the hon. member for Labelle was somewhat carried away by his own eloquence, however, I think, if we wish the people to treat with due respect our judges, they must not be treated disrespectfully by the Canadian parliament. That is why I am astonished that the hon. Minister of Marine did not in this respect reply to the comments made by the hon. member for Labelle, since he rose to speak immediately after him.
In my humble opinion it was wrong to exclude in the first place the judges from the act as regards salary deduction. In a previous debate, I expressed the view that judges themselves would suggest to the government this reduction in order to help the budget during the present crisis, and we feel quite certain that no judge protested either to the right hon. Prime Minister (Mr. Bennett) or to the hon. Minister of Finance (Mr. Rhodes), in that connection.
A number of civil servants draw a pension while receiving a salary or fees for work performed in another position; I have no comments to make as to that. On the other hand, how does it happen that the pension to which a lieutenant-governor is entitled is not paid to him? This is what one might call "discrimination." It is not likely that under the circumstances, the lieutenant-governor in question, for whom I have the greatest regard, would take any step whatsoever to have his pension paid to him, however a pension is simply a continuation of one's salary. If the judges do not receive a higher salary, it is, no doubt, because when they retire from the bench, they are entitled, to a pension which permits them to end their days in peace and tranquility. This pension forms a sequel to their salary and the country owes it to them. It seems to me that if there has been shown some discrimination between civil servants and certain judges the right hon. Prime Minister and his cabinet will not let pass the first opportunity to rectify this misunderstanding, the wrong or injustice which may have been done.
The hon. Minister of Marine stated that we had not understood the real aim of the indemnity intituled "Allowance in lieu of automobiles." This is not very flattering for his colleagues of the house who have not, according to him, sufficient brain development to comprehend the legislation which is submitted to them. My learned colleague, I admit, is my senior at the bar, he has a great deal of experience as I stated-


Alfred Duranleau: I beg the hon. member's pardon. I think that he has not quite followed my argument;

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perhaps I have not clearly expressed myself. I stated that the two hon members who had found fault with the measure did not seem to grasp the object the government had in view. I did not state that the house had not understood the measure since they had adopted it.


Jean-François Pouliot: I wish to
thank the hon. minister for his explanation. He first stated that the hon. members for Laibelle and Beauharnois had not grasped the purport, of the measure and further that I had not followed his argument. Then, we are all in the same class. He stated that it was legislation aiming at cutting down expenditure, I rather think that it is a measure of petty savings. That is not a distinction so very subtle that it may not be understood except by superior minds; it will appeal even to the uneducated. And this is why: Last year, at a time when the crisis was being felt and when the then Minister of Labour (Senator Robertson) had stated that there were 540,000 unemployed in the country, and at a time when the revenues of the country were decreasing owing to our imports having materially decreased, at a time also when our trade was threatened, the government advocated economy, we shall practise it ourselves and the first step we shall take to carry out this program will be to have a yearly amount of $2,000 voted to each minister of the crown to replace the cost of an automobile.
You are, sir, no doubt aware that each minister is entitled to a certain amount which is known as contingencies-


Armand Renaud La Vergne: I drew the attention of the hon. Minister of Marine, a short while ago to the fact that ministers' salary increases should not be made the subject of a debate; one may perhaps discuss this question by making comparisons but not from the viewpoint of the measure itself.


Jean-François Pouliot: 
Mr. BOULANGER (Translation):: I am also a poor man.


Jean-François Pouliot: Will my hon. friend, the distinguished member for Belle-chasse (Mr. Boulanger), who is also a poor man, have to sacrifice $400 for the benefit of the hon. Postmaster General (Mr. Sauve)? I do not contend that the hon. Postmaster General or the hon. Minister of Marine are too wealthy, quite the contrary; I simply wish to bring out the facts. Where is the member who is going to contribute $400 as an additional grant to our international traveller the hon. Solicitor General (Mr. Dupre)? Where is the member who wishes to sacrifice $400 of his indemnity to make a gift to the Solicitor General or any other minister? Perhaps, also, the government will withhold $400 from the indemnity of my hon. friend, the former Minister of Justice (Mr. Lapointe), of my hon. friend, the member for L'lslet (Mr. Fafard), of my hon. friend, the member for Kamouraska (Mr. Bouchard), or again of my hon. friend, the member for Hull (Mr. Fournier), or of my hon. friend the member for St. Hyacinthe-Rouville (Mr. Fontaine), and hand it over to these ministers?
There are among our fellow citizens well known business men. To whom will my hon. friend the member for Cartier (Mr. Jacobs) have to hand over his $400 or rather for whom will he be despoiled of his $400? For what minister? Most likely for the Secretary of State (Mr. Cahan) who represents a county where there are numerous Israelites. Then my hon. friend from the county of Cartier will have to pay $400 to a gentleman who represents a county where many of his com-
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patriots reside. I spy my hon. friend from British Columbia, the member for Comox-Alberni (Mr. Neill) whose wealth is on a par with ours, to whom will go his $400. Probably to the hon. minister without a portfolio (Sir George Perley) who is also one of our international travellers.


Armand Renaud La Vergne: Order!
I think the hon. member for Temiscouata should confine his remarks to the question.


Jean-François Pouliot: The enumeration would be endless; so many things could be said. This measure is absurd and of a nature to bring discredit on the government. I am sufficiently well acquainted with the right hon. Prime Minister and his colleagues to know that they have no intention-to use a popular term-to fatten up at the government's expense. I do not deny that there may have been some abuse in connection with automobiles. I am not discussing this point at present; however, in a crisis the ministers who are responsible for the legislation in this house should first practise on themselves what an illustrious Japanese admiral, Admiral Nogi called "Hari-Kari". Should not the members of the government follow this example?
If the cut in the indemnity is necessary, I think the ministers should be the first to set the example.
It is not that the indemnity they receive for the duties they discharge is out of proportion; however, in a crisis ministers should not simply be satisfied with sacrificing the members and the civil servants of this country.
The right hon. Prime Minister, on his return from England, last year, made a statement, which was published by the Canadian press, and in which he appealed to private charity. Private charity responded most readily. People put into practice this admirable saying of Christ: "Love your neighbour as yourself and love one another." People helped one another. Numerous charitahle societies did marvellous deeds and private individuals made sacrifices to help their fellow citizens who were in poverty How was this charity carried out? By practising the most rigid economy. The 10 per cent taken, to-day, from the civil servants went to charity. One may think that 10 per cent is not much yet, throughout all the cities of Canada, in all the parishes and most remote villages, people set aside the poor man's share, expended a certain sum of money, part of their salary or income to feed those who were hungry, to quench the thirst of those who were thirsty and shelter those who had no home.
To-day with a cut of 10 per cent in their salaries, will private charity be able to do as much, in cooperation with the government,

as it did previously? Future will tell; however, we are inclined to believe that this salary reduction is untimely, that it has set a poor example to the country's capitalists whose eyes are always riveted on the tower of parliament, at Ottawa, and who eagerly read the newspapers so as to take their cue from higher up, from here, on Parliament Hill. I shall n-ot add anything further in this respect; however, previous to closing my remarks, I wish to make a humble suggestion to the government, as regards economy. Salaries have been cut down, a number of civil servants have been dismissed-


Armand Renaud La Vergne: Order!


Jean-François Pouliot: I earnestly think, sir-


Mr.   CHAIRMAN@Translation: The hon. member for Temiscouata should confine his remarks to the subject under discussion.


Jean-François Pouliot: May I, sir, make a suggestion as regards economy? The bill under discussion is one which, it is said, is inspired by motives of economy. The suggestion which I want to make will, perhaps, prevent the salary reduction of a certain number of civil servants, and, perhaps, will also spare the judges the annoyance which some of them might feel in having their salary reduced, notwithstanding that most of them are ready to sacrifice themselves on the country's altar. The following is a suggestion, one of a practical order. It is short but constructive although being of destructive nature. It is of a constructive nature in the sense that it will enable the government to realize an appreciable saving. Mr. Chairman, I suggest that the fifth wheel of the coach be done away with.
You are aware, sir, that a vehicle rolls very easily on four wheels and the fifth wheel which is known as the "spare" is not indispensable.


Ernest Lapointe: What is the fifth wheel?


Jean-François Pouliot: The fifth wheel is the hon. Solicitor General (Mr. Dupre).
We have had, sir, since August, 1930, as Solicitor General, a gentleman who was silent during the whole of last session.


Armand Renaud La Vergne: Order!
order!


Jean-François Pouliot: I beg of you, sir, to allow me to continue my remarks. You will note that my argument is truly to the point.

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Armand Renaud La Vergne: But it
does not appear to me to refer to the bill under discussion.


Jean-François Pouliot: By accepting, sir, the suggestion which I am going to make there wall be no further need of reducing the salaries of lieutenant-governors or judges. That is where my remarks refer to the question under discussion.
The hon. Solicitor General, since August 1930, has been the minister of the defeated candidates in Quebec. His part has been absolutely useless in the house. Last year, he was silent, and, this year, the government dispensed with his services, and according to the press, his leader did not forbid him to talk through his hat, but warned him not to talk through his large beaver hat. He played a useless part in Canada and also in Europe. That is why I request that the office of Solicitor General be done away with. His predecessor, the Hon. Lucien Cannon, pleaded a number of important cases before the Supreme Court, the Exchequer Court and the Privy Council. The present Solicitor General has not been called upon to plead any. He costs the country $40,000 per year. He has numerous secretaries. There is one to listen to what people are saying, another to interview those who come to his office, and another to reply to them. He is surrounded with a body guard, and reminds me of the former Czar Ferdinand of Bulgaria who never travelled without an armed guard. I do not wish to comment on the intellectual gifts of the Solicitor General, however, I think that the government would gain by dispensing with his services or, if the government are desirous of keeping him in their midst or circle, I would suggest that he be appointed Minister of Fisheries. That would be quite appropriate, because at least in Quebec, the fisheries would not fall under his control and he could therefore do no harm.
To sum up, sir, my suggestion is this: I think that, under the circumstances, the position of Solicitor General could be advantageously abolished, and the income could be distributed among charitable societies, such as the Red Cross, the Salvation Army, the St. Vincent de Paul and all the charitable societies which are doing so much good in this country. I have no personal ill-feeling against the Solicitor General. Personally, he seems to be a charming man, but here in the house we are obliged to consider things on their merits, and as, in my opinion, he has not done anything praiseworthy or wrong since he occupies his high office, I think the country would be better off if his services were dispensed with, within the shortest delay possible.


Richard Bedford Bennett: I am sure, with other
members of the committee, I am under a great obligation to the hon. member for Temiscouata for his voluminous exposition of the principles and the law that govern in a case of this kind. The classic defence of the position of a judge in this house was made by the late Judge Doherty. He was appointed to the bench when he was a young man of thirty-five or thereabouts. He served his fifteen years and was entitled to two-thirds of his salary as a pension which gave him $3,333.33 per annum. He was subsequently elected to parliament and later he became a minister of the crown. He was attacked in the old House of Commons for having received his pension while he was in receipt of pay as a member of parliament and as a minister of the crown. If hon. gentlemen are interested, they will find his defence recorded upon the pages of Hansard of that time. Shortly put-and I do not think it can be improved upon-it was this:	that having
entered into a contract with the crown to assume the obligations of judge, one of the terms of the contract being that after a certain number of years had elapsed he should receive a pension, he was entitled to that, having discharged his duties to the satisfaction of those to whom he was responsible and that no question could thereafter be raised because he was receiving the compensation provided for by the contract. The position with regard to judges is just that. They are not the servants of the crown; they are not the servants of the government. Under the Act of Settlement they occupy a very peculiar position. They are the administrators of the law; they constitute that branch of our government which we speak of as the judicial branch; they interpret our statutes and they administer the laws.
When my colleague the Minister of Justice said that it was not regarded as sound to decrease the compensation which judges receive by way of salary, he but stated a truism which might be indicated in another way. The contract is that they shall receive not less than (blank) dollars. However much more they may receive is for parliament to determine, but the contract of service is that they shall not receive less. In but two instances, I think, in all the history of the judicial branch of government in Great Britain has there been a reduction in salary and we recall in the early days the Master of the Rolls occupied a somewhat peculiar position. For many years he occupied a seat in the House of Commons and he was also Master of the Rolls. The Lord Chancellor to-day, of course occupying the highest posi-
299S

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tion in the judicial branch, of government in Great Britain, is also a political officer, being a member of the cabinet. The considerations that prevail here and in other overseas dominions with respect to the payment of salaries have no application in Great Britain, but the contract of every judge of every superior court in this country is that he shall receive not less than the stipulated sum provided for at the time he assumes office. In other words, if he gives up his practice at the bar and becomes a judge, there are two considerations that he must weigh before he takes the step. One is the salary, which will not be less than the sum provided by statute, and secondly, he has a retiring allowance which will not be less than the sum provided by statute. That completes the contract, and the reason the steps suggested were not taken when this measure with respect to the public service generally was submitted to this house was just what I have indicated. In Great Britain where, under the statute to which I made reference on that occasion, action was taken reducing the salaries of the judges by ten per cent, it was at once realized that a mistake had been made and in a very learned article that appeared in the Law Quarterly Review the reasons why that action should not have been taken were very clearly stated. Notwithstanding the observations made by the hon. member for South Perth (Mr. Sanderson) it will be found at page 562 of Hansard for February 26 of this year that I made this observation:
The judges are not included in this measure. It has been contended by legal authority, and an article in the last issue of the Law Quarterly Review goes into the matter rather fully, that it would be a breach of the statutory rights of judges to undertake to make a curtailment in their salaries in this way. There are, however, other methods by which the matter may be dealt with, and the government has not finally determined what action it may take in that regard.
In other words, as long ago as the twenty-sixth of February when the resolution upon which the bill is founded was being introduced into this house, I had indicated that there were other methods by which the end might be accomplished. We were not prepared to break a contract. We were not prepared to determine by act of this parliament that the conditions under which the judges had undertaken to serve the state in their capacity as judicial officers should be set at naught, but I indicated that there were other methods by which, if thought desirable, the judges could be placed on an equality with other public servants, using the words public servants in the largest sense, in equality of

sacrifice. Immediately after the resolution was introduced and while it was still pending in this house, some of the judges wrote to my colleague, the Minister of Justice, others wrote to myself, and others to other members of the administration, saying that they desired at this time of stress and strain to make a contribution to the revenues of this country equivalent to ten per cent of their salaries. I may say for the information of this committee, Mr. Chairman, that the first letter I received was from a county court judge who had appeared before a special committee appointed by this house and given evidence as to the inadequacy of existing judicial salaries, pointing out that he could not with his family live on the salary he was receiving. Yet the first letter that I received from any judge suggesting that he would like to make a contribution of ten per cent of his salary to the state at this time came from that same judge. I thought that was a manifestation of a rather fine spirit. A chief justice was next, and there were other judges in all parts of the country. I will not say that the majority of them, because that would not be fair, and it would also be untrue, but several judges indicated their desire to make a contribution at this time of ten per cent of their salaries for the year. After it became apparent that numbers of them desired to make a contribution in that sense, the government in view of the expressions of opinion from all parts, of this house-for instance, if the exMinister of Justice and those associated with him had seen fit to make as strong observations with respect to interference in any way with judges' salaries as we have heard this afternoon, it is not probable that so strong an inference might have been drawn-


Ernest Lapointe: May I interject and say that I am sorry I was not present when the discussion took place. I intended to differ and disagree in the house with many of the things that had been said, but the question did not come up again.


Richard Bedford Bennett: I accept at once my hon. friend's statement that he was not in the house when the matter came up, but certainly there were no expressions of opinion such as we have listened to to-day as to the undesirability of judges making a contribution this year to the public revenues. That is all that might fairly be said about the matter.
I would like to say that I. am one of those who in this house and outside of it, and I speak with some measure of diffidence because of. the positions I have occupied in my profession-it is somewhat difficult to speak as one really feels because it looks like special

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pleading-have often said that the judges of this country are not adequately paid. The result has been a judicial body which does not as a whole reflect the genius of the legal profession in this country. I say that with very great frankness. I say that we should be able to improve the standard of judicial excellence in Canada. We have large numbers of judges by reason of the fact that we have a dual system. We, the federal power, appoint, and the provincial power determines the numbers. The result is that in almost every province of Canada there are more judges than there should, be, and instead of a few highly trained minds upon the bench you have large numbers of indifferent minds upon the bench administering justice. In the very nature of things that would be so;
The other day we had a striking illustration of the attitude of the British mind towards a position on the bench. One of the most eminent judges of our time, one who is a hereditary peer and occupied a great judicial position,. a man who came to this country some years ago, had said years ago that if the time ever came when any criticism was urged as to his age he would retire. When a resolution came before the House of Commons in England to increase the number of judges because it was found that for the moment judicial business was somewhat congested, the resolution passed after a speech had been delivered by the Solicitor General which invoked from one of the members a eulogy upon the subject w'hich he said had induced him to change his mind. He went on and made certain criticisms with respect to the age of this learned law lord, and the result was that within a few days, as you may have seen in the press, that distinguished jurist retired from his position. That is the effect of public opinion at once reflected upon the mind of a high-minded man who occupied as great a place in the judiciary as has fallen to the lot of any man to occupy in recent years. He retired at once under those circumstances.
In Canada there . has grown up in recent years a tendency to criticize the .judiciary unfairly. I attribute that to two things. First, the inadequacy of the salary makes it impossible to attract to the bench the best legal minds vre have. Secondly, and I am saying this in no over-critical sense or as indicating one party more than another, there has been too much political patronage concerned in appointments to the bench. The result has been that the test whether a man is entitled to a seat on the bench has seemed to be whether he has run an election and lost it. Very often that has been so. If he has run
an election and won it, peradventure he should not look for a seat on the bench because he can better serve his country in some other capacity. I know of cases in which eminent members of the bar have indicated that men who were wholly unfitted for judicial positions, as appeared within a very short time after their appointment, have been appointed to the bench. That happened because of a variety of circumstances and very often from the sense of obligation that men feel to those who have served their party with great faithfulness. In England on one occasion in the last fifty years there was a slight departure from the rule which governs, and the chancellor of that time was severely criticized for the action he had taken. It is also true that in this country there has been a very great deal of criticism with respect to judicial appointments because it has been felt in few cases has the test been the merit of the appointee. To get away from that in a new democracy is not an easy thing. No one knows the difficulty better than I. Under those circumstances I think we must continue to try to secure the best available material because I still hold that of the three branches of government the judicial is the most important. This legislative branch can undo to-morrow what it has done to-day, and it frequently does-although it does not do it so quickly as to-day and tomorrow. The executive charged with its responsibility also may change and undo what has been done. The judicial branch, if it follows the common law system by which precedents, that is the decisions of the courts,, are binding upon inferior courts, cannot readily undo to-morrow what has been done to-day. One of the great poets of;the Victorian era, the poet laureate, made some observations touching these myriads of precedents which have so great an apparent effect upon the minds of men, and so govern the administration of justice, these precedents, these decisions, these judicial interpretations, these determine what the language of a statute really means.
For instance, to-day we pass a statute which may seem very clear to some hon. members. They may have no difficulty in understanding *what it means, but in the end the judges of this country must be able, without the aid of Hansard-because the courts have ruled that Hansard cannot be referred to in the courts to ascertain the intention of the legislature. The intention of a legislature as expressed in words in debate has no effect, but the intention as manifested by the language employed and interpreted in the light of preceding decisions must determine what the legislature meant.

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Let us for example consider the two words "trade" and "commerce" which appear in subsection 2 of section 91 of the British North America Act. When the case of Parsons versus the Queen went to the privy council the interpretation of the words trade and commerce had to be considered. It was found that the meaning of the words trade and commerce had been determined in a statute passed in the reign of Queen Anne. There hon. members have a precedent indicating the power and strength of a judicial decision applied to an act passed in 1867, where words similar to those used in that act had been used in the days of Queen Anne and had been given a particular meaning which governed the interpretation of an act passed in 1867. Thus in our courts we find that where similar words are employed in statutes and they have already been judicially interpreted, that interpretation continues.
So under those circumstances, in this highly developed civilization, the demand for highly trained minds becomes greater. The compensation which men of our profession receive for the services they render to-day are, some people think, out of all proportion to the actual value of the services. I think possibly the complaint is not wholly unfounded. I think it may not be untruly said that perhaps some members of our profession are more highly paid than they should be; that may well be said. It must also be realized, however, that in the hands of the members of our profession there rests a tremendous responsibility, and that no consideration of fear, favour or affection must govern them in the discharge of their duty. From that body, from the legal profession, must be recruited the bench. That is why I take it the ex-Minister of Justice has very properly said we are so desirous of maintaining the standards in the legal profession, because those standards are reflected in those obtaining on the bench.
The salaries paid to members of the bench are wholly inadequate-wholly inadequate. They do not attract to the bench the best minds. However, as the ex-minister has said there is never a dearth of candidates for judicial office. It is remarkable that while salaries are poor, the remuneration small compared with what they might have received from practising their profession, the sense of security and dignity, and the certainty of a retiring allowance will attract men to the bench.
Having in mind the great traditions of the legal profession, the fine traditions of the bench, the services it had rendered to man-

kind, the services it had rendered in Canada in the interpretation of our constitution and the determination of justice between contending parties, as well as the administration of our criminal laws, it is not unfair, is it, to think that with that security, that dignity and that retiring allowance they should make for this year a contribution in keeping with that made by their fellows of the state? I certainly feel, probably more strongly than hon. members opposite, that their salaries must not be touched. In my judgment their salaries could not be decreased but they could be increased. However when it came to a question of making a contribution when others had done so and were doing so, when others had offered to do so and were doing so, in order that there might be no invidious distinctions or that we might not create differences or, shall I say, unfair criticism, making it difficult for two members of the same bench to discuss questions with one another without one thinking that the other was endeavouring to enhance his own position at the expense of the other, we, by the exercise of power conferred upon us by statute, to raise money by taxation, are imposing that tax upon the judicial class, the bench, upon army, navy and police officers, the last three having offered voluntarily to have the deduction made from their salaries. How can it be said that that is discriminatory legislation any more than it could be said if I imposed a tax upon any man who went into a theatre to-night; certainly, he who goes into the theatre pays it. He who does not, does not. You discriminate, certainly, against the man who attends the theatre, and you collect from him a tax. You collect none from the man who does not go to the theatre. So far as that is concerned, the man who occupies a position on the bench contributes ten per cent, and he who does not does not.
I was rather surprised to hear the exMinister of Justice suggest that the principle of taxation without representation had any application here. Taxation without representation never applied to individuals or their avocations. If so the form of government that has been commended so strongly at times in the province of Alberta would have its justification, for then indeed you would have to have a class government in which every class would be represented. The House of Commons would not be complete, in such case, if every class, every occupation and profession did not have here a representative. That is not taxation without representation. Taxation without representation means that the great body of the people cannot be taxed

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until that same great body of people has the right and opportunity to express themselves through their representative.
This House of Commons reflects the whole opinion of the nation not any part of it. It reflects every vocation and every profession, and not any one of them; it reflects them all. The minute this parliament passes any taxing law, that minute it exercises the power reposed in it by the whole body of the nation. The old philosophic principle as to how the rule of majorities came into being finds expression there, and once the majority has acted then the statute is a statute of the Canadian people, and not of one party or of a majority in the house. So all the people find representation through that 'tradition which goes back at least six hundred or seven hundred years as to the rule of majorities and which has been discussed in so scholarly a manner by one of the members of our profession who investigated the foundations of our institutions.
Now, I think on sober reflection it will be found that .most of the members of the judiciary, ill-paid though they are, will realize, and gladly realize, that this affords to them an opportunity, not to render to Caesar what is due to Caesar, but by the application of a law to every member of the judiciary, and alike to .every member of the military, to make that contribution which is made by members of the public service,. That is what is aimed at, that is what is secured. I have no doubt as to the validity of the power, I have no doubt as to the completeness of the authority, that rests upon this parliament to do it.
As to the propriety of .it, as I have said, there seems to be no doubt when all in three classes, and substantial numbers in the other, have expressed not only willingness buit an earnest desire that they might be able to participate in the work of rehabilitation in this period of depression by making their contribution to the revenues of Canada. It is in that sense and for that purpose that this legislation is submitted. Had it not been felt as strongly as we can feel any matter that could be established by reason of our conviction as to its soundness, that to reduce salaries would be a wholly improper exercise of power and a,n invasion of the independence of the judiciary, we would have dealt with them as the other members have been dealt with.
One word more as to the office of lieutenant-governor. I will not traverse the ground I dealt with the other evening, but I have received at least one communication from a lieutenant-governor saying he would have 41761-189
to leave his position even if this ten per cent reduction were made, for the reason, as the ex-Minister of Justice has said, that the salaries .provided for lieutenant-governors are the salaries provided in 1867, or later in the case of the newer provinces; none of them bear any relation to the cost and expense of maintaining the office. I know of no lieutenant-governor with whom I have had any conversation or discussion who at the end of his term of office has not found himself indebted to his own private means for some sum, sometimes small, sometimes large, depending upon his sense of obligation with respect to the hospitality he dispenses.
With regard to pensions, these are not reduced by this legislation. Pensions are a matter of contract. To reduce a pension would violate the condition which I referred to a moment ago. There is the case to which the member for Antigonish-Guysborough referred, and which is within the memory of some members of this house, where we were unable to secure a chairman for the pensions appeal court. There are members in this house who might have filled that position if they so desired, but the salary was so inadequate that they would not leave their professional activities for the purpose. Some suggested that a salary of less than $1,000 a month would be wholly inadequate. We had to find a judge, not sixty years of age, who had served fifteen years so as not to sacrifice his retiring allowance, and who would be willing to serve in that difficult position. If I say we went over the entire list from one end of the country to the other and ultimately secured the gentleman of whom the member for Antigonish-Guysborough has spoken, I state the fact was known to most of us. I know that when the hon. gentleman said that a retired judge who had accepted a lieutenant-governship received his pension last year, he must have realized that that retired judge received his pension up to the time he was appointed lieutenant-governor. For my hon. friend the ex-Minister of Justice will realize that in the case of the lieutenant-governor of Saskatchewan it was determined that on a true construction of the statute he was not entitled to receive a retiring allowance while acting as lieutenant-governor; and the successors of the former lieutenant-governor of Alberta as well as of Quebec, who occupied seats on the bench, at once ceased to draw any retiring allowance by virtue of having accepted those positions under the crown. Therefore so far as they are concerned they have received no retiring allowance since they were appointed lieutenant-governors. There are members of the house receiving substantial pensions, for

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services rendered to the state. No one suggests for a moment that there should be any deduction from those pensions. They had a right under the statute, if for ill-health or otherwise, on a proper compliance with the terms of the law to receive a pension of maybe $3,000, $4,000, $5,000 or $6,000 per annum. They pay income tax upon their pensions. Their pension is part of their income together with their sessional indemnity. But to reduce that pension thus earned is to interfere with an executed contract; for the contract was executed when the term of service called for by the statute had been ended and the right to the emolument completed.
That is all I have to observe with respect to this matter. I think my record with regard to the judiciary is perhaps so well known that my friends opposite to the immediate right have sometimes thought that because of my professional associations and relations I felt that the salaries should be placed far beyond what was reasonable. I still hold strongly to the view, and I desire to express my conviction as strongly as I possibly can, that the judges of this country are underpaid, and that we can never hope to make up the court of final resort which the ex-Minister of Justice has spoken of in times gone by until we are able to attract by suitable salaries during their period of active service and by adequate
Tariff
Item
409q Complete parts for repairs, if imported on or before the thirty-first day of March, 1933, under regulations prescribed by the minister.
(i)	For the implements or machinery enumerated in tariff items 409c, 409e, 409f, 409g, 409j, 409o, 409p and 439c	
(ii)	For the implements or machinery enumerated in tariff item 409b..
(iii)	For the implements or machinery enumerated in tariff item 409d..
(iv)	For the implements or machinery
enumerated in tariff items 409h and 409n	
(v)	For the implements or machinery
enumerated in tariff items 409i and 409k	
2. Resolved, that any enactment founded upon the foregoing resolution shall be deemed to have come into force on the seventh day of April, one thousand nine hundred and thirty-two, and to have applied to all goods mentioned in the foregoing resolution imported or taken out of *warehouse for consumption on and after that date and to have applied to goods previously imported for consumption for which no entry for consumption was made before that date.

retiring allowances thereafter men of outstanding position in the profession, men who are leaders of the bar in the provinces whence they come. That is my profound conviction. Even in this period of depression I think no money is better spent than in placing upon the bench those who are best able to interpret the law. It is always an advantage too, for the litigant, because of the fewer appeals necessary to set right wrongs that ill practised and badly informed men execute.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed. WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. LaVergne in the chair.
1. Resolved, that Schedule A to the Customs Tariff, being chapter forty-four of the revised statutes of Canada, 1927, as amended by chapter seventeen of the acts of 1928, chapter thirty-nine of the acts of 1929, chapter thirteen of the acts of 1930 (first session), chapter three of the acts of 1930 (second session) and chapter thirty of the acts of 1931, be further amended by striking thereout tariff item 409q, the several enumerations of goods, respectively, and the several rates of duties of customs, if any, get opposite thereto, and by inserting the following item, enumerations and rates of duty in said Schedule A:-[DOT]
British Preferential Tariff	Intermediate Tariff	General TariffFree	10 p.c.	10 p.c.Free	7ip.c.	71 p.c.Free	6 p.c.	6 p.c.Free	10 p.c.	15 p.c.Free	Ill p.c.	17J p.c.
Edgar Nelson Rhodes: There is one amendment
which I will ask my hon. friend the Minister of National Revenue to move.


Mr. RYCKMAN:: I move that subsection
(v) of tariff item 409q, as introduced in resolution No. 1, of April 6, 1932, be amended to read as follows:

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(v) For the implements or machinery enumerated in tariff item 409k, British preferential tariff, free; intermediate tariff, 174 Per cent; general tariff, 174 per cent.
Mr. RHODES; That merely eliminates 409i, which has no reference to parts and therefore has no reference to this section.


[Stage Direction]
Amendment agreed to.
Tariff
Item
549 Wool, the hair of the camel, alpaca, goat or other like animal, not further prepared than combed	per pound
Provided, that importations under this item, wholly the product of any British country, when imported direct from the United Kingdom into a sea, lake or river port of Canada, shall be entitled to the benefits of the British preferential tariff.
599 Hides and skins, raw whether dry, salted
or pickled; and raw pelts	
Provided, the importations under this item, wholly the product of any British country, when imported direct from the United Kingdom into a sea, lake or river port of Canada, shall be entitled to the benefits of the British preferential tariff.
Mr. RALSTON; I note two changes from the item as it was last year. In the first place the date is extended to March, 1933.
Mr. RHODES; My hon. friend is dealing with the wrong item. The one to which he refers has been passed, but I have no objection to his discussing it.
Mr. RALSTON:: The date is extended to
March, 1933, and the words "under regulations prescribed by the minister" have been inserted. Those were not in the old item.


Edgar Nelson Rhodes: Quite so. That was necessary to make sure that the intent of the original item was carried out.


James Layton Ralston: Has the minister in mind what sort of regulations may be necessary?


Edgar Nelson Rhodes: For example, that section
was intended to permit the importation of parts for machines which had been purchased in the United States. Under it, however, parts of all kinds, for all kinds of machines, could be imported. The regulation was intended to make it clear that the intent of the original resolution should be carried out.


Armand Renaud La Vergne: Carried.


Mr. YOUNG:: We want to know the reason for this duty on raw wool.


Edgar Nelson Rhodes: This is to implement the undertakings which arise out of the New Zealand treaty.
Resolution as amended agreed to.
Resolved, that Schedule A to the Customs Tariff, as amended by Resolution No. 1 of the sixth day of April, 1932, being a resolution to amend the Customs Tariff, be further amended by striking thereout tariff items 549 and 599, and by inserting in said Schedule A the following items, enumerations and rates of duty:-
British		
Preferential	Intermediate	GeneralTariff	Tariff	TariffFree	10 cts.	15 cts.Free	10 p.c.	15 p.c.


Edward James Young: Have the woollen men been consulted?


Edgar Nelson Rhodes: As much as they can be in the circumstances which surround the negotiating and signing of the treaty.


Edward James Young: What I have in mind is this: I believe this duty will be collected on wool coming from any country but New Zealand, but we import certain kinds of wool from China for the making of carpets. Wool of that kind is not produced in New Zealand, but from now on we are to have a duty of 15 per cent against the raw materials entering into the manufacture of carpets.


Edgar Nelson Rhodes: The question of wool for carpets, mentioned by my hon. friend is under consideration at the present time. If the circumstances are as related by the hon. gentleman, as I think they are, it is quite competent for us to deal with the matter by order in council.


Armand Renaud La Vergne: Carried.


Edward James Young: No, we are still considering item 599.


Armand Renaud La Vergne: Item 599 has been adopted. Items 409, 549 and 599 have been all adopted.


Mr. VENIOT:: I think we have been proceeding too rapidly. If item 599 has been adopted it has not been so understood on this side of the house.
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Edgar Nelson Rhodes: I have no objection to a further discussion, if my hon. friend desires it.


Edward James Young: This item has not been adopted at all.


Armand Renaud La Vergne: These resolutions have been adopted. I have no objection to a discussion on them, if the committee consents to it, but I must say they have been adopted.


Edward James Young: There has been a misunderstanding in the matter. We commenced to discuss these items, and at the request of the hon. member for Shelbume-Yarmouth the minister went back to the former item. When that discussion was concluded you called "carried" and we thought you were dealing with the former item. I believe that is the situation.


Edgar Nelson Rhodes: I think that is how it came about, but I can assure the committee that I have no desire to shut off any discussion on these matters.


Edward James Young: Item 599 puts a duty on hides and skins which formerly came in free. Will the minister explain that change?


Edgar Nelson Rhodes: The answer I gave a moment ago applies in this case also. This is part of the agreement under the New Zealand treaty.


Edward James Young: Will the minister explain how we are going to get our hides for certain specific purposes, which are not produced in New Zealand?


Edgar Nelson Rhodes: My hon. friend will see that all hides are free under the British preference.


Edward James Young: But all hides do not come under the British preference. We get hides from Argentine and from Texas which are required by our tanners for certain kinds of leather. These are going to be shut out and we will be required to buy perhaps kangaroo skins from New Zealand from which to make harness. Will the minister explain how this is to be done?


Edgar Nelson Rhodes: My hon. friend is hardly
accurate when he says that these are going to be shut out. It is true that they will be subject to the rates of duty provided for in the intermediate and general tariffs, but I think it is going a little too far to say that importations will be shut out.


Edward James Young: Have any representations
been made in regard to this matter?


Edgar Nelson Rhodes: Yes, representations have
been made.


Edward James Young: By whom?
[Mr. Veniot.J


Edgar Nelson Rhodes: Certain of the tanners have objected to this duty. They have alleged that there are certain classes of leather which they will not be able to obtain under either the New Zealand treaty or the British preferential tariff except by payment of a duty which may be a handicap to their industry. It remains to be seen how that will work out in the length of time provided for by the treaty, which my hon. friend knows is one year.


Edward James Young: If this results in an increase in the price of harness leather there will be an increase in the price of harness.


Edgar Nelson Rhodes: If certain things happen,
certain results will ensue. However, I do not want to follow my hon. friend in an argument of this kind.


Mr. VALLANCE:: Why do the tanners
object, if it is not because of the fact that they will have to increase the cost of leather? Some time ago, when dealing *with a wheat grower in western Canada, the Prime Minister (Mr. Bennett) said that the only way the farmer could hope to meet the competition of Russia, the Argentine and other countries with which he has to compete on the open market would be by a reduction in the cost of production. If the cost of leather which goes into harness is to be increased, there will be an automatic increase in the cost of production of wheat.


Edgar Nelson Rhodes: If the cost of leather is
increased as a result of this duty it seems to me there will be an increased opportunity for our farmers to supply the leather which hitherto has been imported.


Mr. BROWN:: Is this duty on hides the
result of negotiations in connection with the New Zealand treaty?


Edgar Nelson Rhodes: Yes.


John Livingstone Brown: Then I have a few remarks to make on the subject. For a number of years past an agitation in this house for the imposition of a duty on hides has been carried on by those who presume to speak for the farmer, vigorously opposed by others who perhaps have the right to speak for the farmers. I have given some consideration to this subject, and on more than one occasion I have urged that the imposition of a duty on hides would mean nothing to the farmer but would impose a burden upon the tanners who are compelled to buy large quantities of hides of a quality not produced in Canada. Since the matter has been brought before us in this form I think the time has come when we should be prepared to give more attention

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to the arguments advanced in the past, and I shall take up a little time in referring to some of the objections urged to the imposition of a duty on hides.
I have taken the position that such a duty would mean nothing to the farmer, while it would mean a great deal to the tanners; and the next step would be an additional burden upon the farmer because of the increased price of leather. There seems to be a misapprehension in the minds of many who consider that all hides are alike. There is as much difference between hides as there is between textiles. The hides produced in Canada are not I the kind wanted by some of the large tanners. I do not think I can do better than to quote from Hansard and repeat the arguments which I have used at different times in the past. I shall not quote in full my remarks in 1926, . but in part I said:
Mr. Cahan: And you suggest that we cannot grow the heavier hides in this country?
Mr. Brown: Yes. In proof of my statement, there are tanneries that do not use a single pound of Canadian hides because they do not serve their purpose.
Some hon. members plead for the industries of Canada, and the hon. member for Muskoka-Ontario (Mr. McGibbon) some little time ago spoke of tanneries that were closed up. Yet these hon. gentlemen, appealing to the prejudices of the farmers on this question of imported hides, are advocating a policy which would mean that these tanneries could not get the raw material that they want. The result would be the tanneries would be closed, the men would be out of employment, and we would lose a tremendously profitable business. That it is a profitable business I am going to show the house by further figures. In dealing with hides we must take into account leather. An hon. gentleman a little while ago asked about unmanufactured leather. I will give the figures. They refer to leather that we export, which business would in large measure be shut off if we did not purchase these other hides:
Harness leather	$	385,568
Sole leather	 2,324,961
Upper leather (probably very largely made out of our own
local hides)	 4,580,892
All other leather	 92,467
Total exported	$ 7,383,888
least, they would stop it if we carried out the policy they are advocating, for that would necessarily be the result of putting it into effect.
I took the matter up again in the session of 1929, at which time I dealt with it somewhat along the same lines. I said on that occasion:
Let me refer to the question of hides and skins. The hon. member for South Wellington (Mr. Guthrie) quoted figures to show that we were importing $14,000,000 worth of hides, $10,000,000 being from the United States, while we were exporting about a similar amount; and he indicated something to the effect that these were simply cross entries and that we I might wipe the whole thing off the slate and use our own hides instead of importing from I the United States.
.


Mr. COTNAM:: Was the hon. gentleman
then speaking as a Progressive or was he speaking then, as he is to-day, as a Liberal?


John Livingstone Brown: I was expressing the same
sentiments I have always expressed since I have been in the house. I have never varied in my stand on this matter, so it does not matter what you call me. My remarks continue:
If the hon. member had taken more than a superficial view of the question he -would not have assumed that position. It is true that we import hides to the value of $14,000,000 odd, from the United States $11,164,668. while we export to the United States $11,266,660 worth of this product.
But there is this point to which I would call the attention of the house: that class of : hides which forms the great bulk of our imports and exports consists of raw cattle skins, that is, : the heavier hides. Now, on the hides we imported , we paid a little more than twenty-three cents, and , for the hides we exported we received nineteen cents. Someone may say, "That is bad business; why export hides at nineteen cents and import at twenty-three cents?" But a little close thought will surely convince anyone that there is a reason for this. The Canadian tanner is surely a business man who can be trusted to buy what suits him, and therefore he pays that twenty-three cents for the class of hides he wants because he cannot get them in Canada. When I made a similar statement three years ago it was absolutely endorsed by Colonel Mullins, of Marquette, who has had a large experience in the cattle business and is familiar with the tanning industry. He absolutely endorsed the statement that the class of hides

or at least a large proportion of the hides- which the Canadian tanner requires cannot be obtained in Canada, so that he is obliged to go elsewhere for them. But we cannot consider this question of hides by itself; we must take into account the whole business of buying and selling hides and tanning them into leather, and also the selling of the leather. I notice that we sell to the United States such grades of leather as harness, sole leather, upper leather, with a very small quantity of other leathers, the total being $7,682,521. That is the country with which we cannot compete in these matters.
So that the total figures would indicate a situa-
Those were the figures for the fiscal year 1925. My remarks continue:
Now, bear in mind that the following figures are for our imports of unmanufactured leather, namely, $3,954,482 worth. In other words, our excess of exports is well over $3,000,000. I want to remind the house that of those exports there went to the United States-the country that we cannot compete with-out of the total of over $7,000,000 -worth the very , large proportion of $5,311,184 worth. This is the kind of trade that these gentlemen want to stop. At
Income War Tax Act

tion something like this: our excess of exports of hides and unmanufactured leather, so far as the United States are concerned, gives a favourable balance-to use the term which is commonly employed-of something over $3,000,000; and taking our total exports into account we have a favourable balance of about $1,500,000. Now, if by one stroke of the pen a duty is imposed on hides, what do we do? We simply make it so much more difficult for the manufacturer, the tanner, to obtain his raw product, and we strike at this very profitable business which he is carrying on with the United States and other countries, securing no benefit for ourselves. The probability is that if we insisted on handicapping the manufacturer of leather in that -way we should put him in the position where he would not be able to pay as good a price for that proportion of our own hides which he now uses.


Mr. SPROULE:: Would the hon. member tell us what hides are worth now?


John Livingstone Brown: As a matter of fact that has nothing to do with the question. The price certainly has not improved since the present government came into power, if that is of any interest to the hon. member.


John Thomas Sproule: If the hon. member knows what hides are worth now, let him tell us. Apparently he does not want any tariff on them, yet he cannot sell them.


Edward James Young: They cannot be sold under this legislation.


John Livingstone Brown: If the matter had ended there, perhaps I might have said little more, but last year the Prime Minister, then acting as Minister of Finance, increased the duty on leather. We had taken the position that we wanted to secure to the tanner his raw product at a price at which he would be able to compete with other countries. The thanks we got was an increase in the duty on leather. I went into the matter fully last year, and I thought of bringing it before the house, but the session was rather advanced and I did not give what I had intended, so I contented myself with asking a few questions.


Ira Delbert Cotnam: Can the hon. gentleman tell us at what price the tanner would like to get his raw product? I understand you cannot get fifty cents a hundred for it to-day.


John Livingstone Brown: I said that I contented myself with asking a few questions. When the Prime Minister, then Minister of Finance, brought the matter before the house, I asked:
Mr. Brown: How is sole leather affected by these changes?
Mr. Bennett: Sole leather is dealt with by item 604, which has just passed. However if the hon. gentleman desires information I shall be pleased to give it.

Mr. Brown: In view of the fact that the Exports of sole leather are enormously larger than the imports, an increase of that kind would
/seem to be altogether unnecessary. The imports are trifling as compared with the exports.
I understand that the tanners have been j greatly exercised over this duty that is to I be imposed on hides coming from outside the I empire. If they were the only ones who were to be affected, in view of the little thanks we got for trying to help them in their business, I would be willing to let them stew in their own juice. But they are not the only ones concerned. This means simply that when a farmer goes to buy a set of harness, he will have to pay the increased price for it, because, let me emphasize again, the best harness, sole and belting leathers are made from hides that have been imported from the Argentine, Uruguay, the southern states, and not from hides produced in Canada. Therefore the argument that this will benefit the Canadian producer of hides in any way, is not well founded. It means simply that our tanners will have to pay an increased price for the high-class hides they see fit to buy and the farmer, in the sale of his hides, will benefit nothing.
I telephoned to the Bureau of Statistics today to get the statistics for the fiscal year 1932. They have not come to hand yet, so the latest figures I can give are those for the fiscal year 1931. I find I have neglected to bring with me the figures concerning imports and exports of hides, but I have those with regard to leather. The imports of leather are as follows:
Belting leather	 $ 91,643
Harness leather	 1,673
Sole leather	 116,219
That is, we imported of these heavy leathers only about $209,537 worth. It is true that we imported other leathers to the amount of $4,311,261, but the great bulk of those was leathers of fine classes that are evidently made in very limited quantities in Canada. On the other hand, these are our exports of leather:
Harness leather	 $ 374,034
Sole leather	 1,100,933
Upper leather	 2,550,751
That is, of the classes of leather that are made out of these high class hides,. we exported over $4,000,000 worth, and of all other leathers which, I said, are made in small quantities in Canada, we exported only $46,946 worth. Unquestionably the result of this verbal understanding that the minister had with New Zealand, that on his return to Canada he should have a tariff put upon hides, has landed us in this position: we do not benefit the farmer who sells hides, because

Income War Tax Act
the price of the class of hides that he produces will not be affected a particle, and we compel the tanner to pay a higher price for the hides he uses. He will recoup himself by charging the local consumer a higher price for harness leather. He also will be handicapped in the export market. That is a very striking illustration, Mr. Chairman, of the effect of interfering unduly with the course of trade. In this case it is of no benefit to ourselves; it is an injury to the tanner and an injury to the country to have this very valuable trade interfered with.
There is another point I should like to emphasize at this moment, and perhaps it has a bearing on the principles that will be followed at the coming Imperial conference. Evidently our Minister of Trade and Commerce came to a verbal understanding with the representatives of New Zealand that he would come back home and have a duty imposed on hides. It is a very serious thing if in our trade agreements we allow a country with which we are dealing to insist that we shall alter our own tariff. Let us give them whatever advantages of our tariffs we have to offer, but I say it is pretty serious if we are to accept dictation from outside as to what we shall do with our own tariff. That was just the mistake which the Prime Minister made when he went over to England last year. We on this side have always taken the position that we were content to take whatever preferences the British people offered us in their markets, but we absolutely refused to interfere with the business of the United Kingdom and to say what they should do with regard to their tariff. It is true, I know, that the Liberal government in making the agreement with Australia did adopt that principle with reference to raisins, but it must be remembered that the duty on raisins was not in any sense a protective tariff, but entirely a revenue tariff. I want to insist that if there is any disposition to allow other nations to say what our tariff shall be, we are heading straight for disaster. We can never hope to build up a united empire that way. We can only hope to build up a united empire by each country within the empire retaining complete freedom in the making of its own tariffs. I think I have shown quite conclusively, Mr. Chairman, that the result of this verbal agreement which the Minister of Trade and Commerce made with New Zealand and which the government now seeks to put into effect-I suppose it will have to be done in order to keep faith with New Zealand-cannot be anything else but bad both for the tanners and for the Canadian producer of hides.


John Thomas Sproule: I think the hon. member for Lisgar is entirely off the track in talking like that. There is practically no market for hides in this country. The hon. member says it will not benefit the farmer. What is he going to do with his hides? Is he going to bury them? What is the reason for hides being the price they are to-day? The hon. member is talking about prices of hides three or four years ago. Does he not know that hides are not worth anything to-day? He is off the track entirely.


John Livingstone Brown: The arguments which I combated in 1926 and 1929 were the same arguments which hon. gentlemen are using to-day when hides are worth almost nothing as compared with twenty cents a pound a few years ago.


John Thomas Sproule: They are not using hides at all of the type my hon. friend was speaking about.


John Livingstone Brown: Is it not a fact that some of the large tanneries in Canada do not use a pound of Canadian hides? But, generally speaking, the tanneries are using a certain proportion of our own hides and will continue to do so under any circumstances. I think, Mr. Chairman, that when the argument I have used is given consideration it will be found that it is perfectly valid.


Mr. MULLINS:: This is one time I find myself in agreement with the hon. member for Lisgar. I do not want to do anything to raise the price of harness leather or of harness to the farmer in western Canada, because the farmer in western Canada is going back to horses; he is tired of the tractor. The hon. member for Lisgar is quite right in his statement with reference to hides. I put some money into a tannery in Winnipeg and tried to tan hides. I do not forget it and I shall not forget it for some time. The hides in Canada are not suitable for harness leather. My hon. friend is quite correct in that statement. If they were, why does the Lang Tanning Company in Kitchener go to South America and the United States for their raw hides for making harness leather? The hides we have in Canada, unfortunately, are covered with barbed wire scratches. Any man who puts his money into a tannery in Canada-and there have been two of us in Winnipeg-will soon learn from experience. I am totally in agreement with what the hon. member for Lisgar has said with regard to hides, and I do trust that something will be done so that the price of harness leather and the tariff on hides entering Canada will not be raised because, as I said, Mr. Chairman, the farmers are going
Income War Tax Act

oack to horses. I am sorry that a good many of my friends on this side will not agree with me, but I felt it necessary to support the statement of the hon. member for Lisgar. I listened very closely to what he said, and he was quite correct in his statement.


Mr. EULER:: As one who comes from the city'-which is the home of perhaps the largest tannery in the British Empire and of still another tannery of very considerable size, I might say a word with regard to this matter.
In the first place I will admit that in any treaty, and this provision is the result of a treaty with New Zealand, there must be give and take. If the New Zealand producer of hides would benefit by the imposition of this fifteen per cent duty it would be an argument for it, but I am told, and I think correctly, that New Zealand hides are not suited for the making of harness leather or of sole leather either. If this provision helped the Canadian producer of hides it would be an (argument for it, but the same thing applies to Canadian hides as applies to New Zealand hides. They are not suitable for making the kind of leather of which we are speaking.
Something has been said as to the export trade in leather. My hon. friend from Lisgar stated that if it is true that the duty of fifteen per cent must be paid on these hides that are imported from the Argentine-the Lang Tanning Company at Kitchener and I believe all the Canadian tanneries import their hides from the Argentine-it must necessarily increase the cost of producing leather, and thus make it more difficult to compete with other countries in the export market for leather.


Edgar Nelson Rhodes: How does it interfere with their export business when they are entitled to a drawback?


William Daum Euler: I was going to make this comment, and perhaps it will answer the minister. It is unfortunately true that whereas two or three years ago one large tannery in the city from which I come exported more than half its product to the United States, where it had free entry, at the present time, since the United States has increased its tariff, its export business to the United States, in fact practically its whole export business, has been discontinued. It can no longer get into that market. That perhaps will answer the minister. The question of export business to my mind does not arise at this time.


Edgar Nelson Rhodes: Except that my hon. friend is proceeding to deal with the handicap to their business.


William Daum Euler: No, I was not; I was merely attempting to answer a remark made, I think,
fMr. Mullins.]
in error, by an hon. member on this side of the house. I understand the export business in leather has been practically cut off because of tariffs in other countries being increased, and it is no longer possible to send leather to other countries.
The only point I wish to make is this: The imposition of the duty will no doubt increase the production costs of leather. The tanner will reimburse himself by increasing the price of the leather to the consumer in Canada. If you were going to get some benefit out of it by. helping the New Zealand producer of hides, or if you would help the Canadian producer of hides, then I would say there is an argument for the duty. As I see it, however, the only possible benefit that can come to Canadians is by way of added revenue on hides imported from the Argentine-because they will still be imported from that country. The only benefit which will come to Canadians will be through the increased revenue brought about by the imposition of a duty of fifteen per cent. Against that we must set this: It increases the cost of leather to the Canadian consumer.
In that connection I should like to say a few words in regard to the contention of the hon. member for Marquette. It is perfectly true there has been an increase in the production of harness leather. The Lang Tanning Company of Kitchener was mentioned, and may I say that they are producers of sole and harness leather. At one time they produced only harness leather, and then owing to the fact that the horse has almost disappeared they became tanners of sole leather. I am told that within the last few months they have had great increases in the sale of harness leather to western Canada. The farmers of western Canada, for reasons of their own,-perhaps because they cannot afford to use tractors, or because of the high price of gasoline,

have gone back to the use of horses, involving the use of harness leather. As a result the business of tanning harness leather in the city of Kitchener has been stimulated. What will come out of this legislation would be an increased price of harness leather to the farmers in western Canada.
I do not see any corresponding value, except through added revenue. If this is a measure for the production of revenue, I can see no other arguments.


Mr. BAKER:: Is it not possible the Argentine will reduce its prices to meet competition? That is invariably the case.
Progress reported.
At six o'clock the Speaker resumed the chair and the house took recess.

Ways and Means-Customs Tariff
After Recess
The house resumed at eight o'clock.



WAYS AND MEANS


[Stage Direction]
The house in committee of ways and means, Mr. LaVergne in the chair.
Customs tariff-599. Hides and skins, raw whether dry, salted or pickled; and raw pelts: British preferential tariff, free; intermediate tariff, 10 per cent; general tariff, 15 per cent.
Provided, that importations under this item, wholly the product of any British country, when imported direct from the United Kingdom into a sea, lake or river port of Canada, shall be entitled to the benefits of the British preferential tariff.
Armand Renaud La Vergne: Is the resolution
carried?


Edward James Young: No, Mr. Chairman. Before
dinner, replying to the member for North Waterloo, the minister said there would be a drawback on the exported leather. Where is provision made for that?


Edgar Nelson Rhodes: I am waiting for the commissioner of taxation, who has the documents with him. Perhaps in the meantime we could proceed with some other point.


Edward James Young: Then this is the next point. I take it that the promise was made to the government of New Zealand to impose this duty of 15 per cent on hides coming from other countries with the idea of supplying our present market from New Zealand rather than from South America or wherever we are getting hides at the present time. What steps did the government take to assure themselves that the New Zealand hides would be satisfactory for the purpose for which the hides they are hoping to replace are used?


Mr. STEVENS:: I think, Mr. Chairman, as the hon. member has asked me a question on this matter, I might as well at this time say a few words upon the subject dealing with one or two different observations made this afternoon by other hon. members. ' The apprehension expressed by hon. members on the other side of the house and by one or two on this side regarding this matter is, I think, unduly stressed. The situation with respect to the import of hides is one to which personally I have given a good deal of thought. Like a number of other items of imports of raw materials, as I indicated in some remarks I made to the house a few weeks ago, hides are not moving as normally we would expect them to move. It is quite true that hides, together with a number of other articles of raw materials, have been on
the free list for a good many years, and normally one would expect they would come to Canada from the country of origin; but this has not been the case, and this article is perhaps a very excellent illustration of the situation. I have before me now the trade returns for the fiscal year 1931, and they show that importations of hides from the Argentine averaged 70,000 pounds weight for the five-year period from 1927 to 1931, inclusive, and from the United States 275,000 pounds weight.


Mr. MALCOLM:: Has the minister any
knowledge of how many Argentine hides are included in the American imports?


Henry Herbert Stevens: That is precisely the point I am going to make. A very large proportion -my investigations have not disclosed exactly how many, the reason for which I will explain in a moment-a very large proportion of these hides that we buy in the United States are Argentine hides that enter New York free. New York acts as a sort of free port zone for merchandise destined for Canada. As I indicated the other day, this very important item of trade accrues to the credit of the United States so far as the Argentine is concerned, and Canada gets no credit for it at all. My own opinion is that it is highly desirable to ensure the movement of trade directly from the country of origin to Canada, if it is possible to do so, because it will give to us in that market an enhanced credit, which will enable us in turn to sell our goods there. I am now dealing with the broad general principle, which I think ought not to be lost sight of.
Now, it has been alleged that we do not produce hides which are required by the tanneries for certain purposes, such as harness leather, sole leather, and so forth. I think undue weight is given to that statement. In part it is quite accurate, but to say we can get no hides in Canada suitable for those purposes is not a fair statement. It is, however, a fact that the producers of raw hides in Canada have not developed as good a system of sorting and marketing as characterizes, for instance, the New York or the Argentine market; and there can be no doubt that so far as the Argentine producers are concerned they have a more uniform production of hides of a certain type and class.
I have received quite a number of criticisms from producers of hides in this country that in the negotiation of the New Zealand treaty we were not looking after their interests sufficiently in leaving hides on the free list. It has been argued that by leaving hides from New Zealand free, and by having the British

Ways and Means-Customs Tariff
preference free also, we are doing something to affect prejudicially the producers of hides in Canada. It is true that the tanneries, though I cannot say I have received representations other than one or two very moderate letters, may think they have cause for complaint in the fact that we are imposing duties of 10 per cent and 15 per cent under the intermediate and general tariffs. In the first place I submit to the house that there is a general system of dumping going on the world over. Many countries are practising dumping in a manner that has never been witnessed before, I suppose, in the'history of external trade; they are exceedingly anxious to develop their exports, to correct adverse balances of trade and also to bolster up their own exchange by increasing exports. The result is that with the low prices of commodities there is a tendency to disregard almost entirely home values and to export goods at almost any figure procurable. I have not under my hand the present day prices of hides, but I know they are exceedingly low. A few days ago, if my memory serves me aright, I saw quotations as low as two cents a pound, and I understand that Canadian producers-I will not say farmers, because probably they would get even less-are being paid from one cent to one and one-half cents per pound by the dealers. Obviously a duty of 10 per cent or 15 per cent on hides, with the present condition of the market, is not going to affect the leather situation to any extent at all. The effect would be so small upon the finished product that it would not be noticeable.


Mr. McGIBBON:: What authority has the minister for that statement?


Henry Herbert Stevens: My authority is the
figure to which I have referred, the very low price of the commodity, which is unquestionably below anything that might be considered the cost price of this article.


Edward James Young: If the duty is so small that it will not make any difference, will it not be futile and useless?


Henry Herbert Stevens: The duty is imposed as
one of the conditions of the negotiation of the treaty. My point is that the treaty is for a year. The New Zealanders will be here in July and August, I suppose, at the Imperial conference, and during that period we intend to discuss with them the terms of the treaty and the possibility of its extension beyond the period of a year. As a result of the conference we hope that such matters as are outstanding, which may present some difficulties at the present time, may be finally determined.
[Mr. Stevens.!
My submission to the committee is that under existing conditions, with the present low price of the commodity, the duty imposed is not going to seriously affect the business. In the second place, it must be borne in mind that there is a very substantial duty on leather goods. I have the rate under my hand but had not time to look it up before I rose to speak. At any rate there is a very substantial protection with regard to the finished article, and the added value that goes into the finishing of these hides in the form in which they are marketed so greatly exceeds the cost of the raw material that the ad valorem rate of duty will not affect the finished article to any great extent. Unquestionably it will affect it to a degree, but one must keep in mind the relative values of these different commodities.
I should like now to say a word to the hon. member for Lisgar, who referred to this as a case of another country dictating our tariff. That is not so. In any negotiations looking to a treaty there are bound to arise conditions which call for changes, amendments or adjustments in existing tariff rates. This is one of the items which called for an adjustment, just as on the other hand I think there were one or two items in connection with which New Zealand would have to amend its tariff to meet the conditions of the treaty.
My hon. friend across the way asked if I had given the matter any thought. I can assure him that I have given the matter a great deal of thought. It would not serve any purpose to now go through all the processes of thinking-


Edward James Young: I do not think my hon.
friend caught my question. I did not suggest that he had not been thinking; I wanted to know if he had taken any steps to assure himself that the New Zealand or Canadian hides would fill the place of the Argentine hides which it is now intended to replace.


Henry Herbert Stevens: My own opinion, if it
is worth anything, is that to a certain degree Canadian hides may meet the requirements of the tanneries.


Edward James Young: They may?


Henry Herbert Stevens: Let me make that point
quite clear. I do not say for a moment that they will fully meet those requirements, but I want to point out to the committee that it has always been the practice of any industry which has established certain contacts for its materials to emphasize the difficulties imposed far beyond the actual burden, when anything is done to interfere with the normal routine

Ways and Means-Customs Tariff
of their business. That is almost axiomatic; you find it in every case, and I have never seen it fail. The moment you interfere with the ordinary practice of private industries an extreme interpretation is placed upon the difficulty which is thus imposed. I do not think the interference with the business of the tanneries will be a matter of very great significance, and I think in part they will be able to secure, from the existing supplies of hides in Canada, materials that will serve their purposes, but not as conveniently, not so well assorted, not marketed in such large quantities as is the case in New York, where they are well graded and readily available. To a degree, however, I think hides from other countries can be replaced by Canadian hides, and to a degree also by Australian and New Zealand hides. This should give Great Britain a chance to market some green hides here-not that I think Great Britain is a producer of hides, but she certainly is just as good an assembler of hides as New York is, and I see no reason why she should not get a share of the business. Perhaps I ought not to say this, but I will take a chance

I think an opportunity is being afforded of opening up negotiations with the Argentine which may bring about distinctly advantageous results. Trade relations between Canada and the Argentine certainly have to be improved. There is an excellent market in that country for a wide range of manufactured articles from Canada, and we can buy but little in return, but one product which we can buy is hides. I see no reason why there should not be some arrangement entered into with that country. As far as certain classes of hides are concerned, New Zealand will have a distinct advantage, and that is what we expect and desire.


John Vallance: In the event of Great Britain becoming an assembler of hides, would that automatically do away with the tariff now prevailing against those hides which may be gathered together in Great Britain and then shipped to Canada?


Henry Herbert Stevens: I think it is open for us to deal with that matter should it arise.


Peter McGibbon: Coming as I do from a riding in which is located the largest tannery of sole leather in the British Empire, I think I should say something in this regard. There are two lines of thought in this matter, one academic and the other practical. The minister has a laudable object in view when he desires to transfer to New Zealand the business in hides, but he may not be aware of
the fact that this is practically impossible. New Zealand hides are useless for the manufacture of sole leather. They are largely cow hides; they are thin and will not make good sole leather. The market for hides is not in New York, as the minister says, but in Chicago and the Argentine. I refer now to that market outside of the local domestic market. Under this treaty duties of ten and fifteen per cent are being placed upon the raw material for the manufacture of sole leather. How can this country go out into the markets of the world and compete with England and every other country, with the exception of the United States, where hides are allowed to enter free? A handicap of fifteen per cent is being placed upon the tanneries of this country. I am credibly informed that if things stay as they are, eveiy sole leather tannery in this country will be put out of business. The minister speaks lightly about this matter, but my information is that a duty of seven and a half per cent will be required on manufactured leather to equal this duty of fifteen per cent on the raw material. The manufacturers of sole leather in this country are taking all the hides that are available in Canada, and would take hides from New Zealand if good sole leather could lbe made from them, but that cannot be done. Something is being done in connection with this industry which has never been done with any other-a duty is being placed on its raw material.
I think I have a right to protest against the putting out of business of any industry, especially one located in my own riding. That is what this treaty is going to do should it go through in its present form. England allows hides to enter free and she is our main competitor in the world market. How are we to compete with England when a duty of fifteen per cent is being placed upon the raw material? There are only two courses open; either more protection must be given to the finished article, or an additional cost must be placed upon the consumers of this country. I contend that both these methods would be wrong. I tell the minister quite frankly that he is absolutely on the wrong track. If good sole leather could be made out of New Zealand hides, they could have been used in the past. The tanneries are scouring the earth for hides; they are bringing them from China and Japan, but the principal market is in Chicago and the Argentine. The hides obtained from those markets are the only ones that will make first class sole leather. New Zealand hides will not do it. I object to the way this treaty was born and the way it was put through the house. Men have spent their time and

Ways and Means-Customs Tariff
money during the past fifty or seventy-five years in building up this industry, and for a number of years they have been operating at an actual monetary loss in order to keep going; then the government comes along and puts duties of ten and fifteen per cent on their raw material. I protest against the whole thing; it was wrong in its conception and it is wrong in its application.


Mr. LOUCKS:: What about the Canadian producer?


Peter McGibbon: The tanneries have
taken every Canadian hide available. The only people to be affected by this treaty will be the packers. They have been withdrawing their hides from the market ever since the treaty was announced. They are the ones who will benefit, not the farmers who are producing hides.


Edgar Nelson Rhodes: The hon. member for
Weyburn put a question, and at the moment I had not the record before me. If he will look at section 286 of the Customs Act, chapter 42 of the revised statutes of Canada, 1927, he will find the drawback.


Charles Gavan Power: Has the minister answered
the hon. member for Muskoka-Ontario?


John Livingstone Brown: In view of the speech that the hon. member for Muskoka-Ontario has made, I should like to say a word. I am delighted to hear him speak as he has done; it gives us some reason to believe the gospel we have been trying to preach for the last six or seven years is beginning to be accepted. If I remember aright, the hon. member was one of those who in 1926 made a speech which moved me to speak as I did in the address that I quoted this afternoon.


Peter McGibbon: Never in my life did I advocate a duty on raw material.


John Livingstone Brown: I am well aware that on
the general question of duties the hon. member for Muskoka-Ontario spoke of the tanneries that were going out of business. I am sorry for the ^Minister of Trade and Commerce, because he certainly laboured hard when he was endeavouring to show why this proposal should be endorsed. He did not speak with his usual fluency and authority. He spoke of the possibility of Great Britain becoming an assembling place for hides. I presume the thought in his mind was that those hides would go there from the Argentine. I wonder how New Zealand would accept that way of getting around the agreement we have made-tfiat is, to have the 
hides shipped to Great Britain and thence to Canada. That would seem to be a method of getting around the agreement with New Zealand, but I cannot imagine how she would view it.
Mr. McGIBBON; Great Britain imports about seventy-five per cent of her hides.


John Livingstone Brown: I do not think we can emphasize too strongly the fact that our hides are suitable for certain purposes, and I believe they are used to the fullest extent possible for those purposes. In the figures I quoted this afternoon I mentioned that large quantities of upper leathers were imported. I imagine the greater portion of the upper leather in our ordinary shoes can be made from Canadian hides. But I want to point out that in constantly increasing ratio the cattle which are being slaughtered in Canada are the smaller ones. Even when Great Britain was taking a smaller steer than she is willing to take now, the large animals were going across the seas, and the reason our Canadian cattle are not suitable for the making of hides lies in the fact that the great bulk of our cattle slaughtered here are small ones that do not produce heavy hides, so that what they produce is not suitable for our tanners who have been buying from the Argentine. There is reason to believe that NevTZealand hides are of the same quality. New Zealand is not a beef country, as the Argentine is; she is a dairy countiy, and there is no reason to suppose the qualities of New Zealand hides are in any degree different from our own. The probability is that they are in the same class, and they will not replace the hides which we have been getting from other countries.


Edward James Young: The Minister of Trade and Commerce, in answering my question as to what assurance he had that our hides or New Zealand hides would be satisfactory in place of those from South America, told us that the tanners or manufacturers were prone to exaggerate or over-emphasize the difficulty that any change such as this would make in their operations. He thinks the Canadian hides may be satisfactory and may not interfere very seriously with the business of the tanners. Because he holds the opinion they may not make very much difference, he feels justified in playing with the tanners, as it were, throwing difficulties in their way and telling them they had better overcome them. As regards the question of insisting on direct shipment from the Argentine to Canada instead of the Argentine hides being bought on the Chicago market, if our manufacturers buy hides in Chicago there must be a reason for their

Ways-and Means-Customs Tariff
doing so. If it would pay them to import the hides directly from Argentina, that is what they would surely do. It must be more profitable for them to buy their hides in Chicago.


Peter McGibbon: They buy them both
ways.


Edward James Young: I have no doubt the reason is that, Chicago being an assembling place for hides of all kinds, the buyers have a greater opportunity there to select what they want. If you impose customs duties which make that impossible, you put upon the Canadian tanner the necessity of sending somebody to Argentina to pick up the hides, thus rendering his business more expensive. In regard to the duty being only 15 per cent and the hides only one-half cent per pound, it is said that this will not amount to very much. I suppose 15 per cent of nothing is nothing, but hides are not going to remain at that price. What will happen when the price advances?


Henry Herbert Stevens: Ten per cent from Argentina.


Peter McGibbon: I might inform the hon. member that the duty to-day is equal to seven and a half per cent on the cost of the finished product.


Edward James Young: As the price of the raw
hide advances, it will be still more. To my mind the most amazing statement which the minister made was that by this treaty he hoped to divert to New Zealand the trade which we have now with Argentina. Then he hopes to enter into another treaty with Argentina to switch the trade back again. Surely this ought to be a lesson to us or our government as to what they should or should not do at the Imperial conference. In this we see the direct result of an attempt to divert trade. It is much easier to kill than to divert trade. We are putting obstacles in the way of our trade with Argentina in the hope that that trade will switch to New Zealand. The result will be that we shall lose the trade entirely. This should be a warning to the government to do nothing at the Imperial conference to try to build up empire trade by putting obstacles in. the way of trade outside the empire. You can very seldom divert trade, but you can always kill it.


James Malcolm: I do not wish in any way to embarrass the minister by opposing this resolution. A few days ago, speaking on the New Zealand , treaty, I was able to compliment the Minister of Trade and Commerce on the
treaty which he had made with New Zealand, but on that occasion, due to the faot that I had not had time to study the New Zealand treaty, I had no knowledge that it was the intention of the minister to introduce a budget resolution making a duty applicable to hides from Argentina and other countries. I think some remarks which were made this afternoon and this evening with regard to the injury which would be done to the Canadian hide business were made because there was not a complete understanding of the difference between Argentine and Canadian hides. If hon. members will just realize that there is no other country in the world producing beef cattle as large or as uniform in size as the j Argentine; that in that country barbed wire is not permitted for fencing; that there are no jvaitdedlies or insects which destroy a hide, and that probably the hides of Argentine steers

ire taken off by as expert abattoir workers as there are in the world, they will appreciate why fior-size and freedom from defect, for weight and quality, the Argentine hide has become the accepted hide in the world's sole and harness leather business. Our Canadian tanneries have developed from very small industries using domestic hides. The Lang Tanning Company in the city of Kitchener, to which the hon. member for North Waterloo referred, is the last of thirty-seven tanneries formerly operating in that county. This industry has developed into the largest tannery in the British Empire, under free trade with the various countries of the world on leather and hides. Therefore, given free trade, our Canadian tanners have held their own in producing harness and sole leather with the tanners of other countries. True, Canada imports certain fine leather for shoes and upholstering, but speaking broadly Canada has gained very much by the tanning here of foreign hides. Before anything is done which will interfere with the price of raw material required for the foreign or domestic leather trade, a great deal of consideration should be given to the subject. I quite realize that the minister in making his treaty with New Zealand encountered a lot of difficulties, and I quite sympathize with him in those difficulties. But what has been said by my hon. friend from Muskoka-Ontario with regard to the suitability of New Zealand hides for making sole leather is absolutely correct, and I am assured by those engaged in tanning harness and sole leather that it is utterly impossible to make the type of sole leather, from the hide of a dairy cow that would be suitable for the markets of the world.	,

Ways and Means-Customs Tariff
There are two phases of this situation. One the member for North Waterloo in a very few words ably pointed out to the minister, namely that he had to choose between one of these two things:	He would derive a certain revenue by applying this duty on hides, but he had inevitably to face higher prices on harness and sole leather to the consumers in Canada. That phase is of interest. My hon. friend from Muskoka-Ontario is interested in an entirely different phase. He is interested in whether the producers of sole leather in Canada are going to be able to hold the Canadian market. They will now have to pay duty on hides from the Argentine, the very type of hide that is wanted, and the hon. member for Muskoka-Ontario is interested to know whether the Argentine hide tanned in Great Britain into sole leather is to be permitted to enter Canada free. If that is to be the case, and sole leather is to enter Canada free of duty, then of course the whole market will be lost to the Canadian tanner. If, on the other hand, the minister is prepared to give the Canadian tanner what he considers an adequate tariff on sole leather from Great Britain, that adequate tariff must be added to the cost of sole leather to the consumer in Canada, and we revert once more to the position put by the hon. member for North Waterloo, that the ultimate cost of this duty is going to be on the consumer of sole leather in Canada.
The hon. member for Marquette raised a point of very great interest this afternoon. It is impossible to make from Canadian hides the type of harness leather required. You cannot get the lengths of cut required, and Canadian hides are of poor quality, with too many scratches, too many tears and too many cuts. They are not the type of hide that tans easily. The tanner has certain operations through which he must go, and a vat full of poor hides takes just as much time to handle and uses just as much liquid in the tanning as a vat full of good hides, so it is only natural that the tanner desirous of making a profit on his industry wants to start with raw material of the highest quality and that will give him the smallest percentage of waste. So even if Canadian hides are used to as great an extent as they can be used, there are certain types of leather which cannot well be made from them, and the whole market, domestic and foreign, for certain types of leather will be lost to the Canadian producer unless the proper type of hide is used.
There is another feature which I believe is of just as great importance as anything

else, and that is the question to which the minister has referred. There are not many commodities that we can buy from the Argentine republic. The Argentine republic has been one of Canada's very good customers, and if the spirit of this treaty is to destroy our market in the Argentine the reflex loss through the treaty will be more disastrous to us than any advantages that may otherwise accrue from it. Like my hon. friend from Weybum I simply cannot understand the minister's remark that having negotiated this treaty with New Zealand he proposes to use it as a club over the Argentine to make a more satisfactory treaty with that country. We have already a trade with the Argentine which is tremendously favourable to this dominion, and I would be very loath indeed to disturb this trade, particularly when the balance is very much in our favour, and particularly when the Argentine supplies us with a commodity which our manufacturers require. I quite realize the desire of New Zealand to market a lot of hides, but I am going to say to the minister that I am told by those who know whereof they speak that New Zealand is simply not able to supply Canada with enough hides to replace the hides now coming in from the Argentine republic. I am told that the tanners are willing to do everything they possibly can to increase the use of New Zealand and Australian hides, but they do not want to be deprived of securing the class of hides which they really require in their business.
I know that in dealing with the New Zealand government the minister unquestionably had so many items to consider that it would be physically impossible, without an unusual amount of advice on every subject, to know all that should be known in negotiations of this kind. I am not blaming the minister if on some small points of the treaty he was not able to present the viewpoint of those affected as fully as he might be expeoted to do. I believe he has not given this question of hides his usual careful thought, otherwise this part of the treaty would not be under discussion in the parliament of Canada to-night. None of us on this side of the house wants to oppose a treaty within the empire, a treaty which is replacing an old treaty. Some items in the new treaty I do not think are as desirable as what the old treaty contained; other items may be more desirable, but here is an item in which the very boast of my hon. friend's party is being neglected entirely. My hon. friend's party has always said:	We are
going to better conditions in Canada by helping industry and creating employment. If

Ways and Means-Customs Tariff
this item does what the tanners of Canada think it is going to do, it will eventually cause serious unemployment. There can be no question about that. My hon. friend from Muskoka-Ontario, who is noted for his loyalty to his party, and a man whom his party should be proud to number in its ranks, is certainly not standing in this house and warning the minister against the terms of this treaty without first having given the matter very serious consideration. My hon. friend from Marquette, who has had practical experience in starting a tannery and losing money trying to run it, is not warning the minister without very serious consideration. I would strongly advise the Minister of Finance to pass on to some other resolution and hold this item up until a little more thought is given to it and he has considered further whether he really wants it to pass.


Charles A. Stewart: It gives one considerable satisfaction to hear the expressions of opinion of the two hon. gentlemen on the other side of the house who have spoken in defence of the principle of allowing raw products to enter Canada free. I always had the idea that although the Conservative party was strong for protection on finished products it had a leaning towards the free entry of raw products. But apparently they have gone back on their principles on this occasion, and we have the spectacle to-night of the Conservative party, by putting a duty on raw materials, doing an injury to industry, which they have avowedly set out to protect by way of high tariffs. What I wish to protest against, and protest vigorously, is that tariffs inevitably force the consumer in the country by which they are imposed to pay a higher price for the commodities that are manufactured therein. Without going at length into the argument presented by hon. gentlemen on this side and by the two hon. gentlemen opposite, I want to express my very strong disapproval of any attempt to impose tariffs on raw materials, above all things. That I think is a principle which no party in Canada should uphold for a minute. While I say that, I am just as strongly opposed to excessive tariffs upon finished products, because they are bringing the inevitable result. We see distress not only among our rural population but among our manufacturers, and that condition has been brought about by the policy of this government. As long as the Conservative party continues to follow that policy, just so long will we in Canada be in our present condition.


Henry Alfred Mullins: Mr. Chairman, when on the advice of some westerners I attempted to operate a tannery in western Canada, I found it necessary to go to Mr. Lang, ask him to
go over my plant, and tell me where my difficulties arose. When he came into the plant and looked at the hides I was attempting to tan he said. "There is where you are wrong; you cannot make harness leather out of that type of hides. You have to get your hides from warm countries where they are thin, where they do not carry too much hair, and where they are not harmed by barbed wire scratches or branding." I made harness leather, and before I put it on the market I tested it. I wanted to know that I was putting out a good product, and with that in mind I took a pair of traces, or tugs as some people call them, down to the lumber yard and hitched them to a load of lumber. I am speaking of John Arbuthnot's yard on Princess street; no doubt the hon. member for Lisgar knows where it is. I want to say to hon. members that after the first pull the horses gave the load of lumber the pole fell down. You cannot get the stretch out of small hides. That is practical information, and I want the committee to know it. I paid for that experience. You cannot get the stretch out of the smaller hides that you can get out of those big spready hides from the warm countries. If the government does anything to increase the price of harness it is making a mistake. I do not want the price of harness raised, and from this seat I shall voice my opposition to any measure which will affect detrimentally the farmers in western Canada. I came here with the distinct understanding that any tariffs we imposed or any action we took would not raise the price of commodities to the consumer. I am not going to sit in this committee and support any measure which will raise those prices. If this measure passes I fear that the price of harness may increase. As I said before, the farmers in western Canada are coming back to the use of horses and for those horses they need harness.
For years the Lang people have told me that there is only one place to get these large eighty pound spready hides, and that is in warm climates. They have several stacks of hides in their packing plants, and if an hon. member visited them to-day he would find that Canada, in producing what is known as baby beef, is producing a small hide which is not suitable for harness leather, and is hardly suitable for sole leather. What would hon. members do with a hide covered with brands? What would they make out of it? What could any hon. member manufacture out of such hides? It is absolutely impracticable to make harness leather from the

W7ays and Means-Customs Tariff
hides of our Canadian cattle, especially when we are raising small cattle and producing small hides. Before placing any duty upon hides which would affect the farmers of western Canada, I should like the minister to reconsider the matter.


William John Loucks: What does the hon. member mean when he speaks of small cattle?
j Mr. MULLINS:	I am referring to hides
weighing from forty to sixty pounds. Sole leather cannot be manufactured from forty or sixty pound hides. If I were to go further into the matter I might state that leather cannot be made from inferior hides, and if my hon. friend thinks it can he ought to try it. When I began operations in the tannery I hung out a sign

the hon. member for St. Boniface knows all about it-that I was in the market to buy hides. They fired them at me from all parts of the west. Those hides were frozen, and when I thawed them out I found inside of the bundles feet cut off at the joints, and horns, and I can tell any hon. member in this committee that he cannot manufacture leather out of that type of raw material.


William John Loucks: Mr. Chairman, I have had
no extensive experience as has my hon. friend from Marquette. He has been blaming the type of hides from which he had to manufacture, but probably he should have blamed the feet and horns that he found inside the bundle.
A moment ago I asked him as to what he termed a fair sized animal. I think my hon. friend will agree that the general run of cattle raised in Canada, outside of the baby beef referred to, average up pretty well. The steers shipped to the old country market last year received high praise. I cannot think that hides deteriorate to the extent described by hon. members. My father was a lumberman, and I can remember that the harness he used thirty or forty years ago was tanned and produced in Canada, made from the hides of Canadian cattle. In recent years I have not seen tugs W'hich wTould stand the strain that harness stood, and it is still in use. 1 can see no reason for discrediting Canadian hides, and I am convinced we are discriminating a little too much, and are showing a lack of confidence. May I say to my hon. friend from Muskoka-Ontario that to-day the farmers cannot sell their hides at any price. There has been a very strong suggestion that the tariff should be raised against foreign hides. Probably the tanners are not dealing as fairly as they might with the Canadian producer-
[DOT]"Mr. Mullins.]
and I may say there are no tanners in my constituency, or probably I would not talk so freely. In western Canada we cannot sell our hides; hon. members opposite know that to be a fact. There is a suggestion that our product is so inferior that it cannot be used for sole or harness leather, but I cannot believe that the majority of cattle produced in western Canada are inferior. They are first class cattle, and compare favourably with those from the Argentine or any other country.
Some reference has been made to climatic conditions. It seems to me that our climate should be conducive to the production of the best hides, despite the fact my hon. friend insists that the best can be produced only in warm climates. I can see no reason why, in the production of harness or sole leather, there should not be some protection so that we may use more hides produced in Canada.


William Daum Euler: Within the last hour I have received a letter from a manufacturer of rubber goods in Kitchener who formerly exported a very large quantity of his products to New Zealand. The business was cut off at the time the difficulty with New Zealand arose. Now he is very anxious to have the treaty go through because it will again stimulate the export of rubber goods. My correspondent encloses a letter from his agents in New Zealand, which reads as follows:
We have been informed by our minister

That is the New Zealand minister.
-that they are prepared to bring the treaty before parliament at any time. The delay is with your government.
That is the Canadian government.
We understand there is one item only in dispute. So we have again approached our government to agree to ratify exclusive of that item, if practicable.
I am curious to know if the minister is permitted to tell me whether that item might conceivably be hides; and, if so, whether there is not a possibility that it might be dropped from the tariff list.


Henry Herbert Stevens: Is the question directed to me?


William Daum Euler: Either to the Minister of Trade and Commerce or to the Minister of Finance.


Henry Herbert Stevens: I have no knowledge, of course, of what the correspondent refers to, but certainly he does not refer to hides.


Henry Alfred Mullins: Mr. Chairman, at the time the hon. member for Rosetown (Mr. Loucks) went to western Canada that country was full

Special War Revenue Act
of steers weighing from 1,400 to 1,600 pounds apiece; to-day it is next to impossible to get that type of cattle. Their hides weighed eighty pounds apiece and would make harness leather; but to-day with the small cattle the hides are absolutely unsuitable for any tanner.


Edward James Young: I move that item 599 be
deleted.


Edgar Nelson Rhodes: I may point out to the committee that the New Zealand treaty has passed this parliament and the parliament of New Zealand, and if we are to implement our undertaking in that regard it is essential that the item should pass.


[Stage Direction]
Item agreed to.
Mr. CASGRAIN:: On division.


INCOME WAR TAX ACT AMENDMENT
[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act and to provide:-
1.	That the reduction of twenty per centum from the rates of tax under the first schedule of the act be repealed;
2.	That the rate of tax applicable to corporations be increased from ten per centum to eleven per centum on the income in excess of $2,000;
3.	That all taxpayers in receipt of net income in excess of $5,000, excluding incomes exempt under section 4 of the said act, shall pay an additional tax of five per centum of the amount of taxes otherwise payable under the provisions of the said act;
4.	That the personal exemption heretofore afforded to the extent of $3,000 be reduced to $2,400 and where heretofore afforded to the extent of $1,500 be reduced to $1,200;
5.	That income arising by way of annuity contracts within the meaning of paragraph (k) of section 3 of chapter 24 of the statutes of 1930 be exempt to the extent of $1,200 in lieu of the exemption heretofore provided of $5,000, but the said exemption of annuity income heretofore provided and arising out of annuity contracts entered into prior to the passing of an act based on this resolution shall continue in full force and effect;
6.	That the provisions relating to family corporations be repealed, such repeal to come into force at the end of the 1932 calendar year or fiscal periods ending therein;
7.	That in respect of fiscal periods not coincident with the calendar year the return of income and payment of the tax, by persons other than individuals, in lieu of being made and paid on or before the 30th day of April in each year as in the said act provided, must be made and paid within four months from the close of the fiscal period and if not so made and paid all provisions of the said act shall mutatis mutandis apply;
8.	That income by way of dividends, rentals, interest, royalties and other like income not disclosed by the taxpayer in his return of income may be added to the other income of the taxpayer in double the amount and the whole taxed under the provisions of the act.
9.	That any enactment founded on paragraphs one, two, three, four, five and eight of this resolution shall be deemed to have come into
force at the commencement of the 1931 taxation period and to be applicable thereto and to fiscal periods ending therein and to all subsequent periods.
10.	That any enactment founded on the provisions of paragraph seven of this resolution shall be deemed to have come into force at the commencement of the 1932 taxation period and to be applicable thereto and to fiscal periods ending therein and to all subsequent periods.
Some hon. MEMBERS:: Carried.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act, chapter 179 of the revised statutes of Canada, 1927, as amended by chapter 50 of the statutes of 1928, chapter 57 of the statutes of 1929, chapter 43 of the statutes of 1930, and chapter 54 of the statutes of 1931, and to provide:-[DOT]
1.	(i) That every company authorized to
transact the business of insurance in Canada or in any province of Canada, other than life and marine insurance companies, fraternal benefit societies and purely mutual fire insurance companies insuring principally farm risks, shall pay for consolidated revenue fund tax of one per centum upon the net premiums received by the company in Canada on and after the first day of January, 1932.
(ii)	That every insurance company not so authorized to transact the business of insurance in Canada or in any province thereof but which maintains a deposit with the Minister of Finance as security for the claims of all Canadian policyholders exclusively of such company to the amount of at least the amount of the liabilities of the company to policyholders in Canada, shall pay for consolidated revenue fund a tax of one per centum upon the net premiums received by it in respect of insurance on property in Canada, other than marine insurance, effected or renewed in the portion of the calendar year 1932, and of each calendar year thereafter for which it maintains such deposit.
(iii)	That every person resident in Canada who insures or has insured his property situate in Canada, or any property situate in Canada in which he has an insurable interest other than that of an insurer of such property, with any British or foreign company or British or foreign underwriter or underwriters, or any association of persons,
(a) which, on the twenty-second day of October, 1931, had not a deposit with the Minister of Finance for the purpose and to the amount aforesaid, shall pay for consolidated revenue fund a tax of fifteen per centum of the gross premiums paid or payable by such person for such insurance during the year 1931; and a tax of five per centum of the total net cost to such person of such insurance effected or renewed in each of the calendar years 1921 to 1930, both inclusive, during which such company, underwriter or association did not maintain a deposit with the minister for the purpose and to the amount aforesaid, the amount of such tax payable in respect of any calendar year to be reduced by the amount of any tax heretofore paid to the minister in respect of such insurance for such calendar year; or
[Stage Direction]
Special War Revenue Act
[Stage Direction]
(b) which does not on or before the first day of May, 1932, or at the time such insurance is effected or renewed, if after the said date, maintain a deposit for the purpose and to the amount aforesaid, shall each year pay a tax of fifteen per centum of the gross premiums paid or payable for such insurance during the next preceding calendar year.
Peter John Veniot: Has the minister the suggested amendment to be made to paragraph 1 ?


Edgar Nelson Rhodes: Paragraph 1 of the resolution will be amended by striking out the said paragraph and substituting the following:
1. (i) That every company authorized under the laws of the Dominion of Canada or of any province thereof to transact the business of insurance other than life and marine insurance companies, fraternal benefit societies, purely mutual fire insurance companies insuring principally farm risks, reciprocal insurance exchanges and mutual companies carrying on business on the premium deposit plan, shall pay for consolidated revenue fund a tax of one per centum upon the net premiums received by the company in Canada on and after the first day of January, 1932.
(ii)	That every mutual company authorized under the laws of the Dominion of Canada or of any province thereof to transact the business of insurance and which carries on business on the premium deposit plan and every reciprocal insurance exchange so authorized shall pay for consolidated revenue fund a tax of two per centum upon the net premiums received by it in Canada during the calendar year 1932 and each calendar year thereafter.
(iii)	That every person resident in Canada who insures or has insured his property situate in Canada, or any property situate in Canada in which he has an insurable interest other than that of an insurer of such property against risks other than marine risks, with any British or foreign company or any reciprocal insurance exchange which, on or before the first day of July, 1932, or at the time such insurance is effected or renewed if after the said date, is not authorized under the laws of the Dominion of Canada or of any province thereof to transact the business of insurance, shall pay for consolidated revenue fund a tax of fifteen per centum of the net premiums paid or payable for such insurance during the calendar year 1932 and each calendar year thereafter.


Peter John Veniot: This is a complete change.


Edgar Nelson Rhodes: This amendment is in substance what was intended originally. The original resolution was prepared shortly before I delivered the budget speech and was not in conformity with the intention I had in mind at the time. This in effect means that if outside mutual companies attempt to do business in Canada without taking out registration or making a deposit either with the dominion or with the provinces, then in the event of an individual insisting upon effecting insurance with them he will pay a tax of 15 per cent upon the premiums; but if those mutual companies take out registration or make a deposit,

the tax is only two per cent. I would ask that the Minister of National Revenue move the amendment.


Edmond Baird Ryckman: Mr. Chairman, I move
the amendment as read by the Minister of Finance.


William Daum Euler: Do the mutuals pay twice
as high a tax as the standard companies?


Edgar Nelson Rhodes: No. As a matter of fact
I think there is no exception taken to the two per cent tax, because, as my hon. friend knows, their premiums are based upon a different computation altogether. Furthermore, they have a class of risk on which there is an extremely low premium, and as a matter of fact the yield from this two per cent tax is relatively small. I may say that representations have been made to me that probably the tax ought to be considerably greater, but I understand that no exception has been taken even on the part of the mutual companies themselves.


William Daum Euler: There is no discrimination?


Edgar Nelson Rhodes: No, that question does not arise.


James Layton Ralston: Is the retroactive feature still in the amendment which the minister proposes?


Edgar Nelson Rhodes: No.


James Layton Ralston: Has the minister any
estimate of the revenue which will be produced by these three provisions?


Edgar Nelson Rhodes: It is estimated that the
one per cent tax will yield about $1,000,000, while the total revenue from the two per cent tax will be very small, probably between $10,000 and $25,000. Any estimate of the revenue from the 15 per cent tax must be largely a glorified guess; it depends upon the extent to which those companies fail to avail themselves of the opportunity of registering either with the province or with the dominion. It will be only a fraction of the yield which will come from the one per cent tax.


James Layton Ralston: I can be sure there is
no retroactive feature at all in the section now?


Edgar Nelson Rhodes: No, there is not.


Mr. CAYLEY:: I just want to make sure
whether or not I understood the minister with regard to these foreign mutuals. They are taxed two per cent of the net premiums, and the insured pays two per cent of his premium as well?

Special War Revenue Act


Edgar Nelson Rhodes: No, there is not a double
tax; there is only one.


Thomas Merritt Cayley: What is meant by the
words "net premium" in this ease?


Edgar Nelson Rhodes: In the case of mutual companies transacting business on the premium deposit plan, and reciprocal exchanges, the net premium is the net cost of insurance to the insured, together with the interest on the excess of the premium deposit, if any, over the said net cost. My hon. friend knows what that means.


Thomas Merritt Cayley: I believe that is an exceedingly low rate in some cases. I understand that in some of these mutuals the net premium would be only about four per cent.


Edgar Nelson Rhodes: My hon. friend sees that
we are taxing about all we can tax. We are taxing the net difference as well as the interest upon the fund which remains in the hands of the company and is placed there on deposit by the insured.


Thomas Merritt Cayley: I am wondering if that
is fair to the Canadian companies. You are taxing them on their net premiums, which is a far greater amount.


[Stage Direction]
Amendment agreed to.
Paragraph as amended agreed to.
William Lyon Mackenzie King: Are we taking up this resolution section by section, or are we dealing with the entire resolution?


Edgar Nelson Rhodes: We are taking up the insurance subsection now, and the next one will deal with the tax on telephone and telegraph messages and so on.
2. That on every cable and telegraph or radio message originating in Canada for which a charge of more than fifteen cents is made, except press despatches, and on every long distance telephone call originating in Canada for which a charge of more than fifteen cents is made the sending company shall pay to the consolidated revenue fund a tax of five cents and may charge the same to the person paying the regular charges for such message.


Peter John Veniot: I wish to direct the attention of the minister to a particular case.


Edgar Nelson Rhodes: Perhaps before my hon.
friend proceeds I should bell him that there is an amendment to be proposed, so his discussion might be more in point if the amendment is moved now.


Edmond Baird Ryckman: 
Edgar Nelson Rhodes: This means that in the case of charge accounts for long distance service, the monthly account will be taxed 6 per cent. In the case of pay stations, of which the Bell Telephone Company have some 19,000, whether or not there are attendants present the charge will be 5 cents for each call for which the charge is in excess of 25 cents and up to and including 80 cents,, and an additional 5 cents for each additional 80 cents.
Mr. SPEAIvMAN: Does this tax apply to provincially owned lines as well as privately owned lines?


Edgar Nelson Rhodes: Yes.


Peter John Veniot: Has the minister taken into consideration this instance: In New Brunswick we have farmers' telephone systems linked up with the New Brunswick Telephone Company under some special arrangement. When the farmer is connected up with the New Brunswick Telephone Company line it is charged as a long distance message. Under this measure the farmer will be compelled to pay a certain percentage of the cost of such telephone messages, while if he were using his own lines these calls would not be considered as long distance messages. If that is not looked into carefully I would say an injustice was being done the farmer who uses his own telephone system.


Edgar Nelson Rhodes: There will be only one
tax on one telephone call.


Peter John Veniot: The minister does not get
my point; it is really not a long distance call at all.


Edgar Nelson Rhodes: If it is not a long distance call there will be no tax.


Peter John Veniot: Let me explain it again.
It really is not a long distance call in the true sense of the word, but because of the separation of control between this company and the main line of the New Brunswick Telpnhone Company with which it connects, it
Special War Revenue Act

becomes a long distance call, because the farmer has to have permission to send his message over the line of that company. The New Brunswick Telephone Company has practically a monopoly in that province, and they need not hook up with our farm lines unless they wish to, do so. But as it is, even though the call is made over a distance of only two or three miles, it is regarded as a long distance call, and according to this legislation the farmer will be charged for a long distance message.


Edgar Nelson Rhodes: I must say that I do not
see the difficulty suggested by my hon. friend. The telephone companies have raised no such question.


Peter John Veniot: No; they would not raise
it by any means, but if the farmers' telephone systems knew of it they would raise the point.


Mr. SPEAKMAN:: I want to ask a second question based upon my first, which was whether or not this tax would apply to provincially owned lines. The minister knows that a number of these telephone systems belong to and are operated by the provinces; in other words, they are crown properties in the right of the province. Has the dominion the right to tax crown property held in the right of the provinces, property controlled and operated by the government of a province and not by a private company?


Edgar Nelson Rhodes: We are not taxing property held in the right of the province, we are taxing messages. The law is very clearly established that where a province engages in an undertaking of this character it shall not be exempt from taxation.


Alfred Speakman: That was my question.


Edgar Nelson Rhodes: That was settled in the case of Attorney General of British Columbia vs. Attorney General of Canada, reported in 1924 Appeal Cases. The liquor commission of British Columbia attempted to evade the payment of excise and customs taxes and it was found that wherever a province engages in business it is subject to taxation. I might point out to my hon. friend that the tax is being placed upon the message, and is paid by the individual and not by the company. I do not think there is any shadow of doubt on the question of the legality of the transaction.


Alfred Speakman: The term "property" was used, and that is why I asked the question. I wanted to know whether or not that term included provincial governments.
vMr. Veniot.]


Edgar Nelson Rhodes: I should like to come back to the question asked by the hon. member for Gloucester and request that he give his illustration in terms of locality.


Peter John Veniot: The New Brunswick Telephone Company has a central office at Caraquet, and a message to Lower Caraquet, a distance of seven miles, is not considered a long distance message. The company has a line running from Bathurst to Caraquet, and at certain points the farmers' telephones hook up with the other system. The minute the farmers' line reaches the line of the New Brunswick telephone system a message going only a mile is considered to be a long distance message.


Edgar Nelson Rhodes: What is the cost of such a message?


Peter John Veniot: About fifteen or twenty-five cents.


Edgar Nelson Rhodes: Does my hon. friend say that the minimum charge would be fifteen cents under those conditions?


Peter John Veniot: Yes.


Edgar Nelson Rhodes: In that case the tax would be less than six cents on six messages.


Peter John Veniot: I do not care how small the tax would be, there should be no discrimination because of a peculiar situation. This condition will be found not only in Gloucester county, but in Kent and Northumberland counties and in other sections of the province.


Edgar Nelson Rhodes: I do not know that the discrimination arises out of the tax; it apparently arises out of the attitude taken by the telephone company. Even if it were to arise out of the tax, it happens inevitably in connection with any law of general application that there are points where greater hardship will fall on one individual than on another. That is inescapable, but I may say that such a case had not hitherto been brought to my attention. If there is any way to remedy any injustice by means of regulation, that will be done.


James Malcolm: The minister will realize that my hon. friend is referring to switching charges of five, ten or fifteen cents each, and a regulation exempting such charges up to a certain amount from the application of the tax would cover the point.


Edgar Nelson Rhodes: This is a matter which
had not hitherto been brought to my attention and is entirely new to me, but I have no doubt it could be met by regulation.

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Peter John Veniot: Will the minister give his attention to it?


Edgar Nelson Rhodes: Certainly.


James Layton Ralston: According to the amendment, a copy of which the chairman has been good enough to furnish me, it would seem that a direct discrimination is being made against those who have private telephones, especially rural lines, as against those who use pay stations. A man using a pay station pays five cents if the cost of the message is over twenty-five cents; he pays nothing when the cost of the message is under that amount. A subscriber using a private rural telephone between two places where, for instance, there is a twenty cent toll, must pay six per cent on that twenty cents. I submit that such a condition is undesirable. In the first place it will mean a lot of accounting to cover a small sum and, in the second place, it is not fair that a man should be able to go to a public telephone and put through a message costing up to twenty-five cents and not have to pay, whereas a man calling on his own telephone has to pay six per cent. A message by cable, telegraph or radio originating in Canada, no matter how much it costs, pays a tax of only five cents; no ad valorem charge is made. I am not advocating that a larger tax should be imposed on cables, telegrams and radio messages; I am pointing out that the man using a private telephone-the telephone is pretty commonly used in rural communities -is penalized, while the man using a public telephone goes scot free; and the man using the cable, telegraph or radio pays only a five cent tax.


Edgar Nelson Rhodes: I am advised that upwards of ninety per cent-I cannot give the exact figures-of what are known as shorter haul messages are from subscribers, and that an almost equal proportion of the messages from toll stations are what are known as longer hauls. The inequality about which my hon. friend is concerned does not seem to exist. The man sending a pay station message costing from thirty cents up to eighty cents pays five cents. If he sends three thirty cent messages he pays fifteen cents, whereas a subscriber who does ninety cents' worth of calling would pay a little less than six cents.


James Layton Ralston: Take them at twenty
cents.


Edgar Nelson Rhodes: My hon. friend says: take
them at twenty cents. I am told that only a fraction of the messages is of the smaller amount. If we put the toll at twenty cents, a five cent tax would be a substantial one.
That is the minimum you could charge in a toll station. Coming to the telegraph charges, I am advised that the average cost of all the telegrams sent is a little under seventy cents, so that a five cent charge, taking it on the average, is fair.


James Layton Ralston: But that is not the case
with cables.


William Daum Euler: What does the minister expect to get by way of revenue from his tax?


Edgar Nelson Rhodes: Three-quarters of a million dollars from the telephone and half a million dollars from the telegraph.


James Layton Ralston: I should like to ask the
minister seriously to consider a minimum below which no tax will be charged. In a public pay station, you can have a twenty-cent call and you do not pay a tax; a subscriber should be put on the same basis. My hon. friend is aware that in the province from which he and I come, there are many rural services where the tolls are from fifteen to twenty cents; I can think of a great number in my constituency. My hon. friend, possibly quite unconsciously, is penalizing those subscribers who connect up with those telephone systems. They form a little telephone company; they hitch up with the Maritime Telephone and Telegraph Company and the through rate is fifteen cents. Take for instance, from Port la Tour to Barrington, the rate is, I think, less than twenty-five cents; from Barrington Passage to Clark's Harbour, there is, I think, a ten cent toll. If a man has a telephone, there is no reason why he should have to pay a six per cent tax on those small messages, while I can go into the hotel at Barrington Passage and use the public telephone and not pay any tax to the government. The same benefit should be given to the subscriber. Just as in the case of cheques, there is a minimum of $5 below which no stamp is required, there should, in the case of telephone messages, be some minimum below which no tax is collected. I think this will be an expensive tax to collect; there, will not be a great deal of revenue from it and as drafted in the amendment it is discriminatory.


Edgar Nelson Rhodes: As to the revenue, I have given my hon. friend the figures. In more prosperous times the revenue would be about a million dollars.


James Layton Ralston: I am speaking of the telephone message tax.


Edgar Nelson Rhodes: I am told by the telephone companies that the administrative cost will be comparatively small and the method of
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collection will not be difficult. My hon. friend spoke of the ten cent message. They could take ten of those messages before they would have to pay a six cent tax, which is not an excessive one. Admittedly this is a revenue producing measure; that is all. It has no other excuse in the world. There is no doubt it is to a large extent a nuisance tax, but it seems to me the burden in the case I have indicated is not heavy. I have in mind conditions in the province from which my hon. friend comes. Many of the local telephone companies there which cover substantial areas will not pay any tax at all. It is only when they go into the long distance telephone through the exchange of the Nova Scotia Telephone Company, that there will be any tax, and I consider, in a case of that kind, they should pay a tax.


John Livingstone Brown: I presume, from answers
which the minister made the hon. member for Red Deer, he is thoroughly satisfied of the right of the government to tax provincial companies?


Edgar Nelson Rhodes: I do not submit my own
view as being worth anything. I have consulted eminent lawyers and the Justice department have also advised me that in their judgment there is no question as to that.


John Livingstone Brown: In Manitoba the service is
being carried on at cost, and it is well administered. Unfortunately in these troublous times many farmers and others are taking out their telephones and I am afraid this tax will further emphasize the movement in that direction. This is something I am not worrying over, but I am afraid this tax will not help my hon. friend's friends in Manitoba in carrying out their pledge to have cheap telephones in all the farmers' houses.


James Layton Ralston: The minister, I submit,
has not answered the criticism I am making. I do not want to take up the time of the committee, but it is no use for him to tell us you can put through ten messages at ten cents apiece and pay only six cents on them. A man who steps into a public telephone station can put through at least two messages and pay nothing.


Edgar Nelson Rhodes: I may tell my hon. friend that those messages to which he refers constitute just four per cent of all telephone messages in Canada, so that they are a negligible quantity.


James Layton Ralston: That just points the
argument I am trying to make. My hon. friend is simply imposing an irritating tax

which will not help the revenue and which is discriminatory because it is directly opposed to the principle of applying the tax to the public generally. A subscriber should not have to pay a six per cent tax on those small messages. I am again pointing out to the minister that it is useless for him to argue that it takes a lot of them to make a little money in taxes. That is just my point, and that is why I think he might just as well drop the idea and have a minimum below which he will make no charge on subscriber messages as well as on public toll station business, just as I instanced a minute ago the case of cheques, where we do not impose a stamp tax on cheques of 15 or less.


Edgar Nelson Rhodes: ' My hon. friend is advocating that in the case of a percentage tax there is a minimum below which we should not go.


James Layton Ralston: Yes.


Edgar Nelson Rhodes: As I originally prepared
this amendment it provided that the tax would not apply to a thirty cent message.


James Layton Ralston: Fifteen cents.


Edgar Nelson Rhodes: That is as it appears in
the present amendment, but I am speaking of the amendment as I devised it originally. What would the effect of that be? It would mean that three thirty cent messages would cost fifteen cents.


James Layton Ralston: No.


Edgar Nelson Rhodes: I am referring to the
amendment as I originally proposed it. My hon. friend must get the idea into his head that there are other views than his, even if they are wrong ones. It was the telephone companies themselves who suggested this. I do not say that they are a unit throughout Canada, but I took the judgment of the great bulk of the telephone companies, and at a meeting which they held in Winnipeg representative of the telephone interests of all Canada, they were the ones who suggested to me that it would be a more equitable tax to apply the principle of the sales tax to the telephones rather than start by a five cent tax, a ten cent tax, and so on. Where you come to the dividing point between five cents and ten cents, you are going to have hardship. One man who has only one cent more to pay for a message than another, has to pay a tax of 100 per cent more. They said that it was much fairer to apply the principle of the sales tax, which would mean that you would have a percentage covering the whole

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amount of the tax. That is why the amendment appears in its present form, and although it apparently does not convince the hon. member for Shelburne-Yarmouth, the justice of it appealed to me and that is why I am submitting it to the committee.


James Layton Ralston: I have never advocated
a five cent charge. What I have been suggesting is that the ad valorem six per cent tax, if it is to be imposed, be applicable only to a message above a certain amount, and I have suggested twenty-five cents just as he has made the tax in public pay stations on twenty-five cent messages. I am not talking about a flat five cent charge and have never talked about it. My hon. friend made some remarks suggesting that I was unable to see any other views than my own.


Edgar Nelson Rhodes: I did not say that.


James Layton Ralston: I am endeavouring to
combine my hon. friend's suggested tax of six per cent with a minimum charge just as there is in the case of stamps and cheques. If you make a six per cent charge, with a minimum, and put a rider on the resolution to the effect that no tax shall be charged on any message for which the toll is less than 25 cents, that would carry out my idea.


Edgar Nelson Rhodes: My hon. friend, who is an old friend, I may say, is too shrewd not to realize that I never made the statement that he attributes to me. What I said was that my hon. friend must get the idea that there are other views than his own, even if they are wrong, which is something entirely different from what he says I said. I have got the point that my hon. friend makes as to the tax, but let me point out to him that he is pleading for a man who pays a tax of one cent. We will say that the tax should take hold at twenty cents. My hon. friend is pleading for the fifteen cent man, and he would pay a tax of less than one cent. Six fifteen-cent messages would amount to less than one dollar, so from that angle it is not worth while wasting very many words about it. I discussed the question of the cost of administration with the companies, and they told me that by simply taking the monthly accounts, without reference to amounts, other than to total them, and then charging the six per cent, it is simply a matter of bookkeeping and collection; but to go through every individual item of every account every day of the year and delete the fifteen cents on each message would involve clerical costs running into many thousands of dollars. That is why the companies made the suggestion in its present form.


Edward James Young: There are a great many
people in the country who use. the long distance telephone very seldom, once or twice a month, perhaps less. Some have telephones and some not. Those with telephones would be able to get the call through for a cent and a fraction, but the neighbour without a telephone would have to go to the central operator and pay five cents. It is irritating for a man to pay five cents for what his neighbour gets for one cent and a fraction, and for all the difference it would make to the revenue the minister might as well drop it.


Edgar Nelson Rhodes: I know there must be good neighbours out in the hospitable west, and I would suggest in such a case as my hon. friend mentions that the man without a telephone call at his neighbour's house with a telephone and have the call charged up to his neighbour, and then he will get the call at the same cost as his neighbour.


Edward James Young: Will the minister allow a discount of so much per mile for the distance he has to travel to his neighbour's house?


James Layton Ralston: All the telephone companies would need to have would be two columns in the account, one for messages under 25 cents and the other for messages above 25 cents. Then there would be no trouble at all and no question of spending thousands of dollars as the minister suggests.


Edgar Nelson Rhodes: I am only giving the committee the information as it was given to me by those with experience in the telephone business.


James Layton Ralston: I do not think my hon. friend would say it himself.


Mr. TAYLOR:: There are four small telephone companies in the constituency I represent, and the maximum charge for calls between stations would be possibly fifteen cents. Am I to understand from the amendment that six per cent will be added to the monthly bill of tolls?


Edgar Nelson Rhodes: If they are long distance telephone calls they would be subject to a tax of six per cent. If the account of an individual at the end of a month is $2, for instance, he will pay a tax of 12 cents.


William Horace Taylor: Where a company is giving only a local service to the county, would that be called a long distance call? For instance, to get into the market town in this county costs fifteen cents, through two centrals. Would that be considered a long distance or a local call?	;
Special War Revenue Act


Edgar Nelson Rhodes: I do not know that I can answer my hon. friend with absolute assurance. It is pretty hard to draw the line. But as I understand it, in the telephone business what is known as a long distance call is pretty well defined. If you telephone from here to Aylmer I do not understand that that is a long distance call, although I may be wrong; or if you telephone to Hintonburg that is not a long distance call. A long distance call is when you have to pay an extra toll, and I do not think it is the distance alone which governs, because, as I pointed out to my hon. friend from Shelburne-Yarmouth, there are farmers' mutuals lines in Nova Scotia, some of which extend for a great many miles, where there would be no tax at all.


Agnes Campbell Macphail: In the country districts there are independent telephone companies which connect up with the Bell Telephone Company. Would such a connecting call be a long distance call and subject to the tax? That would be a great hardship in the country districts because these independent companies have some arrangement with the Bell Company whereby the farmers can telephone over a certain distance for five or ten cents. Would such a call come under this tax?


Edgar Nelson Rhodes: I find it rather difficult to give my hon. friend from Southeast Grey an answer with accuracy. The determining factor, it would seem to me, would not be whether there were two telephone companies in the transaction. If there were a connecting charge I do not think that that would have any bearing. I do not think the tax would be imposed on that charge. But if there is a charge for what is known as a long distance call, then the tax would apply. I will have careful inquiry made, but that is how it strikes me at the moment. There will be dividing lines and points where there may be some little difficulty and perhaps inequalities, but I have every hope that such cases can be met by reasonable regulations.


Mr. GARDINER:: What does the minister understand by a long distance telephone call?


Edgar Nelson Rhodes: From here to Montreal, for example.


Robert Gardiner: If the minister would give us a definition I think it would help relieve the situation.


Edgar Nelson Rhodes: There has been no attempt at definitions so far as the department is concerned. Our idea is that we would put a tax on long distance calls as they have hitherto been known in the oustom and usage of the telephone companies.
	.


Agnes Campbell Macphail: The interpretation of a long distance call may make a tremendous difference, because there are a great many districts in Ontario where the local company has to make a connection with the Bell Telephone Company to enable the farmer to reach the town in which he does business. Would the connecting charge be considered a long distance call?


Edgar Nelson Rhodes: I do not think t'he connecting charge would have any bearing. It would depend on the correct interpretation of a long distance call.


Mr. SANDERSON:: Is not a long distance call a call from one exchange to another, whether they are two or five or ten or one hundred or five hundred miles apart?


Edgar Nelson Rhodes: I hope the committee does not expect me to give a technical definition, because as I have pointed out, we have attempted no definition. We propose to apply the definition recognized in the custom of telephone companies. My hon. friend should not attempt to say that a two mile call would be regarded as a long distance telephone call- not at all. My hon. friend can talk a distance of five, six or eight miles right here in the city of Ottawa.


Frederick George Sanderson: That is a different
proposition.


William Duff: It is designated by zones, is it not?


James Malcolm: I think I can explain the matter in a way to satisfy the hon. member for South Perth. A long distance call may be of any distance, provided the subscriber in his contract has the guarantee that he may telephone in a given district without a -long distance charge. The long distance charge, as popularly interpreted by telephone companies, is a charge for phone services beyond the terms of contracts.


William Duff: Beyond certain zones.


James Malcolm: The hon. member for Southeast Grey was referring to -rural telephone companies in Ontario. To illustrate, the Bruce telephone system allows its subscribers to talk from Kincardine to Paisley and Port Elgin without any extra charge. Calls even of that distance are mot treated as long distance calls. But when we cross into the county of Huron o-r switch o-n>
to the Bell Telephone Company lines there is a switching -charge of five cents. The hon. member for Southeast Grey wishes to kn-ow whether the switching charge from the rural-'telephone system to the Bell, which gives the privilege of telephoning within a town, could be treated as a long distance

Special War Revenue Act
charge. * If the minister would repeat what he said to me I believe he would satisfy the bon. member for Southeast Grey. The minister told me that so far as he was concerned the switching charge was not to be treated as a long distance charge, and that no tax would be imposed thereon,.


Edgar Nelson Rhodes: That is as I understand it.


William Horace Taylor: In the county in which I live the local telephone company have some three or four centrals. There is a rental for the use of the telephone. To call from one central to another costs five cents, or to call the county town would cost fifteen cents. Would that be considered as a long distance call over a local line?


Edgar Nelson Rhodes: I am inclined to think so.


[Stage Direction]
Amendment agreed to.
Paragraph agreed to.
Paragraphs 3 to 5 inclusive agreed to.
6. (i) That the rate of consumption or sales tax as imposed by section eighty-six of the said act, as amended by section eleven of chapter 54 of the statutes of 1931, be increased to six per cent.
(ii)	That the following words be removed from the list of articles exempt from the consumption or sales tax set out in schedule III to the said act, as enacted by chapter 54 of the statutes of 1931, that is to say;
"Bakers' cake and pies, not to include biscuits;" "and substitutes therefor" in line seven of the said schedule; "lard compound and similar substances, made from animal or vegetable stearine or oils;" "materials for use solely in the manufacture of any substitute for butter or lard;" "extract of rennet;" "ice cream;" "usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax;" "materials to be used exclusively in the manufacture of usual coverings to be used for covering goods not subject to the consumption or sales tax."
Also under the heading "Goods Enumerated in Customs Tariff Items;" the following figures and words, namely:-
"45. Milk foods, n.o.p.; prepared cereal foods, in packages not exceeding twenty-five pounds weight each;"
"46. Prepared cereal foods, n.o.p;"
And that the word "lard" where it first appears in line eight of the said schedule be struck out and the words "lard, when produced in Canada" be substituted.
(iii)	That the following words be inserted in the said schedule:
"All articles manufactured or produced by the labour of the blind in institutions established for their care or under the control or direction of such institutions."
(iv)	That the following words be removed from the list of articles exempt to the extent of fifty per cent of the consumption or sales tax set out in schedule IV to the said act, as enacted by chapter 54 of the statutes of 1931, that is to say:-
"Biscuits of all kinds."
William Duff: Mr. Chairman, I should like to discuss in oommittee one or two matters contained in paragraph 6 of this resolution. This particular paragraph refers to the sales tax, and I notice that it has been increased from four per cent to six per oent. Two years ago the sales tax was only one per oent, and I can remember our Conservative friends in. the session of 1930 objected very strongly to the fact that the Liberal government and the Minister of Finance of that day had not done away with the sales tax altogether. They called it a poor man's tax. In spite of their arguments in 1930, the first year they were in power they increased the sales tax to four per cent. That did not satisfy them, and this year they make a further increase of fifty per cent, bringing the tax up to six per cent.
While I object very strongly to this tax in its entirety, there are one or two matters to which I take particular exception. Previous to last year an item of common consumption was on the exempted list. I refer to salt, which is used in the maritime provinces, Quebec, probably in the provinces adjoining the great lakes, and also British Columbia, for the cure of all kinds of fish. A particular brand of salt imported from foreign countries is used in this connection. As I said a minute ago, up until last year that salt was on the free list, but for some reason-and I think I am correct when I say that the then Minister of Finance merely slipped up, because I cannot understand why he would want to impose a sales tax on salt used in Canadian fisheries -the tax was put on. This salt is a raw material, and is used to cure a commodity of which 99.99 per cent is afterwards exported.
On page 25 of the Special War Revenue Act for 1931, which I now hold in my hand, the following words appear among the exemptions: "Salt, when manufactured or produced in Canada." The words, "when manufactured or produced in Canada" were added last year, and I cannot understand why the addition was made, especially in view of the fact that there is no salt produced in Canada which could be used to properly cure herring, mackerel and a great many other fish.


Mr. SMITH (Cumberland):: What about
Malagash salt?
Mr. DUFF; Malagash salt is all right for cerfcarn purposes. I am not saying a word against it, but the fact is that Malagash salt comes out of the earth, and there are certain strata in it, and when the salt is used in the curing of salt fish it leaves a scum, due to the fact that there must be earth mixed with the salt. Moreover, when the fish is cured
3026	COMMONS
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and dried, the face of the article shows a dark colour. I think the people who produce the salt to which my hon. friend refers know as well as I do that my statements are correct. I have discussed the matter with Mr. Chambers, who is connected with the production of that commodity; my hon. friend is acquainted with him. I have made certain tests in the hope of using the Malagash salt, but have always found that this earthy scum would appear on the fish, and that consequently it was not possible to produce a white article. In the markets to which we ship, the fish must be white and clean, and therefore our salt must be purchased in Turks island, the West Indies, Torrevieja on the Mediterranean, or Cadiz, one of the Spanish ports.


Robert Knowlton Smith: I understand
that due to processing this salt is now free from the objection mentioned by my hon. friend.


William Duff: Only a year ago a scientist
named Doctor Barry of Halifax, Mr. Chambers, who is president of the Malagash Salt Products Limited, and myself made a number of tests. Doctor Barry, with whom I was associated, thought he could do something to take the strata out of the salt. Mr. Chambers brought some samples down to my own town, and a number of tests were made. We found, however, that it was impossible to get this foreign substance out of the salt. Although a good deal of the Malagash product is used, we find that it does not leave a white surface, and consequently is not satisfactory for our purposes. But even if the salt were as good as the salt which we import from other countries, I would still contend that this clause should not have been put in, because salt is one of the basic articles which the fisherman must use in his industry. Our fishermen should not be compelled to pay a six per cent sales tax when any company producing salt in Canada does not have to pay it. I do not think it is fair, I do not think it is right, and I am trying to be charitable in saying that some way or other these words "when manufactured or produced in Canada" were slipped into this exemption clause last year. I respectfully submit to the minister that it is not in the interests of the fishermen that they should be so taxed on their salt. I need not explain to the Minister of Finance the deplorable condition of that great industry of the maritime provinces at the present time. I should not be here asking the minister to take off this impost, I should be at home trying to do something

for the fishermen of my province. If my hon. friend does not do something to encourage the fishing industry of the maritime provinces, I do not know what is going to happen. I cannot understand why the minister did not give consideration not only to the idea of not having any sales tax on salt but of not increasing the tax to six per cent this year. Instead of not taking salt out of the exempted list, by this clause he deliberately increases the sales tax from four to six per cent.
Let me say something else to my hon. friend in regard to this sales tax on salt. Under a treaty with the island of Newfoundland fish produced there comes into Canada free of duty. I am in favour of that, because all the fish which comes in from Newfoundland is handled by the exporters of fish in Halifax and Lunenburg-I handle some myself -and it does not interfere in the slightest with the producers of fish in Canada; we are able to steady the market by handling a certain portion of Newfoundland fish. But I would bring this to the attention of my hon. friend as another reason why salt should go on the exempted list altogether, both as regards excise and sales tax. Our fishermen have to compete with the fishermen of Newfoundland, and if our fishermen have to pay a three per cent excise tax and a six per cent sales tax, the fishermen of Newfoundland can land their fish in Halifax, Lunenburg or any other Canadian port cheaper than can the Canadian fishermen. For that and other reasons I say to my hon. friend he should amend this clause and exempt salt from the sales and excise tax. It is bad enough for our fishermen to have to pay the excise tax on salt. Of course, if every other article imported is subject to the excise tax I am not going to object very strongly to the three per cent on salt, but I do urge my hon. friend that if it were possible to take both the sales tax and the excise tax off salt it should be done, because our fishermen need every little bit of help to encourage them in their industry. Our fishermen have not only to pay these taxes on their salt, but also on everything else they buy either for their families or to prosecute their industry. My hon. friend should take that into consideration and do something to hold up the hands of these people, and endeavour to encourage an industry that is practically at its last gasp.
Under this clause there is another hardship to our fishermen. Up to this year, as I said a moment ago, there were certain exemptions under schedule 3. If my hon. friend will look at page 4 he will notice the following:

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"usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax;" "materials to be used exclusively in the manufacture of usual coverings to be used for covering goods not subject to the consumption or sales tax."
Now, I would direct the minister's attention to the fact that this means a twelve per cent tax on every package which is used in the fish business, whether cask, butt, drum, herring barrel, mackerel barrel or box, because there is a six per cent tax on the finished article, the package itself, and there is also a six per cent tax on the value of the materials. Take herring and mackerel barrels. Men go into the woods and cut staves, which they sell to the coopers. There is a six per cent tax on the staves. There is also a six per cent tax on the lumber which goes into the casks, barrels and boxes. When the barrels or boxes are manufactured there is an additional six per cent. Surely the government never intended that the supplies of the fish industry, the apple industry, and the hundred other industries where boxes are used, should be taxed in this way. But I am pleading especially for the fishing industry-there are others better qualified to look after the interests of the other industries-and I say it is ruinous that the fishermen of this countiy should have to pay a twelve per cent tax on these packages. I plead with the minister now, if he has not an amendment in his mind -I have written to him and called his attention to it-in regard to the sales tax on salt and the sales tax on the materials which go into the manufacture of fish containers, that he should let section 6 stand and look into the matter with a view to relieving the fishermen of this great burden.


Mr. ERNST:: Mr. Chairman, for once I
find myself in complete accord with the hon. member for Antigonish-Guysborough.


Edward James Young: Free trade doctrine.


William Duff: My hon. friend voted for the
budget, I did not; there is the difference.


William Gordon Ernst: I have no doubt, no matter
what was in the budget, my hon. friend would have voted against it. But I am confident of this, that we can combine our efforts for the benefit of the fishing industry and rise above politics, because I am going to protest against this provision by the Minister of Finance. Last year I was under the impression that salt was exempt, together with other commodities used by the fishermen, from the operation of the sales tax, and when I went home I was amazed, as I have no doubt my hon. friend from Antigonish-Guysborough was,
to find that the rider was added that the sales tax was taken off only when the salt was manufactured in Canada. As a matter of fact practically all the salt used by the fishermen in the province of Quebec and along the maritime coast comes from outside of Canada, and those channels of trade cannot be changed in a moment. The result is that this amounts to a six per cent tariff in favour of Canadian salt and a six per cent tax on Canadian fishermen. I have no hesitation in making that statement, and in view of the present condition of the industry such a tax upon the fishermen is unfair. This is an export product, and every product which is exported should be encouraged in every possible way. In addition we have the three per cent excise tax, making a total tax of nine per cent on the salt used by the fishermen.
I should like to see salt exempt from the application of the excise tax as well. I know the minister will say that the exporter can make a return showing the amount of salt which has gone into the product and recover ninety-nine per cent of the tax by way of drawback. Theoretically that sounds all right, but from a practical standpoint it is impossible. Salt is used by so many individual fishermen, who purchase it and pay the tax but do not export the fish, that there is no way under heaven of getting that tax back to them. The same argument applies to the fish containers. Casks containing fish which are exported cannot be used more than once, because it is not economical to bring them back. In many cases individual fishermen will buy these casks, or the barrels used for pickled fish; they will pay the tax, but they do not export the product so they cannot obtain the drawback. I contend that this is unfair, with the industry in its present condition. The same argument applies to apple barrels, which are used in Canada to a very limited extent only, and are almost entirely exported. They are used by the people in the Annapolis valley and are manufactured to a considerable extent 'in my own county. They too will be subject to the tax. The barrel will go to the exporting firm filled with apples, and the exporting firm may get a drawback but it will not go back to the individual who paid the tax.
There is one other difficulty in this connection. Many of these containers are made by small concerns or by individuals who hitherto have had no system of bookkeeping and would find it impossible to install such a system. Personally I do not see how the minister is going to collect the tax. He may say that is a matter for the Department of
Special War Revenue Act

National Revenue. I tell the Minister of National Revenue that he will find it impossible to collect the tax. The small firms and individuals who cut their own material in the winter and manufacture these articles during the summer and autumn will be in a constant state of turmoil and unrest. I cannot protest too strongly against this measure. The containers and the salt should be exempt from the sales tax, and that salt in particular should be exempt from the excise tax as well.


Edgar Nelson Rhodes: While my hon. friend from Queens-Lunenburg agrees with my hon. friend from Antigonish-Guysborough, I submit that both hon. gentlemen are in error to a very substantial degree. In the first place, my hon. friend raised strong objection to the amendment with respect to the exemption provisions under the sales tax. As far as we are concerned this was not done this year; it was done last year, and I do not know why my hon. friend did not object then.


William Duff: I was in Nova Scotia looking after the fish business when the budget resolutions were discussed.


Edgar Nelson Rhodes: Let me point out to my hon. friend that this provision simply means that if Canadian salt is used no sales tax is paid.


William Gordon Ernst: You cannot do it.


Edgar Nelson Rhodes: Just one at a time, please. If you use Canadian salt you pay no sales tax and no excise tax. My hon. friend from Queens-Lunenburg says you cannot do it. He may be right, but I submit that this is not the entire story. We are capable of producing in Canada salt equal in quality to that produced in any other country in the world. My hon. friend, of course, is free to talk for the fishermen, and let me say that I do not yield to him or to anyone else in my desire to do everything possible to help the fishermen. But we have other people in this country who are just as worthy as the fishermen; we have . many men who could be engaged, and some who are engaged, in the salt industry. My hon. friend says Canadian salt cannot be used. In that I do not agree with him, and I do not need technical knowledge to hold that opinion, though I am prepared to subsitute for my own judgment the opinion of those who are experienced in chemistry. But let me say to my hon. friend that if imported salt is used and the bulk of the product is exported, they can get a drawback of almost the full amount of the sales tax paid on the salt.


William Duff: No.


Edgar Nelson Rhodes: They can get a drawback
of ninety-nine per cent.


William Duff: How?


Edgar Nelson Rhodes: Surely my hon. friend is
aware of the section of the act containing that provision.


Peter John Veniot: Yes, the section is there,
but how are you to operate it?


William Duff: I have asked alreadj^, and
had my friends in the county of Lunenburg ask, for a refund or rebate on salt which was used last year. The customs collector refused to allow that drawback, because, as my hon. friend from Queens-Lunenburg said, this salt was bought by individual fishermen from the very people who buy the fish when it is cured and who export that product. They sell the salt to one hundred or one thousand fishermen, and the collector of customs says that the exporter of the fish, the man who sold the salt to the fishermen, cannot make the necessary affidavit for a refund.


Edgar Nelson Rhodes: That may be quite true in the case to which my hon. friend refers, but I could mention a case to which that argument would not apply, and I think my hon. friend from Gloucester could do so as well.


William Duff: Can my hon. friend give me
one case in which it can be done?


Edgar Nelson Rhodes: Yes; in any curing process in this country using imported salt. My hon. friend is referring to imported salt which is distributed among perhaps one hundred people.


William Duff: How many people import salt and use it themselves? Certainly I should know what I am talking about in this case.


Edgar Nelson Rhodes: I am prepared to admit at once that my hon. friend has forgotten more about the fishing business than I know, and I bow to his superior judgment in that connection. But when it comes to a question of the application of a law I refuse to accept his judgment, and I think I have every right to take that attitude.


William Duff: I just stated that the collector would not allow the drawback.


Edgar Nelson Rhodes: The Department of Finance does not administer the sales tax, and in that respect I have to get a good deal of my information left hand. I can give my hon. friend only such information as comes to me from the experts in the Department of National Revenue.


William Duff: I have my information right
hand.

Special War Revenue Act


Edgar Nelson Rhodes: The hon. member for
Queens-Lunenburg mentioned that a great bulk of the casks are used in the export business, but if that is so a drawback could be obtained.


William Gordon Ernst: What about the individual?


Edgar Nelson Rhodes: My hon. friend now comes back to the individual. A moment ago he was saying that it would be difficult to administer this regulation, that we would not be able to collect the tax from the individual; if that is so, then he need not worry. If my hon. friend has any specific instances where he believes the drawback is unworkable or where no method can be devised to obtain a drawback, I should like to know of them. If he can show me definite instances, then I will agree that he has made out a case. I should like him to give me the chapter and verse and then I can submit the case to the experts in the Department of National Revenue and at the next sitting of this committee I shall be able to give their opinions.


William Duff: The officers of the department have told us that we cannot apply for a rebate on this salt. As I said, 99-99 per cent of the salt used for curing fish is exported; only [DOT]001 of the salt is used for fish for local consumption. I have no desire to be personal in this matter, but I want to give the minister all the information I possess. I am interested in the importation of salt. My hon. friend has said that domestic salt was as good as foreign salt to cure fish, but I contend that that is not correct.


Edgar Nelson Rhodes: Does my hon. friend mean to say that we cannot produce in Canada salt as good for the curing of fish as salt produced elsewhere in the world?


Peter John Veniot: You cannot do it.


William Duff: The salt produced in Ontario is all right for table use, and there is some fishery salt manufactured in that province, but it is too far away from Quebec, the mari-times and British Columbia. Some of the fine salt used in the fish business is called Liverpool salt; it gives what is known as a quick strike. Real fishery salt is crushed to about thfi size of a pea. I am not trying to detract from the virtues of the Malagash salt because I have done everything I could to help Mr. Chambers. I helped him to make investigations; I put a scientist on the job and he, Mr. Chambers and myself made tests for three months. That scientist did everything possible to remove the foreign matter, but he was not successful. That salt is not suitable for our purposes. When our fish is packed in it they will not bring the
same price as when they are packed in salt taken from the ocean. Malagash salt is taken from the earth while the salt we use comes from the ocean. This salt is evaporated in the Mediterranean, in Trapani, Spain, or in the West Indies in Turks island. Anyone who has been in the West Indies will know the strength of the salt water there and will appreciate my argument. The water is put in ponds and allowed to evaporate, the salt taken out and the ponds again filled with water.
There is another matter to which I should like the Minister of Trade and Commerce to give attention. In the old days much of the business from the maritime provinces was carried on in sailing vessels. To-day the use of these vessels is not as great but considerable business is still done in this manner. If I ship a cargo of fish in a sailing vessel to Porto Rico or Trinidad or some other point-in doing this I come into competition with the Canadian government merchant marine

the only return cargo available is salt. If my vessel goes to Newfoundland and loads a cargo of fish for Oporto or some port in Greece or Italy, the only return cargo available is salt. Canadian salt is not suitable for our purposes and we should not be penalized in the purchase of a suitable commodity. The ships return with the foreign salt which is put in storage. That salt is sold, as the hon. member for Queens-Lunenburg has said, not to one man who cures say two thousand quintals of fish but to one hundred men who cure twenty quintals each, or even to five hundred men. Those men do not come back to sell their fish to me because I sold them their salt; they may sell their fish to anyone of the firms who signed a telegram sent recently to the Minister of Finance. This telegram reads as follows:
We the undersigned dried and pickled fish exporters protest against the imposition of sales tax on fish packages thus adding to the cost of articles not used in Canada at a time when exporters cannot sell to cover the purchase price this notwithstanding the fish in most cases were bought from the fishermen below cost of production. If this unreasonable tax is insisted upon it will simply penalize the larger cooperage producers this owing to the impossibility of collecting from the many individuals producing packages in a small way.
That is what the hon. member for Queens-Lunenburg said. The telegram continues:
Further we cannot understand the government's action in continuing to increase the sales tax and excise tax on salt for the fishermen. The production of salt fish being almost entirely for export this burden put upon our fishermen is not consistent with the bonusing of five cents a bushel on wheat. We implore your compliance with our request to eliminate said tax from the tariff.
Special War Revenue Act

This telegram is signed not by fishermen but by exporters of fish. They are as follows:
A. M. Smith and Company,
H. L. Montague, Limited,
W. and C. H. Mitchell,
Farquhar and Company,
Halifax Fisheries, Limited,
Mitchell and McNeil,
Robin, Jones and Whitman, Limited.
I have proved that it is impossible to obtain this refund or rebate or whatever you call it. As soon as I saw this new schedule I got in touch with the commissioner of excise, Mr. Taylor, who referred me to section 94, to which the minister referred a few moments ago. I sent a copy of Mr. Taylor's letter to six different importers of salt in Nova Scotia, as well as a copy of the schedule, and advised them that they could obtain a refund of ninety-nine per cent of the duty paid on salt sold last year. Each importer went to the customs and w'as turned down. He was told: You cannot take an affidavit that the salt which you sold to the fishermen went outside of Canada. Of course the importer or the seller of the salt could not take the affidavit, with the result that they could not get the drawback, although it is a well known fact, as I said a moment ago, that ninety-nine per cent of the salt goes out on export. As I say, the importer or the business man could not take that affidavit; the customs collector knew he could not do so and did not help him in any way to get over the difficulty by saying: All right; we know this is all for export and you can send in your claim. Thus section 94 is of no use at all and for that reason we cannot act on it. I submit to the minister that in the interests of the fisheries, the four per cent sales tax should never have been imposed; in my opinion it was a mistake. 1 am afraid the Minister of Finance and my good friend the hon. member for Cumberland, where this concern is producing salt, purposely allowed this to be slipped in to help that concern, but it will not help the Malagash salt business one iota. If the government puts a 20 per cent sales tax and a 10 per cent excise tax on salt, I want to tell the minister seriously-and I am telling him sincerely-we could not or would not use the Malagash salt in our fisheries.


Peter John Veniot: Although the hon. member to my right, who has just spoken, has discussed this question very fully, and although I agree with everything he has said in connection with the injustice of the imposition of a sales tax and an excise tax on salt, having lived nearly all my life among fishermen, 
especially those engaged in the codfish business, I know from experience it is impossible for our cod fishermen to use Malagash or, indeed, any Canadian salt and put their product on the market in such a way as to command the proper prices. Therefore our fishermen are compelled to import the salt they use. As the hon. member for Antigonish-Guysborough has said, in importing this salt they are met by a double tax, the six per cent sales tax and the three per cent excise tax. If that were the only thing that militated against our fishermen, it might be overcome or they might put up with it for a while; but when you consider the package licence, the covering licence or fee that is charged, the situation is aggravated. The hon. member for Antigonish-Guysborough gave one example; let me give a more striking one of how that covering charge affects our fishermen. For instance, it is a six per cent charge on the value of the can which contains the packed lobster. Once the lobster is placed in those tin cans, they, to the extent of a dozen or two or four dozen, go into a wooden box for transportation. I am talking now of lobster not for shipment to foreign countries but for transportation throughout Canada. That wooden box is also struck with a tax of six per cent on the value of the box which covers the containers in which the lobster is placed. Therefore you have a double tax: you have a tax against the tin can in w'hich the lobster is placed and another against the wooden container which carries the tin can in its transportation to the market. It may be said that this was not intended, and it is because I believe it was not intended I am bringing the matter up in order that the attention of the minister and his officials may be directed to it; that they will give it the study it requires and define what is a container, what is a covering. At present there is nothing to define it; that covering tax can be applied to anything. It can be applied to the can in which the milkman brings his milk or cream to market. When that can returns from its outbound destination and goes out again the next time, under this very act another six per cent is charged on the value of that container.
Let us consider how this applies to the fishing industry and the cheap sea food that is being put up in the maritime provinces. The sardine is a cheap sea food; it sells at retail for five cents a can. The can in which it is contained, including the patent opener that must be used, costs more than the fish that is in the can, and the government are taxing that can six per cent. They are taxing not only the tin can
MAY 17, 1932 [DOT]
Special War Revenue Act
six per cent, but the wooden box in which a hundred cans are placed for transportation. To that extent they are discriminating against the fishing industry.


Edgar Nelson Rhodes: Did I understand my hon. friend to say that a milkman would pay a sales tax on his milk can every time he sent it to market?


Peter John Veniot: There is nothing to say he will not.


Edgar Nelson Rhodes: As a matter of fact my hon. friend is quite wrong.


Peter John Veniot: I hope I am, but can the minister show me where?


Edgar Nelson Rhodes: There would be a tax on the tin can once.


Peter John Veniot: That is not stated.


Edgar Nelson Rhodes: Well, that is the fact.


Peter John Veniot: I have a right to know that. I am glad I brought the matter up.


Edgar Nelson Rhodes: There is only the one sale. When the manufacturer who makes the can sells it, he pays the sales tax and that is the end.


Peter John Veniot: I am not talking about the sales tax; I am talking about the covering tax.


Edgar Nelson Rhodes: So am I.


Peter John Veniot: I understand when the can is manufactured and sold to the farmer, he pays a sales tax. I am not discussing that. I am discussing that can from the time the farmer puts the milk into it. He takes it to the station, say at Sussex, and sends it to Saint John. He has to pay a covering tax on that can.


Edgar Nelson Rhodes: No; my hon. friend is quite wrong.


Peter John Veniot: Will the minister show me in the act which is before the house where that is not the case? That is what I want to know.


Edgar Nelson Rhodes: If my hon. friend will look at section 86 of the Special War Revenue Act, he will find it.


Peter John Veniot: I have the act in front of me. Where is it?


Edgar Nelson Rhodes: Section 86 reads:
In addition to any duty or tax that may be payable under this act or any other statute or law, there shall be imposed, levied and collected a consumption or sales tax of four per cent-
It is six per cent now.
*-on the sale price of al'l goods,

(a) produced or manufactured in Canada, payable by the producer or manufacturer at the time of the delivery of such goods to the purchaser thereof.


Peter John Veniot: I am not talking about that at all.


Edgar Nelson Rhodes: I am talking about what my hon. friend is talking about.


Peter John Veniot: Not at all.


Edgar Nelson Rhodes: When it was sold by the
manufacturer to the purchaser there was a sales tax on it, and that was the end of it. My hon. friend would make it appear that there was a covering tax upon it every time the can was sent to market.


Peter John Veniot: Does the minister mean
that there was no covering tax?


Edgar Nelson Rhodes: Yes, and I have told my
hon. friend so three or four times.


Peter John Veniot: I do not agree with the
minister. You are taking the following words from the list of articles exempt from the consumption or sales tax, "materials to be used exclusively in the manufacture of usual coverings." Those were formerly exempted from the sales tax.


Edgar Nelson Rhodes: My hon. friend is confusing two entirely different things. There is no question that last year the milk can was exempt from the sales tax, and if this provision goes through, it will be subject to the sales tax. But what my hon. friend was saying, and what I took exception to, was that there was a tax on that milk can every time it went to market, which is not so.


Peter John Veniot: I did not say sales tax.


Edgar Nelson Rhodes: There is no tax of any
kind upon it except the tax upon the milk can when it is sold by the manufacturer to the purchaser. The can might last a year or two years, or as long as it does last, there would be no further tax upon it.


Peter John Veniot: What about the cans for
the preserving of fish?


Edgar Nelson Rhodes: Stick to the milk can for the time being.


Peter John Veniot: No, because you apply the same thing to the other coverings. Take the sardine can. There is a covering tax on that.


Edgar Nelson Rhodes: I was not discussing for
the moment the sardine can. I want to get the milk can straightened out first.


Peter John Veniot: The minister will get the
milk can straightened out if he straightens out the sardine can.

Special War Revenue Act


Edgar Nelson Rhodes: I am prepared to discuss
the sardine can tax in spite of the fact that my hon. friend has refused to accept the statement of the minister when he makes it on his ministerial responsibility.


Peter John Veniot: When the statement made
on the minister's responsibility does not bear out what is before us, I have a right to differ from the minister.


Mr. HANSON:: You are all wet about the milk can anyway.


Peter John Veniot: 
Edgar Nelson Rhodes: I cannot possibly finish tonight, and for that reason I was going to ask the committee to rise,-unless my hon. friend

Questions
opposite is particularly anxious to speak. It is nearly eleven o'clock and I should like to introduce some bills.


James Layton Ralston: I am in the hands of the committee.


Edgar Nelson Rhodes: I move that the committee rise and that the chairman report the resolutions on the Customs Tariff and the Income War Tax Act, and that with respect to the other resolution he report progress and ask leave to sit again. I want to introduce bills founded upon the first two I have named.
Income War Tax Act and Customs Tariff -resolutions reported.
Special War Revenue Act-progress reported.
Hon.	E.	N.	RHODES	(Minister	of
Finance) moved for leave to introduce Bill No. 95, to amend the customs tariff.
Motion agreed to and bill read the first time.
Hon.	E.	N.	RHODES	(Minister	of
Finance) moved for leave to introduce Bill No. 96, to amend the Income War Tax Act.
Motion agreed to and bill read the first
time.


[Stage Direction]
At eleven o'clock the house adjourned without question put, pursuant to standing order.
Wednesday, May 18, 1932.