[Stage Direction]
Fourth report of the standing committee on railways, canals and telegraph lines.-Mr. Breithaupt.
Sugar

Hon. DOUGLAS ABBOTT (Minister of Finance):: Mr. Speaker, a few days ago the hon. member for Lake Centre (Mr. Diefen-baker) asked me a question arising out of a press statement regarding sugar stocks in storage in Canada. According to the report to which he referred, these stocks were large, and he asked me whether in view of that situation consideration was being given to increasing the ration by approximately four pounds per person, to take up the surplus. I told him at the time I thought the situation was not such as to justify an increase in the ration. The information I have found is as follows.
While it is true that there are considerable stocks of sugar in the country at the present time, this is no indication that sugar rationing could be abandoned. In fact the world sugar situation is still quite tight, and the abandoning of sugar rationing is out of the question for some time to come.
The reason for the large stocks of sugar on hand now is that we have been receiving quite heavy deliveries of Cuban sugar against our international allocation. Under this international arrangement the actual shipments to Canada are governed by a number of factors, and we take the sugar when we are able to get it, and store it for future use.
Our allocation will allow an approximate per capita consumption of about 80 pounds this year, which is nine pounds better than last year, but still ten pounds or so below the prewar per capita consumption.


Mr. J. G. DIEFENBAKER (Lake Centre):: What is the amount of sugar in storage in Canada today? According to this statement, the storage facilities are being overtaxed because of the amount on hand. The suggestion has been made that soft drink companies, bakeries and the like be given one month's supply in advance on their quota, as is done in the United States, with a View to removing the congestion in storage.


Douglas Charles Abbott: I cannot give a figure as to the amount in storage. I have not asked for that information. However I shall look into the question as to whether storage facilities are being overtaxed. The fact remains that, on balance, over the year, our allocation will not give us more than an approximate amount of 80 pounds per capita, as I said before. We take the stocks as and when we can get them.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk).

Mr. MILLER:: 1.	Are any income tax assessors engaged in travelling around the country checking income tax returns of farmers?
2.	If so, how many from each income tax division?
3.	Of these, how many from each such division are (a) full time; (b) part time?


Mr. McCANN:: 1.	Yes.
2.	Charlottetown, 2; Saint John, 3; Montreal, 5; Ottawa, 4; Toronto, 3; Hamilton, 9; London, 1; Winnipeg, 25; Regina, 25; Saskatoon, 8; Edmonton, 21; Vancouver, 2.
3.	(a) None; (b) Answered by No. 2.
In explanation of the above it is pointed out that all employees of the taxation division are full time employees but the assessors engaged in travelling around the country checking income tax returns of farmers do so only periodically.


RADIO BROADCASTING-&quot;NATION'S BUSINESS&quot;
Mr. FULTON:: What is the actual amount of money expended by the C.B.C. in a full year under the present arrangement for the broadcasts of the "Nation's Business" on the national and French networks, covering such items as pay of staff involved, cost of recording, proportion of charges for line service for that period of time, etc.?


Mr. McCANN:: It is impossible to make any calculation of costs chargeable to this programme. No staff are employed exclusively on this programme and no accurate assessment can be made of incidental or part time employment involved.
I would suggest this question might well be asked before the committee on radio broadcasting, where officials of the C.B.C. might be able to give information on more detailed questioning.


UNEMPLOYMENT
Mr. DIEFENBAKER:: 1.	How many unemployed men as of this date are there in each of the provinces?
2.	What was the total amount paid in each province for unemployment insurance during each of the months of March and April, 1947?
3.	How many unemployed, eligible for insurance benefits, were registered in the months of January to April inclusive by provinces?


Mr. MITCHELL:: 1.	Records of persons registered at the national employment service of the labour department show those who are registered as
[The Chairman.]

Questions
seeking work and are	given as an approach	
to the answer to the	question. The figures	
are as of May 15. 1947. This is		the latest
date for which the figures are available.		
	Unplaced applicants	
	May 16,	May 15,
Province	1946	1947Prince Edward Island.	.. 2,286	1,303Nova Scotia 	.. 14,037	14,810New Brunswick 	.. 10.998	6,731Quebec 	.. 53,169	32.848Ontario 	.. 48,122	23,282Manitoba 	.. 13,568	8,398Saskatchewan 	... 5,627	3,976Alberta 	.. 7,246	4,715British Columbia 	.. 22.053	13,200Total 	... 177,106	109,2632. March, 1947	April, 1947Prince Edward Island	$ 36,524	$ 32,503Nova Scotia 	. 358,040	354,421New Brunswick 	. 145,349	136,866Quebec 	. 1,384,992	1,236,053Ontario 	. 1,214,944	983,908Manitoba 	. 307,778	274,215Saskatchewan 	. 188,559	159,648Alberta 	. 245,228	176,359British Columbia ....	. 598,461	426,776Total 	.84,479,875	83,780,7493. The following figures show the number of	persons eligible for benefit who	signed theunemployment register	on the last	six days ofeach of the months concerned:	1947	January	FebruaryPrince Edward Island	.. 782	914Nova Scotia 	... 7,997	9,023New Brunswick 	... 3,115	3,990Quebec 	... 32,952	34,916Ontario 	... 30,534	30,408Manitoba 	... 7,551	8,567Saskatchewan 	... 4,433	4,640Alberta 	... 4,930	5,775British Columbia ....	... 13,582	14,187Total 	... 105,876	112,4201947	March	AprilPrince Edward Island	... 903	720Nova Scotia 	... 10,114	9,460New Brunswick ....	... 4,421	3,599Quebec 	... 32,642	27,412Ontario 	... 27,569	21,005Manitoba 	... 8.297	6,360Saskatchewan 	... 4,469	3,148Alberta 	... 6.995	5,303British Columbia ...	... 11,636	9,063Total 	... 107,046	86,070


IMMIGRATION
Mr. CAOUETTE:: 1.	How many immigrants have entered Canada since September 1, 1939?
2.	How many of each nationality?


Mr. McILRAITH:: 1.	155,865.
2.	It is impossible to break down by nationality for the exact period requested as nationality tables are compiled yearly rather than monthly. However, the attached statement shows nationalities since April 1, 1939, to March 31, 1947.
Immigration to Canada showing nationalities, from April 1, 1939, to March 31, 1947
Albanian	 2
Armenian	 1
Austrian	 39
Belgian	 277
British	 113,804
Bulgarian	 16
Central American	 21
Czechoslovakian	 2,243
Danish	 155
Danzig	 13
Dutch	 716
Estonian	 17
Finnish	 81
French	 360
German	 1,823
Greek	 189
Hungarian	 502
Icelandic	 8
Italian	,	 261
Japanese	 39
Yugoslavian	 293
Latvian	 23
Lithuanian	 131
Luxembourg	 11
Mexican	  32
Norwegian	 351
Polish	 3,386
Portuguese	 6
Roumanian	 230
Russian	 65
South American	 42
Spanish	 36
Swedish	 41
Swiss	_	167
Syrian	 9
Turkish	 9
Ukrainian	 3
U.S. Citizens	 40,994
West Indian (Not Br.)	 25
Others	 7
Total	 166,428
Questions


CANADIANS IN RUSSIA
Mr. MATTHEWS (Brandon):: 
REVENUES COLLECTED ON TELEPHONE SERVICES
Mr. BLACK (Cumberland):: 1.	What has been collected by the federal government in each province for each of the last three fiscal years as taxes on telephone (a) extension services, and (b) tolls and long distance services?	_
2.	What taxes have been collected in the various provinces (a) from private telephone companies; (b) from public authorities providing telephone service?


Mr. McCANN:: 1.	Excise Division
(A) Extensions
Provinces	1944-45	1945-46	1946-47Nova Scotia 	$ 7,832 82	$	8,669 17Prince Edward Island 	New Brunswick 	3,907 57	4,476 8iQuebec 	'	106,092 76	118,160 22Ontario 	2,840 37	2,703 78Manitoba 	Saskatchewan 	
2,496 25	3,1 li 75	3,900 30Alberta 	3,031 75	3,244 25British Columbia 	
12,126 05	11,811 75	11,678 67Yukon Territory	....	Totals 	
$ 140,718 79 (B) Tolls and Long Distance	$ 138,628 77	$	152,833 20Provinces	1944-45	1945-46	1946-47Nova Scotia 	$ 222,116 44	$	234,090 09Prince Edward Island 	New Brunswick 	
129,991 70	150,549 37	173,402 78Quebec 	3.055,754 44	3,451,707 60	Ontario 	214,684 64	260,518 31Manitoba 	
180,211 53	210,774 91	240,904 09Saskatchewan 	
210,428 34	240',959 03	279,575 62Alberta 	274.058 84	320,284 12British Columbia 	
282,833 47	339,252 85	407,961 29Yukon Territory 	
47 10	56 96	70 35Totals 	$4,708,207 48	$5,368,514 25	
2. No information available.

Questions


PUBLIC SERVICE-WAR DUTIES SUPPLEMENTS
Mr. LOCKHART:: 1.	What are the names of temporary or permanent civil servants who did not receive war duties supplements in (a) Department of Mines and Resources: (b) Department of Transport; (c) National Film Board?
2.	Who recommended payment of war duties supplements?
3.	What is the reason why war duties supplements were not paid to all employees in these departments?


Mr. CHEVRIER:: With reference to this question, I made a statement on Monday and indicated that so far as the Department of Transport was concerned it would be very difficult to answer it. I gave the reasons therefor, and I asked whether the hon. gentleman would not allow the question to be dropped. The hon. member for Peel (Mr. Graydon), who was leading the opposition at the time, suggested that the question be allowed to stand. In view of the statement I have made perhaps the question could now be dropped and the hon. member can reinstate it if he wishes after he has seen my statement.
Question dropped.


ELIGIBILITY FOR CANADIAN CITIZENSHIP
Mr. STEPHENSON:: 1.	How many people in Canada are eligible to take out citizenship papers?
2.	How many have taken out citizenship papers to date?
3.	How many citizenship papers were issued at the price of $5?
4.	How many at the price of $1?


Mr. GIBSON (Hamilton West):: 1.	Part I of the Canadian Citizenship Act defines natural-born Canadian citizens. Part II of the act deals with Canadian citizens other than natural-born and also provides for acquisition of Canadian citizenship by those qualified to apply. No statistics as to numbers who may be eligible to apply.
2.	5,370.
3.	3,016 aliens under section 10 (a) of the act.
4 . 2,354 certificates in proof, under section 10 (b) and section 39 of the act.
(The answer to 4 includes certificates issued free of charge, under P.C. 502 of the 11th February, 1947, to veterans who served with the armed forces of Canada during time of war and regarding which no separate record has been kept.)
In addition to the 5,370 certificates of Canadian citizenship issued to date, there are
about 6,700 pending. Among these, are about 4,050 which are declarations of intention by aliens which will not reach completion until 1948. The remainder are, in the main, applications for proof of citizenship b>
Canadian citizens in process of completion.


BABIES LEAVING CANADA FOR ADOPTION IN THE UNITED STATES
Mrs. STRUM:: What has been the procedure whereby Canada has granted passports to babies leaving Canada for purposes of adoption in the United States?
Mr. ST. LAURENT: When a child's name is not included in the passport of its parent, an individual passport is issued to the child upon receipt of a properly executed application form "B" (for children under sixteen years of age) signed by the parent or legal guardian of the child. Proof of guardianship under provincial law is normally required. In exceptional circumstances, where such proof is not available, an application signed by a person who appears to be the legal guardian, or to have the child in lawful custody, is accepted. In all doubtful cases, the passport officer, before issuing the passport, seeks the advice of the appropriate provincial welfare authority. Passports are documents of identity which facilitate border crossings; they are not issued "for purposes of adoption".


SOCKEYE SALMON-FRASER RIVER RUN
Mr. REID:: 1.	Were tests made as to quality of Soekeye salmon entering the Fraser river during the 1946 salmon fishing season?
2.	If so. when will the result of the tests be made available?
3.	Will the report of the results be made available to members of parliament?


Mr. BRIDGES:: 1.	Yes.
2.	It is expected they will be available not later than July 30, 1947.
3.	Yes.


CANADIAN FORCES-LIFE INSURANCE
Mr. CAOUETTE:: 1.	During world war II, did the men killed in action have any life insurance?
2.	Do their parents receive any pension?
3.	If so. what are the qualifications for eligibility thereto?


Mr. TUCKER:: 1. There was no dominion government insurance plan for members of the forces. Injury or disease resulting in disability or death was provided for by the Pension Act.
Orders for Returns

2.	Yes, if eligible within the provisions of the Pension Act.
3. (a) The Pension Act, section 33 (1)-
A parent shall be entitled to a pension
when in a dependent condition and, at the time of death of the member of the forces, wholly or to a substantial extent, maintained by him.
(b) The Pension Act, section 33 (3)

A parent, who was not wholly or to a substantial extent maintained by a member of the forces at the time of his death and subsequently falls into a dependent condition, may be awarded a pension provided he or she is incapacitated by mental or physical infirmity from earning a livelihood and that in the opinion of the Canadian pension commission such member would wholly or to a substantial extent have maintained such parent.
tc) The Pension Act, section 33 (4) provides for an additional award when there is more than one parent.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Gladys Grace Mae Strum: How many exit permits to the United States of America have been issued, each year since 1939, by provinces, for babies for the purposes of adoption (a) babies under six months; (b) babies six months to one year of age?


Mr. GIBSON (Hamilton West):: Return tabled.


INSPECTION BOARD OF CANADA
Mr. LENNARD:: 1.	How many people were in the employ of the inspection board of Canada on May 1, 1947, and what are their salaries?
2.	Who is the chairman of the board; who are the directors of the different departments of this board and what are their salaries?
3.	What are the duties at the present time?
4.	Have any new appointments been made to the board since March 31, 1947?
5.	If so, have these appointees seen overseas service ?
6.	What is the location of the present personnel, by provinces?


QUEBEC PROVINCE CUSTOMS OFFICES
Mr. ROBINSON (Bruce):: What was the volume of business in each year for each of the following customs offices since they were last opened: Cartierville, L'Epiphanie, Chandler, St. Pamphile?


James Joseph McCann: Return tabled.
IMr. Tucker.]


INK USED BY GOVERNMENT OFFICES
Mr. FERGUSON:: 1.	Who at present supplies the ink for the Canadian government?
2.	Is the ink supplied by contract? If so, what is the amount of the tender; otherwise how is it paid for?
3.	Are there any sub-contractors? If so, what are their names and addresses?
4.	What amount do they supply and how much have they received in payment for same during the past year?


Colin William George Gibson: Return tabled.


EXCESS PROFITS TAX-ACCELERATED DISBURSEMENT
Mr. McMASTER:: 1.	According to return made by sessional paper 239-A the sum of $444,949,665.18 of accelerated disbursement has been allowed to taxpayers in Canada. Would the minister give the amount included in the said sum in the different years?
2.	What loss in the revenues of Canada, either by way of loss on excess profits or otherwise, was caused by allowance of the said depreciation?
3.	What was the number of corporations or individuals to whom in the aggregate this accelerated depreciation was allowed?
4.	What was the amount of the ten largest allowances given?


DIVERSION OF WATER FROM ALBANY RIVER- DAMAGE TO PROPERTY ON LAKE ST. LOUIS
Mr. LACOMBE:: 1.	Has the water of the Albany river which previously flowed into James bay been diverted by the government or any of its departments?
2.	If so (a) has such action caused the water of the Albany river to flow into Lake Superior; (b) at what time and in what year did such diversion take place?
3.	If not, is the dominion government aware of such work being done by the government of the province of Ontario?
4.	If so, in what year did the Ontario government proceed with this work?
5.	Is the dominion government aware of damage to estates bordering on Lake St. Louis, since 1940?
6.	Have the riparian owners on Lake St. Louis complained of the succession of floods caused by the flood waters of this lake?
7.	Has the government been informed of the Marquette drive being considerably damaged this year?
8.	If so, what steps are being taken by the government to correct the situation?


UNITED NATIONS
[Stage Direction]
On the orders of the day:
Mr. JOHN T. HACKETT (Stanstead): Mr. Speaker, I would like to ask a question of the Prime Minister. Why has the government named Mr. Justice Rand, of the

Inquiries of the Ministry
Supreme Court of Canada, to act on a committee appointed to investigate and report on the Palestine crisis, thus precipitating a judge of Canada's highest court into a political controversy in which Canadian opinion is sharply divided?
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I would
point out to my hon. friend in the first place that his question is irregular. It is put not so much for the purpose of obtaining information as for expressing views of his own, which are of very doubtful value.
May I say to my hon. friend, in answer to the first part of his question as to why Mr. Justice Rand was appointed to this very important post, that it was because we thought he was the best possible choice that could be made, and that the choice would be widely approved by the Canadian people, as it has been.


NATIONAL CANCER INSTITUTE
[Stage Direction]
On the orders of the day:
Mr. HAROLD W. TIMMINS (Parkdale): Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare pursuant to the press report in an Ottawa newspaper of May 13, announcing the formation of the National Cancer Institute of Canada. Will the minister inform the house whether the cancer institute is now organized, and what progress is being made, especially in regard to research?
Hon. PAUL MARTIN (Minister of National Health and Welfare):: Mr. Speaker, the hon. gentleman did give me notice of his question this morning, for which I thank him. As he and other hon. members know, my predecessor, who is now the Minister of National Defence (Mr. Claxton), intimated in this house a year ago that in view of the fact that 80,000 Canadians had died from cancer during the war, and in view of the alarming state of that dreadful disease in this country as in others, he proposed taking steps to see whether some measure of coordination on the national level could not be given to deal with this tremendous problem.
I should like to take advantage of this occasion to pay a tribute to what my predecessor did in laying the groundwork for a conference which as Minister of National Health and Welfare I called on January 27-28 of this year, a conference to which were invited all the cancer control workers and cancer authorities in Canada to see whether some means could not be devised to provide for some coordinating authority with respect to this matter. As a result of that conference the Cancer Institute of Canada was set up. It is a nongovernmental, non-profit-making body. Its purpose is to deal with this problem on a national scale, not only clinically but particularly in the field of research. I do not think at this stage there is anything further I can add except to express what I know will be the hope of this house that this institute will succeed in its great endeavours.
I should add this further word. As Minister of National Health and Welfare, at the instance of the interim committee of the [DOT] institute, and as one of the trustees of the King George V cancer fund, I addressed on behalf of the institute an appeal to the trustees of the King George V cancer fund for financial assistance to enable the cancer institute to carry on for the time being. As a result of a motion made by the Prime Minister (Mr. Mackenzie King), seconded by the Leader of the Opposition (Mr. Bracken), the trustees of the fund have placed at the disposal of the institute on a three-year basis the sum' of $450,000 to enable the institute to carry on in the initial stages of what I trust will be a very important and fundamental work.


LABOUR CONDITIONS
[Stage Direction]
On the orders of the day:
Mr. ALISTAIR STEWART (Winnipeg North):: Mr. Speaker, I wish to direct a question to the Minister of Labour. In view of recent serious developments in the dispute at the plant of Ottawa Car and Aircraft, such as the court injunction against picketing, interference of the police, and consequent disorder, will the Minister of Labour undertake to intervene again and seek the cooperation of the Ontario minister of labour to bring the employer and union together to secure a just settlement of the dispute?


Hon. HUMPHREY MITCHELL (Minister of Labour):: The dispute referred to does not come under the jurisdiction of the federal Department of Labour.


STATEMENT ON COAL AND OIL SITUATION
[Stage Direction]
On the orders of the day:
Right Hon. C. D. HOWE (Minister of Reconstruction and Supply):: I desire to make
Coal and Oil Situation

a short statement on the fuel situation. Hon. members will recall a recent statement of mine with regard to the fuel oil situation. It has now been brought to my attention that, throughout Canada, domestic coal consumers generally appear to be delaying making provision for their next winter's supply of coal. Several coal dealers have stated that coal stocks are piling up, and it will be impossible to handle the total tonnage requirements unless there is a constant and active movement of coal into domestic coal bins.
While the immediate situation would appear to be somewhat better in respect to United States coal than it was at this time last year, the situation in eastern and western Canada is somewhat worse. The eastern mines are about to reopen after a prolonged strike, and it is unlikely that any important amount of the coal lost during the shut-down can ' be recovered. In western Canada the mines are operating on a shorter work week and are already finding some difficulty in moving coal into the hands of distributors.
Last winter a combination of circumstances, particularly the bad weather, brought about a serious car shortage. This badly hampered the movement of fuel during the winter months. It is hoped that this condition will not recur, but in any event I would exhort all users of coal to exert every effort to get their supplies in during the open season.
As hon. members know, coal control was discontinued on December 31, 1946. It had been the practice during the existence of the control for the coal controller to attempt to persuade consumers to buy their coal early, and to this end he used advertising and other means. I believe this job can best be done by the coal producers and distributors now, and that the public, in its own interest, should cooperate fully to ensure that adequate supplies shall be available for next winter.
Just a word about fuel oil. I held a meeting of the principal refineries in my office this morning. I found the situation worse than I had expected. Not only will the refineries not be able to take care of new customers for fuel oil, either industrial or domestic, but it is doubtful whether they will be able to take care of the customers whom they have served in the past. The shortage is continentwide, in fact almost world wide. The difficulty is lack of transportation, lack of refining capacity and lack of oil easily accessible to markets. Therefore I should like to warn hon. members, and through them the people of this country that plans for conversion from coal to oil should be carried out only after an 
assurance has been received from a reliable source that a supply of fuel oil can be furnished.


Mr. MacINNIS:: May I ask the minister whether the installation of oil burners is still continuing, and whether there is any way in which the government can limit the number of oil burners being installed?


Clarence Decatur Howe: About a month ago I gave the house a warning of the situation and urged that no oil burners be installed unless a previous arrangement had been made with a reliable distributor for the supply of fuel oil. I am today reiterating that warning. I know that oil burners are still being manufactured, and I am afraid that some of them are being sold. All that the government can be expected to do is give the widest possible publicity to the true situation.


Mr. CASTLEDEN:: I should like to ask a supplementary question in regard to wartime housing. Are arrangements being made for the installation of oil burners in Wartime Housing houses?


Clarence Decatur Howe: I shall examine the situation. To the best of my knowledge oil heaters are not being installed in Wartime Housing houses. I think that in areas where natural gas is available, that type of heating is being used; in other localities coal is being used. However, I shall confirm my impression and correct it if necessary.


Mr. MACDONNELL (Muskoka-Ontario):: May I ask the minister a supplementary question? Is it fair to ask him whether the indications are that with regard to oil this will be a temporary or an indefinitely prolonged situation?


Clarence Decatur Howe: The situation I have described will definitely carry through the burning season of 1947-48; it will perhaps be as difficult during 1948-49. By that time new refining capacity now being planned can probably be brought into production and new drilling can be completed; so the industry hopes that by 1949 and 1950 the situation can be brought into equilibrium, but I should say not before.


Mr. FRASER:: I should like to ask the minister a question in regard to people buying coal and filling their bins at the present time. Has he considered asking the service clubs across Canada to help him in this situation? I believe that they could do a good piece of work in that regard.


Mr. CRUICKSHANK:: I should like to ask a question-


Gordon Knapman Fraser: This is no joke. To the people of my district it is serious.

Special War Revenue Act


Clarence Decatur Howe: I ask them to do so now. My hon. friend will recall that having returned the distribution of coal to private enterprise, the government has no direct responsibility in the matter.


Mr. IRVINE:: Oh, oh.


Clarence Decatur Howe: I think we should reasonably ask for everybody's help in this very important work. It means much to the welfare of our citizens.


Gordon Knapman Fraser: Now that the minister has asked them I believe that they will do a good job.


Some hon. MEMBERS:: Oh, oh.


Gordon Knapman Fraser: Some hon. members evidently do not want the people to have coal.


George Alexander Cruickshank: Is there a special tax on natural gas coming from Peterborough?


Gordon Knapman Fraser: In regard to the last question. Mr. Speaker. I wish to say that we have not yet had it piped in from Fraser Valley.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Macdonald (Brantford City) in the chair.

[Stage Direction]
Resolved, that it is expedient to amend the Special War Revenue Act and to provide:
1. That the tax in respect of transportation tickets or rights of transportation
(a)	be removed in respect of transportation by vessel or aircraft extending outside the northern part of the western hemisphere, except in respect of any part of such trantsportation that is between any port or station in Canada or the United States and any other port or station in Canada or the United States; and
(b)	be extended to apply in respect of all transportation by vessel wholly within the northern part of the western hemisphere;
and that the second proviso to subsection 1 of section 32, under which section the tax is imposed, be repealed.
Mr. BENIDICKSON:: We were discussing,
when the house rose last night, this resolution, the effect of which would be to relieve from transportation tax purchasers of aeroplane or ocean transport going overseas from a point in Canada. Representing as I do the population of Red Lake, which is probably the largest pocket of population in the country dependent solely upon air transportation, I want to add my voice to those that were heard last night urging the Minister of Finance to eliminate the transport tax with respect to those areas where only air transportation exists. I do not think hon. members fully appreciate the great hardship that prevails in those areas because of transportation costs where transportation is a basic necessity
to the people. To go from the main line of the Canadian Pacific Railway to Red Lake one has to travel a distance of less than 100 miles, yet the single fare is $20, on which there would be a 15 per cent tax amounting to $3, which on the return fare of $36 amounts to $5.40. The fare cost is about four times that existing on the T.C.A. lines and about seven times the rate that those of us are accustomed to pay who ordinarily use rail transportation. You can see therefore what an imposition it is on the people there to have this 15 per cent added.
The minister said that he would consider these representations. They have been made to him for some time. The various mines in my district and in other parts of the country have been making representations to him, and I myself have spoken to him, to the minister of mines, the minister of transport and the minister of reconstruction on the subject. I do not want the Minister of Finance to think that this would be a difficult administrative problem.
The minister said that a change had been made with respect to non-scheduled air services, a change reducing the tax from 15 per cent to a tax of one cent per mile for non-scheduled air transportation, passengers only. I think that as the scheduled routes to the major mining areas are so well defined and well known, there would be no administrative difficulty in relieving them from this tax. All that would be necessary would be to provide in the bill that the department should have discretion and be able to make certain specific routes free from transport tax if it could be shown that the population depended entirely on air transportation.
I am sure the same situation that exists in my district exists in other parts of the country, particularly northern Quebec and the rapidly developing Yellowknife territory. Because the ticket costs are about seven times the rail cost, it means that anyone in those areas is paying the crown a tax seven times per mile what others pay in other parts of the country when using other means of mechanical transport.
It is not known to all members of the house that those of us who represent districts of this kind have a personal handicap that other members do not have, and that is that we are not provided with transportation passes to meet our electors in areas that can be reached, only by air transportation. I hope that at some other stage there will be an opportunity for the house to give consideration to those of us who not only pay this tax but
Special War Revenue Act

must, to do our duty by our electors visit these various parts of our large ridings at our own expense.


Mr. COCKERAM:: Following the remarks of the hon. member for Kenora-Rainy River, I should like to table the different fares and the taxes from Edmonton to Whitehorse, Edmonton to Yellowknife, Winnipeg to Red Lake, Sioux Lookout to Pickle Lake, Winnipeg to Favourable Lake, and Whitehorse to Mayo,
District
Edmonton to Whitehorse	
Edmonton to Yellowknife ....
Winnipeg to Red Lake	
Sioux Lookout to Pickle Lake Winnipeg to Favourable Lake Whitehorse to Mayo


Douglas Charles Abbott: After listening to the representations made by various members I said I would give further consideration to the practicability of granting a specal exemption from this tax to areas whose only effective means of transportation was by air. I have given the matter further consideration. I will not make a positive commitment at the moment. What I said last night was that before the bill was brought in I would see what could be done. I have asked the officials to work out a clause which will give this exemption but would not be subject to certain obvious abuses, which I think hon. members will appreciate. It is not free from difficulty, but I believe such a clause can be worked out, and on the assumption that it can be, it will be included in the bill. It may be necessary to come back with a supplementary resolution, but I make that statement now.


Mr. SKEY:: As well as those mining areas that are served by companies, there are many individual prospectors in Canada who must charter aircraft. These men are not working for large corporations that own their own aircraft; they are independent prospectors who must charter a machine to go into the north country. I feel they should be considered at the same time. They would be going into the same kind of remote areas. I suggest that perhaps transportation taxes of this type could be credited to the individual or corporation in respect of their income tax in the same manner as charitable benefits are deducted.


James MacKerras Macdonnell: Lest the minister find that the difficulties in working out the clause he has suggested are

if there were rail transportation, into the area. I have the various figures worked out between the points I have mentioned, and rather than burden the committee with them I would ask unanimous consent to place them on Hansard.


The CHAIRMAN:: Has the hon. member unanimous consent?


Some hon- MEMBERS:: Agreed.


Alan Cockeram: The table follows:
	Approx. Rail Tax on			Tax on
Single	Fare Based on	Air	RailAir Fare	Mileage	3c. a mile (1st)	Tickets	Tickets$75.00	990	$29.70	$10.25	$4.4580.00	740	21.30	12.00	3.2022.50	,175	5.25	3.37	.8020.00	125	3.75	3.00	.5245.00	325	9.75	6.75	1.4760.00	190	5.70	9.00	.85greater	than he	anticipates,	may I	make
suggestion? This is a very unusual case. It is a case that has to do with the development of the north country, which can mean so much to us. I imagine the amount of the tax involved is very small, and this might be an instance of throwing a sprat to catch a whale.


Douglas Charles Abbott: That is the only ground on which we can be justified in singling out this case for exemption. The circumstances are unusual. The areas are remote and there is no other effective means of transportation, and presumably, as various members have pointed out, the cost is very much higher. That is the only basis on which it can be justified.


Mr. REID:: Will the minister make a statement with regard to another aspect of the situation, and that is taking off the tax on travel abroad. I understand there is quite a conflict going on behind the scenes between the T.C.A. and the revenue department in regard to the 'transportation that was booked by many Canadians prior to the tax coming off. Many of them feel that they have a grievance against the imposition of the tax up until the first of May. Let me give one example, which illustrates many more cases. A man books passage to Great Britain in January of this year. He happens to be in the head office the day before the tax comes off and is told by T.C.A. that the tax must be collected. That night 'the tax is off. He feels he is out $243. He is not travelling to the old country until some time towards the middle of June. He sent information today showing that in the United States this very question has arisen and the United States revenue department has issued instructions

Special War Revenue Act
that all refunds have to be made to those who have booked passages on transportation outside the country but who did not have to pay for the ticket until after the tax was removed.


Douglas Charles Abbott: If they have not paid, there is no question involved here.


Thomas Reid: But Trans-Canada Air Lines has taken the stand that according to the act they must take the tax from the people.


Douglas Charles Abbott: Not if they have not paid for their ticket.


Thomas Reid: I know of a case which is just now being debated, where the demand was made that the fare be paid although the people are not leaving this country until the middle of June.


Douglas Charles Abbott: That is correct.


Thomas Reid: They are called upon to pay the tax. The matter should be looked into and some agreement reached between the revenue department and Trans-Canada Air Lines. I realize that there must be a deadline. All those going in to book passages after May 1 know that the tax is off, but those who inadvertently or otherwise booked passage in January, February, March or April and are not leaving the country until June or July should surely not be called upon to pay a tax as heavy as the one they have to pay. I am asking the Minister of National Revenue and the Minister of Finance to look into many of these cases, and I think they will realize the injustice which many are suffering at the present time.


Douglas Charles Abbott: We have had a number of representations along the line that my hon. friend has indicated. Of course, that is a problem arising every time a tax is taken off. The man who has an inventory on which the tax has been paid does not get a refund. Neither does the man who has bought some service on which the tax is paid. In this case, if he has bought his transportation and taken it up, the tax hasbeen paid, and we take the view that there is no refund available. If he has simply reserved his passage and has not paid for it, of course he gets his ticket afterwards. However, I will take note of my hon. friend's remarks.


Mr. CHURCH:: I should like to ask this question: Has the government of Canada no policy with regard to bonuses, subventions and subsidies for air borne traffic for these outlying districts here set out in order to develop
the great natural resources up in that country? The country was undeveloped, until those were adopted for railway and canals; and now it is aircraft. For that great hinterland up north have the government no policy now, after the war, to develop air transportation? Are they leaving it for private industry to go up there and not only find the resources and develop them, but provide transportation by air unaided by subventions? There was a bonus system of subsidies and subventions for light and power and transportation, both federally and provineially. With the rich resources up in that great country where we spent so much money during the war, surely the government of Canada must have some national policy for its development and not leave it to private people. I would ask the minister to consider that matter in the recess, if this legislation cannot be amended without a ways and means measure. Now that the war has been over for two years, I think the government should 'have some policy in the matter.


Douglas Charles Abbott: This is not exactly in my department. As the commiteee knows, we have appropriated substantial sums of money for building mining roads into various parts of the Northwest Territories, including Yellowknife. But in so far as it lies within the provinces, that is naturally the primary responsibility of the provinces.


William Ross Macdonald: May I remind hon. members that in committee we should direct our remarks to the clause under consideration. It does seem to me that the last question is not particularly in order.


Mr. GIBSON (Comox-Alberni):: I should like to add my word to what the hon. member for New Westminster has said with regard to the collection of tax on aircraft transportation overseas when the passage was not taken until after the tax was removed. I know the minister has just said that if the man did not make a deposit on his ticket he would not be subject to the tax.


Douglas Charles Abbott: If he had not bought his ticket.


John Lambert Gibson: But Trans-Canada Air Lines demanded that deposits be made by these people. It was a question of duress. If you wanted to get your ticket, you paid your deposit.


Gordon Knapman Fraser: It was the law at that time.


John Lambert Gibson: I think the government is morally obligated to see that these refunds are made. I think the
Special War Revenue Act

tax under these conditions is on absolutely indefensible ground morally, although I am not going to try to argue with the Minister of Finance on legal grounds because I concede that he is my superior there.


Mr. MacNICOL:: I have a question to ask, and I will first read the clause:
That the tax in respect of transportation tickets or rights of transportation
(a) be removed in respect of transportation by vessel or aircraft extending outside of the northern part of the western hemisphere,-
It is the next part that I want to ask about.
-except in respect of any part of such transportation that is between any port or station in Canada . . .
I have been trying for some time to arrange an aeroplane trip up to Hudson bay, first stopping at the Belcher islands, then going back to the east coast of the bay to Clark islands in order to make a survey of the iron resources in that bay. There is no regular aeroplane route into that country. I shall have to engage a private plane or some private company to take me up and back. Shall I have to pay the tax on that trip?


Douglas Charles Abbott: That will be covered, if it is covered, by the further amendment that I may introduce. It has nothing to do, of course, with the resolution as it now stands, which relates simply to transatlantic and transpacific travel. I have undertaken to see if an appropriate amendment can be introduced to permit the exemption of tax on aeroplane travel into these remote areas, particularly mining areas, where there is no other readily-available means of transportation. As to what the exact terms of that amendment will be, I cannot yet say. However, I have given the undertaking that if it can be worked out I will introduce it. I cannot tell my hon. friend now whether it will cover the exact case which he has outlined. I would hope it might.


John Lambert Gibson: Will the minister also reconsider the transportation tax collection?


Douglas Charles Abbott: It is purely an administrative matter. The tax is repealed as and from May 1, 1947. It is the usual rule when a tax is removed as from a certain date, that there is no refund to one who has already paid it. We do not make refunds on inventories. We do not as a rule make refunds on taxes. It is similar to the case where a man buys something at a higher price, and the price changes the next day; he has bought a little too soon. That is the general rule in the making of 
budget changes. It is only in the most exceptional circumstances that you depart from it, and for fairly obvious reasons. We will consider the matter further, although I would not want to hold out too much hope.


James MacKerras Macdonnell: I should like to ask a question with regard to draftsmanship. If the minister will look at paragraph (a) he will see that it begins by saying that the tax in respect of transportation tickets or rights of transportation "(a) be removed in respect of transportation by vessel or aircraft"; which seems to imply that the tax existed in respect to both. Then clause (b) reads: "be extended to apply in respect of all transportation by vessel". Are the words "or aircraft" left out with intent?


Alan Cockeram: What does that clause actually mean?


Douglas Charles Abbott: It is a little technical, but I am advised that, in the past if you bought a one-way ticket to Europe or to Bermuda it was not taxable but if you bought a return ticket it was. Now in accordance with a similar practice adopted' in the United States with respect to this tax, if I may use the figure, we intend to put a box around the northern part of the North American continent; and tickets sold from one point within that box to another point will be subject to this tax. I think it will be made a little clearer when the legislation is actually brought down. My hon. friend will appreciate that these resolutions are drawn in rather general terms and that the statute itself will be a bit more specific.


Mr. HACKETT:: The northern part of the North American continent; what does that mean? North of Mexico?


Douglas Charles Abbott: I answered that question
last night and said there would be a definition in the statute itself when it is brought in. I have not seen the draft of the statute and I cannot give my hon. friend that definition today, but it will be specifically defined in the terms of the statute.


Mr. GREEN:: Does it include Bermuda?


Douglas Charles Abbott: Yes, I am informed that it does.


John Thomas Hackett: And Mexico?


Douglas Charles Abbott: Yes.


Mr. JACKMAN:: 1 asked the minister last evening, not out of idle curiosity, how it was that the tax on aeroplane travel was sometimes based, in the case of non-scheduled

Special War Revenue Act
flights, on a rate of one cent a mile rather than the 15 per cent rate. I wonder if he could tell me how that came about?


Douglas Charles Abbott: I am not too certain that
1 am quite clear on that myself; it is primarily an administrative problem, but here is the situation as I understand it. It relates largely to a private chartered plane which would be taken by an individual prospector. The charge could be on a mileage basis or at a charter rate. The plane would carry both passengers and equipment, and sometimes general freight. The department did not want to charge a tax with respect to the freight; therefore this rate of one cent per passenger mile was worked out as an alternative. That may not be too clear but I am afraid it is the best I can give my hon. friend at the moment. If he would like a further explanation I would be happy to refer him to the officials of the department.


Harry Rutherford Jackman: I am more interested in the general principle behind this matter than in the actual tax of one cent a mile on non-scheduled flights. I find that in a number of cases we pass taxation statutes here, framing them as we think they were intended to be framed by parliament. By the time they are operated upon in the national revenue department however, they bear little resemblance to the original. 1 want to know just how it comes about that when we pass a law imposing a tax of 15 per cent on aeroplane travel the Department of National Revenue or the Department of Finance sees fit to change the basis of the tax.


Mr. LALONDE:: Will the minister give
me some information about this tax on passengers in chartered planes? When a plane is chartered to carry both passengers and goods, is the tax applied to both passengers and goods, or to the passengers only?


Douglas Charles Abbott: Just the passengers.


Mr. HANSELL:: I think it is a commendable thing, of course, when we are asked to pass anything that removes some tax and :herefore I do not see how I can oppose this particular item. But personally I am opposed to any tax on railway and steamship travel, for the reason that the tax is imposed upon a service which is given. I can quite understand when the government has to obtain revenue, as it does under the system under which we are now operating, how they have to look around for sources of taxation. I can quite understand how they could reasonably tax chewing gum and lipstick and a few other things of that kind. But that is something people buy, something they have, something they use and wear out or keep as long
as they wish. Here is a tax on a service which is given. People do not carry it home with them; it is a service they are compelled to have. I can understand-perhaps I would not know how to designate it-how a tax might reasonably be imposed upon pleasure travel, but you see we are so constituted that if we want to go somewhere we cannot get there without taking our bodies along with us. Therefore we need a little transportation. This is a service given to us, and we are taxed upon a very necessary service. I am opposed to that because, as the government looks for new sources of revenue, the first thing we know we are going to be taxed upon other types of services.


Mr. BURTON:: Don't give them new
ideas.


Ernest George Hansell: Perhaps when I remove
my baggage to the train, or when I take a taxicab somewhere, I will find myself paying a tax. I do not suppose they would be so mean, shall I say, as to tax doctors' bills, but a doctor renders a necessary service, and the first thing we know the government is going to say, "We have taxed this service and that service; perhaps we can tax doctors' bills." All sorts of services are being taxed. I think we have to cut this thing off somewhere and cut it off as short as we can. I do not think any government has a right to tax such things as necessary services that are given.


Mr. ADAMSON:: I want to ask just one question before this item carries. The air transport board have licensed a number of carriers for certain routes; I am thinking of several emanating from Toronto, which are occasional carriers. During part of the season they run fairly regularly, and in the winter perhaps they do not run at all. I understand that under the regulations these carriers would be taxed at the rate of one cent per passenger mile, though they are definitely licensed to operate from certain points to certain districts. I am thinking of the service from Toronto to Muskoka and Toronto to Lake of Bays, and further north. On the other hand mining operations, such as the service from Kenora to Favourable Lake, which has a definite rate but no definite schedule, because it is a definite prescribed trip operated by Canadian Pacific Air Lines would be taxable under the 15 per cent rate, whereas the other services would be taxed only at the rate of one cent per passenger mile. I point out to the minister that in the one case the tax is extremely unfair, while in the other it has to do with
Special War Revenue Act

what is more or less a pleasure type of travel which probably should stand the extra impost.


Douglas Charles Abbott: Well, if I am able to follow out what I hope I may be able to do-that is, eliminate this tax where the flight would be made to a certain area where there is no other means of transportation-that would eliminate the 15 per cent tax and the cent tax as well. It is explained that that cent tax is in lieu of the 15 per cent tax, and applies only, in addition to the matter of the unscheduled flight, to where the plane is carrying both passengers and freight. If the plane were carrying passengers, only 15 per cent would apply to the price of the flight. But it is to get away from charging this tax on the freight that this was worked out, after consultation with the air transport companies. They advised the department that that was equitable, and worked out, as closely as could be arrived at, at the 15 per cent rate on the passenger part of the load.


[Stage Direction]
Resolution agreed to.
2. That the tax on syrups enumerated in customs tariff items >139 (except glucose and grape sugar) and 140 (except molasses) be reduced from two cents per pound to one cent per pound.
Douglas Charles Abbott: Perhaps I might give an explanation. The purpose of this amendment is to remove present anomalies in the sugar tax structure. Prior to the war, table syrups and corn syrup sold for domestic use were taxable at the same rate as granulated sugar. During war time, for price ceiling reasons, the tax on sugar was reduced from two cents a pound to one cent a pound, although the tax on table syrups and corn syrup was left at two cents a pound. The amendment at present proposed would bring the tax on syrups into line with the tax on sugar of one cent per pound. Revenue from the sugar tax in the fiscal year ended March 31, 1947, was about $11,300,000.


John Thomas Hackett: This lowers the rate to one cent?


Douglas Charles Abbott: Yes.


Howard Charles Green: This resolution involves an amendment to section 80 of the Special War Revenue Act. Under that section we deal with the tax on soft drinks. I should like to make a few submissions to the minister today in respect to that tax.
If he will remember, we had a spirited discussion last session; at that time he made some concessions to the tea and coffee drinkers.


William Ross Macdonald: Order. The committee is now considering resolution No. 2, with respect to syrups. I do not think at this

time a discussion on soft drinks should be allowed. I should think when second reading of the bill is before the house the discussion might be in order; but it is not related to this resolution.


Howard Charles Green: The minister did not raise any objection-and rightly so, I suggest. I submit that the resolution involves a change in section 80 of the Special War Revenue Act, because it concerns a schedule under that section. In that same schedule we find a portion of the tax on soft drinks. Furthermore this item has to do directly with the same group of taxes. The same commodity, sugar, is required for the manufacture of soft drinks. So that in two ways I say it is relevant to have the discussion now.
I submit, sir, that you are unduly zealous in raising the point at this time. Certainly if I am in order in discussing the matter on the bill, I am equally in order in discussing it on this resolution, and I submit I should not be ruled out of order.


William Ross Macdonald: I assure the hon. member I do not wish to restrict the discussion unduly. But as chairman of the committee I feel I should draw the attention of hon. members to the resolutions under discussion. I believe it is 'the wish of the committee so far as possible to keep the discussion relevant to the resolution under consideration. However I am in the hands of the committee.


Douglas Charles Abbott: Perhaps I might add a word. I agree with the view taken by the chairman, that my hon. friend is not strictly in order when he proposes to discuss the soft drinks tax on this resolution. He would be completely in order if he were to make a speech on second reading of the bill. I took the same stand last night in connection with the hon. member for Peterborough West.
The tax on soft drinks comes in here only because it is in the schedule referred to in section 80, along with a great many other commodities. This is a very narrow change in the act, and relates solely to bringing into line the tax on table syrup and corn syrup with the changed tax on sugar.
If we were to allow a discussion on this very interesting topic of soft drinks in the committee stage on this resolution, I believe we would have to allow the discussion to take place in detail, and to answer questions in detail in respect of all the other commodities taxed (under the schedule. I submit that would be going a long way. My hon. friend will have the fullest opportunity of placing his views on the question of soft drinks before the house when the bill is introduced, one sec-

Special War Revenue Act
tion of which will relate to this resolution. I do suggest, however, that he is out of order now.


Howard Charles Green: On the minister's own argument I am in order, because he has said I can discuss it on a section of the bill.


Douglas Charles Abbott: No, I said it could be discussed on second reading.


Howard Charles Green: Or on second reading. If I can discuss it on a section of the bill, then I can discuss it here.


Douglas Charles Abbott: My answer is that the hon. member cannot discuss it on a section of the bill.


Howard Charles Green: I do not want to carry my submission to the extent of having to appeal from the Chairman's ruling. I understand, sir, you have not made a ruling yet, in any event. But I submit I am in order, bearing in mind the two points I have mentioned. Certainly I am in order on the ground that sugar is required in the production of soft drinks.


Douglas Charles Abbott: And a great many other things are required, too.


Howard Charles Green: This is part of the tax on sugar. Now, the minister may not like to have this subject discussed; I do not doubt that he is trying-


Douglas Charles Abbott: Nonsense. I can discuss soft drinks as well as my hon. friend. I have had as many letters as he has.


Howard Charles Green: Perhaps that is why he is trying to put off the discussion.


Douglas Charles Abbott: My reason is that I am endeavouring to cooperate in completing the proceedings of the house, in order and within a reasonable time. If we debate all those resolutions in the schedule in respect of which sugar ia a raw material, then surely the field is wide open. My hon. friend or any other member in the committee may make any speech he likes on second reading of the bill to amend the Special War Revenue Act. He can talk about soft drinks, or about the candy tax or any of the other taxes imposed under that act. But when we are trying to have passed through committee a resolution which authorizes the introduction of a bill to make certain specific amendments, then it seems to me it is out of order to throw the door wide open and to discuss any commodity tax imposed under the provisions of the Special War Revenue Act. That is what my hon. friend is suggesting.


Howard Charles Green: The minister does not want to have the session delayed by the opposition asking questions, and I can quite understand why.


An hon. MEMBER:: He did not say that.


Howard Charles Green: We can understand why he takes that position. I would do the same thing if I were over there. But I submit that if we are to be bound down when the house is in committee, in a manner such as has been suggested by the minister, we would have imposed upon us an entirely unwarranted restriction of our rights as members of the house.
It will be noticed that the minister did not raise this point of order. He was perfectly willing to have the discussion go on. The chairman was the culprit. I suggest that I be allowed to proceed.


William Ross Macdonald: I did raise the point of order, because I try to keep discussion in committee within the bounds of the rules. It occurs to me, with considerable force, that there are about 79 other items in the schedule.


James MacKerras Macdonnell: If you are going to make a ruling, Mr. Chairman, will you allow me to say one word further?


William Ross Macdonald: May I conclude my statement? I will give the hon. member opportunity to make his remarks before I give my ruling. As the minister has stated, there are eighty items in the schedule, and if we allow a discussion at this time on soft drinks there is no reason why we should not allow a discussion on any of the other seventy-nine items. But I do not think that would be the wish of the committee. After hearing everything that has been said so far I still feel that the discussion on soft drinks would not be in order at this time, but as I said, I shall be glad to hear from the hon. member for Muskoka-Ontario.


James MacKerras Macdonnell: Mr. Chairman, I shall not base my remarks on technical rules of order, but I think the discussion should be allowed as a matter of convenience and common sense. It is a matter in which I believe a good many members are interested. I do not think there is any chance of any of the other seventy-nine items being brought up at all. I suggest that for us to make speeches across the floor at each other on the second reading of the bill is a poor substitute for a free and easy discussion in committee where question and answer are in order. It does seem to me that as a matter of convenience as well as for the reasons given by the hon. member for Vancouver South, it
Special War Revenue Act

would be in the interests of the committee to discuss this matter now, and that we should not be kept from discussing it by a technical rule. It is a matter of public interest and of interest to a good many members of the house.


Mr. BOUCHER:: Before you give your ruling, Mr. Chairman, may I ask a question? If you were to say it would be out of order at this time to discuss the tax on soft drinks, would it not amount to an interpretation of the rules to the effect that there could be much wider latitude for debate on second reading than on the resolution? The object of a resolution is to give notice of the introduction of a bill and to give a general outline of its purpose, but not its specific terms. But once the bill has been introduced and given second reading you have its specific terms before you. I should think that the rules of the house would govern debate more strictly on the second reading of a bill than they would on resolutions, that debate on the second reading would be more restricted. On the other hand we have the Minister of Finance saying that it would be proper to make speeches on the soft drink tax on the second reading of the bill but improper on the resolution. If we look at the logic of it I think we shall realize that the better policy and the more efficient and1 I believe the more expeditious would be to allow question and answer in committee on the resolution rather than having long speeches on second reading.


Mr. KNOWLES:: May I make a suggestion in connection with this matter?-and I do it as one who does not intend to take part in the soft drink debate. It seems to me, Mr. Chairman, that members are desirous of speaking on this matter, and if some arrangement is not made as to where the discussion can take place, members wall be attempting to discuss it at every possible stage. Frankly I do not see any place where the rules clearly provide that the soft drink tax can be discussed; for the budget makes no reference to it at all. I think it would be a matter of convenience and expedite the business of the house if the discussion could take place now, on the understanding that it would not constitute a precedent for permitting the discussion of other matters. I think it would be best to have the discussion now and get it over with.	*


Douglas Charles Abbott: I have run into this business of not creating precedents before. My understanding of the rules of the house, and I must confess that my knowledge of them is not as wide as it might be, is that they are
made to be followed and designed to expedite the business of the house. Standing order 58 provides that speeches in committee of the whole must be strictly relevant to the clause under consideration. I do not want to cut off any debate on the soft drinks tax. I assume that a great many members want to put forward their views and urge that the tax * should have been removed, so there is going to be no surprise element in this soft drinks tax debate. I am not going to be a bit surprised by it. I know everything I can say in answer to it now, and I am quite prepared to answer at the proper time, but I say that the proper time under the rules of the house is on the second reading of the Special War Revenue Act, when I shall be prepared to answer any arguments then put forward. The only question I can answer now is: Are you going to take the tax off? My answer would be no.


Mr. ROSS (St. Paul's):: There has been a lot of discussion and a lot of time wasted over this. I would point out, Mr. Chairman, that there is a clause of this resolution on which the discussion, could take place, and that is clause 4, which deals with, sales and excise taxes. Anything in connection with sales and excise taxes could be discussed under clause 4, so you might as well let the discussion proceed and get it over with.


William Irvine: Mr. Chairman, are we discussing a point of order or are we discussing the item?


William Ross Macdonald: We are discussing a point of order, and hon,. members are expressing their views on the point of order before I give my ruling.


Howard Charles Green: The minister has intimated that there could be a debate on the second reading, but what I would ask him is whether he means that there can also be a discussion when we are considering, the, sections of the bill in committee.


Douglas Charles Abbott: There can only be a discussion of matters which are relevant to the particular sections. Unless the government sees fit to introduce an amendment there will be no amendment to the Special War Revenue Act with respect to the tax on soft drinks. Nevertheless it is perfectly open to any hon. member to express any views he may have with respect to that or any other tax covered by the bill when it is up for second reading. That is all.


Howard Charles Green: That means in effect that if you rule against me, Mr. Chairman, there can be no discussion of this soft drinks tax when

Special War Revenue Act
the house is in committee. There can only be a discussion of it in speeches on the second reading of the bill. I submit that that is most unfair, that in effect it is gagging the house on this question.


Douglas Charles Abbott: That is nonsense.


Howard Charles Green: That is the effect of it.


Douglas Charles Abbott: My hon, friend knows better than that.


Howard Charles Green: That is the effect of it, and I suggest, Mr. Chairman, that we should be allowed to discuss it at this time. I repeat my grounds for asking that the discussion be held now. The resolution comes under the same section of the act and under the same schedule of the act and involves a sugar tax, and sugar is the main commodity used in the manufacture of soft drinks. I therefore submit that I am in order in discussing the soft drinks tax on this resolution.


John George Diefenbaker: Mr. Chairman, the arguments advanced by the minister have convinced me that this is the place where the discussion can take place.


Douglas Charles Abbott: Were you not convinced before?


John George Diefenbaker: No, Mr. Chairman. I had a more open mind toward the question than the minister would have had to the arguments that would have been advanced by my hon. friend respecting this tax. The minister with great frankness, unusual in ministers, has said that no matter what arguments may be advanced by those who desire this change, there is going to be no change in the soft drinks tax. In listening to the argument, I had a more open mind than that displayed' by the minister. We have had this argument year after year, and invariably it started off by a general discussion of the question whether or not the section permits a discussion. Over the years I think we have found that time is saved wdien a discussion such as this takes place once and for all. Now that we have heard both sides, I suggest that it will not take long. We have taken more time in discussing whether or not it should have been discussed than would have been taken in discussing the subject had it been discussed. Having regard to the general feeling of the committee, I suggest, sir, that you be not too strict in the application of the rule.


William Ross Macdonald: I have been generous in allowing discussion at this time, and I have received expert advice which I appreciate. I 83166-225
am almost prepared to make my ruling, but perhaps I should hear the hon. member for Humboldt before doing so.


Gordon Knapman Fraser: I should like to speak on this matter because I opened up the subject last night.


William Ross Macdonald: After I hear the hon. member for Humboldt, I shall hear the hon. member for Peterborough West and make my ruling.


Joseph William Burton: What I was going to bring to your attention before you made your ruling, sir, was this. The Minister of Finance said that when the bill came up for second reading any hon. member could speak on the questions that have been raised. May I point out that when the bill is up for second reading all that any of us can do is to talk. When it comes to making any change or any impression on the minister to change the bill, may I say that I have never seen that happen in this or in any other house. On second reading you vote for the principle of the bill. If you rule against us now, sir, you put us in the position, if we do not like what is incorporated in the bill, of having to vote for it if we approve the principle of it.
As has been mentioned before, if the wishes of the Minister of Finance are followed, the question cannot be discussed at any other place. What is the purpose of the resolution stage if it does not give the minister, who is piloting the resolution through the house, the benefit of the advice that may be offered to him by hon. members representing all parts of the country? If he is not prepared to make any change in the resolution, wrhy try to lead us to believe that we can discuss it and have any effect on it on second reading of the bill? I contend, Mr. Chairman, that our procedure is obsolete, and that we should have something to say in helping to draw up legislation.


Douglas Charles Abbott: I must answer the constitutional point raised by my hon. friend. He asks why a resolution precedes a bill. It is in accordance with the old British parliamentary practice that a money bill must be preceded by a resolution. A resolution can be proposed only by a member of the government. A private member is not permitted to move an amendment to a resolution which affects the balance of ways and means. The resolution is to permit a particular tax which it is proposed to change to be discussed, not any and every tax which hon. members may feel should either be imposed or removed. That, I think, is perfectly clear to my hon. friend.

Special War Revenue Act

1 know my hon. friend did not mean to insinuate otherwise. The purpose of introducing a resolution with respect to a particular tax, in my understanding, is not to enable hon. members to suggest any other tax that they think should be proposed which does not relate to the particular tax covered by the resolution.


Angus MacInnis: May I ask the minister a question?


Gordon Knapman Fraser: In the remark made by the minister a few moments ago, he said that we could ask him all the questions we wished on second reading, and he would answer them.


Douglas Charles Abbott: No, not on second reading.


Gordon Knapman Fraser: Yes.


Some hon. MEMBERS:: No.


Douglas Charles Abbott: If I said that I did not intend to say it.


Gordon Knapman Fraser: The minister said he would answer all the questions.


Douglas Charles Abbott: I think I said argument.


Gordon Knapman Fraser: All right; argument and questions are the same.


Some hon. MEMBERS:: No.


Gordon Knapman Fraser: Pretty close to it. The minister would not have a chance to answer them.


Douglas Charles Abbott: I would conclude the debate on second reading.


Gordon Knapman Fraser: The minister would not have the time to answer all the questions at once. The resolution says:
Resolved that it is expedient to amend the Special War Revenue Act-
And so on. Amendments are being made, and then it goes on to provide for certain things as set forth here. Therefore, Mr. Chairman. I believe that under the heading we can discuss anything at all.


Angus MacInnis: Mr. Chairman, I was going to ask the minister a question and you may listen in, too. This is a resolution preceding a bill.


William Ross Macdonald: May I remind the hon. member that all questions should 'be put to the minister through the chairman of the committee.


Angus MacInnis: That is honoured more in the breach than in the observance. This is a resolution preceding the amendment of a certain act. The minister said that certain
things could be debated when the bill comes up for second reading. Must it not naturally follow that if this is a resolution preceding the amending of an act, on which a bill will be based, anything that can be discussed on the bill can be discussed on the resolution?


Stanley Howard Knowles: And vice versa.


Angus MacInnis: Of course; therefore anything that can be discussed on the bill surely can be discussed on the resolution.


Some hon. MEMBERS:: No.


Douglas Charles Abbott: My hon. friend may be
right. I have never made any pretensions of being an expert on the rules of the house. My understanding has always been, over the three or four years I have followed these matters, that when we were discussing a particular resolution we had to stick to its terms. Possibly I have been labouring under a misapprehension all this time. That has been my understanding. It seems to me it is a common-sense sort of rule if one is to expedite the business of the house. As I said before, I do not want to curtail debate or discussion on the soft drink tax or any other tax. My only suggestion is that we have the discussion if we can at the proper place. If you will make your ruling, Mr. Chairman, I shall abide by it. I suggest that the proper place for the discussion is on the second reading of the bill.


Douglas Gooderham Ross: Before you make your ruling, sir-


William Ross Macdonald: I have had a lot of advice. I think I should be in a position to make my ruling shortly.


Some hon. MEMBERS:: Ruling.


Mr. McMASTER:: I understand that the hon. member for Vancouver South desires to speak on the tax on sugar. In the course of his remarks on the tax on sugar, he will be led into a consideration of the sugar that is used in various ways, and he will find that it is used in soft drinks. That is the sugar he wants to speak on. He does not want to curtail his remarks to one specific use of sugar, and I do not see why he should not be permitted to make his remarks.


Douglas Gooderham Ross: May I ask a question? I suggest that this discussion could all take place under clause 4.


William Ross Macdonald: Order. We are not
considering that clause.


Douglas Gooderham Ross: Clause 4 states:
That payment of sales and excise tax he required without refund in respect of taxable goods purchased or imported . . .

Special War Revenue Act
And so on. There is no question in my mind that the discussion can take place on this clause. The whole gamut of it can be discussed, and you may rule as you like.


Howard Charles Green: The fact is that there can be no discussion across the floor of the house as a result of your ruling, Mr. Chairman, and therefore I appeal to the house.


William Ross Macdonald: As chairman of the
committee I ana bound by the rules of the house. Some hon. member suggested that we might gag discussion. If that is the result it is on account of the rule, and it is the rule that should be changed. Let me read to the committee standing order 58 (2):
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
It leaves no latitude so far as the chairman is concerned. He must see that the discussion is strictly relevant. Before I could make any ruling that would contravene the standing order I would require the unanimous consent of the committee. I take it that there is not unanimous consent at this time to a discussion of the soft drink question.


Some hon. MEMBERS:: No.


William Ross Macdonald: Therefore I must make my ruling in accordance with the standing order. There are seventy-nine items in the schedule referred to in the present clause, and if at this time I allowed discussion on soft drinks without unanimous consent, I would have to allow discussion of the seventy-eight other items. I do not think that would be the wish of the committee. Therefore, since there is not unanimous consent at this time for the discussion of the soft drink question, I am forced to rule that discussion of the question at present is out of order.


Howard Charles Green: With all due respect, Mr. Chairman, I must appeal your ruling to the house.


William Ross Macdonald: I may remind the hon. member for Vancouver South that the appeal will be to the house and the Speaker will have to be recalled and take the chair. In view of that, does he wish to proceed?


Howard Charles Green: I realize only too clearly what has to be done, but we have a question to discuss, and the result of your ruling, Mr. Chairman, is that it cannot be discussed either here or in committee when the bill is brought in. We do not propose to let that go without appeal to the house, and therefore I appeal to the house.


William Ross Macdonald: The only result of my ruling is that discussion of soft drinks cannot take place under this clause. That is the only result of the ruling.
83166-225j
Mr. Speaker resumed the chair, and the chairman of the committee made the following report:
The chairman of the committee of the whole ruled that discussion of the question of soft drinks could not take place under clause 2 of the resolution referring to the Special War Revenue Act on the ground that under standing order 58 (2) discussion should be strictly con-nned to the clause under consideration. Mr. Green appeals the ruling.


Douglas Charles Abbott: I believe that is correct.


Alan Cockeram: Is it a fact that
chocolates and confectionery are the only foods that pay such a tax as a war tax?


Douglas Charles Abbott: All foods that have sugar
in them pay the tax. There has been sugar tax for some time; it has been reduced from two cents to one cent, but the tax is on sugar as such.


Alan Cockeram: Recently the cost of
sugar was increased by one cent a pound, and is it to offset that increase that this tax is being reduced by one cent?
IMr. Green.]


Douglas Charles Abbott: No; my hon. friend is
under a misapprehension. The tax on sugar as such was reduced one cent a pound two or three years ago. The tax of two cents a pound on these specialized syrups, which was based on sugar, was retained at two cents. This is an adjustment action, to bring the tax on these table syrups other than glucose and grape sugar into line with the tax imposed on sugar itelf. It is a related measure, as the hon. gentleman will appreciate.


John Ritchie MacNicol: What is the reason for
the exemption of glucose?


Douglas Charles Abbott: There is no exemption;
that is simply the definition.


John Ritchie MacNicol: Is there a tax on glucose and grape sugar now?


Douglas Charles Abbott: Yes. Glucose and grape
sugar are already taxed at the rate of one cent a pound. That is the explanation.


John Ritchie MacNicol: And this brings them
all to one cent?


Douglas Charles Abbott: That is right.


[Stage Direction]
Section agreed to.
3. That the provisions relating to the imposition of the consumption or sales tax on the sale price of goods be amended to provide that where the sale price is payable in instalments, the tax will be payable pro tanto at the time of payment of the instalments whether or not there has been physical delivery of the goods.
Stanley Howard Knowles: When the minister explains this matter would he say how active has been the consideration given the removal of the sales tax?


Douglas Charles Abbott: Perhaps the committee
would like the usual brief explanation as to just what is involved in this change. The purpose of this amendment is to enable the department to continue to collect tax oq instalment payments on taxable goods, regardless of whether there has been physical delivery of the goods. A recent court decision held against the departmental practice which over the years has been followed. I think the principle which has been followed is sound, and the purpose of the amendment is to provide law for continuing it. I have in my hand a long list of various commodities which are sold under these terms, coal stokers, pulverizers and so on.


Gordon Knapman Fraser: Is this not already in
section 80A?


Douglas Charles Abbott: It is in section 86, I am
told.


John George Diefenbaker: What is the name of the case?

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Douglas Charles Abbott: I believe it is the Dominion Engineering case; I have not the reference here. The case in question related to some paper mill machinery sold by Dominion Engineering. That was the particular set of circumstances in which the question arose; and to the surprise of the department this practice which it had been following for years, which it believed was justified under the act and which the department believed was the law, was held by the court not to come within the section. The section imposes a consumption or sales tax of eight per cent on the sale price of all goods produced or manufactured in Canada, et cetera ; and then there is this proviso in section 86 (1) (a):
Provided that in the case of any contract for the sale of goods wherein it is provided that the sale price shall be paid to the manufacturer or producer by instalments as the work progresses, or under any form of conditional sales agreement, contract of hire-purchase or any form of contract whereby the property in the goods sold does not pass to the purchaser thereof until a future date, notwithstanding partial payment by instalments, the said tax shall be payable pro tanto at the time each of such instalments falls due and becomes payable in accordance with the terms of the contract, and all such transactions shall for the purposes of this section, be regarded as sales and deliveries.
I do not remember the reasoning in the case, but apparently it was held that where there was not actual delivery, though there were payments of instalments, we could not charge the sales tax.


William Alexander McMaster: Read the next clause. I think that is the answer.


Douglas Charles Abbott: The next clause reads:
Provided further that in any ease where there is no physical delivery of the goods by the manufacturer or producer, the said tax shall be payable when the property in the said goods passes to the purchaser thereof.


William Alexander McMaster: If it never passes you never get it.


Douglas Charles Abbott: That is right.


Mr. WRIGHT:: Does this clause apply to the luxury tax?


Douglas Charles Abbott: It has nothing to do with that.


Stanley Howard Knowles: I wonder if the minister would answer the question I asked in the beginning.


Douglas Charles Abbott: Well, consideration was given to all the taxes, including the so-called luxury tax and the sales tax. But as I said in my budget speech, I came to the conclusion that such tax relief as I felt could be given this year should be concentrated on the personal
income tax, and that therefore it was not possible to make a reduction in the sales tax. As my hon. friend appreciates, a reduction of even one or two per cent in the sales tax would run into a substantial sum of money. That is the sort of thing one would have to consider, if he were reducing the sales tax. To put it briefly, I felt I could not justify a reduction in both taxes this year, and therefore decided against it.
Mr. KNOV^LES: It has been said that our efforts to persuade the government to change any items in the budget do not get very far. As a matter of fac't, they do, over the years. We do find from year to year that points for which we have argued in the past have been given a little more consideration by the government than seemed indicated at the time.


John George Diefenbaker: After public opinion has been created.


Stanley Howard Knowles: That is right. I can give my hon. friend examples-and may do so before the debate is over, but shall not take the time just now. In view of the slight progress we make, I rise to register the strongest objection I can to the continuance of so laTge a proportion of our federal revenue being collected by means of a sales tax, which bears no relationship whatever to the ability of our people to pay. This is not a sound principle of taxation. It means that those in the lower income brackets, brackets so low that they are not paying any taxes at all under the heading of income tax, are paying huge sums of taxation in this indirect form.
I urge that the minister give further consideration to this matter. I still hope that something may be done about it this year. If not, then at the next session let us have a repeal of the sales tax.


James MacKerras Macdonnell: I notice that resolution 3 is confined wholly to cases where the sales tax is payable in instalments. Is it clear that this point cannot arise where the sales price is not payable in instalments?


Douglas Charles Abbott: Yes, the law is perfectly clear, where it is not payable in instalments. As I said, legislation is being introduced because of the court's decision in the Dominion Engineering case.


James MacKerras Macdonnell: My point was as to whether in a case where payments were not made by instalments, but where there was non-delivery of goods, the same point might arise.


Douglas Charles Abbott: The point will be made clear when the hon. member sees the proposed
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amendment to the law. This is intended to cover those cases where, although delivery may not have been made, if the contract is there and the price is being paid, a proportion of the amount of sales tax goes with each instalment.


[Stage Direction]
Resolution agreed to.
4. That payment of sales and excise taxes be required without refund in respect of taxable goods purchased or imported for commercial or mercantile purposes by provincial governments or agents or servants thereof.
Stanley Howard Knowles: What does this mean?


Douglas Charles Abbott: The purpose of this amendment is to remove what I think is an unintended exemption in the present law. The law at present does not impose sales or excise taxes on purchases by provincial governments unless the goods are for resale. The tax does apply, however, in respect of goods purchased by provincial railways, commissions, boards or public utilities. There are certain provincially owned commercial undertakings which, on the basis of the above principles, should bear tax but at present escape tax. The purpose of the amendment is to remove the existing anomalies in the law and bo treat purchases by or on behalf of provimcially owned industrial or commercial enterprises taxable.


Mr. BROOKS:: Does this mean that provincial governments which buy road machinery through an outside agent place the agent in a position where he would be exempt from the sales tax?


Douglas Charles Abbott: He would be exempt in that case. But a provincial government through its hydro electric power commission, for example, purchasing equipment for development of electricity, would be subject to tax. It is looked on as a commercial venture of the provincial government.


John Thomas Hackett: Is there a distinction made between machinery used for the development of electricity, taking the example the minister gave, and that which is purchased for resale to a consumer?


Douglas Charles Abbott: That, I understand, is
exempt. Production machinery would be exempt. But if a public utility-as, indeed, a great many of them do-were to carry on business in a retail store selling refrigerators and things of that kind, then those would be subject to sales tax, the same as they would be in any other concern.


James MacKerras Macdonnell: What is the position with respect to corporations formed by the dominion government?


Douglas Charles Abbott: They pay sales tax, and always have.


John Ritchie MacNicol: If the hydro electric power commission of Ontario, or of any other province, were to purchase equipment for the production of electricity-


Douglas Charles Abbott: That is exempt from sales tax.


John Ritchie MacNicol: If it is for the production of power?


Douglas Charles Abbott: That is right.


Mr. JAENICKE:: I presume the provinces pay the tax in the first place do they; and then there is a refund?


Douglas Charles Abbott: No. A provincial government which is carrying on a commercial or industrial enterprise so far as sales tax is concerned is treated exactly the same as any other individual or corporation carrying on a like business. Purchases by a province for purely provincial purposes such as stationery for the parliament buildings or government offices, would be exempt from sales tax, and always has been.
But, as I say, if they are carrying on a public utilities business, and are selling electric ranges or electrical equipment, then those transactions are subject to tax in the same way as their commercial competitors would be subject to the same tax.


Frank Eric Jaenicke: But do they pay it in the first place, and then apply for a refund?


Douglas Charles Abbott: I am told they do not, in practice.


Mr. STEPHENSON:: What about motor vehicles bought by provinces; w'ould they be subject to tax?


Douglas Charles Abbott: No, not if they are for their own use. If they are buying motor vehicles for use of provincial officials, they are exempt.


William Alexander McMaster: I should like to read section 105(2) which states:
A refund of the amount of taxes paid under Parts X, XI, XII and XIII, of this act may be granted to a manufacturer, producer, wholesaler, jobber or other dealer on goods sold to His Majesty in the right of the government of any province of Canada, if the said goods are purchased by His Majesty, for any purpose other than purposes of resale or for the use _ of any railway, commission, board or public utility

And so on. Does that mean that if it is for use of a railway or commission it should not be taxable?


John Thomas Hackett: A railway, commission, board or public utility.

Special War Revenue Act
Mr, McMASTER: I do not understand the use of the word "or". Does it mean when the purchase is made by His Majesty for any purpose other than the purpose of sale, or for use? I understood the minister to say it would not be taxable if it was taken for their own- use.


Douglas Charles Abbott: I am told the short answer is that if a province buys for its own use, it is not taxable. If it buys for any of the purposes set forth in section 105, then it is taxable.


William Alexander McMaster: But if it is bought for the use of a commission it is not taxable?


Douglas Charles Abbott: It is taxable, yes.


Douglas Gooderham Ross: Is it proposed to make any revision in the whole matter of sales and excise taxes? I note various items in the schedule. My hon. friend has mentioned the tax on soft drinks and on chocolate bars, and I understand the minister says he is going to do nothing about it. The poor children, of course, will not have any relief from that. It seems a pity. And not only the children, but a good many adults buy chocolate bars and pop.
It seems to me that the whole schedule should be revamped. Anyone who says that all toilet articles, for instance, are luxuries, is crazy; or all things for the use and care of the human body-and that includes the hair. I did not take enough care of mine.


Mr. GRAYDON:: Perhaps you took too much.


Douglas Gooderham Ross: And surely no one would say that shaving soaps or antiseptics are luxuries. They are charged 25 per cent. A refrigerator is taxable; an ice-box is not. A vacuum cleaner is taxable; a carpet sweeper is not. An electric range is taxable; a coal range is not. Here is another question-


William Ross Macdonald: Might I remind the hon. member that the clause we are discussing relates to purchases by provincial governments.	,


Douglas Gooderham Ross: Purchased for
resale.


William Ross Macdonald: It relates to sales tax and excise tax on goods purchased by provincial governments.


Douglas Gooderham Ross: They buy these things.


William Ross Macdonald: If the hon. member is referring to hair tonic purchased by provincial governments he would be in order.


Gordon Graydon: They have as much need of it as we have.


Douglas Gooderham Ross: I shall not talk about buying hair tonic for myself any more than you would, Mr. Chairman.


William Ross Macdonald: The chairman has
bought enough of it himself.


Douglas Gooderham Ross: I think the government should have taken into consideration the revision of this whole schedule. Most of it is crazy. A lot of these things in the schedule are not luxuries. Flatware, for instance, is not a luxury, although sterling silver might be. There is not only a luxury tax but on top of that a sales tax as well, so that by the time you have bought an article costing $3 and paid all the taxes on it you have paid about $5.30 for something worth $3. That is ridiculous. I ask the government to take into consideration the revision of this whole schedule and also that the retailer be not compelled to show the tax that goes on because that is a great detriment to sales.


William Alexander McMaster: It is really not a luxury tax at all.


Douglas Charles Abbott: I want to make clear that it is not called a luxury tax in the act. It has never been referred to by my predecessor or by myself as a luxury tax. It is a tax on certain specific articles. Some of the articles mentioned by the hon. member for St. Paul's, such as electric ranges, and so on, have been removed from the list.
On the general question of excise and sales tax, I can only repeat what I said a little earlier in answer to the hon. member for Winnipeg North Centre, that I could not undertake a revision of the sales tax and excise tax structure this year at the same time that I was proposing substantial reductions in the personal income tax. You cannot have it all ways. For reasons which I elaborated in my budget speech I could not recommend reductions in this tax and at the same time recommend reductions in the personal income tax. I know perfectly well the line of attack which would have been taken by my hon. friends opposite, in the Conservative party at any rate, if I had made substantial reductions in the excise and sales taxes and not made substantial reductions in the personal income tax.


Stanley Howard Knowles: You do not take your lead from them, do you?


Douglas Charles Abbott: No.


Gordon Graydon: He might go farther and fare worse.
Special War Revenue Act


Douglas Gooderham Ross: There are other things that enter into this, such as oil paintings, oriental rugs and many other items which could have been taken into consideration and which would have helped to make up the revenue lost by a reduction in the excise tax.


Mr. MERRITT:: I have here the budget speech of the present Minister of Justice when he was finance minister in 1942 and imposed this tax which the minister has just said is not called a luxury tax. The Minister of Finance in 1942 said at page 3588 of Hansard:
I come now to indirect taxes. I would remind the house that, in the three previous war budgets, we have made a highly selective approach to indirect taxes. We have attempted to collect revenues on specific expenditures rather than on all expenditures.
And further down in the same paragraph:
I propose to follow again, therefore, a selective approach and recommend substantial increases in taxes which fall on luxury expenditures.
Then by the budget resolutions of that year all these nuisance and so-called luxury taxes were imposed. The next words I commend to the minister:
It is hoped that these taxes will discourage such expenditure. To the extent that they do, current savings will be increased. To the extent that such expenditures persist, the treasury will benefit from the revenue.
That was an understandable attitude in war time. The question I wish to ask the minister is this: Does he still hope that these taxes which the hon. member for St. Paul's and the hon. member for Vancouver South have mentioned will discourage expenditure by the people on these items?


Douglas Charles Abbott: No, not necessarily. That was a general statement my predecessor was making. I would hope that it would be possible to remove this tax as soon as it can be done. But that was a general statement applying to a wide field of taxes. Obviously, some articles are less necessary, if I may put it in that way, than others. A short answer to the general proposition is that I felt I could not disturb that tax structure in this budget, because a very large number of goods with equal claims comes within that category, and you cannot pick out a particular article and say that the tax should come off that and not off another article.


Charles Cecil Ingersoll Merritt: 
Douglas Charles Abbott: Only in part; they were put on, in addition, to obtain, revenue, of course, as all taxes are. They have produced and are continuing to produce substantial revenue. As to whether they accomplished the particular object to which my hon. friend has referred, it is very hard to say. The cosmetics tax was referred to by the hon. member for St. Paul's. It was on a long time before the war; the rate was moved up a bit, but I do not know whether we need to stimulate the production or sale of these particular products as yet. Then, as to electrical equipment, stoves and that sort of thing, they were affected shortly afterwards by direct controls on production which simply did not make the material available for that class of goods. My reason for not taking them off this year, I say frankly to the committee, is based purely on revenue considerations.


Gordon Knapman Fraser: The minister said that, he does not think this tax affects the sale. I have definite proof-


Douglas Charles Abbott: I do not know whether it
does or not.


Gordon Knapman Fraser: I have definite proof that this luxury tax, as it has been called, has affected the sale of such necessary articles as alarm clocks, non-jewel watches, knives, forks and spoons that are plated. The drop in the

Special War Revenue Act
sale of these articles has affected the livelihood of over two thousand industrial workers in Canada. It affects the lives of 625 in my own riding. There are 533 affected in one plant in Toronto, 175 in another plant in that city, 375 at Niagara Falls and over 300 in Hamilton. There is also a plant in Quebec manufacturing these articles, and there are similar plants in other provinces. The luxury tax on flatware, plated knives, forks and spoons applies when these articles are sold to hospitals, but the sales tax is eliminated. In the present circumstances I feel that the removal of this tax on necessary articles, such as knives, forks and spoons, not hollow ware or sterling ware, but on alarm clocks and cheap non-jewel watches, would bring more revenue to the government than the luxury tax does at the present time. There is no doubt that, because of the tax, the sale of these articles across Canada has dropped. Only about twenty per cent of the articles are sold in jewellery stores; over eighty per cent of the articles are sold to railways, hotels, hospitals; they are sold in hardware stores, drygoods stores, and general stores across the country. They are also sold in the five and ten cent stores. There is no doubt that an increased production in the country together with the extra work that the men and women would be doing if the tax were removed would bring in more money to the government, and I do hope that the minister will still change his mind with regard to these necessaries and do away with the tax. It is absolutely necessary that these people continue to work. Their work has dropped' off in the last few months. People will not buy the articles. If you buy a knife, fork and spoon and the cost comes to a dollar you have to pay another 25-cent tax. I do not think that is right. On these articles alone the minister should drop the tax.


William Ross Macdonald: I wonder whether the committee would not revert to consideration of the clause under discussion. We have been discussing sales and excise taxes generally. The clause under discussion i3 No. 4. The principle there is whether or not it is advisable that provincial governments should pay sales and excise tax.


Gordon Knapman Fraser: Before we revert to that clause, will the minister say something in answer to my remarks?


Douglas Charles Abbott: Yes. Perhaps I might tell my bon. friend that I have given a great deal of consideration to the points which he has raised, and I will give some further consideration to them. As to the falling off in sales, 83166-226
it is a little difficult to arrive at what the real cause may be. It has been my experience, and I have been told by others that for some considerable time before a budget waa brought down, where there was a prospect of some change in these commodity taxes, there was a pronounced falling off in sales. I think we shall find that the curve will go up now that it is known there is not to be this change. That undoubtedly has some effect on the purchase of these articles.
I will consider my hon. friend's representations, but I cannot hold out any real hope that I can start a revision bf the sales and excise tax structure this year.


Gordon Knapman Fraser: On this same point, the minister lias mentioned the s?,les. I have received letters and I have bad travellers tell me that they have gone into drygoods stores, hardware stores and general stores, and as soon as they say they want to sell these articles they are told by the owners of the stores that they do not want them because they have a tax on them. They say that they do not want to have anything to do with articles that have a tax on them because it is a nuisance bo have to make out so many forms. The retailer does not want to sell an article with a tax on it.


William Alexander McMaster: I presume there was a reason for this resolution. I presume some provincial authority objected.


Angus MacInnis: Not necessarily.


William Alexander McMaster: I happened to notice the peculiar language of section 104:
The taxes imposed by parts X. XI, XII, and XIII of this act shall apply to goods imported by-
I emphasize the word "imported." It does not say ''purchased."
That seems to be the only section under which the provincial authority can be taxed, because the word "person" as defined by section 2 of the act does not say anything about the crown. If the object is to tax provincial railways or provincial commissions in the purchase of certain articles, on what basis do you tax these provincial boards and commissions other than under section 104?


Douglas Charles Abbott: I am advised that the amendment will apply bo section 104 as well as to section 105. If my hon. friend waits until he sees the 'bill he will find that the point he has raised is covered.


William Alexander McMaster: I want to keep the minister straight because I find it very hard to convince him after we get the bill before us.


Douglas Charles Abbott: I think my hon. friend will find that it covers the case.

Special War Revenue Act


James MacKerras Macdonnell: I apologize for again appearing as an amateur grammarian, 'and still more as questioning the minister who is a real lawyer because I am only a reformed lawyer of many years ago. I want to raise this question. Under section 105, subsection 2, I understood the minister to say that he construed that section to mean that a railway board or commission pays a tax.


Douglas Charles Abbott: That is correct, yes.


James MacKerras Macdonnell: May I invite his attention to the wording, because I submit that is not what it says?


Douglas Charles Abbott: We have been collecting it in the department for some time.


James MacKerras Macdonnell: Probably you might like to collect it legally.


Douglas Charles Abbott: That is true.


James MacKerras Macdonnell: May I ask the minister to follow .me as I read the section, leaving out the irrelevant parts? It states that a refund of the amount of the tax may be granted to a manufacturer, and so on, and then we go down to the third line, "if the said goods are purchased by His Majesty for any purpose other than the purpose of resale or for the use of any railway commission", and so on. I suggest that the "or" puts the following words "for the use of any railway commission", and so on, in the same position as the other words "for any purpose other than the purpose of resale". That says that they do not pay the tax.


Douglas Charles Abbott: The interpretation argument, as I have had occasion to say before, is purely assertive, and I can only say that I do not agree with my hon. friend's interpretation.


James MacKerras Macdonnell: I am not asking the minister to pronounce upon it now. I am asking him to look at it when they are revising it, because I know one or two people, who, I believe, are compos mentis, who agree with me.


Douglas Charles Abbott: I have not been over the text of the bills and have not considered these sections very carefully, because the administration does not fall under my department. I make no pretensions to be an expert in the sales tax, though I know something about some of the other taxing statutes. I will take a note of my hon. friend's view as to how this should be interpreted and. when revising sections 104 and 105, will try to make it perfectly clear.


[Stage Direction]
Resolution agreed to.

5.	That payment of excise tax be required in respect of any performance, exhibition or contest that includes professional performers, horse races or motion pictures when held, staged or operated by the institutions, boards or other organizations mentioned in subsection 2 of section 122 of the said act.
Douglas Charles Abbott: With the permission of the committee I should like to drop this clause, and I will give the reason. The section now provides for the exemption of charitable organizations and for the exercise of discretion by the minister with respect to others. We had proposed to insert an amendment to try to prevent what we felt to be certain abuses of this exemption for charitable purposes, and there is no doubt that there are certain abuses. I do not need to go into the details of them. However, on further consideration of the question my colleague the Minister of National Revenue and I came to the conclusion that, in order to do this, we would have to give such wide discretionary power to the minister that the discretion was one which, in his opinion, he should not have to exercise. It was felt that it might well result in a great deal of unfairness, and under the circumstances we concluded that we would prefer to allow the law to stand as it is and use its provisions as far as possible to check such abuses as continue. We could not devise an amendment which we felt would not in some cases do an injustice to organizations which have been enjoying this exemption and which might not have the advantage of it in the future. Therefore with the permission of the committee, I would ask that the resolution be dropped.


Mr. FAIR:: I am glad that the minister has dropped it, because I have had letters from a number of veterans' organizations and others.


Some hon. MEMBERS:: Dropped.


Douglas Charles Abbott: I have had many representations myself.
Resolution dropped.
Resolutions 6 and 7 agreed to.



EXCESS PROFITS TAX ACT, 1940

[Stage Direction]
Resolved that it is expedient to amend the Excess Profits Tax Act, 4940, and to provide:
4. That a tax shall not be imposed under the said act on profits earned after December 31, 1947.
Stanley Howard Knowles: I do not think the clause should carry. I would agree that the present taxation structure with regard to corporations, in its twofold aspect, is not an ideal one at all. There should be a complete overhauling of the whole basis of our taxing of corpora-

Excess Profits Tax Act
tions and it should be put on a graduated scale. We are not going to get anything like that out of the minister this time, and in view of some of the changes that have already been made, raising the level at which excess profits taxation applies, I feel that it is too soon to drop the provisions of the Excess Profits Tax Act. I think the minister should do, with regard to clause 1, what he did with the other clause a few moments ago-ask permission to drop it.


Douglas Charles Abbott: I cannot do that. I do not propose to go into the matter now, but I have given reasons why this tax should not be continued. It was never intended to be permanent. It is already dropped in the United States and the United Kingdom, for the reasons I gave the house in the budget. It should be continued until the end of this year. There are differences of opinion as to that.


John Thomas Hackett: I compromise for the first of July.


Douglas Charles Abbott: I realize that my hon. friend would like to see it continued, but I am not prepared to take his view.


Harry Rutherford Jackman: I should like to point out to the minister what does happen by the continuance of this tax, not that I have any hope of having it changed or even the time of its decease altered at this particular stage of the proceedings, but it does affect industry in this country, particularly branch plants of United States industries located here, and now that the excess profits tax is entirely done away with in the United States, while we retain it this year, it may very well mean that we shall be in a much more severe depression than the United States, should hard times come upon us at the end of this year or next year. The reason for my saying that is this. If a United States company has a plant in Canada, as hundreds of United States companies have, making up tremendous United States investment of capital in Canada, we shall find that in regard to the export business the United States plant will do its exporting from the United States side and not from the Canadian. Yet that was the purpose for which the Canadian plant was originally designed, so that the plant in Canada could take advantage of certain markets. But as the tax rates in the two countries now stand, the United States plant doing the export business from its own factory will be allowed to retain all its profits except thirty-eight per cent, which is the maximum tax on profits, or, in other words, sixty-two per cent. Should the United States concern give consideration to manufacturing 83166-226J
for export through its Canadian plant, it will be faced with not only a thirty per cent federal corporation tax, but the additional seven per cent provincial tax; and if its business is at all in any volume related to the 1936-39 ancient history volume, it will be subject to a tax of fifty-two per cent altogether, which, as compared with the United States tax of 38 per cent, clearly indicates to any manufacturer where his business will be done. It will be done in the United States plant by United States workmen and United States materials instead of in the Canadian plant by Canadian workmen using Canadian materials, produced by Canadian workmen. It is a bad thing for Canada to have this tax retained, not from the point of view of the corporation itself but from the point of view of our general economy, and should hard times come upon us within the next six or twelve months, this will be one of the reasons why we have those hard times.


William Alexander McMaster: Like all other taxes, this should be kept secret until the day it is announced to the house, because otherwise people will take advantage of the knowledge. Yet here is a tax which it is announced ahead of time will expire at the end of the year and not now. We all remember what happened last year when charges were made throughout Canada and no one was in a position to refute them. The government did not take any means of finding out, or if they did, they did not let us know, that the manufacturers and wholesalers were wilfully holding back production so as to take advantage of the situation. The government are making the same mistake now. I suggest that they should either abolish the tax now or not announce the date on which it will be abolished. We are saying to the manufacturers, "Hold on, and after the first of January there will be no excess profits tax". Human nature is such that they are bound to take advantage of the situation. If the government desire to have manufacturing curtailed, this is a good way of achieving that end, and if they so announce and say that is their intention, I am satisfied.


Douglas Charles Abbott: May I say that I think my hon. friend's objection is a bit more apparent than real. I may be wrong, but if nothing had been said about the excess profits tax in this budget I think most concerns would have taken it for granted that it would not apply in 1948. So, while there may be some inventory question involved, I do not think it is too serious.


John Thomas Hackett: I always fear that the
minister may accept my suggestions, and

Excess Profits Tax Act
feel guilty afterwards. But here is one I am going to make to him which I hope he will consider very carefully. As I said a few days ago, I think "excess profits tax" is an unhappy name, a misnomer, and conveys the impression of unfairness and exploitation which should not find expression in a sober tax act. I was willing to compromise with the hon. member for Winnipeg North Centre and suggest that the tax be abolished at the end of next month. But if that does not meet with the approval of the government I am going to ask that they take into serious consideration a change in the name and call it a special tax on profits or something like that, rather than excess profits.


Harry Rutherford Jackman: Excess tax on profits
is the proper name.


John Thomas Hackett: I do not know whether
it need be "excess tax on profits." It is a special tax on profits. I think the wording "excess profits tax" is an unfortunate one and has implications that one should not labour under.


Douglas Charles Abbott: I am inclined to agree with my hon. friend on that point. It is, of course, the difference between "excess" and "excessive". But in the public mind I think excess profits have come to be considered as being excessive profits, when such is not the case. However, with all due respect, I think it is a little late in the day to make any change in the name now. It was called "excess profits tax" in other jurisdictions, and it is a tax which is going to disappear. I think it is perhaps a little late to do anything about it now, even if one should have done it in the first place.


Angus MacInnis: I, too, was going to make a suggestion to the minister, but was afraid he would not accept it, if I may judge from past experience. The minister is not inclined to pay much attention to what he hears from this corner of the house. I am afraid he has been listening too attentively to hon. gentlemen on my right since the session began.


Douglas Charles Abbott: I have not paid much attention.


Angus MacInnis: I deplore the poor opinion of Canadian manufacturers held by the hon. member for High Park. Personally, I do not think they are as bad as he makes out. I think they are more patriotic than he has indicated and would not let Canada down in the way he suggests just for a few measly dollars. I hope that he will not allow that impression to get any farther.


Gordon Graydon: The manufacturers have a new champion.


Angus MacInnis: 
[Stage Direction]
Resolution agreed to.
2. That no taxpayer shall be entitled to make application for determination of his standard profits on or after August 1, 1947.
Mr. FLEMING:: It will be observed that this clause appears to be general in its application. provided that no taxpayer shall be entitled to make application for determination of his standard profits on or after August 1, 1947. In other words, July 31 is to be fixed as the deadline for the making of application for determination of standard profits, regardless of the ground on which the application is based. The committee will have in mind that the statute provides different bases for making such application. There is the case of the taxpayer who belongs to a depressed class of industry or business. There is the case of the taxpayer who himself has suffered by depressed business, even though he does not belong to a depressed class. Then there is the case of the taxpayer who qualifies as a new business for certain purposes, either because he is a new business starting up, or because of a change in capital or because of reclassification. The present resolution, if one is to confine

Excess Profits Tax Act
oneself to its terms, appears to make a blanket application of this new deadline of July 31 to all these cases. So far as the depressed industry or the depressed class is concerned, I do not think anyone will seriously contend that there has not been, or will not have been by July 31, ample time for the making of application in any case where application is warranted. But that does not at all apply to the other class of case where the reference is to companies which qualify as new businesses, either because of capital increase or recent reclassification. I suggest to the minister that the latter class to which I have referred should be excepted from the application of this new deadline of July 31; or, if that will complicate matters unduly or raise administrative problems, the simpler way might be to defer the application of the deadline until December 31 of this year when the imposition of the tax itself comes to an end. I happen to have knowledge of cases where hardship is likely to result if indiscriminate application is made of this deadline so as to make it apply to taxpayers in the class of new business. Real hardship may result because the time is not sufficient, as I am told by those who are dealing with these cases, for many of these people to put their SP-1 applications in proper form, and file them. I have made alternative suggestions to the minister, based upon what I am told are substantial grounds of justice.


Douglas Charles Abbott: I have a perfectly open mind on the question of this date. When this matter was being discussed with the deputy minister of taxation he felt some deadline should be fixed within which applications for the fixing of standard profits should be filed. I am informed that there is something in the order of 1.500 applications still waiting to be dealt with by the board of referees, and the department are extremely anxious to know as soon as possible just how much work there is to be handled. Since notice of this resolution was given, we have had some representations that the period was apt to be a bit short. I should like to discuss the matter with the deputy minister of taxation, who is not here at the moment, and I can say to the committee that we will do whatever is felt to be reasonable. Perhaps December 31 might be a bit too far ahead; I do not know.


Gordon Graydon: Is there a deputy minister of taxation?


Douglas Charles Abbott: Yes; he is still very much there. As I say, personally I think most of the applications could be put in, even if only in temporary form and subject to amendment, by August 1; but if that period is a bit too short we could extend it, and I do not think
it would require any amendment of this resolution. I will give that question consideration before putting a date in the bill. Perhaps we might say-I am just thinking out loud- August 1 or September 1, or such later date as may be determined by the Minister of National Revenue.


Harry Rutherford Jackman: How long will it take to dispose of the 1,500 cases?


Douglas Charles Abbott: At the present rate of progress it will take the board about a year to clean up the 1,500 cases which have already been filed.


Donald Methuen Fleming: May I offer just one or two comments on the minister's statement, for which I thank him. In the first place, I think this idea of leaving some discretion in the determination of the deadline in the hands of the minister is not the best way to handle the situation.


Douglas Charles Abbott: I agree.


Donald Methuen Fleming: I think it is agreed that the public who are to be affected should have knowledge of the date; and unless the date fixed is of general application and wide publicity is given to it I believe many might be misled by any such provision as the minister has suggested. I also took the minister to suggest the possibility of filing a pro jorma return, as is sometimes done with ordinary income tax returns, just in order to comply with the deadline fixed by the act, with the thought that the details could be supplied later and perhaps the return amended to comply with those details. But I should like to-leave with the minister the thought that you cannot file a pro jorma return, in reference to one of these SP-1 applications, that will be any good at all. It may be that in some cases' pro jorma returns have been accepted, but I should be very much surprised if they would be of any use to the department, or if they are the kind of return that should be encouraged. I urge upon the minister that a much better way is to fix a later deadline of general application, certainly in case of those taxpayers who are applying under the new business section.


Douglas Charles Abbott: My information is that there are very few applications still to come in. They were coming in at a very rapid rate up to two or three weeks ago, but relatively few now remain to be filed. From the point of view of administration, and so that the board of referees may know how much work they have to do, it is desirable to fix a deadline somewhere. If August 1 is too soon we should make the date a little farther away; but in the interests of getting the job done
Income War Tax Act

I think we should make that date as early as it is reasonable to ask taxpayers to get their data together and file their applications.


Harry Rutherford Jackman: I should like to bring to the attention of the minister another class of case which seems to call for an extension of time. 1 refer to those small limited companies having profits of $15,000 or less in one year, in which case I understand they do not come under the Excess Profits Tax Act. Many of these companies have not had their final returns verified by the Department of National Revenue, and are going along with the thought that their returns are quite satisfactory. Should they find their returns increased to $20,000 or $25,000 instead of $15,000, they might find themselves in the position that they would like to apply for a ruling under the act.


An hon. MEMBER:: This is all very interesting.


Harry Rutherford Jackman: I am glad it is; I am trying to make it so. In that case it is not the fault of the company but of the department, owing to the tremendous amount of work that has to be done. So I would ask the minister to consider that there are cases of this kind which might require an extension of time.


[Stage Direction]
Resolution agreed to.
Some hon. MEMBERS:: Six o'clock.


William Ross Macdonald: Shall I call the Income War Tax Act?


Douglas Charles Abbott: We will take that up at -eight o'clock tonight.


William Ross Macdonald: Then it is agreed that when we resume at eight o'clock tonight the committee will consider the resolutions under the Income War Tax Act.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.
Resolved, That it is expedient to amend the Income War Tax Act and to provide:
1. That, effective on and after July 1, 1947, payroll deductiones for taxes be reduced to conform with the following schedule of graduated rates of tax:-	_
On the first $100 of income or any portion -thereof, 10 per cent per annum; or $10 upon the income of $100; and 12 per cent upon the amount by which the income exceeds $100 and does not exceed $200; or $22 upon the income
[Mr. Abbott!
of $200: and 14 per cent upon the amount by which the income exceeds $200 and does not exceed $300; or $36 upon the income of $300; and 16 per cent upon the amount by which the income exceeds $300 and does not exceed $400; or $52 upon the income of $400; and 18 per cent upon the amount by which the income exceeds $400 and does not exceed $500; or $70 upon the income of $500; and 20 per cent upon the amount by which the income exceeds $500 and does not exceed $3,500; or $670 upon the income of $3,500; and 22 per cent upon the amount by which the income exceeds $3,500 and does not exceed $5,000; or $1,000 upon the income of $5,000; and 26 per cent upon the amount by which the income exceeds $5,000 and does not exceed $6,500; or $1,390 upon the income of $6,500; and 30 per cent upon the amount by which the income exceeds $6,50-0 and does not exceed $8,500: or $1,990 upon the income of $8,500; and 35 per cent upon the amount by which the income exceeds $8,500 and does not exceed $11,500; or $3,040 upon the income of $11,500: and 40 per cent upon the amount by which the income exceeds $11,500 and does not exceed $14,000; or $4,040 upon the income of $14,000; and 45 per cent upon the amount by which the income exceeds $14,000 and does not exceed $17,000: or $5,390 upon the income of $17,000; and 50 per cent upon the amount by which the income exceeds $17,000 and does not exceed $25,000; or $9,390 upon the income of $25,000; and 55 per cent upon the amount by which the income exceeds $25,000 and does not exceed $50,000; or $23,140 upon the income of $50,000: and 60 per cent upon the amount by which the income exceeds $50,000 and does not exceed $75,000; or $38,140 upon the income of $75,000: and 65 per cent upon the amount by which the income exceeds $75,000 and does not exceed $100,000; or $54,390 upon the income of $100,000: and 70 per cent upon the amount by which the income exceeds $100,000 and does not exceed $150,000; or $89,390 upon the income of $150,000; and 75 per cent upon the amount by which the income exceeds $150,000 and does not exceed $250,000 : or $164,390 upon the income of $250,000: and 80 per cent upon the amount by which the income exceeds $250,000.


Douglas Charles Abbott: Mr. Chairman, before we proceed to deal with these in-come tax resolutions, I wish to make a statement in regard to the special provision of the act which provides for the so-called carry-back of deferred maintenance. A week or so ago I explained to the house that the order in council which established any twelve months' period in the years 1946, 1947 and 1948 selected by the taxpayer as the period during which half of the expenditures on deferred maintenance might be charged back to excess profits taxes paid in previous yeans, was passed -at a time when I was busily engaged in the preparation of the budget and was not -attending council as regularly as I might.
Since that time I have given a great deal of study t-o this matter and the -government on my recommendation has reconsidered the order which was passed on April 17 last.

Income War Tax Act
In view of the existing shortages of various kinds of construction materials and of building labourers, we 'have come to the conclusion that it would be unwise to encourage by such an incentive provision still further concentration of this type of maintenance work in the present year or in the period immediately ahead of us. On the contrary, we think it desirable that scarce materials and labour of this sort should be devoted as far as practicable to residential housing in order to remedy the acute shortage of dwelling accommodation. The committee will recall that one of the two major reasons for inserting this provision in our tax legislation was to encourage the expansion of maintenance work at a time w'hen under-employment rather than over-employment was threatening.
Under all the circumstances, therefore, the government has decided to rescind order in council P.C. 1502 and this decision has been carried out. In lieu thereof, I am proposing to amend section 5 (1) (v) of the Income War Tax Act in such a way as to provide that the period to be determined by the governor in council for the purposes of the subsection shall be a twelve months' period to be named by the governor in council ending not later than December 31, 1950. The bill which will be introduced when the house has dealt with all these resolutions will contain this amendment.
It will be noted that the governor in council will have a certain measure of discretion as to the choice of the period, but he cannot delay his decision indefinitely; under no circumstances can he name a period later than the year 1950. The end of the twelve months' period therefore is bound to come within about five years after the end of the war. This, it seems to us, is the most reasonable solution of what has been a rather difficult problem. It will enable us to avoid aggravating still further the shortage of material and labour that exists at the present time. It will make it possible to postpone the special inducement to expanded maintenance work until some time when conditions are at least "less tight" than at present and perhaps to a time when it may be desirable to have the increased employment which the special provision should encourage. It will, we believe, make it possible for taxpayers to do some advance planning and to defer certain less urgent types of work to be carried out during the twelve months' period to be named at a later day.


Mr. POULIOT:: I have a suggestion to offer to get rid of the income tax altogether. Some articles have been published in a Montreal daily explaining the whole thing, and I shall try to summarize it as briefly as possible. The data is from the "Canada Year Book, 1945," because I received the 1946 issue too late to deal with it.
In 1944 the total income for national revenue was 89,200,000,000, earned by 5,000,000 people. One-half of them, or 2,450,000, earned revenue amounting to $4,767,000,000, or approximately one-half of the national revenue. The income tax amounted to $682,000,000, or fourteen per cent of the total yearly income of one-half of the working or earning population. That proportion of the earnings of the people came from the best class of people, namely the middle class and the poor.
To refer again to the "Canada Year Book, 1945," the government states therein that the banks submit regularly true accounts of every banking transaction they handle. According to these statements to the government, the banks during 1944 cashed cheques amounting to $60,000,000,000 and passed over counter currency involving $25,000,000,000. So it appears that banking operations in Canada attained $85,000,000,000 in 1944.
The banks are compelled to make a monthly report to the government. Why then should not the government avail itself of this opportunity to impose on the banks the obligation of deducting a fraction of their transactions, perhaps to the extent of one per cent. Taking as a basis the last statement of the banks, the state could derive from that tax $850,000,000. By the same process, every individual would recover the right to save or spend or invest his money as he wishes, among other things leaving him free to better his own position in life and to contribute more liberally to the social welfare and care of the needy.
Moreover this form of taxation would assess the taxes more equitably on the whole of the population fit to work, without setting a heavier ransom. Each individual would pay according to his means and according to the proportion of his business transactions.
The forms which the income taxpayers must fill out are real Chinese puzzles, and the law itself is so entangled that a great number of people are unable to get through its many riddles without help; while on the other hand the proposed new principle of taxation, to be levied as a duty on banking operations, presents no complications whatever, and is most easy to understand. In fact the main criticism that has been made by the press was that it was too simple to be adopted. If it were more complicated there would be a better chance of having it adopted. But under this new principle of taxation nobody would have to rack his brain any more or

Income MTar Tax Act
to employ accountants to prepare the yearly report which would be supplied to the state by the banks in the course of their routine business, for they are already compelled to make a daily statement on the cheques they handle, and thus time and worry would be saved to the people.
The monetary system of the country, as we know, is under the exclusive control of the federal government.
The proceeds of the special tax we propose would depend upon the commercial activities of the taxpayers and on the amount of money put in circulation therefrom. It is a logical result that the flow of money should increase in proportion to the commercial activities of the country. From 1935 to 1944, the approximate amount of the national revenue and the total of the rolling funds doubled in 1941 and trebled in 1944 from their levels of 1935.
The figures in connection with the national revenue are calculated only by approximation, but banking statements on fluctuation of credits reflect with much more accuracy the progress of our commercial situation.
These bank reports indicate that our economic progression is rapid and constantly moving forward. These healthy conditions should be a source of increasing revenue for the state without having recourse to an increase in the rate of the tax.
Now let us consider how notoriously inefficient is the collection of the income tax. In order to collect it, the government must stand as the censor of the expenditures made by all the taxpayers, of their family budgets, of their donations to charity and, in addition, it must reckon on the accuracy and the reliability of each individual making a report.
With the system we propose, which is in reality a duty on every cheque passed through a bank, all those hindrances should be nonexistent. At the same time, it should yield to the state, as we have already shown, $850 million, if we take as a basis the 1944 report of $85 billion of bank clearings at the rate of one per cent.
Once more we insist on the fact that this indirect tax would be much fairer than income tax, because it would be paid by all, not by only one-half of the people. It would also be more logical, because the tax would be proportionate to the amount of the cheque. For instance, the beneficiary of a cheque would pay $1 on a cheque of $i()0; $10 on $1,000; $100 on $10,000, and so on. In short, the tax on bank credits would be spread over all the population, and everyone without exception would pay it proportionally to his commercial endeavours.
IMr. Pouliot.]
If the payment of the income tax were shared by all the ratepayers on this same basis the average cost would amount to six per cent instead of being, as it stands, fourteen per cent on the income of those who have paid their fiscal dues. This is figured on the amount of the income tax paid in 1944 and with reference to the total of the national revenue, only one half of the debtors having paid the income tax.
For the purpose of showing the mechanism of the proposed tax and making its working clear to everybody, we take as an example the case of a merchant who buys from a manufacturer some articles for an amount of $10,000. The manufacturer, creditor of the merchant, cashes the cheque he received in payment; the bank retains $100 on it as tax at the rate of one per cent. To help him sell his goods, the merchant employs clerks, to whom he pays $3,000 as their salary. These clerks, creditors of the merchant, deposit their cheques at the bank and are credited with the amount less the tax, namely $30, which is retained by the bank. Now the sale of the merchandise has yielded $16,000, which represents a profit of $3,000 on the original purchase price and includes the salaries of the clerks. So the merchant deposits $16,000 at the bank, and the bank withholds one per cent, which is $160.
In all these banking operations, the following taxes would have been paid on commercial transactions amounting to $29,000:
By the producer	 $100
By the clerks	 30
By the merchant	 160
Tax on the bank credits	 $290
Following this operation, the capital of the merchant has been increased by $3,000 less $160, making a net profit of $2,840; the tax taking only 5-3 per cent of the merchant's profit. This rate cannot fail to be maintained, with the increasing amount of business, whereas, with the present system of the income tax, the contrary happens.
If the business done by a merchant continues at the same rate every month, as shown here, we have only to multiply by twelve to obtain the total amount of the business done during one year and the total of taxes paid:
By the producer on $120,000	 $1,200
By the clerks on $36,000	 360
By the merchant on $192,000	 1,920
Taxes on bank credits	 $3,480
According to the actual rate of the income tax, the merchant who realizes an annual profit of $3,000 pays $506 if he is unmarried,

Income War Tax Act
and $278 if he is married with two children. If he makes a monthly profit of $3,000, or twelve times more, he pays $16,450 in the first case, and $15,670 in the second; whereas, if the proposed tax were in force, this merchant would pay only $160 in the first case and, in the second, $1,920.
We want to relieve the salaried men who are paying, at the present time, the greater part of the income tax. The method of taxation we are explaining does not apply exclusively to income, but extends to all banking transactions. Those who carry on the more numerous and more important commercial enterprises should pay proportionally to their financial activities, which is only right.
It is easy to figure that, under the new mode of taxation we are proposing, the tax affecting revenue would be much lower and more equitable than it is at present; because each creditor, or beneficiary of a cheque, would be charged a tax of only one per cent on each payment made to him by a debtor. The fact is that banking debits represent the total amount of negotiated cheques each day at the banks.
As we have already said, if this new method of taxation were adopted, private individuals and corporations, except banks, would not have to produce income tax returns. The banks would take care of that themselves by the simple process of retaining one per cent on every cheque deposited or cashed in future. They would thus become the government's agents for the collection of duties on the banking credits of the depositors. These would know immediately and exactly what they should have to pay. The following table shows a comparison of payments under the income tax and the proposed tax. It is most difficult to read a tabulation to the house and, if it agrees, I will put the table on Hansard.


Some hon. MEMBERS:: Agreed.


Jean-François Pouliot: Thank you.			The table is
as follows:			
	Income Tax	Rates For	1947
		Tax	Rates of
Earnings	Tax	Married	Proposed TaxUnmarried	2 Children	on Cheques$1,000	$ 42	$101,200	83	121.500	150	152,000	266	$ 52	202,500	386	161	253,000	506	278	304,000	758	518	405,000	1.020	770	607,500	1.76)1	1,466	7510,000	2,645	2,288	100
This proves, without leaving any doubt, that salaried men would be relieved nearly completely.
The paramount importance which the bank account occupies in our economic life is pointed out, each year, in the "Canada Year Book," published under the authority of the Minister of Trade and Commerce. In the latest issue, that of 1945, we find on page 1051 the following statement about the payment of accounts by cheques:
In every progressive industrial community currency represents only the petty cash of commerce. The greatest part of all commercial exchanges, especially when large deals are involved, is done through the medium of banks. About six per cent only of all financial transactions of the country, it appears, are done by means of currency; the other 94 per cent are negotiated by cheques. Thus, if we are able to ascertain the global sum of all cheques paid by the banks, or charged to the accounts of their clients, we would possess a nearly complete estimate of the volume of business carried out, therefore an accurate knowledge of the commercial activities of the country.
Since 1924. the bankers' association has consented to give out, in a monthly report, the figures on the amount of business passing through the clearing houses in the most important centres of the country.
Based on these statements, the federal office of statistics publishes a monthly and yearly return of these figures comprising all cheques charged by the banks to the account of their clients. Moreover, a report on the credit and debit balances of the banks is made over by the manager of the clearing house to the Bank of Canada, the latter obtaining from every bank, through telephone or telegraph, a confirmation of the accuracy of the report. Then, the Bank of Canada enters daily this balance sheet on the account of each bank on the debit or credit side, whatever may be the case. This is how nearly all banking transactions of the country are compiled daily at Ottawa.
It is easy to see that the federal government has already in hand the necessary- organism to collect the proposed tax on banking credits. If parliament should see its way to replace the income tax by this new tax, the simplicity and flexibility of which are striking, it could authorize the government to fix its rate which should never exceed the maximum established by law. By its adoption, the government would get rid of its present obligation of auditing the accounts of each taxpayer. What a relief that would be for them.
Another point in favour of the proposed tax is that it would put an end to numerous anomalies which are contrary to common sense
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and fairness. For instance, a large number of people who make big profits by the sale or the exchange of real estate property, by the promotion of companies, by the sale of corporation shares, et cetera, do not pay any taxes on these commercial operations. Under the new plan, that kind of business activity would be automatically taxed by one per cent. Speculation on the fall of stock and any business negotiated at a loss should also re taxed.
Now we come to the fact ti. jt ninety-four per cent of all commercial deals are made by cheques, and six per cent, only by currency. So the practice which is already in current use could be rendered compulsory by law. Everyone would be ordered to deposit into chartered banks all the currency he possesses. This rule would be made effective by replacing all bank notes in circulation by a new issue completely different from the one actually in use. This new' currency would become the only legal one in Canada. New issues of currency, at regular intervals, would force gvery ratepayer to apply periodically at the banks to exchange their currency for tha new one. Without a special permit the banks would not be allowed to grant more currency than S100 at one time to any one person. Every person who would possess more money than authorized by regulations would be under the obligation to account for it, the over-plus being subject to confiscation.
In order to facilitate their clients in carrying on their daily business, the banks would deliver to them, on demand, a book of certified cheques of small denominations, that is, $1, $5, $10 and $20, similar to travellers cheques. These cheques would bear the signature of the bank and that of the client and would be perforated so that the value could not be altered. Whenever the customer wished to use them he would countersign them, enter the amount and the name of the beneficiary. On presentation of the cheque by the beneficiary the bank would deduct one per cent for the tax. If the beneficiary transferred the cheque to a third party the latter would have to endorse it, and then the bank would deduct two per cent instead of one and so on increasingly at one per cent each time for each additional endorser.
We hear very often that it is the rich man who pays the income tax. It is easy to prove this assertion as false and contrary to the existing facts. The statistics show that on
2,450,000	individuals who paid income tax in 1944, the latest year for which we have official figures, 2,270,000 taxpayers whose taxable income amounted to less than $2,000 contributed to the tax. So we cannot do [Mr. Pouliot.}
otherwise than come to the conclusion that this tax hits the bulk of the population, by striking at the middle class and the poor.
Here is a list of those with earnings of less than $3,000 a year. A summary outlined in regard to the 2,270,000 persons who earned less than $3,000 and were taxed reads as follows; in 1944, 385,000; in 1945, 425,300 earning less than $1,000; in 1944, 1,290,000, and in 1945, 1,250,000 earning from $1,000 to $2,000; in 1944, 695,00 and in 1945, 478,200 earning from $2,000 to $3,000. In order to complete the table we must add that 80,000 individuals having an income from $3,000 to $4,000 and
35.000	with an income of from $4,000 to $5,000 paid the tax. Throughout the country, of a total of 2,450,000 persons who paid income tax there were only 65,000 with a taxable income of over $5,000. These were the figures for 1944.
In 1945 there were 144,000, instead of
115.000	in 1944, with earnings of from $3,000 to $5,000 who paid the tax. In 1945 there was a surplus of 500 earning over $5,000 who paid the tax. Consequently we are convinced that in suggesting to suppress the income tax we are defending the cause of the middle class as well as that of the poor.
We have heard friends confiding that they were unable to give to a sick wife or sick children the medical care they should have received precisely on account of their lack of money, a relatively considerable part of their earnings being withheld by their employer for the income tax. It is no secret that numerous heads of families are compelled to withdraw from schools their most promising children because, after having discharged their income tax dues, they are unable to save anything. So, when at the age of sixteen the child loses his right to family allowances the father is not left with enough money to keep him in school.
The thriftiness of the Canadian population is to be greatly admired, and it is deplorable that it has become nearly impossible for a man who is the father of a large family, and also for the unmarried man who has dependents, to provide for their old age. Especially since the last war, this fact is more obvious on account of the high rate of taxation. How many of our fellow citizens do we see working late at night so as to be able to pay their insurance premiums? More often than not, they must work on the sly, because the income tax act-does not always allow them to keep for themselves any compensation for overtime work.
The income tax is a source of restlessness and worry for those who, despite the hardships they have to suffer, find it a difficult matter to make both ends meet. That form of

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taxation, even perverts our population by inciting to heedlessness and laziness. We hear people saying, "What good is there to work harder if we get in return no benefit whatever from our overtime work?"
The income tax is also an indirect cause of labour strikes because, if the taxpayer were not deprived of that part of his pay, he would otherwise be nearly always satisfied by getting a fuller amount of his earnings.
During the war, when parliament was voting blindly billions over billions of dollars, we could not help thinking of the results on our economic system in the years to come.
We had many occasions to discuss the matter with that great Canadian, the lamented Mr. Cardin, for whom we had a profound esteem; and while we were exchanging together our views, which were rather gloomy, on our future, we could listen to the claim of a certain class of optimists insisting that we were amidst a period of transition, and that everything would be rosy and pink-coloured after the war. The war is over, and not even a tinge of pink is yet visible on the farthest distant horizon.
Well, after having heard the sighs of despondency, the demands, the complaints, soaring up from all classes of society, we have consulted leading businessmen and bankers; and we have tried to find the best means to lessen the burden which weighs on the people.
If this plan of a tax of one per cent on all cheques were adopted, the 385,000 taxpayers whose income is less than $1,000 would pay only $5,290,000 instead of $19,700,000 in taxes; the 1,290,000 having an income of from $1,000 to $2,000 would pay $19,620,000 instead of $146 million; and the 695,000 in the $2,000 to $3,000 bracket, $14,040,000 instead of $158,400,000.
No error is possible. The rate could be no more than one per cent of the total of banking credits amounting approximately to $85 billion. It would bring $850 million to the public treasury. Every individual would pay according to the number and the importance of his commercial dealings, and nobody would have to submit any form of declaration.
This tax would not in any way affect deposits at present in the banks, but would be applied in the future on cheques negotiated through the banks. Mathematically, it would apply on all the commercial activities of the country: profits on capital, exchange, rolling capital, profits, salary; contrary to the present tax which affects only new capital and earn-'ings.
We have submitted only the broad lines of our proposal. It was impossible to do otherwise in the restricted frame of this sketch, but a careful study, with a view to ironing out
possible objections relating to particular conditions, could easily render this proposed tax the most efficacious and reasonable, and certainly the most equitable of our fiscal
measures.
I thank you, sir, and my colleagues as well for having paid so much attention while I was explaining the plan in as concise a manner as possible. People are under the impression that it is only the rich who pay income tax, but it is not so, and one effect of such taxation is not to take from a man what he can pay but to get from him all that can possibly come out of his pocket. Of course it is hard. It is pretty difficult. I will not insist on what happened during the war, when I was one of those who opposed reckless expenditures, but now we must consider the present as it is, and it is the duty of every member of parliament to offer suggestions.
I do not suggest that I am infallible; I do not contend that this proposal is a perfect cure. It is. however, a suggestion. What it is worth I cannot say, but I have offered the proposal in complete earnestness in a desire to relieve the people of the burden that weighs so heavily upon their shoulders, and I hope the minister will consider it in due course. I do not expect that it will be done this year. It may take years to do it; but the later it is done, the worse. Something should be done right away.
Everyone must use his own imagination in making suggestions. Are we to stay in the mud of the ditch without thinking of bringing the car on to the road of prosperity? I hope that what is proposed will come in due course. I thank the committee again.


Donald Methuen Fleming: Under the heading
"Income War Tax Act", the minister has submitted a total of thirteen resolutions, not a large number as compared with other years, but it does raise at once the question which has faced this house in each of the sessions of the present parliament. When are we to get on with the task of revising the entire act?
The house listened with interest to what the minister had to say on this subject in his budget speech, and he concluded the two paragraphs containing what he had to say on the subject with these words, at page 2558 of Hansard:
. . . the complete overhauling of our tax legislation, which the government regards as one of its major, immediate post-war objectives.
One of its major immediate post-war objectives; and the overhauling to which the minister referred apparently had reference to all the three taxing acts which have been the subject of resolutions considered in this committee of ways and means.
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Two years have now passed since V-E day and the government is still talking about immediate post-war objectives. The house will be glad to know that at last the revision of our tax structure has become an immediate objective of the government. At the same time the house will be pardoned if it entertains a little scepticism on this subject, in view of the fact that these words have a familiar ring about them, if we recall what has been said by the then minister of finance in each of the two previous sessions of parliament.
hi the first session in 1945, the then minister of finance admitted the imperative necessity for the complete revision of our tax structure, speaking, with particular reference to the Income War Tax Act. He admitted many of the delays and abuses that have grown up in a tax structure which belongs to earlier years, which is fast becoming obsolete, and which is in need of revision from both the legislative and the administrative points of view. But nothing happened at that session. The then minister explained that, while he admitted the necessity for a complete overhaul of the tax structure, he was too busy to undertake it in time to bring down legislation at that session. So the house looked forward hopefully to some remedial measures at the 1946 session. But what awaited the house? Again it was the same thing. The minister of finance of that time again admitted the necessity for the revision of the act but pleaded that he had not had time to do it; and he was under criticism, certainly from this quarter of the house, because of his failure to address himself to a task which is of first importance and first urgency. So the house was invited then to wait for another year in the expectation that the overhaul of the tax structure would be announced at this 1947 session. We are now told that we are not to have any overhaul of the tax structure at the present session but that we are to wait for another year.


Douglas Charles Abbott: No. I said that we would introduce the bill this session.


Donald Methuen Fleming: Yes, but the minister went on to say that there would be no thought of pressing the bill at this session; it would be introduced so that members could have some opportunity to examine it.


Douglas Charles Abbott: No. I said that the house would probably not want to put it through, but that would be up to the house.


Donald Methuen Fleming: Very well. Let us look at exactly what the minister said.


Douglas Charles Abbott: My hon. friend will find that is a large order.


Donald Methuen Fleming: I wrnuld be the last member in the house who would wish to do the Minister of Finance any injustice. I do not blame him for all the delays which have occurred because, after all, he has been in office for only the last five and a half months.


Douglas Charles Abbott: Do not blame my predecessor either.


Donald Methuen Fleming: Well, I am blaming the government for not addressing itself to this task.


Douglas Charles Abbott: If my hon. friend had as much experience as I have had in drafting legislation and tax laws, he would realize it is not any simple matter.


Some hon. MEMBERS:: Order.


Donald Methuen Fleming: I am sure the committee has noted with interest the liberties taken by hon. members on the treasury benches in getting up and making speeches in the middle of speeches being made by other members of the house. They do not even wait to ask the member who is speaking for the usual permission to put a question. They just take liberties, get up and interject, and interpolate speeches in the middle of other members' remarks. All I have to say on that, score is that if the Minister of Finance wishes to make a speech, there is a proper occasion for it. I suggest that if we want to get on with the business of the house expeditiously it would perhaps be best for all members to observe the rules of the house.
I was saying, Mr. Chairman, that I am not undertaking to put all the blame for this delay on the shoulders of the present Minister of Finance; but I am saying that this government has to take full responsibility for delaying a task which should have been given a place of first importance in any programme that this government claims to have for bringing our tax structure up to date and doing something constructive to remedy the situations which have arisen, the need of remedy for which has been admitted by the government in at least the last two sessions of parliament.
What the present Minister of Finance had to say on this was that he had been giving as much time to this subject as he could give to it. This will be found at page 2557 of Hansard. He says:
We have been busy during the past year upon the rewriting of our basic income tax law in an effort to improve its arrangement, to make it clearer and simpler, and to remove ambiguities and anomalies.

Income War Tax Act
Then he goes on to say that he thinks hon. members will be pleased to see that there is much less ministerial discretion. Again, the house will be pleased indeed, I am sure, if this document when it is submitted to our gaze does contain some restriction upon ministerial discretion which, as you will recall, under the present Income War Tax Act and Excess Profits Tax Act, can only be described as having been extended to most extravagant *limits. The minister went on to say that officials of his department had been engaged on a detailed revision and that he has taken a considerable personal interest in their work in this field. Then there are these words, and I take it they are the ones to which the minister referred in his interjection a few minutes ago:
I hope to be able later in the session to introduce a bill embodying this general revision of income tax law with the intention of making it effective with respect to incomes of 1948. In all probability it will not be expedient or reasonable to ask the house to enact this new bill in the current session, but I believe it would be useful to bring it in this session in order to give members full opportunity to study it and mull it over, so that the country may get the full benefit of their consideration of all its details. We do not consider that this measure, when enacted as law, will constitute the final word, but we believe it will provide a framework within which further improvements can be made over the course of future years.
I should like now to say this in commendation of the minister. The house is glad to hear that some progress has been made with regard to this important subject. The house will be glad to see this bill when it comes in. The house regrets and deprecates the long delay in the introduction of this measure in the house, for which delay the government must assume full responsibility. In the meantime, for another long year, the people of this country must put up with the sort of thing which they have been putting up with for altogether too long, the sort of thing which has been the subject matter of proper complaints on their part. We are still complaining. The taxpayers are still complaining about delays in the making of assessments. With more men available to the Department of National Revenue with which to staff those branches where the staff was inadequate, surely it was fair and reasonable for this house to hope that by this time-nearly the middle of 1947-substantial progress would have been made with this great backlog in the work of the department in the matter of assessments. But these assessments are still going on. The backlog is still, in some cases, years and years behind. As long as there are these long delays in the making of assessments, taxpayers

whether individuals or corporations-will be
labouring under handicaps because of the uncertainty that hangs over their heads as long as their returns are not yet the subject of assessment, and which may be the occasion of their being called upon subsequently- perhaps three or four years or more subsequent to the date of the making of the return or the earning of the income upon which the assessment is made-to pay substantial sums of money arising perhaps through error or for other reasons. As long as that situation exists,
I submit that the house must apply the goad to this government to get on with the task, +o see that this great backlog of assessment work is caught up with, and to see that the taxpayers are told promptly and within a reasonable time what their tax liability is in terms of the department's computation of their assessments.
In the next place, we must apparently for another year labour under the unsatisfactory situation arising from the existence of these vast ministerial discretionary powers. I hope the minister is not going to claim that the amendments which were made in the Income War Tax Act at the 1946 session had the effect of reducing ministerial discretions; because the house, I hope, has not forgotten that there was an actual increase in the number of ministerial discretions as a result of the amendments made to this act at that session. I hope the minister is not going to claim that any contribution has been made toward the reduction of these vast discretionary powers as a result of that legislation of the 1946 session which looked toward the establishment of the income tax appeal board and the income tax advisory board. The house has not received from the Minister of Finance any report whatever on the progress, if any has been made, in connection with appointments to these boards, or the steps, if any, taken by those boards to launch themselves on their work. Perhaps the minister has a good reason for not having made that reoprt during the course of his remarks on the budget. Personally I should have thought that was the proper place for a comprehensive report on this subject.
I am sure the house has not forgotten that the establishment of the income tax appeal board originated with a very useful senate committee, which did admirable work. Unfortunately all its recommendations in this respect were not given effect by this government. but at any rate in the 1946 amendments to this act provision was made for the establishment of an income tax appeal board. I am sure the house would appreciate receiving from the Minister of Finance or the Minister of National Revenue a report on
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the progress made in the establishment of that board and in launching it on its work.
Then also, Mr. Chairman, I think the house would appreciate a report as to the progress, if any, made in the direction of the establishment and launching on its work of the income tax advisory board. It will be remembered that this was to be a board of reference from the minister in cases of the exercise of ministerial discretion, where the minister chose to invite the board to give an advisory opinion in respect of the exercise of that dis cretion. I am not going to delay the committee by going over the subjects that we discussed in the debate on that matter; I simply say at this stage that the house is entitled to a report on what steps, if any, the government has taken in the direction of the establishment of this board. I am, however, going to hark back to one incident in that debate. It had to do with the time when this advisory board would be launched on its work. The committee will remember that the jurisdiction of this board is confined to assessments for 1946 and subsequent years. I for one invited the minister last year to move that period back, because of the backlog and because there would be work for the board to do if the minister would move back the effective date of the first assessment in connection with which the board would have jurisdiction. Then the board might have started to work right away. If I correctly recall the minister's remarks, he hoped to have the board established early this year and at work by the middle of this year. He pictured to us a situation which I do not think exists, and which, I am sure, those who have had experience with the various local income tax offices of the Department of National Revenue find does not exist; that is, that the backlog would be reduced, and this advisory board would begin work at an early day. At that time I suggested to the minister that if conditions continued as they were then and as they had existed for some time, this board would not go to work before about 1949. I estimated that the present backlog had been running about three years in arrears, so it could hardly be expected that the board would have any work to do before 1949. The backlog still continues; and I think the committee would be interested to know' when this board is going to go to work.
As far as the revision of the act is concerned, I renew to the minister a suggestion I made last year. It was not a novel suggestion then; I am sure it has been made often in this house, and it was repeated last night by the hon. member for Grey North in an eloquent and forceful manner. I refer
{Mr. Fleming.]
to the title of the act. Surely, if the time has come-and I put this position before the committee because I am quite sure hon. members will appreciate the reasonableness of it-when the fiction attached to the title of the Special War Revenue Act should be removed, equally the time must have come to remove the fiction from the title of this act.


Douglas Charles Abbott: It has come. We are taking "war" out of this act, too.


Donald Methuen Fleming: I am sure that announcement will be received by the committee with the utmost satisfaction.
In conclusion, I should like to invite the minister, if he will be so good, to make a statement on the matter of deductions. The first resolution before us, while it establishes the new scale of taxes, does so by way of fixing the scale of deductions. When deductions at the source with respect to salaries and wages were first decided upon, the house will recall that ninety per cent was the percentage of deduction, on the theory that ten per cent was the percentage allowed to any person in respect to charitable donations, so it was felt that would be a reasonable amount. The idea of deductions at the source was sound, since it enabled, people to pay as they went along, and to avoid being faced at some later day with an accrued liability of substantial proportions which they might find it difficult to pay. That idea was sound. In a later amendment. I think three years ago, the percentage of deduction was increased to ninety-five per cent. The reason given at the time, if I remember correctly, was that ninety-five per cent was thought to be closer to the amount of actual liability, according to the experience of the department in connection with the returns filed in the following spring of each year.
In view of the time that has elapsed since then, I think the house should be given a report by the minister on the way in which the present percentage of deduction is working out with reference to tax liability; because, with what I think is a trend toward increased charitable givings, it may be-I can only conjecture this in the absence of any report, of an official nature-that perhaps ninety per cent is as close to the actual amount as ninety-five per cent. In any event, if there is very little to choose I submit that the taxpayer should be entitled to the benefit of the doubt, when the margin is so narrow. I say that particularly because of the delay in repayment to taxpayers from whom more has been deducted than is required to meet their tax liability. As long as we are to have a backlog of work in the department which delays the payment of

Income TFar Tax Act
refunds for a year, two years or three years, then I say it is not fair to require the deduction of more than is reasonably necessary to meet the tax liability.


Douglas Charles Abbott: Perhaps I had better answer the two or three points raised by my hon. friend, and I should deal first wTith the question of the preparation of the new act. I am not prepared to concede that there has been any undue delay in the preparation of that revised act. It has been really a tremendous task;
I do not think that word is too strong to use. Officials of the. Department of National Revenue, the Department of Justice and the Department of Finance have been working long hours during the last seven or eight months to prepare this revised text; and I am satisfied that even after it is brought into the house and, has had the consideration of hon. members, when it becomes available for consideration by such groups as the association of chartered accountants and others who are specialists in this field, other desirable changes will be suggested. As I say, it is an important matter; but in the order of priority I think there are other matters which have been engaging the attention of the officials I referred to and of my predecessor during the last, year or two, and which are of higher priority. For that reason I am not prepared to concede that there has been any undue delay; nor am I prepared to concede that our present income tax law is anything nearly as defective as some people w'ould make it out to be. It is not perfect, certainly, but over the course of years I have had a good deal of experience in the practical application of that law, and I make the assertion with confidence that it is not nearly as imperfect, not nearly as obscure as some people would pretend it to be. Anyone who is familiar with the income tax laws of other jurisdictions, and particularly that of the United States, will find that our law has a good, deal to commend it, even in its present form.
However, it is my intention to bring in this bill within the next couple of weeks, if possible, or probably in three weeks, and at that time the house will have an opportunity to consider it. As I said in my budget speech, I think they will find that it will be desirable to discuss it here for a time, and then to hold it over, and take it up early in the next session. But that is a matter which will rest with the house.
Then, as to the matter of the appeal board and the advisory board; in view of the fact that I think it will be possible to eliminate a very large number of these discretionary powers it may not be necessary to set up an advisory board as such. We shall be able
to do away with that. We shall need the appeal board which, in effect, is a type of court, and will be between the minister and the exchequer court. That we propose to set up, and I hope it will be possible to set it up within the next few months.
The last point mentioned by the hon. member had reference to deductions. The basis followed now is that of a ninety-five per cent deduction. The experience we have had so far is perhaps not sufficient to enable us to form a final opinion. There have been a substantial number of refunds on the ninety-five per cent deduction. On the other hand, the objection to underdeduction and having to pay later, is equally strong, where the majority of w'age and salary earners believe that their full income tax has been paid, by deduction at the source.
However I am glad to have the point raised, and I can assure the hon. member we are looking into it closely. If it is found that the ninety-five per cent deduction results in an excessive number of refund payments, then I agree it should be lowered to ninety per cent.


Donald Methuen Fleming: Do I understand that
two bills will be introduced, one of which will deal with the amendments in the thirteen resolutions and, when that is disposed of, an entirely different bill is t.o be introduced which will contain the new act?


Douglas Charles Abbott: That is correct. I propose
to introduce a bill which will simply contain the amendments necessitated by the budget proposals, to which these resolutions refer. Then, in addition, I shall introduce a complete new income tax bill, which w'ill cover the whole field, and which will contain a number of provisions that are completely newT, so far as the existing act is concerned. Some of those changes will involve important questions of policy which the house will have an opportunity to debate, and which, I hope, will be carefully studied by people throughout the country, including chartered accountants and lawyers who are specialists in these matters, and also by taxpayers generally. I should hope that when we get into committee on the bill we might be able to hammer out a bill, as I said in my budget speech, in connection with the income tax law.


Douglas Gooderham Ross: I listened with great interest to what was said by the hon. member for Eglinton. Among other things he mentioned assessments. First, I should like to make an appeal to the Minister of National Revenue. I know something about conditions which pertain in the income tax office in Toronto. They are very much crowded at
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that point, and the conditions under which they have to work are bad for their health and for the efficiency of the office. I make the plea to the Minister of National Revenue that he do something about this condition, with a view to getting better quarters for them to work in, if it is possible to do so. I am sure the minister knows about the crowded conditions in the Toronto office, and I should like to see something done about it, so as to improve conditions at that point. I have no doubt that probably the staff could be cut down and a more efficient job would be done if the working conditions were improved.
I now wish to make a plea on behalf of married women who are working. The point is that a married woman is today allowed to earn only $250, without having an additional deduction made. In these days when drives are being made for nurses and schoolteachers, and for women to work in laundries, I think some change should be made in this law. These are places where, as a rule, single women do not work. There are many places where married women can work to advantage, and be most useful.
I said something about this in my speech on the budget. The plea I make is for the married women to be permitted to make a little more money, without having her husband penalized. At the present time all she can work is about 400 or 500 hours a year. As the children get older, the mothers can go out and do useful work; and want to. The children do not require so much attention, but they require more food, and more money is required to defray the expenses in connection with them-clothes and a few chocolate bars, and pop.
Is it not fair not to allow these married women to make a little more money so that they can help out their husbands, especially in view of the high cost of living prevailing today? The children need better food and better diet and, as I have said, these things must be obtained, despite the higher prices which prevail.
Why penalize a married woman who is in a position to work today? At this time $250 is only pin-money; it does not amount to a row of pins to the government. Why penalize them? If a woman earns $750, why place the man's income in a higher bracket? But that is exactly what happens. A man with a taxable income of $2,750 pays $218 this year and will pay $180 next year. If the wife works full time and earns $750, the net return is only $637. I cannot see any point in penalizing a woman who works like that with her hands. Hospitals are crying out for nurses, [Mr D. G. Ross.] 1
but married women are leaving the hospitals today because it is not worth their while to work in them.
Then, there are many women with nursing training who are married to doctors and others with fairly good incomes, but the fact that the wife is working, places the doctor in a 30, 40 or 50 per cent bracket. It is not worth while for the nurse to work under those conditions, and I should like to see something done about the matter. I make a plea to the government to raise the amount which married woman may be permitted to make, so that we may have their services. They would not be taking the place of other persons, or putting them out of employment. They would be going to places where others would not be going; and we need them more than we ever did. I plead with the government to do something about this.


Gordon Knapman Fraser: Mr. Chairman-


Douglas Gooderham Ross: Let him answer.


Douglas Charles Abbott: I was going to say a word. There has been a good deal of talk about this penalizing of married women, so far as the income tax schedules are concerned. But people overlook the fact that the exemption to married women is given on the assumption that the man is supporting his wife. If he is not supporting his wife, then the exemption should be either eliminated or curtailed, depending upon the circumstances.
In no other country in the world that I know of is the full married exemption given to a married man whose wife is also earning. In the United States they have the option of joining their incomes, and taking the full marriage exemption, which, of course, would be far less favourable than the provision we have in Canada.


Harry Rutherford Jackman: And dividing by two.


Douglas Charles Abbott: No, not "dividing by two" -paying the tax on the joint income. They can divide the income and take single exemptions. And practically the same rule applies in Great Britain.
Our rule with respect to exemptions for married women is more favourable than that of any other country I have been able to find. Therefore I think the criticism of the treatment of married women, so far as the income tax law of Canada is concerned, is unjustified. And the combined effect of the reduction last year and this year means that the actual increased tax paid, with the wife earning in addition to her husband, who is in receipt of income, is extremely small.
I do not want to clog up the record, or to take time to read these tables, but I have

Income War Tax Act
had tables prepared which show the actual increase in the income of a married couple as a result of the wife's earnings taking account of the effect on the husband's tax, in the various brackets, where husbands and wives are both in receipt of income. These tables show the situation under the newr tax deductions coming into effect on July 1 and also the situation for the whole of 1947, and if the committee gives me consent I shall be glad to place these tables on record because I think they will be of interest.


The DEPUTY CHAIRMAN:: Does the committee give unanimous consent?


Some hon. MEMBERS:: Agreed.


Douglas Charles Abbott: The tables are as follows:
Table I
Increase in weekly income of married couple due to wife's earnings after July 1, 1947, taking account of wife's tax deductions and effect on husband's tax deductions.


Douglas Gooderham Ross: I should like to follow this up. A good deal of what the minister says is true, but the fact remains that we need nurses badly and schoolteachers and textile workers and we cannot get them to work. I am sure that the amount of money which would be lost by raising the exemption for women to $750 or more would not amount to anything. The minister talks about $250 being sufficient for the wife to earn for herself.


Douglas Charles Abbott: I did not say that.


Douglas Gooderham Ross: I understood the minister to say that that wTas sufficient.


Douglas Charles Abbott: We allow her to earn that much without interfering with her husband's exemption.


Douglas Gooderham Ross: You cannot possibly keep a wife nor can she keep herself on $250.


Douglas Charles Abbott: Nobody ever suggested that.
Earnings of Husband
Wife's 1200	1500	1800 2000 2400 3000arnings	23.	.07	28.	85	34.	62	38.	46	46.	.15	57.69$	$	$	$	$	$	%4.	81	4.	81	4.	81	4.	81	4.	81	4.	81	4.81to	.00	10	.00	9	.25	8	.85	8.	.75	8.	70	8.7012.	,00	.11	.70	10.	,95	10	.50	10,	,35	10	,35	10.3513.	00	.12.	.70	11.	95	11.	50	*11.	35	11.	35	11.3514.	00	13.	.50	12.	60	12	.10	12	,00	12.	.00	12.0015.	00	13	.85	12,	,80	12.	.35	,12,	.20	12,	.20	12.2016.	.00	14	,75	13.	.70	13.	.25	13.	.10	13	.10	13.1017.	.00	15.	.65	14	.60	14.	.15	14.	.00	14	.00	14.0018.	.00	>16.	.55	15	50	15.	.05	14.	.90	14	,90	14.9019	.00	17	.40	16	.35	15	.90	15	.75	15	.75	15.7520	.00	18	.25	il7.	.20	16,	.75	16	.60	16	.60	16.6025	,00	22	,45	21.	.40	20	.95	20,	.80	20	.80	20.8030	.00	26	.50	25	.45	25	.00	24	.85	24	.85	24.8535	.00	30	.55	29	.50	29	.05	28	.90	28	.90	28.90
Table II
Increase in annual income of married couple due to wife's earnings in 1947 taking account of wife's tax and effect on husband's tax.


Douglas Gooderham Ross: Nor on $750 either. The proof of the pudding is in the eating, and you are not getting these people to work. Nurses are leaving the hospitals-and I know what I am talking about.-because it is not worth their while to continue working. This is just an arbitrary ruling and something should be done about it. The revenue you would lose by raising the exemption does not amount to a hill of beans.


Douglas Charles Abbott: I have only one word to add. We did not do so before the war and, so far as I am concerned, I can see no justification for granting special income tax exemptions to special groups in order to persuade them to work.


James Joseph McCann: Just a word with reference
Annual Earnings of Husband
Wife's
Earnings	1200	1500$	$	$250	250	250520	520	474624	612	557676	656	598728	699	639*780	717	656832	736	669884	779	712936	822	755988	865	7981040	907	8401300	1112	10451560	1314	1247'1820	1514	14471800	2000	2400	3000$	$	$	$250	250	250	250462	459	457	455543	540	536	534583	580	575	574623	620	615	613641	638	632	630652	646	640	639696	690	684	682739	733	727	725782	776	770	768824	818	812	8101028	1022	1016	10151230	1224	1218	12171430	1424	1418	1417
*If at the end of the year a wife has earned this amount she could give $30 to the government and thereby prevent her husband's exemption going down from $1000 to $750 and also reduce her own tax from $4.80 a year to nil. This line has been worked on this basis.
to the office space situation in Toronto. The observations of the hon. member for St. Paul's with reference to that situation are reasonably accurate. Conditions are obvious to anybody who has visited the office in Toronto. It has been impossible to secure the required space. In addition, we have been short-staffed throughout the years and the volume of the work has greatly increased. However I am very glad to say that within the last two weeks we have leased an extra 47,000 square feet in the Tip Top Tailors building, which will be ready within the next three months, and that will meet our requirements in that city for the time being.


Gordon Knapman Fraser: The item we are on is payroll deductions, and I want to mention something in that regard. If I read this letter
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from the county clerk of Peterborough it will explain the situation better than I could. She says:
I Snd it almost an impossibility to comply with regulations pertaining to remitting income tax deductions on T.D.2 (employers) as at present demanded.
Most of our deductions come from the payroll from work on roads. We have a two payroll system here from the 1st to the 15th in the month, and from the 16th to the 31st. I find that the wages up to the 31st must come in here on pay sheets from foremen in outlying districts, to be checked here, paid and deducted, and the remittance has to be in Belleville before the 7th of the following month. If this is not done a fine is handed out.
When the snow conditions were bad this was was absolutely an impossibility, as the reports of wages from the foremen simply did not arrive in by the 7th of the month, due to mail service. Because this was not possible I had a letter from Belleville stating if it happened again I would be subject to a fine. One of our local clerks actually did have to pay a fine.
She is referring to a clerk of one of the townships. She goes on to say:
This time should be extended to the 15th of the following month instead of the 7th.
At times it is an impossibility for me to conform to these regulations, and I speak for our local clerks as well. If all our employees were on salaries we would have no worries. However, they are not and we must have time for wage reports to come in and be checked in the office before deductions are made.
Would it not be possible for the minister to have the regulations changed so that these returns can be sent in by the 15th of the month instead of the 7th? In this past winter, the snow has absolutely tied up all kinds of traffic, with the mail often being two or three weeks late. I do hope that the minister will do something about the matter.


James Joseph McCann: I shall be very glad to look into it. I recognized that there is some cause for complaint in that district and in like districts with reference to sending in these returns.


Gordon Knapman Fraser: That is perfectly true. I understand from the county clerk that this also was the condition in many townships, and no doubt the same is true of counties throughout the whole of Canada.


Mr. McKAY:: With reference to payroll deductions for income tax, has the minister or the government given any consideration to allowing a five per cent discount for wage-earners who have had the greater part of their income tax deducted from their pay by the end of the calendar year? The government has the use of this money for at least four months and the greater part of it for ten months, and at present no interest is allowed
to the wage-earners for the use of it. Businessmen and most professional men pay their income tax on the 30th day of April of the following year, so that they have the use of the money for four months after the close of the taxation year and no additional charge by way of interest is made against them for having had the use of this money for a period of at least four months. The wage-earner, who can often ill afford' to pay income tax at all, is therefore penalized for being prompt in his income tax payments through compulsory deductions, which begin with the first month of the taxation year. The government has the use of this money for many months, and so I think that when the wage-earner makes his final return in April he should be allowed to deduct at least five per cent from the income tax payable on that date.


Douglas Charles Abbott: My hon. friend has referred to professional men, doctors, lawyers and the like. They have to make quarterly payments, in March, June, September and December, so that by the end of the year they have paid or should have paid their income tax in full. There is a provision in the act that, if they have underestimated, they have to pay interest on the amount of the underestimate. I do not think there is any substantial inequality of treatment between the wage-earner and the taxpayer who is required by the act to pay by quarterly instalments. It is not quite accurate to say that the government has had the use of the money during that period. The circumstance is simply this. The taxpayer is paying the proper proportion of the tax as he goes along. It is a strict pay-as-you-go policy, and the country gets the needed revenue from the earnings as they are paid out.


Harry Rutherford Jackman: There is one obvious and unfair working of the income tax regulations which I should like to suggest to the government might be remedied in the present budget. This suggestion should, I think, meet with the support of all hon. members, and I believe it would apply personally to at least ninety-nine per cent of them. I refer in particular to the various sections of the act which allow an individual who comes under a retirement or pension plan set up by a company to deduct from his gross income before assessment the amount which he contributes under the plan.
Tomorrow we hope we may be on the old age pensions bill. We have seen that, even with the comparatively low income tax which we have had during the last thirty years or so, with the exception of the war years, the people of Canada to a substantial percentage

Income War Tax Act
have been unable to provide for their own old age, and that is why we have to give serious consideration to making some grants to ease their existence. Therefore, if our people, or a substantial number of them, have had difficulty in providing a competence for their old age under no personal income tax or a comparatively low rate we may imagine what our problem will be in the years to come when we are almost bound to have fairly substantial personal income taxes.
As I mentioned, if a worker comes under a company plan for retirement, which plan must be approved by the Minister of Finance, the company may make a contribution, perhaps four or five per cent or more of the wages which are paid the individual. A company is allowed a tax deduction for that amount. The worker is also allowed to make a contribution, which we will say is five per cent of his wages, to a plan leading to his retirement. This amount is also deductible from his income before tax assessment is made. Furthermore, the individual may, if he is just coming under a plan now and has been in the service of the organization or company for a number of years, make a deduction for the years of work which he has put in during which time he did not come under the plan, so that he has on two counts the possibility of making a deduction for his old age, and these deductions on the two counts are both subtracted from his gross income before the tax is calculated.
The great majority of Canadian people, however, are not fortunate enough to work for large companies or prosperous enough companies that have these retirement plans; therefore they do not have the same attractive and advantageous means of providing for I heir old age as this limited class of workers coming under the various plans. I shall read one section of the Income War Tax Act, so that members may perhaps more clearly understand the nature of these exemptions. I shall read from section 5, paragraph (g). These are deductions and exemptions allowed under the Income War Tax Act:
(i) An amount not exceeding nine hundred dollars in the taxation year, actually retained by the employer from the remuneration of the taxpayer for an employees' superannuation or pension fund or plan in respect of services rendered in the taxation year or paid by the taxpayer who is a member of a trade union as part of his union dues.
I am told that in negotiating contracts with their employers many trade unions insist that some retirement plan be put into effect before they sign with the company; so that it is clear that under the existing regulations there is a distinct, welcome and worthwhile advantage to the workers who come
under these plans. Altogether it can amount to a total of $900 under each of the three counts which I mentioned, which is $2,700 deducted from a man's income before tax. Of course a person would need to have an extraordinarily large income to be able to set aside that amount. But may I just point out in connection with these regulations which we now have under review that if no personal income tax were applied until the married man reached an income of $2,000 there would'be a saving of $70 a year in tax? If the man who at the present time does not come under a plan where able to come under such a plan, which I shall suggest later should be under government sponsorship, and put in his 870 which he now pays in tax, he would find that, starting at the age of thirty, when many a man wakes up to the fact that old age will eventually come upon him and that he had better start making some provision for it, and putting $70 a year into a dominion government annuity, he will at the age of seventy be able to receive an annuity of $700 a year; or if he prefers to retire at sixty-five, having paid until that age, he will be able to have an annuity of approximately $500 a year. It is obvious then that there is discrimination against the great majority of our people who are not fortunate enough to come under one of these company sponsored plans approved by the Minister of Finance.
The principle that is already contained in these plans is approved by the government but because of inertia or for some other reason, the government has not seen fit to devise a plan whereby these workers who do not come under the company plans may make some provision for their own old age.
I might say, in passing, that these amounts are not entirely free of tax. It is in a sense a delayed tax because, when the man retires and starts drawing his yearly amounts as annuity, if you like, under the plan, the whole amount that he receives is taxable year by year as he receives it. But this is fair to the government and also fair to the individual because, when the individual retires, he is not likely to have a substantial income and his tax on whatever he receives is likely to be moderate, just as exists under the plans now approved by the Minister of Finance.
At the present time, with the extraordinarily high tax rates that we have, it is almost impossible for a person, particularly in the lower brackets, to make adequate provision for himself or his wife or widow as the case may be. when he retires from work or dies. Taxation is already making too large an
Income H'ar Tax Act

inroad into our personal incomes to allow many a person to balance his budget, much less look forward to a day when he is not a regular wage-earner. Therefore anything that this committee can do to make it possible for a man to provide for his own old age should meet with the approval of every hon. member.
What I am suggesting is that the government under the Department of Labour, where the annuities branch now is, or under some other suitable department, frame an over-all plan containing the various provisions which the Minister of Finance now insists upon when he gives approval to a company-sponsored plan. That overfall plan under the government could be made open to all individuals who wish to pay into it in order to provide for their own old age. I am not suggesting at this moment that the government make a contribution to it, although the idea is capable of that elaboration, and perhaps further consideration should be given it. But if we look at it entirely from the angle of personal tax, there should be an opportunity for the individual, under the government plan, to do as much for himself as the government now allows him to do if he is fortunate enough to work for a company having such a plan.
It may be that our insurance companies, who act as trustee for many of these company-sponsored plans, might formulate an over-all plan which would allow individuals who are not employees of these favoured companies, as I shall call them, to come under a plan sponsored by individual insurance companies, and the ordinary citizen could take his choice of the plan of the dominion government or of the insurance company. I suggest this, not only because I am a supporter of private enterprise, but also because many people will no1! save or come under a plan like this, no matter how favourable it may be, or how much they may save in tax this year to provide for their eventual old age, unless the plan is sold to them; and it requires selling. It may be desirable, therefore, to have private institutions formulate government-approved plans, as well as the government itself.
I should hope that if the government does formulate, under the dominion government annuities, a plan such as I recommend, it will allow the same rate now allowed in respect of annuity accumulations, namely four*per cent, which is a somewhat higher rate than the artificially low rate at which the government is able to borrow at the present time. I would also suggest, because of the social nature of

this undertaking, that the government would, as in the case of government annuities, bear the cost of administration.
There would, be, of course, the usual provision which the minister now insists upon in the company plans in regard to a man on retirement not getting money out in a lump sum but spread over his life in the form of an annuity or some other form which would appeal to the minister. There would also be suitable provision made for the widow of a worker should he die and perhaps also for dependants in, case they are still young.
This is a proposal to allow people who are not able to participate in, the benefits now extended by the government under the company approved plans to look after, through the process of self-help, their own old age, so that they will not become dependent and so that they will have the feeling of self-reliance, which people cannot have if they must lean upon a paternal government.


Mr. ISNOR:: What features does the hon. member's plan propose which are not included already in the group insurance annuity plan?


Harry Rutherford Jackman: I do not know whether I understand entirely my hon. friend's question. I do not know exactly what he means by the group insurance annuity plan. He must be a little more specific. I suggest that unless a person comes under a company-sponsored plan, of which there are a great many, particularly during the last five years or so, when a greater feeling of social consciousness has swept across the country, he cannot possibly get the benefits which are extended to the individual who does come under such a plan.
Take our own situation in this house. I should think that not more than two or three per cent of the members would be eligible to come under these plans. The ordinary citizen cannot do it. The man in a large steel mill or in a coal company or some other industry that has a plan like this can get the benefit of it. As a guess, I should think not more than fifteen per cent of our working population, or perhaps I might make it twenty per cent, are eligible to take advantage of these plans, and many small employers do not feel that they can set up such a plan, having regard to the additional cost of the company contributions. If the government approves a plan there is also a contribution by the employer as well as by the employee. Some companies do not feel that they can accept the added responsibility, but what I am suggesting now is that the government set up a plan whereby the indi-

Income War Tax Act
vidual at least can do all that he could if he were working for a company maintaining a retirement plan.


Gordon Benjamin Isnor: Apparently there are no new benefits suggested in the hon. member's proposal.


Harry Rutherford Jackman: I only want the benefit which the government has approved, so far as a particular section of the population is concerned, extended to the whole population.


George Russell Boucher: I support the suggestion of the hon. member for Rosedale, and I would point out to the hon. member for Halifax the scope of the proposal. It would, in fact, cover all those people, or make it possible for all those people not engaged in industrial enterprise. under an employer or corporation who had set up superannuation benefits, to get the advantage of such a scheme. It would be an opportunity for the farmer, who has not a full-time employer, to contribute live per cent of his income to the dominion government on a superannuation basis, to be paid to him in instalments upon his attaining of a certain age, and without taxation, and that could be deducted from his income, after the manner of compulsory savings collected during the war.
I remember when compulsory savings were first introduced into this house, the then minister of finance did not feel that those who contributed to the superannuation plan under the Department of Labour should be entitled to consider their annual contribution to that as part of compulsory savings. After some consideration, the minister did yield to our exhortations that that should be allowed as part of compulsory savings.
In further answer to the hon. member for Halifax, I would ask the committee to realize that only a small percentage-my hon. friend says fifteen or twenty per cent-of our population work for employers who have set up a superannuation fund. I know many big firms who have never set up such a fund for their employees. I have in mind several in my own city who have had employees for twenty, thirty and forty years, and these people find themselves too old to continue working and without any superannuation set up for them. Consider the case of the independent-enterprise man, the small tradesman, the mechanic, the seasonally occupied man, the man who runs his own business or runs a small business for someone else. These people have not the advantage of a superannuation plan where the employer pays half and the individual half. Such a man has not even an opportunity of providing for his old age, getting a reduction from his income tax or assessable income for the purpose.
If we were to realize how this would work out, I think we would feel that it is, in effect, the most advantageous policy for old age pensions that we could have. So many people have said that we in Canada have reached the stage where we should have a contributory old age pensions scheme. This is a scheme that would replace that to a large extent, because any man who felt provident enough, beginning life at the age of twenty-one years of age, to provide five per cent of his income for dominion government annuity payment, deducting it as expense of living from assessable income, would at the age of sixty or sixty-five have sufficiently established a superannuation benefit to carry him along on a substantial income, so that he would be entirely independent of any gratuity from anybody. Our civil service has the advantage of the superannuation plan. Many people have argued that the civil servant gets compensation by virtue of the benefit he gets in being allowed to contribute to the superannuation fund and having the government contribute a like amount. The government need not contribute to the individual, but they could contribute by w'ay of administering the fund and by way of paying him in the same manner as is now adopted by the annuities branch of the Department of Labour, the amount being calculated mathematically on a four and a half per cent compound interest basis.
We all know that there is in existence in the Department of Labour a scheme under which individuals can make annual contributions until they are sixty, sixty-five or seventy years of age, and thus provide themselves, their wives and dependants with annuities ranging as high as $100 a month per person. That in itself is security against old age or mature age. If those who are not in industrial enterprise-and even those who are in industrial enterprise, if they want to take advantage of it-had an opportunity to contribute a small portion of their income each year, as part of their everyday living expense, and could have that exempted from income tax, they would become more self-sufficient and satisfied that they themselves were looking after their old age. They would not look to this government with anxiety for paternalistic legislation, as so many people would have us believe they do today.
I believe the fundamental spirit of our Canadian people is one of independence and thrift. I believe they want an opportunity to provide for themselves in their old age, and I believe the government should make that as easy as possible. I also believe that, in the long run, we would save a great deal
Income War Tax Act

of expense if that opportunity were given by way of annuity, if we were to give them the inducement so that they could set themselves up in that way with pride, independence and a feeling that they were getting at a later day something which they had provided for throughout their lives.
I highly commend the suggestion made by the hon. member for Rosedale. Instead of thinking of a compulsory contribution to old age or retirement allowances, I believe the government would be well advised if they made it voluntary and gave the ordinary rank and file of our Canadian people who are in independent enterprise, assistance and cooperation. As the hon. member for Rosedale has said, I believe that this could be done through the annuities branch or through the insurance companies. I also believe that if this contribution were exempt from income tax, it should be made on the basis that it can be received back by the taxpayer only in annuity form in month to month payments and benefits at a time when he is most likely to need them. I believe the Minister of Finance would be well advised to take this matter into serious consideration, because I think the great mass of the Canadian people have not appreciated, or have not been encouraged to appreciate, the benefits of an annuity under the Department of Labour as it now stands; otherwise a great many more people would have taken out one, and we would not have the difficulty we have today, namely, that people feel they are about to face difficult days in the eve of their lives.


Gordon Graydon: I should like to branch into another field with respect to income tax, and ask the minister a question which I fear is somewhat of a perennial one; perhaps it is perennial because of its importance. It is a question which arises from a series of inquiries received in the mails, and it must have come to the attention of hon. members on scores and scores of occasions. It concerns the person who has a self-contained domestic establishment, who has all the expenses, all the outlays and all the overhead that married people have, but who at the same time is not entitled to the same kind of consideration under the income tax law and regulations. It is a matter which, I think, touches the homes of many worthy and deserving people in Canada. I have listened to the arguments of those who have gone before, but I have not been convinced by them. After all, what is the use of our changing finance ministers unless we can expect something better from the new one than was received from the old one? On that basis I feel somewhat optimistic and not a little encouraged to press my 
case again for that group of people who, 1 think, are deserving and have been long-suffering and kind-perhaps too kind-to their government in the past for not having given them a little more consideration. I should like to ask the minister if he will, after I resume my seat, deal with that matter and give us the reasons he has finally designed which apparently have prevented the change.
The other matter to which I wish to refer is one which perhaps some people may consider small. But after all, as most public men will find, the small things in the world are really the big things. Certainly they are big things to the people we represent. Today we are experiencing the development of education in a way that we have never experienced before. Our seats of higher and secondary learning in every part of Canada are bulging with students; and I suppose that applies to every country of the world where education is available. In many cases one finds that the ordinary middle-class person is struggling to make ends meet. I do not make any apologies for saying a word on his behalf; and it is no reflection on those who are making less money, either; because, after all, that middle class of our people who are struggling hard to make ends meet, very often at the end of the year have just about the same amount left over as those in even lower brackets. In addition to that, in trying to educate their children they find that, after the boy or girl reaches the age of twenty-one, their exemption with respect to that child, as a dependent under the income tax law and regulations, ceases. They are then on their own without any of those considerations being available to them. I have had this matter brought to my attention within the last few months by several deserving citizens in my own constituency, and not all of them have been of my own political faith either. I should like the minister to give some consideration to cases of that type. As a nation we are now reaching the position where it is not so hard to see that if, in the years which lie ahead, education advances as much as it has in the past, we might conceivably find that university degrees in Canada are almost as numerous as senior matriculations were some twenty-five years ago. That, of course, makes a situation which, I think, deserves attention by the government because of conditions we see developing. I should like the minister to give some consideration to that class of people, who, I think, are worthy and deserving Canadian citizens.


Douglas Charles Abbott: Dealing with the two points my hon. friend has raised, as he himself has indicated the first is not a new one, I

Income War Tax Act
think I have answered it myself on at least two previous occasions. That is the suggestion that a person who lives in a self-contained domestic establishment should be given the same treatment as a married man who lives in such an establishment, or a man who has such an establishment and maintains in it someone connected with him by blood relationship or marriage and who is wholly dependent upon him. Personally I have never considered that there was justification for extending that exemption to groups other than those already covered. After all, living in a self-contained domestic establishment, in a house, is a way of life. The exemption is given to a married man as part of his married exemption; and it is given to a widower or a single man who is maintaining in that type of establishment dependents who are connected with him in the degree mentioned in the act, as a further concession. But to give it to all taxpayers who choose to live in that way, I felt, and my predecessor also felt, was never justified, and personally I would not feel that we should extend the law at this time. I think I have given a similar answer on previous occasions.
The other question my hon. friend raised, namely the possibility of extending the exemption for children who are attending university when they get beyond the age of twen'ty-one, has been brought to my attention by a great many hon. members. I have had a number of letters concerning it, and it has been brought to my attention by several hon. members on this side of the house. There again the justification for allowing the exemption up to the age of twenty-one-and it is an exception to the general rule-is that this is about the age at which children complete or at any rate nearly complete their ordinary arts course. If they are going on to take professional training as a doctor or lawyer, or to do post-graduate work, that is usually after they have reached the age of twenty-one years. I am not quite sure just what income bracket my hon. friend means when he refers to "middle class", but I would think he meant someone receiving up to about $5,000 a year, would he?


Gordon Graydon: I did not have in mind a figure that high. I think I used the words "middle class" where I meant the medium income class.


Douglas Charles Abbott: If it is lower, so much
the better, because under the new rates on an income of up to $3,500 the top rate is twenty per cent, so that the value of the exemption to a taxpayer with an income of up to $3,500 would be only $60 a year. I will
concede that $60 a year is $60, and has some significance when you are sending a boy to college; but it is not a sum that is going to make the difference between sending him there and not sending him. I have never felt that we would really be justified in extending this exemption beyond the normal period within which a man is giving his boy or girl the initial university education.


Mr. CROLL:: Following that up, did I
understand the minister to say the exemption was given a widower with children in the same way as to a married man?


Douglas Charles Abbott: That is true, if they are
wholly dependent upon him and under the age limit.


David Arnold Croll: In a self-contained establishment?


Douglas Charles Abbott: That is right.


David Arnold Croll: But what about the widower himself?


Douglas Charles Abbott: The widower himself is the same as a bachelor. That is a way of life; he is living in a house instead of in an apartment or hotel or boarding house.


Gordon Graydon: May I say one word to the minister with respect to my observations on the educational point? I did not have in mind people making as much as $5,000. In the one instance I have in mind I believe the man's income is just over $2,000, which I think, generally speaking, is not a large income.


Douglas Charles Abbott: Probably he would not be paying any tax at all.	[DOT]


Gordon Graydon: Well, his income may be over $2,000, bu't in any event it is in one of the lower income brackets. When I said "middle" perhaps I should have said one of the lower income brackets, because that is what I had in mind.


Douglas Charles Abbott: To a man with an income of $5,000, the value of an exemption of $300 at the marginal rate would be $66 a year.


Gordon Graydon: But take the person who is making something over $2,000, from $2,000 to $3,000. He has a pretty tough time trying to get his children educated.


Douglas Charles Abbott: If he is a married man he gets an exemption of $1,500, and he would have an exemption of $100 for each child in receipt of family allowance and $300 for each child not in receipt of that allowance. My only point is that the value of the exemption is perhaps significant, but I should think it

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extremely unlikely that an individual with an income of $2,000 to $2,500 would be in a position, out of his own resources, to send his children to college. He could probably help them-


Gordon Graydon: He does the best he can, and he should not have any obstacles placed in his way.


Douglas Charles Abbott: Of course he does the best he can, but I think the children would have to help earn their way through college. The point is that he would get the exemption until his children were twenty-one, which is a very fair average age for completing an arts course at university, which covers a period of three to four years. If they are going on to post-graduate work, in the professions or otherwise, I do not think there should be an exemption which does not apply to other taxpayers.


Mr. TIMMINS:: Following the remarks of the hon. member for Peel and the explanation of the minister on the first question raised, in regard to widowers, I should like to give the minister an example for his consideration. In this case in 1945 the widower had a pension of $624 and a small investment income which brought his total income to a little over $1,500. He is a widower maintaining his own home, with a housekeeper to whom he has to pay $40 a month. His taxes in 1945 amounted to $260. He is considered as a single person, even though he continues to maintain his home since the death of his wife. In 1946, on an income of $1,619, his tax amounted to $208.54. In that year, in order to help pay his way, his son had to contribute $300 out of his own income, and of course in turn the son had to pay income tax on his own income. This man is eighty-one years of age. By thrift and diligence he has made almost enough to maintain himself, but not quite; and I am asking the minister whether in a case of this kind, where a man is past the age of seventy years, we will say, some consideration should not be given him in respect of the exemptions, and whether the exemptions should not be increased from $750 to $1,500.


Douglas Charles Abbott: Well, consideration has
never been given, as far as I am aware, to increasing the exemptions solely by reason of the age of the taxpayer. I should think it would be undesirable from a good many points of view.


Harold Aberdeen Watson Timmins: Then following the remarks of the hon. member for St. Paul's with respect to the exemptions of married women earning
salaries, my opinion has been that v/e should
protect the exemption of $750 given a married woman, and maintain it as it was in 1946. I see the minister is not sympathetic to that point of view, because, as I understood him a few moments ago, he said he did not favour a special dispensation to any class in order to induce people to work.


Douglas Charles Abbott: I did not say "dispensation." I said I was not in favour of income tax concessions to any group in order to persuade them to work.


Harold Aberdeen Watson Timmins: This year, 1947, we have certain problems to meet, and probably the most important of- them is the question of production. Engaged in business as I am, it seems to me that the minister has lost sight of the fact that if we do not protect the exemption which was given to nurses, teachers and stenographers in 1946 we are going to lose these women from industry, As a matter of fact, I was interested in the table the minister filed, and I shall certainly be interested in perusing it, when I have a chance to do so, because in my attempts to find out what the tax on married women earning incomes in Canada amounted to, from questions which I asked of the Minister of National Revenue, I discovered that there had not been any statistics kept in respect of the tax paid by those married women in the years up to this date, although the situation will probably be changed from now on.
But I did get an estimate from a departmental official as to what the situation really was, and this is it. The total salaries and wages earned by women in Canada in 1946 is estimated at about $607,000,000. This does not include income from investments. It is estimated that twenty-five per cent of the women in business are married women, and seventy-five per cent are single. That is only an estimate. Therefore $148,000,000 represents the income earned by married women in 1946. For the most part these earnings were in the low-income group.
It is estimated that the number of married women who earned this amount of wages and salaries was 110,000, so that the average annual wage or salary per person was $1,350. It is estimated that the tax upon salaries and wages of married women paid in 1946 amounted to $18,000,000.
There is nothing very scientific about that return because, as a matter of fact, it is only an estimate, and apparently it is not taken from any statistics at all. I think the Minister of National Health and Welfare will probably have something to say a little later on when he finds there are not enough nurses
[Mr. Abbott.1

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in the country to take care of the work to be done in the hospitals, if eventually we have a national health insurance plan.
I think the minister might very well give consideration to this matter of protecting the 1946 exemption for married women. I do not like to let his statement go unchallenged that he does not intend to give any special concession to any class in order to induce people to work, because, after all, production is the thing we are looking for this year. I think that is a fact the minister ought to take into account.


Stanley Howard Knowles: I should like to say a few words in support of the two points made by the hon. member for Peel. In a sentence or two, may I say my interest in this matter stems, in particular, from a number of widowers living in Weston, a part of Winnipeg. These are men who are employees in the shops of the Canadian Pacific Railway Company, who have small homes. But even though they are widowers, they endeavour to keep those homes together as a place for the children to come, whether they be married or single. The suggestion that the exemption be granted is not only for the reason the minister stated, but because of our interest in this country in maintaining homes.
I rose not only to support the suggestions made by the hon. member for Peel, but to encourage him to carry on. And the means I shall use to encourage him is to make reference to something I now hold in my hand. As some hon. members may recall, in every budget debate since I came to this house-


John Ritchie MacNicol: That is not long ago.


Stanley Howard Knowles: -I have spoken as strongly as I can with reference to a discrimination between railway train conductors and railway sleeping-car conductors. The minister will probably remember some of the discussion he and I have had across this floor. I had some discussions with his predecessor, and some with the present Secretary of State, who was then minister of national revenue.
I was told every year that it simply could not be done, and that, because of the distinction in the manner in which the incomes were received by these different employees, a line had to be drawn. The railway train conductors, being on a mileage basis, were allowed their away-from-home expenses as a taxation deduction; but the sleeping-car conductors and sleeping-car porters, because they worked for wages or salaries, were not allowed their away-from-home expenses.
It would make interesting reading if I were to quote from Hansard the arguments used by the ministers I have mentioned when they 83166-227
told me that it simply could not be done. I am happy to say I hold in my hand a directive from the deputy minister, signed by F. H. Brown, deputy minister of taxation. This is directive No. 14. dated May 2, 1947, and the subject matter is the assessment of railway men's away-from-home expenses. It states:
The same consideration will be given to claims for away-from-home expenses of those railway men who are paid on a salary or wage basis as is given to those paid on a mileage basis.
I wish to express my thanks to the government for having acceded to this request. It did not come from me in the first place, although I have been fighting for it here. It came to the department from the unions and brotherhoods representing the men. I am sure it is clear now that it was a discrimination which should not have been maintained for such a long time.
Speaking particularly for the sleeping-car conductors and sleeping-car porters, and also for those other railway employees who are on a wage or salary basis, may I say that they appreciate the fact that they now have the same right as these other railway employees, namely that of charging their away-from-home expenses as part of the cost of their job.
So I say to the hon. member for Peel that probably his arguments are not in vain.


Gordon Graydon: How many times did the hon. member have to present them?


Stanley Howard Knowles: Just four years.


Gordon Graydon: I have presented mine for only three; I have only one year to go.
Mr. KNOWLES; The Minister of Labour will note that I said a minute ago that I did not start the suggestion. It came from the brotherhoods and the unions representing the men. However I did say that I led the fight on the floor.


Humphrey Mitchell: You are more successful in fighting in other places than on the floor, sometimes.


Stanley Howard Knowles: I rise to take part in this discussion in order to say something which may seem to be in an entirely different vein from the views I have just expressed. What I shall say grows out of a statement made to me in Winnipeg two or three nights before I left home last January to come to Ottawa to attend this session of parliament.
The man who spoke to me was a carpenter named Gus Johnson, a gentleman I have known for some time. He was giving me a bit of advice about the session, and made this interesting suggestion: "Don't worry too much about trying to get taxes reduced, but give the government so-and-so for their failure to give us good value for our taxes".

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I think it is really regrettable that the unfairnesses and injustices in the taxation structure, about which we have been talking during the course of this debate, lead us to a point where sometimes we consider that our main job is to try to have taxes reduced. I think the far more important thing is to find out what the government does with the tax moneys. I would say to the government of the day that their future depends not so much upon the taxation structure as upon the measures they take to achieve a really high level of economic activity, to raise the level of wages and the standard of income of all our people and to provide definite social security. It has been said a good many times in this debate, but it is well to repeat it, that one of the most striking remarks made by the Minister of Finance in his budget speech was his admission that more than half of the income earning people in Canada receive incomes below the income tax exemption level.


Douglas Charles Abbott: I do not like to interrupt my hon. friend, but this is wandering a bit far from the resolutions we are considering, the schedule of income tax rates. It is probably relevant to discuss, under these resolutions, almost any feature of the income tax act which relates to personal income tax, but I would hope that my hon. friend would endeavour to keep within that field.


Stanley Howard Knowles: I would hope that the minister would appreciate the fact that at least I did not get into the preview of old age pensions which we had a little while ago, which was stretching the rules a bit.


Douglas Charles Abbott: That was close. There are deductions permitted from personal income tax for pension purposes and I think that was relevant. But to discuss the use which the government makes of the taxes it collects is going a bit far afield from the income tax schedules.


Stanley Howard Knowles: I am quite prepared to abbreviate my remarks. I have made my point that the important thing is what the government does with the taxes it collects.


Douglas Charles Abbott: We are in agreement there.


Stanley Howard Knowles: I am glad that the minister agrees with me and I hope that by the time he relinquishes his post as Minister of Finance he will not still have to say that more than half of the people of this country are living below the income tax exemption level.


Humphrey Mitchell: That is not fair. You are just kidding the troops.


Stanley Howard Knowles: I am quoting what the minister said in his budget speech.


William Henry Golding: I must ask hon. members not to interrupt.


Stanley Howard Knowles: I am prepared to leave it at that. When one reaches the point where he starts getting interruptions of this kind he realizes that he is making his point, and so I am quite prepared to sit down.


Mr. HAZEN:: There is a matter to which I would direct the attention of the minister in the hope that something will be done. This is the second time that I have referred to it.
I referred to it about ten months ago. It has to do with the income tax on domestic servants, particularly those in the maritime provinces.
In order to arrive at the income of a domestic servant for taxation purposes under the Income War Tax Act, the value of board and lodging provided- by the employer is added to the wages the servant receives. When a domestic servant in the maritime provinces files an income tax return he or she is obliged to add to the cash received as wages the sum of $26 a month or $312 a year for 'board and lodging supplied by his or her employer; but when a domestic servant in the province of Quebec files his or her income tax return he or she is required to add to the cash income received, not $26 a month or $312 a year for board and lodging, bult $15 a month or $180 -a year. It is ridiculous to suggest that a domestic servant employed in the maritime provinces has board and lodging any better or at greater cost than a domestic servant who is living in a mansion in Montreal or vicinity, or in some luxurious apartment house in Montreal, or in any other city in the province of Quebec. These hard-working people who reside in the mari times are being discriminated against. They are, in my opinion, getting an unfair deal. There is no reason why their income should be increased in this unfair manner and their taxes increased in consequence. Last year, on July 24, I brought this matter to the attention of the present Minister of Finance, -and I was supported in the stand I took by the hon. member for Halifax who said that he also had received complaints. The present minister said then that he would be glad to look into the matter and he added:
I agree with both members that there should be no discrimination between servants employed in the maritimes and those employed in other provinces. I shall look into the matter and see what is causing this condition.
I do not know whether the minister in 'the past ten months has had an opportunity to look into the matter or not, but I am informed that this discrimination continues. It

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should have been done away with long ago. In fact it should never have existed. I would ask the minister why this discrimination exists. I have given the amounts that are imposed on domestic servants in the mari-times and in Quebec for board and lodging. I have referred to Quebec, because that is the only other province for which I have the figures. I ask the minister to give us the figures that are imposed for board and lodging in the other provinces.
While I am on my feet, I should like to direct the minister's attention to another matter that was brought up last year by the hon. member for Halifax when he supported me on the taxation of domestic servants. At that time he said that he had brought to the minister's attention, then the acting minister of finance, the case of railway porters, stewards and waiters who operate on the Atlantic division between Halifax and Montreal. They complain that, whereas those who operate in the central and other regions of the Canadian National railway system are not taxed on tips, those operating in the Atlantic region are taxed to the amount of 8300. I do not know whether that situation has been remedied or not, but it does seem to me unfair that that condition should have existed. I would ask the minister if that situation has been remedied and, if not, why it has not been.


Gordon Benjamin Isnor: Before the minister replies, may I say briefly that I support what has been said by the hon. member for St. John-Albert. I very well recall bringing before the minister last July the case of the porters, stewards and waiters of the Canadian National railway system in particular. So far as I know, that situation still exists in the Atlantic region and does not apply either to the central or western divisions of the Canadian National Railways.


Douglas Charles Abbott: Answering, both hon. gentlemen who have just spoken, following the statements which were made last year I took the matter up with the then deputy minister, Mr. Elliott, and was told at the time that there was no discrimination. My colleague, the Minister of National Revenue, will look into the matter at once. I dloubt whether there is any discrimination. There may be some variation in the amounts which are reported by individuals as the value of board and lodging for domestic servants. If my memory serves me correctly, that was the information which I 'had been given on previous occasions when this matter was brought up; but I was informed-it is not in my department, of course-that there was not a case of a rate fixed for one district and a lower rate fixed for 83166-227J
another. The question has been brought up again; and may I say that my colleague, the Minister of National Revenue, has assured me that he will go into it at once and see exactly what the situation is and will be able to give my hon. friend an answer either when we come, to the bill or when the bill is in committee.


Douglas King Hazen: When I get the answer I should like to have the information I asked for in regard to the other provinces. I said I referred only to Quebec because these were the only figures I had. The information I gave referred to the city of Montreal, which showed that it was $15 a month.


Douglas Charles Abbott: We will get the full statement.


Douglas King Hazen: It was $15 a month for board and lodging, w'hile it was $26 a month in New Brunswick and other parts of the maritimes. I should like to have the figures for the other provinces as well.


Douglas Charles Abbott: We will give my hon. friend a full statement as to what is allowed in all the provinces. It may require consultation- I do not know; I am not the Minister of National Revenue-with inspectors in the various districts. But my hon. friend is entitled to the information which he has asked for, and I know that my colleague will see that he gets it.


Lawrence Wilton Skey: May I return the discussion for a moment to the subject brought up by the hon. member for St. Paul's and the hon. member for Parkdale, namely, the meagre exemption of $250 allowed as an income tax deduction for employed married women?


Douglas Charles Abbott: I know my hon. friend wants to be accurate. A married woman pays no tax until she earns over $750 a year. But if she earns over $250 her husband's exemption is decreased proportionately.


Lawrence Wilton Skey: I thank the minister for checking me up on that. That was the point I wanted to make. There are many husbands whose wives are employed to some extent or partly employed, making up to $250 or between $250 and $700 a year. The husbands of these women are called upon to inform their employers of their wives' income so that the proper deduction can be made from their pay. It may be a small point but I think it' is fairly important, in that there are many men who do not care to inform their employers that their wives are working. For that reason it leads to a number of women giving up their jobs, a number of women who are in essential employment, and I shall refer to only one
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case, namely, that of laundries. I do not suppose there is an hon. member in the committee who, during the last year, has not had some difficulty in having his laundry returned to him. If they have not, 1 am sure that the wives know of the situation which exists today all across Canada with regard to laundries and that type of business which employs a high percentage of women. Laundries have been hit particularly hard by this tax ruling, as have restaurants, bakeries and other types of business employing women workers chiefly. You have only to walk down the street of any big city today to see the signs in the windows saying "waitress wanted" to know what is happening in the country. If one wishes to get an impressive illustration of the situation today he has only to refer to the want ad sections of the daily newspapers. I realize that this employment problem is bringing a large revenue to the daily papers, and I would be the last one to want to cut into their revenue, but you see column after column of advertising asking for women to take employment in all types of industry. I am one who feels strongly that this ruling which says that income tax must be paid by the husband on the amount between $250 and $750 on his wife's wages, has caused this situation to a great extent.


John Ritchie MacNicol: I have two examples of what appears to me to be discrimination so far as income tax payments are concerned. I had a communication from the widow of a doctor who lived in my part of the city. When the doctor died some three years ago he left not only his wife but two daughters. In the meantime both the daughters have married and moved out of the city. One moved to Hamilton, but I do not know to what place the other moved. It is necessary for this lady to retain the services of her servant or maid, and she has complained to me in the strongest language that it is impossible for her to carry on. She has lived in the home for thirty years and raised her family there. While that is only one example, there are many other such cases. I should like to know if the government has in view any amendment or regulation to give redress to cases such as that.
Earlier in the evening some hon. member mentioned widowers. I know of many widowers who retain their own homes. A few moments ago the minister said, well, if they cannot keep their home they can go to a boarding house or apartment, or something to that effect. That does not seem to me to be fair treatment to a widower who wants to keep up his home so that his family may come to stay with him or visit him for the
holiday or longer in the summer time. Has the department additional allowance in view along that line?
Let me give another case which does not seem fair. Take a man in a position like the Prime Minister of this country. I have no right perhaps to mention his case, but he occupies a big home like many other men who keep up big homes. However, in the case of the Prime Minister he is under a tremendous expense because he must keep a home to receive and perhaps to take care of those who may visit him. In his case he is forced to pay heavy taxation and has little allowance, being a bachelor. There seems to be an acute need for improvement in our income tax set-up. The two examples I have mentioned do not seem to be quite fair. What is the real explanation of the treatment meted out to the widow or widower and to bachelors maintaining homes such as the Prime Minister?


Douglas Charles Abbott: As my hon. friend knows, the exemption is based on married status or its equivalent. In the case of the widow to whom he has referred, when her husband died and she was supporting the two children in the house she had a $1,500 exemption. If her children marry and go away that exemption is reduced to that of a single person, $750, and if she is in the income tax bracket that I was discussing a .moment ago with the hon. member for Peel she would pay something in the order of $100 to $150 a year more tax than she did before her husband died or while she was still supporting children in the house. But that applies to everyone who lives in a house. It is a way of life, and we do not assist in paying for self-contained domestic establishments by giving increased exemptions if the taxpayer has no dependents to support.
As regards the bachelor, I do not know that we should amend the income tax law to allow the Prime Minister to get an additional income tax credit. These are the reasons. The additional exemption is due to the married status or its equivalent. It is not an inducement, but a special concession handed out to those who are supporting wives and children or dependents.


Mr. BLACKMORE:: I wish to join with
those who have spoken in disapproval of the income tax as a means of discouraging people from working. The minister expresses unwillingness to modify the income tax in such a way as to encourage people to work. I suggest to him that the country wants him to say whether or not he is equally unwilling to modify the income tax structure so as to discourage people from working. The

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Canadian people, generally speaking, need no encouragement to work if they are given the chance, but it is certainly unfair to discourage them from working, and I maintain that for the last several years the income tax structure has been such as to discourage them from doing work that needs to be done. The time has come to overhaul the income tax structure in order to see that such defects in it are corrected.
I wish to say one thing more and it has to do with production on the farms. I do not know whether it has been brought to the minister's attention, but if it has not I should like to point it out to him now. There is a serious falling off of production in western Canada, at least in the matter of hogs, beef, wool and a great many other things which are needed vitally in the life of the nation. This situation is bad and should be remedied. A few days ago I had a letter from an outstanding agriculturist in my constituency, who, speaking of hogs, said that the falling off in production was not the result particularly of the price of grain or the scarcity of grain or the scarcity of labour or the price of hogs, but simply of the fact that if a man came in after a hard day's work feeding hogs to produce food for the nation he was immediately penalized for doing so. Surely no intelligent group of people governing a nation will permit such a condition to continue. I hope that is sufficiently emphatic and does not need to be remarked upon again.
I would say this in conclusion. I think the suggestion this man made to me in his letter was sound. He said that the first $800 which a man makes from producing, on the side, food such as beef, pork, eggs, butter, potatoes and other needs of life ought to be exempt from taxation, regardless of what his taxation might be in respect of other activities on his farm. That may present some difficulties, but these difficulties must be met and overcome, because this tendency to discourage production of food in this country must be stopped.


Mr. NICHOLSON:: The Iron, member for Winnipeg North Centre tells me he did not finish his story in connection with Gus Johnson, his Swedish friend. Gus mentioned that he did not like the income tax particularly, but ten years ago he was on relief, and he is much happier paying income tax on an income than he would be back on relief. I think he was speaking for the great majority of Canadians. We do not like income tax very well, but most of us would rather have an income that places us in the income tax brackets than belong to the majority of Canadian wage-earners who do not receive an income high enough to be taxable. I will not pursue that line further.
Members of this group have repeatedly emphasized the fact, that it is not the amount of income tax one pays that is important but rather the amount one has left after paying the tax. Ministers of finance have never been able to satisfy the members of our group but we persevere in our argument. It was the minister of finance of New Zealand. Hon. Walter Nash, who captivated the minds of members of our parliament when he was here early in the war, when he outlined the fiscal policy of his country. He said that no one who put on a uniform for hie country should find himself in a worse position because of his service, and, second, that no one who remained at home should find himself in a better position because of having remained at home.
I thought that these opinions had been forgotten by members of the Canadian cabinet, but I happened to be in Montreal in January of this year and heard the Minister of National Defence speak at a public gathering, when he said that it was the policy of the Canadian government so to prosecute the war that, no one who put on a uniform for his country would be in a worse position because of having offered his service, and he mentioned the fact that the Minister of Veterans Affairs was doing everything in his power to see that those who served Canada in the army, air force and navy would not be in a worse position than if they had remained at home. The Minister of National Defence was given a warm ovation when he mentioned that his colleague from Montreal, St. Antoine-Westmount, the present Minister of Finance, was doing his job in seeing that those who remained at home were not to be in a better position financially because of having remained at home.
I am afraid, however, the record of performance will not support that claim. Recently the Minister of National Revenue tabled some information in reply to some of my questions. The information was given on May 26, indicating the financial position of our people in the top brackets. The minister did not reveal how many Canadians receive incomes of $200,000 or more. The Minister of Agriculture gave approximate information. Apparently he has information that is not available to the rest of us. He indicated that there are between twenty and twenty-five in that bracket and suggested it was not really worth while for the hon. member for Rose-town-Biggar to raise this question.
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Douglas Charles Abbott: I am told that it would make a difference of roughly $200 million.


James MacKerras Macdonnell: I hope the fact that the Minister of Finance made no reference to the suggestion made by the hon. member for Rosedale, and supported by the hon. member for Carleton, does not mean that he was not interested in it. Indeed I very much hope that he may say something about it. To me it seemed to be a most important and interesting suggestion, and I would think it has to do with something which, regardless of party, we in this house would approve, namely, helping people to help themselves. I appreciate that there may be difficulties. The difficulties of administration may be great. I understand that it is
one thing to have a pension plan brought forward by an organization which can take care of all the details, which can practically assure the minister that the thing will be carried out in a businesslike way, and that it is another thing to deal with individuals. Nevertheless, it seems to me that there is basically an inescapable fairness in what the hon. member for Rosedale suggested. Once more may I say that it seems to me that, to whatever extent it may be made effective, the suggestion does move in the direction in which, as I said a moment ago, I believe we all want to go, namely, helping people to help themselves. Therefore I would earnestly hope that the minister would find it in his heart to say that the idea is of interest, that it will not be disregarded, that, in spite of the difficulties, the thing will be studied and whatever else he feels he can say with regard to it.


Douglas Charles Abbott: Yes. I was greatly interested in the suggestion made by the hon. member for Rosedale, and I intend to study carefully what he said. Of course, offhand I can see certain obvious objections. Any such government plan which was made purely voluntary would mean that some people would come in to it and some would not. I agree that it is desirable to get people to help themselves as much as possible; but if you have a government plan of that kind which is purely voluntary, you will be faced with some people who have provided their own social security and others who have been improvident and have not done so, but who, nevertheless, if in need, will insist upon being looked after and who will have to be looked after in their old age. So that offhand it would seem to me that is one objection. However, the subject is one which has a great many ramifications and would require a great deal of study. I was most interested in what the hon. gentleman said, and he can rest assured, as can the hon. member for Muskoka-Ontario, that I will study it carefully. Other than that, I cannot be expected to offer any comment this evening.


Mr. ARCHIBALD:: I should like to mention two problems which were laid before me by the representatives of the halibut fleet in Prince Rupert. For the people in many of the fishing villages up the British Columbia coast the cost is quite heavy when they go to a hospital, especially if they have to take their families along with them for medical purposes. They wish to have the cost of transportation to a hospital included in the amount which is deductible for medical expenses. It is getting prohibitive for a man, his wife and

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family to live in these villages up the coast if medical attention is needed for the family. They cannot afford to go out to get it. I also found out that, owing to the fact that there is a shortage of accommodation in the hospitals at the present time, these people who come from Massett in the Queen Charlotte islands and go down to Vancouver to receive hospitalization are told that they must leave the hospital as soon as possible. Granted that while they are in hospital, the amount of their expense is deductible; but when they are discharged from hospital and have to live in Vancouver in order to receive treatment in the hospital each day, the cost of their board and room and their expenses while living in Vancouver is something they are not able to put in as a deduction. Further, if they get drugs through any other source than the hospital, they are not able to mark up their cost as a deduction. Therefore, on behalf of the small communities on the coast, especially where the fishermen live, in order that these communities may grow and become prosperous, I should like to have the benefits I have mentioned extended to these people.
Another matter is one which I can best outline by reference to a letter sent by the Prince Rupert Fishermen's Settlement Service to the inspector of income tax in Vancouver. It reads in part:
In many instances we have cases where assessments are not made for three years after the return is filed, and any differences there may be are assessed and on this non-payment interest is charged for the full three years, and both the fishermen and myself feel that this is not fair and interest should be charged from the date of assessment.
In some cases the mistake may be made by the income tax office itself; yet the fishermen has to pay the interest on the amount he owes, even though it is not his mistake. Some rectification should be made in regard to this matter, because it has been a burning problem there, as many of the men have had interest charged against them where really it should not have been charged.


Douglas Charles Abbott: I will take note of my hon. friend's remarks and see what, if anything, can be done.


Mr. HARKNESS:: I wish to refer to the matter mentioned by the hon. member for St. John-Albert. The minister stated that he would produce the figures for the various provinces as to the amounts which domestic servants are required to show in their income tax returns for board and lodging. I wonder if he would do the same thing as far as hired men in the various provinces are concerned.
I have heard a few' complaints in regard to the matter, and I think it might be well perhaps to have it cleared up at the same time.
I have reference to hired men on farms. I do not know whether it is practical or not to do anything about the matter but in our part of the country at any rate the fact that the farmer has been required to collect the income tax out of the payment he makes to his hired man has been productive of a great deal of difficulty and a great deal of trouble. The practical effect of this requirement has been that the farmer who himself turned in an income tax return and in that return reported what he paid to his hired man and deducted from his hired man's wages the amount required, in most cases lost his hired man and lost him to the man who did not turn in an income tax return or who turned in an incorrect one, we will say, or something along that line. As I say, I do not know whether there is any practical means of correcting that situation, but I should like to bring it to the minister's attention, because it has been the reason why at least two farmers whom I know have had to cease business in our part of the country, owing to the fact that they could not get hired men. Their hired man said, "Well, you are taking so much a month away from me because of income tax. Nobody else around the country is doing it, and I won't work here". These people found it impossible to keep hired men, so they just quit. They were oldish people anyway, and could not carry on by themselves.
As I say, the average farmer is not in the same class as the businessman wTho keeps regular books and is in a position to make deductions from the wages he pays his employees. A large number of farmers do not know anything about this and just will not bother with it. As a result, I say it works out in a very unfair way to the people who do make an effort to comply with the law. and causes them to lose their hired men. It seems to me that, from the practical point of view, the amount of money the government would realize through collections made in its behalf by farmers from hired men would not be sufficient to compensate for the difficulty and trouble it causes, so I would ask that the matter be given some thought and consideration.


Douglas Charles Abbott: I shall be glad to do that.


Robert Fair: I should like to get same information from the minister. Once before I thought we had this matter settled, but I see the administration entirely ignores some of the answers given by the former minister, so I vould like to have this thing squared up and
Income War Tax Act

perhaps get some definite information so that farmers making up their tax returns may know exactly where they stand. This form I hold in my hand is the blue form used by farmers. On the back, under the heading, "Notes re farm receipts and expenses", I find this paragraph:
4. Produce used from "family garden" and small sums usually termed "pin money" obtained by the wife, sons or daughters, by their own efforts, need not be taken into account.
I understand that the practice, at least in the Edmonton district, is that all this has to be accounted for, even though in most cases produce of this kind is raised by the wife and children. They are allowed no wages whatever for the work they do, and the farmer is billed for income tax on all the income received from the sale of all produce, whether raised by himself, his hired help, or his wife and family. Then again under the same heading I see this paragraph:
Produce raised on the farm and consumed in the farm home:	Include only commercial produce raised for sale as part of regular farm operations. Do not include produce of unsaleable quality or produce from family garden. Value at price you would ordinarily receive for the produce.
I understand that in the Edmonton district a charge of $50 is made against each member of the family for produce grown and consumed on the farm. I should like some definite information in connection with this clause, which, I understand, has been causing a great deal of trouble, because there is not uniformity of administration.


Douglas Charles Abbott: If my hon. friend will allow me, I shall have that looked into. It will not be possible to give an answer tonight, but I will try to give it on the. section of the bill relating to the income tax schedules.


Robert Fair: I would be glad if the minister would do that.
Then, before getting away from some other points that have been raised, I should like to ask the minister some questions in connection with the brief presented not so long ago by the Alberta Farmers' Union and the United Farmers of Canada, Saskatchewan section. On May 12, when I was speaking on the budget, I did not have sufficient time to complete what I wanted to say, so I am going to bring these points to the attention of the minister now so that he may give me the answers at the same time.
These organizations are asking for a four-year average for income tax purposes, for farmers. I realize that we now have a three-year average, but I believe that should be extended to four or even five years in order 
to give a fair average. Then they recommend that in the case of dispersal sales of live stock, an equivalent number of animals to those owned on January 1, 1941, be considered a capital asset and not subject to income tax. I believe there is just cause for complaint in this connection, and I should like very much to have the minister give, this matter consideration also.
Next they ask that the exemptions be increased to $1,200 and $2,400 for single and married persons respectively. The minister has told us there will not be any changes in the exemptions this year, but I am going at least to request that further consideration be given this point.
The next request is that an allowance be made for the labour of farm families in connection with production on the farms. For many years those of us who represent agricultural constituencies have been trying to get some allowance or some exemption from income tax on account of the work done by farm wives and families. Up to the present time we have not been successful, but I am hoping that at last the government will see that some justice is done ini this connection.
Then, as has been pointed out by the hon. member for Calgary East, these organizations request that the farmer should not be made responsible for income tax deductions from the wages of his hired help. As the hon. member has said, farm help is scarce; if a farmer collects the tax on the wages of his hired man, that man will just go to the farmer next door and get a job there, and the first farmer will be left without heip.
Then they recommend that payments of arrears of principal on the farm home, and on machinery debts and all that kind of thing, contracted prior to 1940 when we were coming out of the depression, should be allowed as an expense of the year in which the payments are made.
They also request that the income tax form be simplified. If all the farmers were bookkeepers they would be able to get along with the present forms, but since they are not bookkeepers it is quite a job for them to make out these returns.
Then item No. 12 in this brief requests uniformity of interpretation and administration of the act, and I believe that request should be given consideration.
Another question which has caused some trouble is in regard to the expense incurred by farmers in brushing and breaking land. I find that in some cases a farmer who has hired an outside man, perhaps a contractor, to clear and break his land is not allowed that expense as a deduction. In one instance which I referred to the department, they did allow

Income War Tax Act
the cost of breaking, because that was ploughing, but not the cost of brushing; but before this particular piece of land could lie ploughed, it had to be brushed. I believe that should be taken into consideration as an expense and allowable in the year in which payment is made. If the farmer hires a man by the month or by the year and has him do that work, there is no question whatever about the expense being allowed as a deduction.
Then I believe money expended in drilling or boring wells or excavating dugouts on the farm, together with all equipment for this work, should be chargeable as a current expense. That has not been done in the past; only recently, I think, have farmers claimed depreciation on wells and other things of that kind. I believe consideration should be given this request also.
Then I am going to give the minister a suggestion that was made by one of my constituents in Hughenden, a man named Nicholson, who discussed the income tax with me last fall. He suggested that the government include in its programme of public information some information dealing with the making up of income tax returns by farmers. If the government does not find it feasible to do this by way of radio programmes I would suggest that a booklet be made up setting out the things allowable as expenses and giving all other information, so that farmers may understand exactly what the department expects of them in connection with filing their returns.


Douglas Charles Abbott: I shall take note of my hon. friend's questions and try to give him an answer later.


An hon. MEMBER:: Eleven o'clock.


William Henry Golding: Shall I report the special war revenue resolutions?


Douglas Charles Abbott: What is the wish of the committee with respect to these income tax resolutions? Do we carry on, or could we pass them?


Some hon. MEMBERS:: Stand.


Some hon. MEMBERS:: Carried.


Douglas Charles Abbott: I do not want to press it, but we have had three hours of discussion on the income tax rates. There are a number of other resolutions we have to discuss, so I wonder if we could not carry these.


James MacKerras Macdonnell: Which do you refer to?


Douglas Charles Abbott: I refer to resolutions 1, 2 and 3. They are all together. Then, under the other ten resolutions, we could carry on with the matters therein dealt with.


Donald Methuen Fleming: I have one question in respect of resolution No. 3.


An hon. MEMBER:: Eleven o'clock.


Douglas Charles Abbott: Perhaps I could answer the hon. member's question on the next section, if the committee would agree to that procedure. I am anxious to make progress; that is all.


Howard Charles Green: Why not let the first resolution pass?


Agar Rodney Adamson: The first two.


Douglas Charles Abbott: Then I understand the committee is prepared to pass resolutions 1 and 2.
Resolutions 1 and 2 agreed to.
Resolution 3 stands.
Progress reported.



[Stage Direction]
Resolutions reported, read the second time and concurred in.

[Stage Direction]
Resolutions reported, read the second time and concurred in.
On motion of Mr. St. Laurent the house adjourned at 11.05 p.m.
Thursday, May 29, 1947