OFFICIAL REPORT


[Stage Direction]
Jfyoust of Commons Bebates
[Stage Direction]
Monday, April 12, 1943


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I should
like to invite Your Honour and all hon. members of the House of Commons to a special screening of the film entitled "Desert Victory", at 10.30 o'clock on Wednesday morning. The screening will take place at the Capitol theatre, the management of the theatre having very kindly made it available for that purpose.
As hon. members are aware, the film "Desert Victory" relates to the advance of the eighth army to Tripoli. It was made under actual battle conditions by camera men of the army and air forces. Some weeks ago I received from Mr. Churchill a message in , which he said that he had just seen this vivid film, and would like me to see it, and that he was sending me a personal copy by air. Through some delay in transmission the copy did not arrive until last week. I have seen it and have been very deeply impressed by it. I feel that it would be a matter of unusual interest to hon. members to see this very remarkable motion picture before they leave for their homes at the Easter recess.
I am sure that the experience of seeing it will be an incentive to any who have that opportunity to do all in their power to help in the organization of the fourth victory loan campaign, which will begin a fortnight hence.
I might add that an invitation is also being extended to hon. members of the senate and to the members of the press gallery of this House of Commons.



QUESTIONS

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

Mr. CASTLEDEN:: 1.	What persons are or have been the members of the wartime depreciations board?
2.	Have any of these persons retained any financial, directional, or business connections with any private company, partnership or corporation while they held positions on this board?
3.	What positions did they hold prior to becoming members of this board?
4.	What are the rates of pay and other arrangements regarding allowances and expenses while serving on this board?
5.	Is there any report of the depreciations allowed by this board published by the department?


Mr. GIBSON:: 1.	(1) The Hon. Mr. Justice Charles Patrick McTague, (chairman); (2) Francis H. Black, C.A.; (3) Robert F. Burns, C.A.
2.	(1) The Hon. Mr. Justice C. P. McTague and Mr. Robert F. Bums, C.A., have retained no financial, directional or business connections with any private company, partnership or corporation while they hold positions on this board. (2) Francis II. Black, C.A., has retained no financial or directional interest with any private company or corporation but remains a partner in the accounting firm of Black, Hanson & Co.
3.	The Hon. Mr. Justice C. P. McTague was and still is a member of the Court of Appeal for Ontario. (2) Francis H. Black, CA., was and still is a member of the firm Black, Hanson & Co., chartered accountants, Port Arthur, Ontario. (3) Robert F. Burns, C.A., was an employee of the income tax division.
4.	(1) The Hon. Mr. Justice C. P. McTague: Order in council P.C. 60/5095, dated the 15th June, 1942: "Expenses incurred while away from his home in Toronto, such expenses to include travelling, hotel, meals and incidental expenses." (2) Francis H. Black, CA.: Order in council P.C. 1/495S, dated the 20th September, 1940: "Fifty dollars (S50) for each day he is in attendance as a member of the said board, in addition to expenses incurred for mileage, transportation, taxicabs, telephone and telegraph, for each day he is absent from Port Arthur, Ontario, in the exercise of his duties as a member of the said board." (3) Robert F. Burns, C.A.: Nothing except the usual civil service travelling expenses.
5.	In the aggregate, yes; as to individual taxpayers, no.

Questions


POST OFFICE-REDUCTION OF SALARIES AFTER EXAMINATIONS
Mr. LACOMBE:: 1.	Are employees of the Post Office Department after they have commenced their duties as such, compelled to submit to examinations?
2.	If so, do the examinations relate exclusively to the duties they are called upon to perform?
3.	Who is the superintendent of these examinations?
4.	As a result of such examinations,' did certain employees have their salaries reduced by as much as $120 per annum?


Mr. MULOCK:: 1.	Yes.
2.	Based on general postal duties.
3.	Chief superintendent of railway mail
service.	[DOT]
4.	Yes. Such action was taken because the employees concerned had failed to pass the required examination, although repeated warning had been given to them as to the possible consequence of failure.


CANADIAN FORCES-FOOD RATIONS WHILE ON LEAVE
Mr. CHURCH:: 1.	What are the present regulations with respect to allowing soldiers on active service special allowances on food rations while home on leave?
2.	Are any special allowances made to soldiers' families when members of the active forces are home on leave?


Mr. ILSLEY:: 1.	Personnel of the armed forces proceeding on leave of five days or longer may obtain a ration card by presenting their leave warrant at any branch office of the ration administration or at any local ration board of which there are more than five hundred. If the party proceeding on leave does not leave from or go to a point where ration cards are issued, a ration card is applied for in writing by the officer commanding the unit.
2.	Special allowances of rationed commodities are not made to soldiers' families except as mentioned above.


ROYALTIES ON TABULATING MACHINES
Mr. MARSHALL:: What are the particulars of the following item appearing in the auditor general's report, page 376, for year ended March 31, 1942: "an amount of $10,800 was' paid to F. Belisle and J. T. Richard for royalties on tabulating machines"?


Mr. MacKINNON (Edmonton West):: 1941: May 13, S3.600; June 6, $3,600; July 9, $3,600; total: $10,800.
IMr. Gibson.]
Being royalties in connection with six tabulating machines at $1,800 each. Each machine was valued at $9,000. Amount of royalty authorized by patent office.


METALS CONTROL-WERNER LAKE, ONT., COBALT PROPERTY
Mr. NOSEWORTHY:: 1.	Has the metal controller, or any other government official or government board, granted any priority rights or privileges to any individual or company for the building of a mill on any cobalt property at, or in the vicinity of Werner lake, Ontario?
2.	If so, is such a mill being built, or about to be built?
3.	To what company or individuals have such priority rights or privileges been granted?
4.	What is the nature of any such priority, rights and privileges, or permission, granted by any government official or board?
5.	Has any government board or controller granted the owners of this property, or anyone else interested in the development of this property, the right to fly a mill and equipment into this camp?
6.	If any such priority rights, or permission, have been granted, on what grounds are they justified?
7.	Has cobalt already been shipped by airplane from this property?
8.	If so, what quantity has been shipped, and where has the destination been of such shipments?
9.	Has any one or more individuals associated with the metal controller's department any connection, financial or otherwise, with this Werner lake property?
10.	If so, who are they, and what is their connection with this property?


Mr. HOWE:: 1.	No priority rights or privileges have been given or asked for. The ordinary form of construction permit was granted.
2.	A small 25 ton per day mill is being set
up.	'
3.	No priority rights have been granted.
4.	Permit issued under the construction controller to set up a small mill.
5.	No.
6.	Answered by 5.
7.	Yes.
8.	Approximately 400 tons of ore. Destination was a consumer in the U.S. under a private commercial contract arranged in July, 1940.
9.	Yes. One.
10.	Norman B. Davis, technical adviser to the metals controller had started development of the property in question under lease prior to joining the staff of the metals controller in September, 1940. Mr. Davis joined the staff of the metals controller at that time on a clear understanding of his interest in the Werner lake cobalt property.

Questions


ISSUE OF REGISTERED NON-INTEREST BEARING CERTIFICATES
Mr. KNOWLES:: 1.	What is the total amount, from July 8, 1940, to the present, loaned to the government by the purchase of registered non-interest bearing certificates, due June 15, 1945?
2.	What is the total number of certificates issued as above?
3.	What is the total amount, from December 11, 1940, to the present, loaned to the government by the purchase of registered non-interest bearing certificates (series B), due June 15, 1945?
4.	What is the total number of certificates issued, as above?


Mr. ILSLEY:: 1 and 2. $12,055,248.88 of non-interest bearing certificates (series A) have been issued to March 31, 1943, covering 4,436 applications. To the same date $3,475,732.38 of these certificates have been redeemed.


James Lorimer Ilsley: Province:
Alberta	
British Columbia ....
Manitoba	
New Brunswick	
Nova Scotia	
Ontario	
Prince Edward Island
Quebec	
Saskatchewan	
Northwest Territories
Total	
3 and 4. $497,328.12 of non-interest bearing certificates (series B) have been issued to March 31, 1943, covering 18,962 applications. To the same date $21,972.23 of these certificates have been redeemed.


OLD ACE PENSIONS
Mr. BLACK (Cumberland):: 1.	How many old age pensioners were there in each of the provinces during the year 1942?
2.	What was the number per thousand of population in each of the provinces during the year 1942?
3.	What was the average amount paid pensioners in each of the provinces during the year 1942?
4. What was	the average amount	paid to
pensioners by each province as its		share or
contribution to year 1943?	old age pensions during the	
(as at	December 31, 1942)	
(1)	(2) Number of	(3)
	pensioners	Average
Number of	to each 1,000	monthlypensioners	population*	pension11,150	14.15	$18 6614,411	17.81	19 2612,737	17.64	18 7811,883	26.23	15 1614,273	24.91	15 2958,460	15.56	18 811,918	20.40	13 5247,450	14.29	17 0013,215	14.88	17 449	.82	20 00
185,506
4. The Old Age Pension Act provides that the dominion pay to the provinces quarterly 75 per cent of the net sum paid out for pensions. The provinces' share of the average pension shown in the answer to question 3 would, therefore, be 25 per cent.
Note.-The above figures relate only to old age pensions and do not include pensions paid to blind persons under the act.
*Based on the estimated population as at June 1, 1941, taking into account the preliminary figures of the 1941 census.


MACHINERY SERVICE LIMITED, VILLE LA SALLE, QUE.
Mr. COTE:: 1.	Who are the directors and officers of the Machinery Service Limited, of Ville La Salle, Quebec, and where does each reside?
2.	Do the abovementioned devote their whole time to work of this company?
3.	What salary, bonus and allowance does each receive?
4.	What number of technical workers were there in this plant, (a) during the first month of its operation; (b) during March last?
5.	Are these workers refugees?
6.	Did the Canadian authorities approve the employment of each of such refugees?
7.	Was the home office of the United Kingdom consulted regarding such employees?
8.	Did the government facilitate the housing of such workers?
9.	If so, to what extent?
Questions


Mr. HOWE:: 1,	2 and 3. Directors-Mr. Thomas Arnold, Montreal, president; Mr. Emile Corbeil, Montreal; Lt.-Col. R. S. W. Fordham, Ottawa. Officer-Mr. R. W. Clark, Montreal, secretary-treasurer. The president and directors receive no remuneration. The secretary-treasurer receives $4,200 per annum and is the only full-time officer.
4 and 5. In February, 1942, there were 26 technical employees, all refugees. In March 1943, there were 100 technical employees. Ninety of these are refugees and the remaining ten are Canadian.
6.	Yes. .
7.	Yes.
8.	Yes.
9.	Hutments have been erected by the government with facilities for housing all refugees employed.


WARTIME HOUSING LIMITED-TORONTO MUNITIONS WORKERS AND SOLDIERS' FAMILIES
Mr. CHURCH:: 1.	Will any houses he built in Toronto by Wartime Housing Limited for wartime munitions workers and soldiers' families?
2.	If so, where, and on what terms or conditions ?
3.	What is being done by the government to aid housing situation in Toronto and provide houses for returned soldiers after the war?


Clarence Decatur Howe: Since the minister's statements on housing conditions in the city of Toronto of March 17 and March 25, Hansard pages 1325 and 1544,, respectively, no changes have occurred in housing conditions in that city within the knowledge of the department that would warrant any change in policy. The minister's statements are as follows: Page 1325, Hansard, March 17, 1943, "Hon. C. D. Howe (Minister of Munitions and Supply): The housing situation in Toronto has been under study more or less continuously for some months by the Department of Munitions and Supply and by the real estate administrator of the wartime prices and trade board. Until quite recently there was a difference of opinion within the government of the city of Toronto as to whether housing was needed, but within the last two or three weeks a unanimous request has come from the city government for housing. Since then new surveys have been made by both Wartime Housing and the real estate administrator and it has been found that the situation in Toronto is not so acute as to bring it within the purview of Wartime Housing Limited. The decision is that the situation in Toronto is not sufficiently grave to warrant action with respect to housing at this time." Page 1544, Hansard, March 25,

1943: "Hon. C. D. Howe (Minister of Munitions and Supply): I think the matter is wholly one for the city of Toronto. I cannot see how it- affects matters of supply."


*USE OF EIRE NAVAL BASES
Mr. CHURCH:: 1.	Has the government, since the house closed last August, taken any steps with other allies to secure the use of the Eire bases which belong to the empire, for immediate use so as to help in the battle of the Atlantic?
2.	What action, if any, has been taken by the government in this matter since August last?
3.	Has there been any consultation with the government of the United States or Great Britain, or other allies, on this subject since the above date?


William Lyon Mackenzie King: I hope the hon. member will not think that I am taking too strong exception if I say that I feel that this question should not have been permitted to appear on the order paper. It is certainly a question to which a reply could not be given at this time.


CANADIAN FORCES-PAY AND ALLOWANCES
Mr. CHURCH:: 1.	Has any consideration been given yet to the matter raised re inequalities in pay, subsistence and all other allowances of officers and men in His Majesty's forces since the blueprint of rates paid was tabled last session?
2.	Will immediate action be taken to bring about some changes in these inequalities set out in the pay of all ranks?


Mr. RALSTON:: I can answer this question to the effect that consideration has been given to the matter of subsistence and allowances of officers and men, and certain changes have been made, which have been announced in the press. With regard to future action, that will be announced when any new policy is decided upon.


LIABILITY OF AUTOMOBILE OWNER CARRYING
Mr. ROSS (St. Paul's):: Has the Department of Justice given any opinion as to the liability of an automobile owner in case of an accident to a member of the armed forces while being driven as a passenger?


James Layton Ralston: The answer is in the affirmative.


DEFENCE INDUSTRIES LIMITED-TRANSCONA CORDITE PLANT
Mr. KNOWLES:: Has an order been issued for the lay-off in May, 1943, of five hundred men, more or less, from the Transeona cordite plant of Defence Industries, Limited?

Questions as Orders for Returns


Clarence Decatur Howe: No, and there is no further lay-off contemplated at this time. For the month of March and continuing until April 7, 1943, 134 men were laid off and 221 left the employ of the company of their own accord.
Payroll and staff figures for the Transeona cordite plant for the last five months are as follows:
	Payroll	Staff
November . . . .	.... 2984	358December . . . .	.... 2880	363January	.... 2749	353February .. ..	.. .. 2613	348March	.. .. 2261	327



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. FAIR:: 1.	Since the wartime prices and trade board was set up, what items necessarily purchased by the farmer for production purposes, have been increased in price by order of the board?
2.	During the same period, on what products of the farm has the ceiling price been raised?


James Lorimer Ilsley: Return tabled.



SUBSIDIES TO FISHERIES

Mr. ROY:: During the fiscal years 1937-38 to 1941-42, both inclusive, what subsidies relating to fisheries were granted by the dominion government to governments, individuals, companies and other organizations in each province, directly, or through the media of federal bodies?


Mr. BERTRAND (Laurier):: Return tabled.



PENSIONS-VETERANS OF NORTHWEST REBELLION

Mr. PARENT:: 1.	How many veterans of the Northwest rebellion are still living in Canada?
2.	Are they on the same footing as veterans of the great war, and in receipt of a similar pension?
3.	If not, will steps be taken to put them on the same footing with respect to rights and privileges as veterans of the 1914-1918 great war and the present war?



GOVERNMENT-OWNED COMPANIES

Mr. COTE:: 1.	Have any government-owned companies been set up since January 1, 1943?
2.	If so, what are they, and for what special
purpose ?	_
3.	What are the addresses of their business offices and/or plants?
4.	To which federal department is each responsible?
5.	What are the names and addresses of the directors of each company?



SHIPBUILDING


Mr. CASTLEDEN:: 1.	Are any of Canada's shipyards not working
twenty-four hours per day?	_
2.	If so, what are the reasons for not working full time?
3.	What is the total number of full-construction days lost in Canada's shipyards during 1942?
4.	What is the average time required to construct a corvette from Canadian shipyards?
5.	How many man-hours of labour are required in the construction of a corvette from Canadian shipyards?



APPOINTMENTS BY ORDER IN COUNCIL

Mr. CASTLEDEN:: 1.	How many persons have been appointed by order in council in each of the departments of government in each of the years, 1939, 1940, 1941, 1942?
2.	What was the rate of salary, expenses or other remuneration in each such appointment?



NUMBER OF GOVERNMENT EMPLOYEES AS OF MARCH 31, 1943

Mr. McGREGOR:: 1.	How many government employees, both permanent and temporary, including those working on wartime boards, were there as of March 31, 1943?
2.	How many were there on March 31, 1942?



PURCHASE OF ARM CHAIRS, CHESTERFIELD SUITES, ETC.

Mr. McGREGOR:: 1.	How many, (a) arm chairs, whether upholstered or not; (b) chesterfield suites, in whole or in part; (c) sofas or lounges, have been purchased by each department in each year, 1939-1942 inclusive?
2.	What was the total expenditure therefor in each of said years?



PROVINCIAL GASOLINE TAX REVENUES

Mr. REID:: 1.	What was the total number of gallons of gasoline used in each of the nine provinces during the years, 1939, 1940, 1941, and 1942, (a) for civilian use; (b) commercial use, trucks and busses?
2.	What sums of money have been paid or are due to the various provinces for any losses they have sustained due to the loss of revenue in connection with gasoline taxes, giving the period for which these sums are due or payable to the various provinces?



WARTIME HOUSING LIMITED-PREMISES

Mr. ROSS (St. Paul's):: 1.	How many premises are occupied by Wartime Housing Limited?
2.	What is the location of each?
3.	What is the floor space of each?
4.	What is the rental price of each?
5.	Whom were they rented from?
6.	What is the duration of each lease?

Questions as Orders for Returns



WARTIME HOUSING LIMITED-EMPLOYEES

Mr. ROSS (St. Paul's):: 1.	What were the total number of employees, including directors, of Wartime Housing Limited, on March 31, 1941, March 31, 1942, and March 31, 1943?
2.	What was the total amount of salaries or wages paid up to these dates?
3.	What was the total amount of living allowance paid up to each of these dates?
4.	What was the total amount of travelling expenses paid up to these dates?
5.	How many were in receipt of a wage or salary of $3,000 or over?
6.	What were their names and positions, and what positions did they occupy before being employed by Wartime Housing Limited?
7.	What amount of remuneration was paid to each of them by way of salary, wages, living allowance and travelling expenses?



GOVERNMENT EMPLOYEES IN WAR AND NON-WAR WORK

Mr. ROSS (St. Paul's):: 1.	What is the total number of employees of the government of Canada, including employees of boards and commissions, appointed by federal authority, as of the following dates, viz: September 1, 1942, and March 1, 1943?
2.	What is the total amount of salaries, wages and allowances paid to such employees in each of the following months, viz: September 1, 1942, and March 1, 1943?
3.	What is the total number of employees who have been appointed since September 1, 1942, (a) for work not directly associated with the war; (b) for work directly associated with the war?



WARTIME HOUSING LIMITED-BOARD AND LODGING IN STAFF HOUSES

Mr. FRASER (Peterborough West):: What are the rates for board and lodging charged by Wartime Housing in their staff houses for, (a) men, and (b) women?



OTTAWA HOSTELS FOR GOVERNMENT EMPLOYEES

Mr. FRASER (Peterborough West):: 1.	Are there any hostels in Ottawa for government employees?
2.	If so, how many, and by what department are they operated?
3.	What are the rates for board and lodging for, (a) men, and (b) women?



MOTIONS FOR PAPERS


Stanley Howard Knowles: For a copy of forms of contract, also any agreements or memoranda attached thereto or made part thereof, used by the government, or any department thereof, in letting contracts for printing to private firms. .


Mr. McLARTY:: Return tabled.



MUNITIONS AND SUPPLY-PURCHASING AND COSTING POLICY

['I understand a few cars have been ordered in, and no further difficulty is anticipated after they arrive.']
James Alexander Marshall: For a copy of memorandum dated February 15, 1943, received from an association of forty-seven Canadian firms and industries by the Department of Munitions and Supply covering the purchasing and costing policy of the department.



Mr. ROSS (St. Paul's):: 1.	At what locations have housing developments been constructed by Wartime Housing Limited?
2.	How many houses have been built at each location?
3.	What are the descriptions of these houses showing, number of rooms, construction, material, etc.?
4.	What conveniences are at each location, such as water, sewers, etc.?
5.	What was the estimated cost of each unit at each location?
6.	What was the contract price at each location?
7.	W as it lump sum, cost plus percentage, or fee?
jj- What was the actual cost at each location?
9.	What was the actual cost of each unit at each location?
10.	What were the administrative costs at each location?


NATIONAL DEFENCE-TELEPHONE CALLS
Mr. ROSS (Souris):: What are the total amounts of charges within the Department of National Defence by the month, January 1, 1942, to January 1, 1943, (a) headquarters telephone calls; (b) each district command telephone calls?
(.Mr. Douglas G. Boss.!


MINING AND MILLING OF COBALT
Mr. NOSEWORTHY:: For a copy of all letters, telegrams and other documents passing between the metal controller's office and the metal reserves board of the United States of America relating to the discovery mining or milling of cobalt, and in particular the correspondence relating to recommendations made by the metal controller to the metals reserve for the setting up of a fund of $100,000 to dewater and rehabilitate mines in the cobalt area.


Clarence Decatur Howe: This refers to correspondence exchanged between the Department of Munitions and Supply and an agency of the United States government. The correspondence could not be tabled in any event without the consent of the latter department. In any event I do not consider that it is in the public interest to table the correspondence and documents between the two countries concerned.
There is a question on the order paper to-day asked -by the hon. member who is sponsoring the motion, and the answer is given regarding that particular transaction. If the hon. member would like to see the

Munitions and Supply Act-Blackout
correspondence and documents referred to in his motion I shall be glad to let him see them, but I do not think they should be tabled in the house.


JAPANESE NATIONALS IN BRITISH COLUMBIA- REMOVAL TO OTHER AREAS
Mr. GREEN:: For a copy of all agreements and letters between the dominion government and/or the British Columbia security commission and any provincial government dealing with the removal of persons of the Japanese race from their respective provinces.


PRISONERS OF WAR
[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Leader of the Opposition):: I should like to address a question to the Prime Minister. A news dispatch from Ankara, Turkey, which appeared in the press of Saturday last states that twelve hundred British wounded prisoners of war are to be given up by the axis in return for twelve hundred of their wounded men. The exchange, it is stated, will take place at Smyrna. Can the Prime Minister inform the house whether or not any wounded Canadian prisoners of war will be included in this exchange?


William Lyon Mackenzie King: I regret that I am not in a position to give my hon. friend any information.


INTERNATIONAL CURRENCY
[Stage Direction]
On the orders of the day:
Mr. J. H. BLACKMORE (Lethbridge):: I should like to direct a question to the Prime Minister. The other day he indicated that he would table at an early date the proposals from the United States and Great Britain for their respective plans for international currency stabilization. Can he say when the house may expect these documents to be tabled?


William Lyon Mackenzie King: Just as soon as I get them from the officers of the department.


REPORTED SHORTAGE AT FLIN FLON
[Stage Direction]
On the orders of the day:
Hon. J. G. GARDINER (Minister of Agriculture) :: The hon. member for Rosetown-
Biggar (Mr. Coldwell) asked a question the other day with regard to supplies of milk at Flin Flon. Just before the question was asked there had been a shortage. That shortage was supplied by having some shipments sent in. The shortage was created because of the necessity for accumulating milk to ship overseas. I understand the cause is past and there is no likelihood of any further difficulty.


Mr. COLDWELL:: I have a letter by air mail to-day reiterating the complaint. I sent the minister this morning a copy of the material part of the letter.


James Garfield Gardiner: I understand a few cars have been ordered in, and no further difficulty is anticipated after they arrive.



WAYS AND MEANS


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of ways and means.
Mr. JEAN-FRANQOIS POULIOT (Temis-couata): I have a few remarks to make in connection with a deplorable incident that occurred on Friday evening, when we were discussing the bill to give new life to the Department of Munitions and Supply. That bill received first reading on February 24. According to an amendment passed in 1941, not according to the original statute, the life of this department was to end on Friday night at twelve o'clock. Though the bill to extend the life of the department had been before parliament for a month and a half the minister waited not until the last day but until the last evening to move second reading. The debate was going on when you, Mr.' Speaker, said there would be a blackout in Ottawa. I understood there was to be a surprise blackout for the whole city.
Mr. CRUICIvSHANK: We have one here now.
Mr. POULIOT:: There are none so blind as those who close their eyes, and none so deaf as those who will not hear. I always abide by the law; I thought the blackout was a wartime regulation applying to the whole city. I did not protest. I took it for granted that the blackout of which we were informed a few minutes before it occurred, was to be complete; therefore I went to my room. To my great surprise, however, I saw glaring lights all over the city. The lamps on the posts in these grounds were burning; the windows of the Rideau club were lighted, and I found that the blackout was only for the House of Com-
2050	COMMONS
Munitions and Supply Act-Blackout
mons and the government buildings. The blackout of government buildings when night shifts are not on duty is a farce. There are no lights in those buildings anyway; there is nothing to black out. But we were sitting here; we were discussing this bill, and the debate was adjourned before 9 o'clock, while two hours remained for discussion.
I have some further objection to the report of the comments by the minister to the Ottawa Journal, which I quote from the noon issue of Saturday last. The reporter got in touch with the minister, and this dialogue is reported:
. "Sorry to bother you," said the Journal, calling Mr. Howe by phone later, "but now that you are just an ordinary citizen, and out of a job at that, it doesn't matter so much." "How so?" asked Mr. Howe. "No bill, no munitions department, not until Monday at 3 p.m., anyway." "Ah," returned Mr. Howe slowly and sweetly, evidently enjoying it-
Mind you, sir, he was enjoying it.
-"We fooled you. Just rushed through an order in council, expecting that perhaps the bill might not pass to-night." The munitions department still is the munitions department through the minister's foresight and the grace of a hurried order in council. The bill may go to the ash-can, killed by a black-out; for the order in council gives the munitions department life for the duration.
I wonder if the minister really said those words; if he tried to fool the House of Commons by ordering a blackout to interrupt the debate on the bill. It may look strange at first, but the bill was there, waiting for the last moment; and before the last moment came we had this blackout. There are jokes, of course. I do not wish to be hard on the minister; if he tried to fool the correspondent of the Journal, so much the better. On the other hand if he tried to fool the House of Commons it is an altogether different matter.
I remember that one fateful day, February 21, 1941, I expressed grave fears about growing fascism in this country, and if the minister used that language with regard to the House of Commons it is a very serious matter.
My first question directed to the minister is whether he spoke to the Journal as he is reported. My second question is this. The original bill creating the Department of Munitions and Supply was passed by parliament in 1939. There was an amendment in 1941, and since February 24 we have had on the order paper this bill to amend further the original bill and also to extend the life of this department. My second question to the minister is whether the debate on that bill has been concluded forever as a result of the blackout that was ordered on Friday evening. The amending bill of 1941 contained a section providing
(Mr. Pouliot.]
that some decisions made by the munitions department might be prolonged even after the bill creating the department expired, but there is no suggestion there that the life of the whole department could be extended by an order in council. I understand it is an emergency measure, but if the bill had been brought before the house a month earlier there would have been no need for the order in council.
This is not a question only for the hon. member for Temiscouata; he is not at all moved by rebuffs. It is a good thing to be hard-boiled1 at times; but the question involved1 is the survival of parliamentary institutions.
My third question is this: Who ordered the blackout of the parliamentary buildings? At what time was it done? At what time was the notice given to turn off the switch in this building?


Clarence Decatur Howe: Mr. Speaker, no one was more
disturbed than I was when the blackout occurred at the time it did. In fact, I think no one in the house has more right to complain about blackouts, because I seem to be the victim of all of them. I have no idea who ordered the blackout. I received advice of it about ten minutes before it occurred, and that advice came from the Prime Minister's office. But I am certain the Prime Minister was not in any way involved in ordering it. Just from whom the order came I cannot say.
My conversation with the Journal reporter was a very simple one. He called and asked if the Department of Munitions and Supply had ceased to exist. I replied that it had not. He said, "How does that occur?" I said that an emergency order in council had been prepared and signed, to permit the department to continue throughout the life of the present session of parliament. Of course, the intention is to pass the amending bill as soon as possible. The government is reluctant to amend legislation by order in council; and for that reason the government, including myself, was anxious to have the bill passed within the allotted time. We were unable to do so, and for that reason the order in council was necessary.
In the conversation with the Journal reporter I said nothing derogatory of parliament. Certainly it was no fault of parliament that the sitting had to be adjourned.
I read the article in question hastily, and I saw nothing in it which suggested that I had said anything derogatory of parliament.

Income Tax-Deductions and Allowances


Hon. R. B. HANSON (York-Sunbury):: Mr. Speaker, before you leave the chair so that the house may go into the committee of ways and means there are some observations I should like to make. I do not rise for the purpose of discussing the blackout, except to say we all agree that these trial blackouts should take place. But I am wondering who gave the instruction to turn off the power for the elevators in this building at the same time. That would not seem to be necessary, when a blackout of the lighting of the buildings is required. A group of us were nearly caught for the duration in one of the elevators. I thought the pulling of power switches, along with the light switches, was a stupid procedure.
I am glad to have the assurance of the Minister of Munitions and Supply that he is not withdrawing his bill, because the discussion on second reading only touched lightly and, so far as I am concerned, very gently, the principles underlying the bill. There is a great deal I could say about the measure. And I would have said it, too, had I not thought the department was more or less in extremis, and that its life might be endangered. I hope that when the bill comes up ample opportunity will be given for its consideration, now that we are assured that no irreparable injury will be sustained by reason of the delay.
I was interested in the minister's statement that the government is always reluctant to amend legislation by order in council. That will be news to most private members who, in season and out of season have watched the passage of orders in council by the administration, not by the dozen but by the hundreds, while parliament is in session. I have said on more than one occasion that it is an affront to parliament, and I reaffirm that position to-day.
I am afraid the minister had his tongue in his cheek when he made the statement. However, accepting it on its face, it is a promise for the future that legislation, the prerogative of the House of Commons and of the people's representatives, will not be altered over night by order in council while parliament is in session.
I think we ought to insist upon that, except in cases of greatest emergency. When such procedure is followed, the orders in council ought to be placed on the table of the house, with explanations as to why they were required.


Richard Burpee Hanson: Mr. Speaker, on the motion to go into ways and means I desire to make some observations respecting income tax. I regret that for the moment the Minister of Finance (Mr. Ilsley) is not in his seat, because I should like to put
72537-131	.	revised
to him some general questions with respect to the basis of income taxation. These matters are not at present before the house under the resolutions soon to be discussed by the committee.
I refer first to the question of taxation of superannuated civil servants. May I at the outset say that I am not doing this of my own volition, but rather as the result of a flood of correspondence from superannuated civil servants who feel they have been harshly dealt with. It will be recalled that when the cost of living bonus was introduced a body of associated superannuated civil servants applied for the bonus. I have in mind one of them-a superannuated postal clerk living in Halifax, his only income being a small superannuation. There are many others in similar circumstances. These people applied for the cost of living bonus. Correspondence between the minister and the organization was produced indicating that the minister took the ground that the superannuation system was a contract between the government and the civil servant, and that because the position was governed by contractual relations between the parties arising out of the operation of the statute, they were not entitled to the cost of living bonus. The minister was adamant. But when the income tax was imposed, the government, being the paymaster of the superannuation allowance, by regulation or statute or otherwise stopped at the source a contribution to income tax out of these superannuation annuities. This was done I should think on the theory that the country needed money.
If superannuation allowance was a contract between the government and civil servants, under which they were not allowed the cost of living bonus, then the same argument applies with respect to deduction at the source for income tax purposes from the annuities or pensions of civil servants. The same reasoning must apply, the minister cannot have it both ways. If these persons are not entitled to the cost of living bonus, then the minister should not, on the basis and theory of contracts, deduct from these small pensioners-in most cases they are small-a contribution to the income tax irrespective of their financial position otherwise.
The second point I desire to make arises out of a statement made last week by the minister in the debate which arose on the amendment to the motion to go into supply moved by the hon. member for Charlevoix-Saguenay (Mr. Dorion), and which asked for extended exemptions to those with large families. That is a position which has always had my support, because for married men with


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2052	COMMONS
Income Tax-Deductions and Allowances
substantial families who are in the lower brackets and subject to income tax, the exemption is not large enough. The amendment was ruled out of order. Since the reports of that debate appeared in the public press I have had a good deal of correspondence on the point.	I have before me one or
two letters which I produce merely as samples of the public reaction to the position taken by the minister that the allowances made for income tax purposes could never under any system be commensurate with the cost of raising a family. I think I have epitomized succinctly the position taken by the minister on that occasion. The following is the reaction of one man who I think is in the S3,000 class:
The writer noticed in a Canadian Press report of even date your criticism of several clauses in the government's new income tax act, especially those pertaining to the extremely low allowance provided for families with children.
I believe the deduction from the tax is $108 for each dependent child.
I also noticed a remark by the Hon. Mr. Ilsley, Minister of Finance, to the effect that no country, including Canada, makes sufficient allowance in income tax deduction to provide for the necessary cost of food, clothing, medical care, etc., of children.
To my humble mind, this is the most ridiculous statement I have ever heard come from a man of the honourable minister's standing. In one department, namely pensions and health, under the Hon. Mr. Ian Mackenzie-
This is for my hon. friend for Vancouver Centre.
-parents in this country are continually told by pamphlets, press reports, etc., of the type of food, clothing, and medical care Canadian children should receive from their parents, and then to have the Minister of Finance get up in our House of Commons and make a statement such as he did, either proves that he has no conception of the costs and responsibilities of raising a family, or else he does not care.
These are nut my statements; they are the statements of this correspondent. The letter continues:
As a native of this country, I maintain that the. foundation of Canada, or of any other civilized country, rests upon men and women who are prepared to bring up a reasonably well educated, well behaved, well fed and well clothed family, and to do this, adequate deductions from income should be allowed; and any minister of the crown who does not make this provision is working to the detriment of our country.
May I therefore appeal to you to continue your appeal on behalf of Canadian fathers and mothers. Having four children who are now in their teen age, I can assure you that my wife and myself are at our wits end endeavouring to feed, clothe and educate them under the existing conditions.
I shall send this letter over to the minister if he cares to examine it further. In the same 
connection I have a letter from a young married man who lives on the Atlantic coast and who takes exactly the same position. He is trying to raise a family, and he claims that he is being grossly discriminated against in comparison with the bachelor receiving the same income. I shall not read the whole letter, but he says:
Take for instance the tax on an income of $3,000 per year. The single man with no dependents pays a tax of $1,064.40. The married man with three children pays a tax of $560.50. This leaves the single man with a net of $1,935.60 and leaves the married man with the three children with a net of $2,439.60. I have not computed the savings portion of these taxes for the important feature is the residue of income left to the tax payer after the amount of the tax has been paid, whether or not part of it be paid to an insurance company or upon a mortgage or for any of the purposes for which a deduction may be made from the savings portion. Furthermore, the married man with the three children is much more likely to be making payments of the nature which can be deducted than is the single man and in many cases is paying for such purposes more than the savings portion of the tax.
Last year I read an article by the headmaster of one of the junior colleges in Ontario as to the very serious results of this small allowance for children. I also recently read that the Marsh report-
We have heard of that before.
-quotes a recognized authority that $40 a month (I haven't the article before me but I think that was the figure) as the minimum cost of supporting and maintaining a child. It certainly seems that at this time such a discouragement should not be given to the possible parents of children who are not altogether indifferent to the responsibility which should attach to that relationship.
It does seem to me that either the married man with the children is being taxed too much or the single man is not being taxed enough. If one of the objects of our taxation system is to discourage inflation, why such a disparity betw'een the man who has only himself to provide for and the married man with the children?
And so on. I suggest to the minister that there is tremendous feeling in this country over the fact that the allowances for children are not sufficiently high and that the whole policy of the government is to discourage the raising of families and to make it impossible for the very ones who ought to be raising families, the people who can give their children a moderately good standard of living and educate them reasonably well, to do so. The}' have reached the point where they have to consid. carefully whether they will have more children or have any children at all. The crux of the matter is the taxation being imposed upon the young married man and the glaring disparity in favour of the bachelor receiving the same income.
An hon. MEMBER:: Out of order.

Income Tax-Deductions and Allowances


Richard Burpee Hanson: I hear the Minister of Pensions and National Health (Mr. Mackenzie) muttering that it is out of order. I suggest that I can discuss any grievance on the motion to go into committee of ways and means. If I am out of order, I shall stop, but until I am stopped I intend to continue. I had just reached the conclusion of my remarks. I do not know why the Minister of Pensions and National Health is always trying to rule discussions out of order.


Mr. MACKENZIE (Vancouver Centre):: I have not said a single word, but now that my hon. friend has raised the question may I suggest to him that it is not within the competence of the hon. gentleman to discuss income tax matters when there are many specific resolutions in connection with income tax before the house in committee of ways and means.


James Layton Ralston: May I refer my hon. friend to a passage in Beauchesne which I think is to the point. He has invited us to point out whether he is in order. Citation 488 of Beauchesne reads:
Whenever an order of the day has been read for the house to resolve itself into the committee of supply or the committee of ways and means, the motion "that the Speaker do now leave the chair" must be proposed, except in cases provided by standing order 28.


Richard Burpee Hanson: That is the motion.


James Layton Ralston: That is the motion, to go into committee of ways and means. I continue:
When such motion is proposed, it shall be permissible to discuss any public matter within the powers of the federal parliament or to ask for the redress of any grievance, and it is not necessary to move an amendment for that purpose; provided that the discussion and the amendment, if one is moved, shall not relate to any decision of the house during the current session, nor to any item of the estimates, nor to any resolution to be proposed to the committee of wrays and means, nor to any matter placed on or whereof notice has been given in the order paper.


Richard Burpee Hanson: None of these resolutions affects the matter I am discussing. This is the only chance I have.


James Layton Ralston: The income tax resolutions certainly are concerned with the matter my hon. friend wishes to discuss.


Richard Burpee Hanson: The income tax resolutions before the house, with great deference, Mr. Speaker, do not refer to the matters I have raked. This subject matter is not within the resolutions. If it were, I should have hoped to discuss it then.
72537- 131J


James Layton Ralston: The first question my hon. friend discussed was the right of the Minister of Finance or the Minister of National Revenue to make deductions from the pay of pensioners. Surely deductions are a part of the income tax resolutions.


Richard Burpee Hanson: Which one?


James Layton Ralston: That matter comes within the income tax resolutions.


Richard Burpee Hanson: Which resolution?


James Layton Ralston: I have not read them all in detail.


Richard Burpee Hanson: It is not there. The minister had better read the resolutions before he makes such a statement. I have read them many times, and that is why I bring the matter up now.


James Layton Ralston: I take it that where the Income War Tax Act itself provides for deductions that matter relates to the income tax resolutions. My hon. friend is really arguing that there shall be no income tax in respect of pensioners.


Richard Burpee Hanson: I should like to know under which of the income tax resolutions this matter could be brought up. The income tax act is before the house in certain specific phases covered by the resolutions, but not one of the resolutions refers to deductions from pensioners or to the allowance for children. Where then can I under income tax at any stage of the proceedings of this house discuss the two grievances I have brought up this afternoon?


James Layton Ralston: My hon. friend can discuss either of these matters on the income tax resolutions which are before the committee.


Mr. SPEAKER:: Citation 488 is very clear. The hon. member for York-Sunbury (Mr. Hanson) at the beginning of his remarks did say that there was no opportunity on the income tax resolutions before the house to discuss the matters he wished to bring up, and on that basis he made his argument. It is a question whether the matters already referred to come within citation 488. But if nothing more specific is submitted to the Chair I would say that the hon. member for York-Sunbury is entirely within his rights and may proceed.


Richard Burpee Hanson: Thank you, Mr. Speaker. I do not wish to discuss the point of order further, and I suppose I do not have to. But I would ask the Minister of Pensions and National Health and others to be a little more considerate of private members and not try to rule them out on technicalities. It is not charitable, at least, and
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Income Tax-Deductions and Allowances
it is not very kind. We ought to have a chance once in a while. This is only the first or second time this session that I have brought up in this way any matter such as this. It is rarely that I have raised this sort of thing in other sessions because they were war sessions and I did not want to take up the time of the house. But one has a responsibility towards one's constituents. People are writing to me from differents parts of the country and feel that they have grievances. Where else can those grievances be aired except on occasions such as this?


James Layton Ralston: I was suggesting that the grievances could properly be aired and the representations properly be made in the committee of ways and means when the income tax was being discussed, and I am quite certain that most of the members of the house had that idea. But my hon. friend suggested that this could not be done. I am sure that anything concerning the income tax or having to do with the system of taxation can be freely urged in the committee of ways and means. My hon. friend is an old parliamentarian, and I do not quite understand why he should take up the time of the house at this stage to discuss these matters. He says he did not believe they could be brought up in the committee of ways and means. With deference, I do not agree. I think they can be. There will be ample opportunity for doing so in the committee, and I do not think my hon. friend need plead for consideration because ample consideration has been given on motions to go into supply. But we certainly do want to keep within the rules.


Richard Burpee Hanson: I do not want to carry the matter any further. I certainly felt that I was within the rules. I do not want to trespass against any of the rules. There is a tendency, you know, Mr. Speaker, in this house, and I protest against it, to impair the rights of private members. There is that tendency on the part of the administration on the plea of war necessity. That is constantly occurring, and the government will have to give some consideration to that and allow private members a little more leeway if they are not actually wasting the time of the house. I hope I am not doing that.


James Layton Ralston: I am only suggesting that the matter be not discussed twice, that is all.


Richard Burpee Hanson: I do not recall that I have brought these matters up before.


James Layton Ralston: You will, again.


Richard Burpee Hanson: As a matter of fact this discussion that has interpolated itself has almost knocked my ideas out of my head. I have not much more to say. I am going to ask the Minister of Finance to give further consideration to the question of the superannuated pensioners. If he intends to refuse them the cost of living bonus, on the basis indicated in the correspondence which I saw last year, namely that there was a contractual obligation on the part of the government and. that the government in paying the superannuation was fulfilling that obligation to the letter-that was the reason he could give no cost of living bonus-then I suggest that on the basis of contractual rights he should not tax these men on the pittance they get by way of pension.
I suggest to the minister that he went pretty far in his statement with respect to the duty of the state not to take into consideration to too great an extent-I am trying to put his position in a few words-the obligations of the state in the matter of the raising of families. He said that it never was the duty of the state, in Canada or anywhere else, to pay too much consideration to the cost of raising a family.


James Lorimer Ilsley: I deny absolutely that I ever said anything of the kind. I never said it.


Richard Burpee Hanson: Then I am corrected.


James Lorimer Ilsley: I will tell the hon. gentleman what I said and he can verify it from Hansard. I have said and repeated that it has never been contemplated under the taxation system of any country that the state should provide for the full cost of maintenance of children out of the tax saving for income tax purposes. I said that before and I say it again.


Richard Burpee Hanson: The implication is this: the minister takes the ground that no country, Canada included, should in its taxation provisions make full allowance for the cost of bringing up children.


James Lorimer Ilsley: Correct.


Richard Burpee Hanson: That would be going the whole length, and. I have never suggested that he should go that far. But in the taxation principles and proposals now in the statute the minister has not gone far enough. My mind goes back to the session of 1923 or 1924, when a popular and able member of this house, representing what was then the constituency of Chambly and Ver-cheres, the present Mr. Justice Archambault, made a plea on behalf of the taxpayer who
APRIL 12, 1943	A
Income Tax-Deductions and Allowances
was the father of dependent children. As a result, Mr. Robb, who was then minister of finance, did make concessions in the income tax exemptions for children. My recollection was that an allowance of S600 was allowed for each child but I was corrected the other day when it was intimated that the allowance had been raised to S500. The minister said on a previous occasion that the $108 a year exemption for children is comparable to the $400 exemption. All I have to say to the minister is this. Notwithstanding the necessity to raise income tax, notwithstanding the necessity to get revenue so that the government can carry on the war effort, there is another feature of our national life which must be given consideration, and it is indicated by the question: Is this country to go on? Are families to be raised by people in the lower income tax brackets, or are we to put a penalty on them? To-day they are being penalized, and unduly penalized.


Mr. JACKMAN:: Relatively.


Richard Burpee Hanson: Relatively. But it does not matter-


James Lorimer Ilsley: These are the only ones that are. The hon. member for Rosedale (Mr. Jackman) admitted the other night that it is only when we get up around the $3,000 incomes that this applies.


Richard Burpee Hanson: I am
speaking only for myself. The minister ought to review the position of these people. He will get much support in the country if he does, and he will not lose a great deal of revenue.


James Lorimer Ilsley: The hon. gentleman is
pleading the cause of the well to do and less wealthy.


Richard Burpee Hanson: No, I am not. I deny that absolutely. I am pleading the case of the married man with $3,000 income and with four or five or half a dozen children. Is he a wealthy man?


James Lorimer Ilsley: Ninety per cent of the
people of this country are in receipt of incomes of under $2,500 a year.


An hon. MEMBER:: Shame.


James Lorimer Ilsley: They earn seventy-five per
cent of the national income; and everybody earning up to $2,500 benefits by the change we made last year as against the provision which was in force up to that time of $400 a year deduction from the income. The hon. member for Rosedale, and the hon. member for York-Sunbury, always take a certain line on these things, and when they get up to raise grievances and ask for redress of grievances I always know whose grievances it is they are calling to have redressed.


Harry Rutherford Jackman: I object to that statement and ask that it be withdrawn. It is a reflection on both of us, upon our integrity and our sincerity.


James Lorimer Ilsley: No, it is not. It is not a reflection on the integrity or sincerity of either hon. member, but it is a statement of a point of view which the hon. gentlemen hold and express repeatedly in this house, to the knowledge of everyone in this house.


Harry Rutherford Jackman: I ask for a retraction of
the statement of the Minister of Finance.


Mr. SLAGHT:: Mr. Speaker-


Richard Burpee Hanson: Just a
moment; there is a point of order. The minister has imputed motives to both of us, and I want them taken back.


Thomas Vien: I did not take it from
the words of the minister that he was imputing motives to any hon. member.


James Arthur Ross: I wish to ask a question at this time, although I know it is difficult to do so.


Richard Burpee Hanson: We are
not yet in committee.


James Arthur Ross: The question has no
bearing on this matter at all. I wish to ask a question of the Minister of Munitions and Supply. May I not do that?


Thomas Vien: Hon. members must
realize that we are not yet in committee, and if they wish to address themselves to the subject under discussion they must do so in the ordinary way, not by asking questions across the floor of the house. I do not know whether the hon. member for York-Sunbury (Mr. Hanson) has concluded his remarks.


James Lorimer Ilsley: May I continue to argue the point of order? I do not think it would be contrary to the rules of order if I were to say that an hon. member was arguing the case of the labouring man in this house. I do not think it would be contrary to the rules of order if I were to allege that hon. members were arguing the case or presenting the point of view of the farmers in this house. Nor, for the same reason, do I think I am infringing the rules of order when I say that the hon. member for Rosedale and the hon. member for York-Sunbury ordinarily argue in this house the case for the well to do and the wealthy.


Harry Rutherford Jackman: On the point of order, I object to what the Minister of Finance has said, and to one word in particular, that is the word "ordinarily", and I ask that it be withdrawn. The word "ordinarily", when taken in conjunction with his other remarks, implies something which I think I have a right to ask to have withdrawn.

Wages-Income Tax-Rationing


Richard Burpee Hanson: Just a
cheap jibe.


Harry Rutherford Jackman: It essentially implies that I speak for one particular interest and not for the generality of the people. If the minister will review some of my remarks he will realize that I speak for all classes at different times. I represent a constituency in which are people of the lowest income brackets and of the highest income brackets. I hope I speak for all of them at different times. There is perhaps a certain reason for speaking on behalf of some people more often than for others, because of the type of legislation the minister brings down. I ask that his remark be withdrawn.


Thomas Vien: I thought the house realized that I had given my ruling. I-do not think there was any motive imputed by the Minister of Finance in anything he has said.


Arthur Graeme Slaght: Directing myself to the topic last discussed by the hon. member for York-Sunbury (Mr. Hanson) just before he sat down, as you, Mr. Speaker, indicated it was proper to do before you leave the Chair, I want to say a word with regard to the discrepancy, the lack of proper relation, if I may so put it, between what is left, after the tax is taken, to the unmarried man, to the married man with a wife and without children, and to the married man with four children. I was greatly impressed by the remarks which the hon. member for Rosedale (Mr. Jackman) made with regard to that question; and I do not at all confine myself to the higher bracket people. Perhaps the confusion which has arisen with regard to this subject is attributable to the fact that the minute a complaint is made that, for instance, the $2,500 a year man is taxed too much when he has four children to support, the answer is made by the administration, "We are doing more for him than we were doing last year." What has that to do with it, if we were entirely unfair to him in last year's taxes?
The point I would ask the minister to reconsider is this-and I will just take the $2,500 a year man as one illustration. Under the present taxation, if he has four children, he is left with an allowance of $432 more than is permitted to the $2,500 a year man who has a wife but no children. As the minister indicated in his remarks the other day, that means that-the man with four children is left with $108 per child more than the man who has no children at all to support. Is that enough? Of course it is not enough; and it is not sufficient if we look at it from the point of view of what is left to the man who earns $2,500 a year, and has no children, to support only himself and 
his wife. It may be that the remedy is to raise the rate against the man who has only his wife and himself to support; to tax him more.


Richard Burpee Hanson: Or the
bachelor.


Arthur Graeme Slaght: What the hon. member complains of, and what I seek to complain of is that the obligations of the man who has four children are too onerous in relation to those imposed on the man who has no one but his wife and himself to support; that the state has not put them relatively in a fair position. However, I am quite in accord with what the minister pointed out. The minister corrected it to-day, he put it accurately; the hon. member for York-Sunbury did not put it accurately. At page 1966 of Hansard the minister is reported as saying:
I want to say very emphatically that in no income taxation system that ever existed in this or any other country has there been provision for the maintenance of children out of the tax savings.
Of course there has not; that statement taken by itself is unanswerable. But it is not the point that is being raised at the mordent. The point is that in this country we are definitely discouraging the raising of families unless we readjust taxation as between people without children and people who are rearing children. That is the whole question, and I would like the minister to consider it from that point of view alone. If there is a remedy, he and his able advisers can find it, and somewhere else they can find something to make up for the easing of taxation against married men with four or more children so that they will have more left to support them than they have to-day after paying proper taxes. That is all there is in this point, in my submission.


Joseph Sasseville Roy: There comes a time in one's life wdien he must stop and glance at his achievements in order to mark the exact point he has reached and make sure he is going in the right direction. This is true also with regard to any important undertaking, such as the pursuit of our war effort. According to what we hear from the man on the street, from the workers in the different industries, from farmers, and gather from letters sent to editors of newspapers or to members of parliament, there is a steadily growing discontent among the people of Canada. There are many reasons

Wages-Income Tax-Rationing
for that. I shall not take time to mention them all, but I should like to bring to your attention, sir, a few points which I think are most important.
At the beginning of the war the wages of workers were frozen at a very low standard, the level which they had reached at that time. Not long afterward we began to see strikes. The wages of those striking employees were raised; one could foresee then that we were to have more and more strikes, because other groups of workers would also take some means of getting their wages increased, the same as those had done who. had gone on strike. We have had a good many strikes since that time, and some of them have been very serious. I will mention only one, the strike in the steel industry a little while ago, one which was most damaging to our war effort.
We are told that our most important task is to win victory in this war, and that one must throw everything he has into the fight to make sure that we do win. But it seems to me that we have subordinated this most important matter of winning the war to that of maintaining the value of the dollar. That is why wages have been frozen at so low a standard and why we prefer to take action which may result in strikes involving serious loss of time and production in industry, instead of giving fairer wag-es to people who are obliged at this time to face heavier obligations. There is a danger of more strikes for this very reason. Following these strikes at the conclusion of which wages have been increased, the rest of the workers of Canada who do not belong to any union organization -farmers, the prices of whose products have been frozen at a low ceiling-all these workers are not pleased and will try in some way to obtain an increase in their revenues or wages. The government should take steps to prevent any more strikes which do harm to our war effort and might have the worst possible consequences.
There are other reasons why the people of this country are discontented-for example, the way sugar, tea, and butter are rationed, and the announcement of the rationing of meat in the same manner. Some weeks ago when I asked the minister if he could allow more butter to workers who are obliged to bring their meals to the shop and who were complaining of the lack of butter, he said there could not be legislation for each case. That is all right, but attention should be given to different classes, if not individuals. Take sugar; down in my constituency there is no railroad for a distance of two hundred miles along the coast, which is served by the water route. In the fall, merchants are obliged to bring in sufficient stocks to last until navigation reopens in the spring. Last autumn when they were making their provision for the winter there was a shortage of molasses and of different syrups, and the merchants could not bring in sufficient stock for the winter. That population, which is not a rich one, could not get enough sugar for its needs during the winter. I reported the fact to the authorities and they told me they could not make special arrangements for that section of the country. But people down there have been suffering much more than we in the cities do from the rationing of sugar. That section of the Gaspe coast is a special case.
Taking the population as a whole, the country with the city, there is another great injustice which could very easily be corrected. The people of rural districts, where there are no restaurants, where they can not go to public eating places for their meals, are affected to a greater extent by rationing than people in the cities, especially the well-to-do classes who may take two or three meals a day in restaurants or hotels, as in Ottawa. Those who take their meals in restaurants obtain a great deal of sugar, butter, tea, and so on, in addition to the amounts they are allowed under the ration. The restaurants are given large amounts of butter, sugar, and so on, and those who take their meals there are not required to surrender any coupons, so that they get much more of these things than people who work on the farms, in the factories, in the bush, in the mines-


Thomas Vien: Order. The point was
raised this afternoon as to whether on going into ways and means a discussion of this kind could be carried on, under citation 488. The hon. gentleman now is discussing the rationing of butter. On page 4 of the estimates I see several items under the headings "Production service" and "Marketing service", and it seems to me that the argument the hon. member now is presenting to the house might very properly be presented when those items are being discussed. That being so in my opinion citation 488 would apply, which provides that no matter may be discussed on the motion to go into committee of ways and means which can be dealt with by the house in some other manner.


Joseph Sasseville Roy: Well, Mr. Speaker, I was explaining the amendment I intend to move at the conclusion of my remarks. Perhaps I
Wages-Income Tax-Rationing

could move it now, as follows, seconded by the hon. member for Charlevoix-Saguenay (Mr. Dorion):
That all the words after the word "that" be deleted and the following substituted therefor:
"This house is of the opinion that it is expedient that measures be taken by the government to remove amongst Canadian workers the causes of justifiable discontent brought about by the government's policy in relation to frozen wages, unjust methods of imposing income war taxes, and in the rationing of certain food products."
In my opinion this unfair situation could be corrected by creating a special category of coupons, as we do in connection with gasoline. Those patronizing restaurants and hotels might keep the coupons they now have, while those who are not able to go to restaurants but who are obliged to get along on their rations might be given a special category. The difference between the two categories might be this. If the government cannot import any more sugar than it is importing at the present time, those in the first category might be allowed one-third of a pound a week while the workers and those who do not use restaurants at all might be given two-thirds of a pound. This would equalize things; the net result would be the same, but the injustice would be removed. The same thing would apply to butter, if necessary, but in that connection I wonder if the present ration of half a pound per week could not be increased for everyone. According to some figures I saw in the newspapers last Saturday our production of butter increased by nearly four million pounds in the month of March. In March, 1942, our production was 11,729,900 pounds, while in March of 1943 our production was 15,594.614 pounds, an increase of 3.864,714 pounds. I think therefore the government should be in a position to increase the ration. If that cannot be done, however, something of the kind I have suggested might be undertaken so that one-third of a pound would be given those who are in a position to get butter and sugar without having to surrender coupons-I mean those who eat in restaurants-while two-thirds of a pound could be given those who do the hard work and who do not eat in restaurants.
We are told that meat rationing is to be introduced next month, and I believe the same principle should be followed in that connection. The other day the minister announced that the government might institute one more fish day a week, in order to save meat. I submit to the minister that the Roman Catholics, who comprise about fifty per cent of the population of Canada, already have one fish day every week, namely Friday, and also a good many Wednesdays during the course of the year. So that if it would not disturb

others in Canada I would ask that the minister have the fish days on Wednesdays and Fridays, so that we might not have more than two fish days a week, which is quite enough. The hon. member for Temiscouata (Mr. Pouliot) tells me that is the way it is being done in the United States.
I also contend in -my amendment that there is some discontent in regard to the methods by which income war taxes are collected from the people. So far as the family man is concerned, I think enough has been said already by the hon. member for Charlevoix-Saguenay last Thursday afternoon, by the hon. member for York-Sunbury (Mr. Hanson) this afternoon, and also by many other hon. members. I hope the government soon will become convinced that something should be done in this connection in order to straighten things out and give more encouragement to those who are bringing up large families for the benefit of the country.
I should like to add a word on this point. If a married man with many children is not allowed as great a deduction from his income as a single man or a married man having no children, it does not mean he is not paying more taxes! In fact, under our general scheme of taxation the man who has a big family is paying much more in taxes than the man who has no children. That is so because everything he buys in the stores is taxed, and because he buys more he is taxed more than the single man. Let us not forget that.
Another reason why the people of this country are discontented, is that they will be compelled to pay, on top of this year's taxes, one-half of the taxes they were supposed to pay for the period between January and September of last year. Yet they are so heavily taxed to-day that they can hardly pay this year's taxes, and they are worried about where they are to find the money with which to pay the amount due for last year. That is why people are asking why the Ruml plan was not applied in its entirety. They are not satisfied with the present arrangement, and this is one matter I suggest the government should reconsider.
There are some other points I might speak about, but I shall do so on a later occasion.


James Lorimer Ilsley: Mr. Speaker, I think before the question is put I should say a few words. I would turn first to the observations of the hon. member for York-Sunbury (Mr. Hanson) with respect to cost of living bonus as it applies to civil servants. I have ma'de no secret of my position with respect to the payment of cost of living bonus to superannuated civil servants. My position is on this ground: A civil servant,

Wages-Income Tax-Rationing
when he enters the employ of the government and becomes a permanent civil servant, in effect begins to purchase a pension. He pays part of the cost of the pension, and the government pays part. But in effect it is a purchase of a pension by a civil servant, because the part the government pays could justifiably be regarded as part of what the government pays to or on account of the civil servant.
The normal course would be that over a fairly long period of years the civil servant would pay money toward the purchase of that pension. During that period of years the value of the dollars paid in by the civil servant would vary. Certainly it would vary if it covered the period between 1916 and 1935. The value of dollars was low in 1918 and 1919, and very low in 1920. The value would be relatively high, as compared with commodity values, in 1935. But there comes a time when the civil servant begins to draw money out of the fund. He draws over a period of years, by way of pension; and he may very well find the same situation exists during the time he draws from the fund. During one part of that period the value of the dollar he receives back may be high; during another part of the period the value of the dollar may be low. That is a factor on which he must take a chance.
For example, had we said to the civil servant in the early nineteen thirties that the value of money was high-and by that I mean that commodity prices were low-and had we said to him, "The dollar you are getting from this fund is a very valuable dollar compared with the dollar you paid into it, and we are going to deduct something from the amount you receive," the civil servant would have objected. He would have said, "You cannot do that; we made a contract with the government. It was well understood at the time we entered into the contract that prices might vary, and that therefore the value of money might vary over the period of time during which money was paid in, and that prices and the value of money might vary in the period during which a pension was paid out. But you certainly cannot repudiate a contract in this way, nor can you deduct any dollars from the amount of our pension simply because prices are low." And of course we could not do anything of the kind. If we could not justifiably have done anything of that kind, I do not know how we can defend doing the opposite, namely, paying him more because .prices are higher, and the value of money lower. If we did that for the civil servant who in effect has purchased a pension from the government in the manner
I have indicated, how could we defend ourselves against claims for the same treatment on the part of government annuitants? Applicants for government annuities have purchased annuity contracts and have paid in over a period of years, in the same way. When the age limit is reached the annuity falls due and the annuitant begins to draw money from the government. Certainly persons in that position would have just as good a claim for cost-of-living bonus under their annuities as the superannuated civil servant would have.
And if we did that with respect to government annuities, why should we not do the same thing for those drawing annuities from insurance companies? They are citizens of the same country; they have entered into the same kind of contract. They pay in money for the annuities they purchase. After a time they begin to draw those moneys out. Why should they not be entitled to cost-of-living bonus on their insurance pension? If that were done for insurance company annuitants, then why should we not include .persons drawing interest and dividends generally-in fact all persons in receipt of income, from one end of the country to the other?
iMr. GRAHAM: It would be ridiculous.


James Lorimer Ilsley: It would include pensioners of every sort. That shows the sort of project upon which we wouM be embarking.
I must insist, as I have insisted repeatedly, that our cost-of-living bonus policy is a wage policy. It is therefore properly payable to civil servants who are working. It is properly payable to workmen who are working, and to salaried persons within the lower ranges who are working. But it is not properly .payable to pensioners. I have taken that position in times past, and I contend it is sound to-day.
The hon. member for Gaspe (Mr. Roy) has referred to allowances for children.


Richard Burpee Hanson: But what about the other side of the question? You tax the pensioners. The point raised in the correspondence I have received is that they are to be held to the contract. If they are to be held to the contract-and I was not asking the minister to waive it-why then should he tax them on the same pensions? Is there not the same contractual obligation to leave those pensions alone?


James Lorimer Ilsley: No, it is not a breach of contract for the government to tax those employees.


Richard Burpee Hanson: It is a case of heads you win, tails they lose.

Wages-Income Tax-Rationing


James Lorimer Ilsley: No, it has never been so regarded. Let us consider it fairly. When the government imposes higher taxation and increases taxes on wage-earners in the country it can properly, and invariably does, extend that higher taxation to persons working for the government. It is applicable to civil servants as well as to the servants of industry. Nothing else would be practicable, nothing else would be reasonable. It is not a breach of contract for the crown to propose taxation. Some years ago when 10 per cent was deducted from the salaries of civil servants it was argued that this same deduction should not be made from the salaries of judges.


Richard Burpee Hanson: The civil servants argued that it should not be deducted 'rom their salaries.


James Lorimer Ilsley: The civil servants never argued that, but it was argued that it should not be deducted from the salaries of judges.


Richard Burpee Hanson: On the basis of an implied contract.


James Lorimer Ilsley: It was not on the basis of a contract; it could not be on the basis of a contract because the contract with the judges was no different from the contract with the civil servants. It was argued on the basis that judges' salaries should be regarded as sacrosanct and immune from deduction because of the great importance of the independence of the judiciary. That was the ground upon which is was placed.


Richard Burpee Hanson: It was not the only ground.


James Lorimer Ilsley: It was the only tenable ground. Mr. Bennett, who was then prime minister, resisted the deduction from judges' salaries on the ground that there you had a class, the independence of whom was of paramount importance and there should not be any deduction. However, finally he did impose a special 10 per cent tax on judges' salaries on the ground that it is never regarded as a breach of contract or a breach of anything else to impose a tax. We are the taxing authority and we can impose taxes without regard to contracts of service.


Mr. ROSS (Calgary East):: Are you not imposing a double tax on annuities? Is not the annuity taxed when it is first issued, when the person is setting aside the money with which to buy the annuity, and then later on?


James Lorimer Ilsley: Is the hon. gentleman talking about government annuities?


George Henry Ross: Yes.


Richard Burpee Hanson: There is plenty of double taxation.


James Lorimer Ilsley: With regard to government annuities, the purchaser of an annuity buys it with money which has been taxed. There is no doubt about that. He will have paid a tax on his income before he saves the money with which to purchase an annuity. But the principles applicable to the purchase of an annuity are these:	The purchaser of an
annuity lays out capital and in return he gets income. He does not get capital back. He may live two years or he may live twenty years. If he lives two years he does not get his capital back and he is not entitled to his capital back; if he lives twenty years he gets a lot more than his capital back. The title to the capital has disappeared and in its place is income. From 1842 down they have taxed that in England. Even though the capital went into it, the capital has gone and income has taken its place.
Let me come to the amendment. This is a want of confidence amendment, a sort of catch-all amendment. It reads:
This house is of the opinion that it is expedient that measures be taken by the government to remove amongst Canadian workers the causes of justifiable discontent brought about by the government's policy in relation to frozen wages, unjust methods of imposing war taxes, and in the rationing of certain food products.
The measures that are to be taken are not clear; they are extremely vague. I am not sufficiently acquainted with the rules of order to give an opinion as to whether or not the amendment is out of order, but is this the occasion to precipitate a triple debate? If we were to take the amendment seriously we would have three great debates. First, we would have a debate on the government's wage policy; second, on the whole taxation system of the country, and, third, on the rationing policy of the administration. I sub^ mit that this is not the time or the occasion for those three debates, and I certainly am not going to undertake a presentation of the case on this occasion for the wage policy of the government or the taxation policy of the government or the rationing policy of the government. These should come up at the proper place and under the proper estimates. There will be an abundance of opportunities to deal with all of them. The only position I can take is that this is a want of confidence motion. If the house adopts it, we cease to function as a government. If the house does not adopt it, if the house votes against it, there will be abundant opportunities for hon. members to present their arguments against any specific matter to which they object.

Wages-Income Tax-Rationing


Major James William Coldwell: Mr. Speaker, if this motion' is voted upon we shall have to take a stand on the terms of the motion, and for that reason I should like to speak briefly upon it. I have not been able to consult with my colleagues regarding the matter, but if this is voted upon I shall support it because it is in line with the general criticisms of government policy which we have made throughout the session. Unlike the minister I am pleased to see a member representing a constituency in the province of Quebec raise these matters on going into ways and means. I do not think he need offer any apologies for the time that has been taken up in discussing the problems from his point of view.
During this session there have been few opportunities to debate matters of this description. Last week the hon. member for York-Sunbury (Mr. Hanson) made some caustic comments because I dared on behalf of this group to raise some questions connected with the war, and yet this afternoon we have had a prolonged debate on a matter of income tax which in my opinion should properly have been discussed under the resolutions now before us in committee.


Richard Burpee Hanson: Mr. Speaker did not rule me out of order.


Major James William Coldwell: My hon. friend says
something about the Speaker having ruled in his favour. I would not criticize the Speaker's ruling, and I do not intend my remarks to be so construed, but I think it is a ruling to which the Speaker might give some further consideration. In any event we like to see members of the house who hold prominent positions observe the rules of the house, and I was amazed to hear the hon. gentleman violate one of the elementary rules which denies the right to a member to read communications criticizing something that was said on the floor of this house. That was certainly done this afternoon.
By bringing up this question the hon. member for Gaspe has raised in the minds of hon. members of the house the whole problem of the injustices from which certain classes of labour in this country are suffering at the present time. I know it is important that we do not have a price j-ise which will cause an inflationary movement. The people who would feel the effects of high prices would be those who have to work for their living, those who work in the factory and on the farm. But it seems to me that the discontent that exists is largely due to the fact that the basis of the wage and price freezing, if I may use that term, had no relation to anything else.
A period was taken and no attempt was made to relate one price or one wage to another price or wage level. Therefore we find ourselves in our present difficulties. A short time ago I was looking over comparable wage rates for the provinces of Ontario and Quebec and I found that even in war time the rates of wages paid in the province from which the hon. member who has moved this amendment comes are low when compared with the rates paid for comparable employment in comparable places in Ontario. A few years ago industries were invited to establish themselves in the province of Quebec on the ground that labour there was plentiful and cheap and, my colleague behind me suggests, unorganized. That I think is true and must be taken into . account. In my opinion steps will have to be taken for the adoption sooner or later of a labour code for this country, with standard minimum wage rates for comparable types of work, in order to remove the discrepancies which now set labour in one province against labour in another province and cause discontent and unrest. I think the hon. member was thoroughly justified in bringing this matter before the house this afternoon.


Arthur Graeme Slaght: Would not a labour code have to be a provincial matter?


Major James William Coldwell: Under the present constitution it is a provincial matter, but under the War Measures Act the dominion has the power to supersede provincial legislation. We would have the authority under that act, I take it, to do anything of that kind that we wished to do.
I do not propose to prolong the debate. I rose to say that if a vote is taken we shall support the amendment. The members of our group intend when the proper time comes, when the appropriate estimates are before the house, to discuss rates of wages and questions akin to those I have suggested this afternoon.
I am not saying anything at the moment about the income tax, because as time goes on, if we are given the opportunity and a few members of the house do not continue to monopolize the time by rising frequently to discuss income and other taxes, we shall have something to say about that matter.
Mr. JEAN-FRANQOIS POULIOT (Temis-couata): Mr. Speaker, just before this matter is decided one way or the other, may I remind the house that in the old days, in 1928, I was very much interested in making tabulations of salaries paid in the province of Quebec and in other parts of Canada. What I noticed at that time was that salaries and wages paid in the border cities of Ontario were higher than salaries and wages paid in other cities of

Wages-Income Tax-Rationing
Quebec. A comparison between wage rates, for instance, in Montreal and Windsor was striking. That was before the question of establishing a minimum wage had been raised by any party or group in this house. That was a long time ago, and at that time I had the help of the Liberal leader, who taught me how to prepare statistics. Afterwards, in 1930, we obtained the passing of an act, which was sponsored by the Hon. Peter Heenan, establishing a minimum wage provision applicable to all dominion public works. That proved to be useful to some extent. The government did not care to go farther on account of constitutional obstacles which had been mentioned in a judgment handed down earlier by the Supreme Court of Canada.
I regret that the Dominion of Canada is now setting a bad example. There is on the order paper to-day a question which has been there ever since March 29, concerning the very question raised in the house this afternoon. That question asks:
1.	Who are the inspectors of the wartime prices and trade board, (a) for the province of Quebec, and (b) for each one of the other provinces?
2.	What is the grade and salary of each one?
I already had the names of the inspectors, but what I cannot get is their salaries and their grades. The answer to this question will show that much higher salaries are received from the dominion government by inspectors who work in the province of Ontario than by inspectors of the same grade who work in the province of Quebec. That may be the very reason why it has taken such a long time to answer this question. I also complain of the fact that when I asked a similar question respecting employees of the unemployment insurance commission, the second part of the question was not put on the order paper. I received an answer to the first part. I shall ask the question again so that I can get a complete answer. The wartime prices and trade board, having available to them the names of all their inspectors, have no excuse at all for not answering my question at once as to the grades and salaries of their inspectors. The wartime prices and trade board have many inspectors in the province of Quebec and they are doing just as good work as the board's inspectors in the province of Ontario. There is no excuse whatever for not paying dominion employees in whatever province they work the same salary for the same grade of work.
I congratulate the hon. member for Gaspe (Mr. Roy) upon bringing these matters into the limelight, and I am sure that the minister will give the utmost consideration to his suggestions. I know very well that what he has
I Mr. Pouliot.]	[DOT]
said about the railway men having trouble is true. I have in my riding a good many railway employees, as well as others who have to take their lunch boxes with them. They require butter and sugar. Sometimes they are away from home for several days; they cannot get sugar or butter when they are away from home without ration cards and it is very embarrassing and inconvenient for them. Moreover, when men work hard they need more food. I hope it will be possible for the minister to meet the suggestion made in regard to these matters by the hon. member for Gaspe, and if he can meet the other suggestions made by the hon. member, it will be highly appreciated by the Canadian people.


Mr. DANIEL McIVOR (Fort William):: Mr. Speaker, in speaking to this amendment, I ask myself how often and how long is this sort of thing to go on? I think of the debates that have taken tip the time of this house, debates on fuel, debates on labour, debates on a secret session, and debates on other matters. I think of the debate on the battle off the coast of Gaspe between corvettes and a submarine that never was there. I think of these things and then ask, as a good many other hon. members must be asking, have certain members of this house the right to tax the patience of other hon. members indefinitely? I notice that in yonder corner there is only one hon. member who can stand the heat. I think we should get on with the business of this house. Let us, in the language of the street, cut out all this extra work.


Gordon Graydon: Mr. Speaker, before the vote is-taken upon the amendment I should like to make my position clear with respect to one or two points with which the amendment deals. When this session of parliament commenced, this party of ours, which I have the honour to lead at the moment, made a declaration which we did not take lightly in a war-time period such as this. It was a. declaration very sincerely meant. It was, in effect-I am not repeating my exact words- that we would not during this session dog the heels of the government with unnecessary criticism, but that criticism would be reserved for cases where a principle of a major nature was involved; and that, where a certain stand was in the interests of the country and the people at large, we would pot hesitate to meet the government in a head-on collision on the particular point involved.
This is a serious time, not only for the government and for all members of the house but for the people as a whole. Bearing that in mind, I would offer this observation, though not in an unduly critical fashion, that.

Wages-Income Tax-Rationing
from time to time during this session, when important war measures were to be considered, much time was occupied with motions preparatory to going into supply or into ways and means. I hesitate to criticize too severely those who moved those motions; but I believe, in the best interests of our country, we must give our first attention to the war measures which the government brings down. As far as the official opposition is concerned, it is for no small or picayune motives that we have raised our voices from time to time against measures which we believed were not in the interests of the country and should not be proceeded with in the form in which they were presented. As regards amendments such as the one now before the house, they are frequently brought down in the middle of the afternoon session; they cover, as this particular amendment does, a wide variety of subjects, and certain clauses cannot but call for the support of many members of our group, perhaps of the entire group itself. I must, however, define clearly our position with respect to this particular amendment. It proposes this substitution:
This house is of the opinion that it is expedient that measures be taken by the government to remove amongst Canadian workers the causes of justifiable discontent brought about by the government's policy in relation to frozen wages. . . .
I believe all hon. members will have recognized by now the sympathy which I, as leader of the official opposition, have always given in word and action to the legitimate claims of the workers of Canada. For that attitude I make no apology; during the whole of my public and private life I have been a strong supporter of labour, and I do not intend to reverse my position. But with relation to this particular amendment I find such vagueness in its .phraseology that I do not feel it merits our support. I am as much in favour as any who may support this amendment, and perhaps more so, of ironing o.ut inequalities in respect of the wages of working men. But the general phraseology of this amendment may be interpreted as a direct attack upon the broad antiinflationary policy which most of us in this chamber are anxious shall not be assailed. Therefore, I say to those who have moved and seconded the amendment and to those who may support it that, while I do not take a back seat to anyone in my earnest and conscientious and effective support of labour, I cannot see my way. in view of the vagueness of the terms of the amendment, to give it support.
The reference later in the amendment to "unjust methods of imposing income war
taxes" covers a tremendously wide field. So far as debates in this chamber are concerned, we prefer, when these matters come u.p in committee, to attack particular inequalities and injustices. This method, we believe, is more effective than to cast a blanket, so to speak, over the entire income tax structure, a course which might be interpreted, perhaps with reason, in some quarters as a general attack on the whole system of raising money to carry on the war. We are not prepared to do that at the present moment.
The amendment is also vague in its reference to rationing of food products. It states "certain food products"; it does not specify the instances of which it complains; it does not furnish information upon which we can form a considered judgment regarding any special complaints of inequalities in that connection.
There are parts of the amendment, underlying the general blanket, upon which we cannot agree with the government. I want it to be distinctly understood that the stand we take is not opposed to labour or the improvement of the position of the working man. Nor does it preclude us from attacking anything which we regard as an inequality when income tax resolutions are before the house or in respect of any other matters dealt with in the amendment.
As I said at the beginning of my remarks, however, we are in a wartime period, and I think we ought to get along speedily with the government's war-time measures. That is our first and primary duty as members of parliament. While refusing our support to this amendment, we reserve the right to advocate the things for which we have consistently stood during the session. By voting against the amendment we accord our wholehearted support to greater, more effective, and more rapid prosecution of the whole war effort. Having in mind the position I took at the beginning of the session. I feel bound to implement my promises and undertakings at that time. That we intend to vote against the amendment on account of its blanket nature does not and will not preclude us from maintaining the stand which we have always taken in this chamber, and which we hope will prove beneficial in the serious times which lie ahead.
For these and other reasons which I think will appeal to most hon. members I must vote against the amendment.
Amendment (Mr. Roy) negatived.


[Stage Direction]
Motion agreed to, and the house went into committee of ways and means, Mr. Bradette in the chair.
Income War Tax

[Stage Direction]
7. That taxpayers whose chief business is that of farming shall in respect of the year 1943 and for each year thereafter pay two-thirds of their income tax liability for the current year on or before the 31st day of December and the remaining one-third on the following 31st March.
The CHAIRMAN:: There was an amendment moved on Thursday by Mr. Gibson:
That resolution No. 7 of the resolutions to amend the Income War Tax Act be amended by deleting the words "31st March" in the last line thereof and substituting therefor the words "30th of April".


Richard Burpee Hanson: No. 4 was amended too?


James Lorimer Ilsley: Yes.


Mr. PERLEY:: When this resolution was under discussion on Thursday last I had made a number of statements with respect to it and the minister replied, as reported on page 2004 of Hansard, as follows:
There is a good deal in that speech to answer, and I think I had better let it stand for the time being because it would be embarrassing to give a wrong ruling on the spot.
The minister has had two or three days now to consider the suggestions I made, and I trust he will now make a statement regarding those two or three suggestions. I
I may say also that in speaking on the budget on March 15 I made two or three suggestions which I considered important, with respect to farmers and the income tax. I suggested that farmers be allowed to charge to their costs of production an allowance for the labour of their wife, daughters and younger sons. Since making that suggestion I have had letters from many farmers in western Canada who thought the government should take that suggestion seriously into consideration. One hon. member, when speaking the other night, dwelt on it at some length. I had a few notes on it also on Thursday and intended to enlarge on it, but hon. members may remember that the leader of the opposition just happened to get into the debate when I was not expecting him and he stole a little of my thunder. However, I have just received a letter from a farmer in Saskatchewan who is working sixteeen hundred acres of land. He says the wages he will have to pay this summer are in the neighbourhood of SSO a month and that his wife and daughter will have to do a lot of work this summer that they would not ordinarily have to do. He also complains that
[Mr. Graydon.J
in making up their statements with respect to costs of production farmers are allowed to charge only at the rate of S15 a month for board for day labour, and that if farm labour is hired for the season I think it is SJ8. He complains about this. We know that the cost of living has gone up and that the cost of the things the farmer has to bring into the house to feed his help has increased considerably.
There was a question also with respect to farmers being exempt. I think the hon. member for Battle River enlarged on that the other day. I believe I was the first to bring the matter to the attention of the minister, when I spoke here on March 15. There are so very few farmers who pay income tax; last year some 1,488 out of 750,000 farmers paid income tax, and paying only about $150,000 altogether. That is something the government should take into consideration. I said that if the government could not see its way to exempt them altogether it should certainly reduce the amount of income before they are taxed. I believe I suggested on Thursday $2,000.
I also wish to bring up the question of depreciation on farm buildings and machinery. This letter states that this man thinks farmers should be allowed some depreciation on the land. He sets out what it is costing him to keep his land in anywhere near the state of fertility it was in twenty years ago. It deteriorates and if he undertakes to keep the fertility of his land to what it should be it will cost him a good deal in labour.


James Lorimer Ilsley: He gets that as a deduction.


Ernest Edward Perley: Not the depreciation of the land.


James Lorimer Ilsley: It does not make any difference as long as he gets it, it is an expense.


Ernest Edward Perley: But this man goes further; he thinks there should be some depreciation allowance from the point of view of assessed value. The suggestion comes in this letter from one of the best farmers in the Indian Head district. This man is working 1,600 acres of land, and this year he will have only himself and one man, and possibly a boy at certain periods of the rush season.
The matter of depreciation of machinery has come up before, I shall not enlarge on it now. But I should like the minister to make a statement now as to what he proposes to do with respect to the suggestions I made on March 15 and on Thursday last that the farmers be allowed to charge wages for wives, daughters and younger sons and with respect to depreciation on buildings and machinery, and whether he cannot consider making a very

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considerable reduction in the amount of income before there is an exemption. I think an injustice is being done to the farmers at present.
Mr. IvINLEY: I do not think it is 20 per cent depreciation on machinery now.


Mr. GIBSON:: I might answer the question raised by the hon. member for Qu'Appelle as to whether a member of parliament who is a farmer and is losing money on his farm is entitled to make any deductions from his income received by way of indemnity.


Ernest Edward Perley: That was one of them.


Colin William George Gibson: The answer is that any taxpayer whose chief occupation is farming is entitled to deduct any losses on his farm from any subsidiary income. In the case of a member of parliament who is a farmer by occupation, if he has losses he may deduct those losses from the indemnity he receives. Deductions will have been made from his indemnity at the source, and he will be entitled to a refund of the over-deductions that have been made.


Richard Burpee Hanson: In other
words, you offset the losses on his farm-


Colin William George Gibson: If farming is his chief
occupation. That is not so, however, if farming is not the chief occupation of the taxpayer. People may have farms as side-lines, as a method of recreation, or as something to play with; they may have racing stables or things like that, but losses in those connections certainly would not be allowed as deductions from incomes.


Richard Burpee Hanson: May I
ask if at one period in the history of this taxation that was not done? I have a distinct recollection of one case in which it was done.


Colin William George Gibson: I have no knowledge of
any cases where such losses were allowed, and I know that since I have been connected with the department that has been the policy. Then there is the question of the depreciation of the land. Farmers are allowed depreciation on their buildings and equipment, and the suggestion was advanced to-day that they should also get depreciation on their land. Well, that is already allowed by way of an expense. If a farmer spends money on fertilizer or on improving the land, that is an expense which may be deducted from his income. Consequently allowance is made for any money expended in that way.
Then there is the question of the allowance for boarding a hired man. Again that is an expense of the farmer. If the hired man is paid a certain salary and is receiving
free board and lodging, he must add to that income an amount adequate to cover the value of his board and lodging. That becomes the income of the hired man, and is a deduction as an expense of the farmer, so he can offset that. That is not allowed in regard to the farmer himself, and the farmer who uses produce he has grown himself must include that as part of his taxable income It has been suggested that an allowance should be made for the farmer's wife, that it should be assumed he is paying her for the work she does on the farm. This is entirely contrary to the provisions of the income tax act. No shopkeeper or other person in business is allowed to deduct from his income any salary or wage paid to his wife, and this applies to farmers as well as to all other taxpayers.


Ernest Edward Perley: Certain storekeepers are
getting round that by forming companies and paying salaries to their wives and daughters. The farmer cannot do that. I should not like to say these storekeepers are beating the government, but I think they get round that provision by incorporating themselves and allowing wages to their wives and daughters who happen to be serving in their stores or other places of business.


James Lorimer Ilsley: The great majority of small stores are unincorporated. When we had the price spreads inquiry the evidence was that there were 225,000 retailers in Canada, and the great majority are these little neighbourhood stores. Certainly it is not in accordance with the fact to suggest that anything but a minor fraction of them are incorporated.


Ernest Edward Perley: That just makes it all the worse, because they are able to pay wages to their wives and daughters.


James Lorimer Ilsley: They are not. The wife cannot get wages.


Ernest Edward Perley: If the man takes the wife in as a partner, as many of them have done, he can pay her a salary. However, there is no way whereby the farmer can get wages for his wife and daughters; is that it?


James Lorimer Ilsley: That is not what was said; we were merely talking about the wife. All over Canada there are men whose wives are helping them to earn their incomes. That is true of working men and many others. Their wives are keeping the home fires burning, looking after the children, preparing the meals, and so on. It would be a complete innovation in the income tax system to allow a workman to deduct the amounts he gave his wife, as
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though she were someone engaged in a business he was running. The same is true of small shopkeepers, just as it is true of farmers. But when it comes to children there is no reason why the farmer could not put his children on the payroll, if he wanted to, and claim the amounts paid to them as a deduction, as part of the expense of running the farm, as long as they were actually paid.


Ernest Edward Perley: I think there should be some way of making some allowance for the wife, because last fall I saw many farmers' wives in overalls, pitching sheaves, driving trucks, drawing grain to the elevators, and so on. Then they would go home and prepare the meals. Right on my own place I know there were three women working in the harvest fields on the tenant's farm, and at times his wife drove the truck. I think there should be some consideration for the work these women do, because that practice was prevalent all over the west last year.'
While I am on my feet there is another matter in regard to the allowance for board for hij-ed help. A farmer is allowed to charge fifty cents a day as board for a day labourer, but last fall he was permitted to charge $1 a day for board for the harvesters who went to the west from universities and so on in the east. I think there is discrimination in that regard. Last year the farmers were permitted to charge $1 a day for boarding harvest help, but now for seasonal help they are permitted to charge only fifty cents a day. Some adjustment should be made there.


Mr. CASTLEDEN:: Suppose the farmer's
wife has an income as a result of her own work keeping chickens, milking cows, making butter, and so on. Does the farmer have to show that as part of his income?


Colin William George Gibson: No; that is usually allowed to the wife, where she is running an independent side-line on her own account and due to her own activities. That is regarded as the income of the wife.


George Hugh Castleden: What would you call an independent activity? Suppose she is using grain grown on the farm; that would not be completely independent.


Colin William George Gibson: Well, it is hard to define, but I refer to cases where the wife is perhaps looking after chickens and selling the eggs herself, taking the entire responsibility for that activity.


George Hugh Castleden: She would be granted that income?


Colin William George Gibson: Yes, she gets that now.


James Arthur Ross: The other evening I raised the question of the man selling perhaps

a herd of pure bred cattle, and I endeavoured to point out that this should be classified not as income but as investment return. Just the other day I received a letter which puts the case much more clearly than I could put it. This letter does not come from my own constituency, but the writer says:
You no doubt wonder why I am writing you, but it appears to me you, Mr. Perley and Mr. Leader are about the only ones in the house who take the farmers' grievances seriously.'


Some hon. MEMBERS:: Hear, hear.


James Arthur Ross: I think he is rather flattering in that, but I will pass over the personal part and get to the meat of the letter:
I am writing you this letter to let you know what a lot of farmers in this western country are up against when we are asked to produce more food for Britain.
We had a splendid crop of everything in 1942, but can only realize on fourteen bushels to the acre; and have eighteen bushels to the acre in the granary and no market for it. After the year's operations and after paying all expenses my son and I have $530 for our year's work. We keep quite a number of cattle, hogs and sheep since 1939, and have sold no females except in the hogs. And now when we have come to the point where we have to dispose of about $4,000 worth of live stock the inspector of taxation, Mr. Loury tells me everything over and above our profits in 1942 we have to pay 40 per cent excess profits tax; and my son would have to take 15 per cent compulsory savings; or in other words $2,200, if we sold $4,000 worth of live stock.
I was talking with Mr. Loury in Winnipeg a fewr days ago and I know this is absolutely correct, and he gave me the above figures. Now, Mr. Ross, I am not trying to get out of paying income tax, as I think it is up to the farmers of this country to do their share absolutely. What I think is wrong and you know as well as I do that we have passed through some of the w'orst years in Canadian history, and machinery was worn out before the w'ar started. And now none can be purchased. As for ourselves we have to spend $2,000 for new' equipment as soon as this war is over. And where are we going to get the money if the government takes it in income tax? If W'e keep our present number of live stock and get some efficient help we could produce from 45,000 to 50,000 pounds of meat, besides poultry and dairy products.
He goes on to point out that the hon. member for Portage la Prairie (Mr. Leader) and the "Irish preacher from Fort William" will vouch for his statements.	[DOT]
Then, I have another statement from another gentleman who contemplates having to sell most of his live stock, to the value of $8,000. He must have a different set-up in respect of grain production, because he points out that the government is taking only forty per cent, or $3,200 in income tax on the sale. He points out further that the live stock he

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is selling is the accumulation of a herd built up over a period of fourteen or fifteen years. I have discussed this matter with Mr. Loury, but it is not his fault; he is just the representative in Manitoba. He points out, however, that farmers do not keep books, and therefore do not take inventories at the end of the year, and that in those circumstances they could not be handled in the same way.
These men are forced to sell their herds they have built up over a lifetime. The first instance I mentioned was with respect to a first-class herd of Angus cattle. I never met the gentleman in question, but I have met his son, and I know something about their herd of live stock. The crux of the whole situation is that on account of a lack of manpower the farmer in question is be'ing forced to change his capital invested in producing stock to income received from their sale, and this at a time when Canada and the United States face a food shortage of serious proportions.
The second letter goes on to point out the whole man-power situation, how it has been disorganized by the government through lack of cooperation of various departments, and he indicates that the entire situation rests with our handling of the voluntary system of supplying man-power. Then he points out another situation where a man operated a well-drilling machine, and that while the machine was drilling to produce a water supply for an air field in western Manitoba the expert who was operating the machine was called for military duty. He, like many other farmers' sons, refused to ask for exemption when called. I sympathize fully with the feeling of those young men. If somebody in authority is not in a position to tell them where they can render the best service, they do not like asking for exemptions. That more than anything else is at the root of our difficulties in connection with our farming operations.
In the instance I have in mind the young man did not ask for exemption, despite the fact that the airport at which he was working was very short of water, and that large sums of money had been spent. That, it seems to me, is a concrete example of the condition we have in Canada to-day.
I come back to this procedure of selling herds of pure bred stock, herds which in some instances have been built up over a lifetime. Surely some provision should be made whereby they could be shown as capital investment, rather than as income for the year. If they were so shown the farmer should be entitled to the same consideration as that given to
industry. Someone has pointed out the difficulty of securing new farm machinery to-day. If a man sells his live stock and invests a large proportion of the selling price in the new equipment he says he needs, surely he should be entitled to write it off over three years, as depreciation, in the same manner as industry is allowred to write off capital equipment. The farmer is certainly entitled to the same consideration.
This whole set-up must be revamped, and consideration must be given to these farmers who, I am sorry to say, in many cases, are going to leave the western country, with the result that the development of herds and farming generally will suffer. I trust the Minister of National Revenue will give some assistance in this respect. The hon. member for Portage la Prairie knows the situation well. He and his son, who is now in the army, have developed herds; but they are now scattered to the winds. I am sorry to say there are many examples which could be given which would show that farmers do not agree with the treatment they are accorded under this income tax.


Mr. POTTIER:: I understand there are 750.000 farmers in Canada, and that last year 1,488 paid income tax. Could we find in what section those farmers were located? We hear in all parts of the house that the income tax will ruin farming. I should like to know where those 1,488 are located.


Colin William George Gibson: That information can be secured, but I cannot give it offhand.


James Arthur Ross: Would the minister say something about this matter connected with the sale of cattle?


Colin William George Gibson: It has been stated that two farmers paid different tax rates in connection with the disposition of their herds. That would arise from the fact that one man has been keeping his books on an accrual basis and the other on a cash basis. The man on the accrual basis has been charged with profits from year to year. The other man, on the cash basis, has not been paying on accrued profits. He may have been paying taxes, but he has not been including as income accrued profits from the herd from year to year. Finally, when the time comes to dispose of his herd, the proceeds show as a profit in the one year, and he is in a difficult position at that time. But that is how the two different types of taxation arise, in the same industry. As I have said, one man has been keeping his accounts on the accrual basis, showing his income from year to year, whereas the other
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man has not been showing income until he has actually received it in cash from the sale of his stock.


James Arthur Ross: Has that been possible in the past under the form signed by the farmer?


Colin William George Gibson: That is the basis on which he is assessed. He puts in his return, himself, and decides which way he will submit his account. As the hon. member has pointed out, the purchase of equipment has been written off from year to year. He gets a depreciation at the rate of twenty per cent for power equipment and ten per cent for other types.


James Arthur Ross: Is it not twenty per cent the first year and ten per cent thereafter?


Colin William George Gibson: It has varied throughout the years; but I understand that the rate for motor trucks, tractors and other types of power equipment is now twenty per cent each year, and that for other types of machinery and equipment it is ten per cent. If the machinery has been on the farm, and has been worn out, it has presumably been written off through the years. Consequently the money should be available for the purchase of new equipment by the time the old is worn out.


Mr. WRIGHT:: The other day I brought up the matter of the depletion of capital assets in cattle and herds built up over a number of years. A great number of farmers are ju9t coming into t'he income tax group. Did I understand the minister to say that they may choose the manner in which they wish to file their income tax returns? May they decide whether they do it on the accrual or on the cash basis?


Colin William George Gibson: If they are in business for the first time they can pay it on either basis.


Percy Ellis Wright: I think that point should be made clear to the farming population. I know of several farmers in my province whose sons have been called up and who have had to dispose of fairly large herds of cattle during the last year. If they fill out the form properly, they will have to pay approximately half of the value of those herds in income tax. That is what will happen unless it is known that they may choose the accrual method of figuring their income. It simply means that the value of half of their cattle will be wiped out and that they will never be able to get back into the production of live stock, the government having collected the money.


Colin William George Gibson: The man is not just starting in business for the first time; presumably he has been in business for a number of years and has not been taking into account any profits made through an increase in his inventory. He now suggests doing it for the first time when he is beginning to get some income from the sale of his herd. If he had wanted to go on an accrual basis he should have been doing that as he went along. If he starts to-day on an accrual basis, he shows as income the sales he has made, and he also shows the increased value of his inventory for the year. That would put him on am accrual basis from now on, but he will have been on a cash basis up to now. That is how he finds himself in the predicament he is in at the present time.


Mr. QUELCH:: As has been stated already, this year many farmers will be paying an income tax for the first time, perhaps in many years, and I am hoping that they will be saved the embarrassment I was under in 1936. Back in 1926, 1927 and 1928 I filed income tax returns. Then the depression came along, and I was running my farm in the red and did not make any return until 1936. In view of the fact that I was elected, I made a return. Shortly after that I received a notice from the income tax branch to file income tax returns for 1930, 1931, 1932, 1933, 1934 and 1935. We had been through very serious times, and the officials must have known that the farmers did not have any income during that period. Yet they expected me to file income tax returns for those years. I wrote and told them I would be visiting Edmonton in the near future. I went there and conferred with the official in charge. I told him just what I thought about the whole thing. He brought in another official, and finally they said, " Go home and forget all about it." I think the minister should try to see that this should not occur again. Nothing will be gained by asking farmers to file returns for past years. They will simply have to sit down and fake-that is the only word that can be used-the information for the returns because most of them do not have books.
There is another point in connection with the wife of the farmer looking after the poultry and other side-lines. She should be able to count that as her own income, and the farmer should not have to pay any income tax on that. According to the return the farmer must show the produce consumed from the farm. The wife may be raising a garden, and the farmer must show the amount of produce consumed from that garden. The wife and children may have done the work, and if the

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farmer pays them for the work they have done, he is not allowed to show that as an expenditure. He must pay income tax on the produce of the garden, and yet he is not allowed to show any expenditures which were incurred as a result of that garden.
If provision is not made to take care of this situation, there is one thing that may happen. You could have two farmers living side by side, each with a large garden. In order to be allowed to charge an expenditure for their wives' work, they could trade wives. If that were done, the government would allow the expenditure. Would it not be more sensible to permit the farmer to show an expenditure for his wife's work? This should be permitted in connection with gardening, dairying, churning and other side-lines.
I think a suggestion was made by the Canadian federation of agriculture that the income tax should be based upon the average income over a number of years rather than for the one year. I can see considerable difficulty in carrying out this suggestion, because farmers seldom keep any books and therefore would not be able to compute their incomes for past years. On the other hand I think the government could do something to take care of the situation which has been created as a result of the farmer having had serious losses over a number of years. I am referring now to debt.
Debts were incurred in the depression years. Generally speaking, these debts were incurred through no fault of the farmer. When he comes to repay the debt he finds that he is faced with an increase of thirty to forty per cent in the form of income tax. I think the farmer should be allowed to show the repayment of debt as an expenditure, provided the debt was incurred, we will say, prior to 1940. He is allowed to show the interest on the debt as an expenditure, but he is not allowed to show the repayment of that debt. I wish the minister would consider the advisability of allowing this as an exemption from income tax.


Mr. GRAHAM :: I have heard some comments about the income tax form for farmers which has been issued. I must confess that I was somewhat alarmed at the size of the form. However, I want to say to the minister and to the officers of his department that on looking over the form I find a great deal to recommend it. I feel that if the government of the day and future governments will follow some of the advice that I have given so freely, more and more farmers will be in the position of earning sufficient to pay an income tax. I sincerely hope our national policy will finally result in the farmers of this country being in
such a position that they will be one of the largest contributing factors in our national income. That is the status our farmer population should have.
That being so, I think in the long run it would be wise for our farmers to become familiar with the filing of returns. I think the income tax is the best form of direct taxation that we can have. I realize the great time and thought that must have been put into the drafting of this income tax return. Every effort has been made to assist the wheat grower, coarse grain grower, dairy farmer or cattleman in filling out his return and marshalling the facts in regard to his different sources of income.
According to the notation at the top of the form there is a realization on the part of the minister and his department that the farmers are and have been in a peculiar position for a considerable period of time. They realize that a large number of those engaged in agriculture will have no taxable income and that therefore it is not necessary for them to file a return. However, I notice it is suggested that for his own benefit the farmer should fill out a portion of the return in order to determine whether he has had the necessary income. I have considerable sympathy with the suggestion which was made by the hon. member for Muskoka-Ontario (Mr. Furniss). I think the minister has a great deal of sympathy for the farmer's wife and older children and the contribution they are making in the farm, production programme, and it is only on account of the principle of taxation which he has to assert that he finds it impossible to give some measure of recognition by way of salary or remuneration, to the wife. But I do think he might simplify still further the form of the return. The depreciation column presents the chief difficulty to the farmer, and I suggest that the minister take into consideration the suggestion made by the hon. member for Muskoka-Ontario and eliminate the necessity of the farmer having to keep track of the farm, produce which he uses up in his own household. I suggest that that would be some measure of recognition for the contribution which the housewife and the children make to farm income in Canada.
I should like to ask the minister one question, following up the suggestion made by the hon. member for Melfort writh regard to the accrual method of computation as opposed to the cash method in connection with stock raising. The minister very properly pointed out that after a person has been in a given business for a certain length of time he cannot change his methods merely to take
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advantage of changes in the price level. But suppose a farmer has been in the cattle business for some years and in none of those years would have made sufficient profit to make it necessary for him to file an income tax return. He is now coming into, the taxable brackets of income. Could he, as it were, antedate the computation of the increased value of the cattle and spread that over the years he has been in the cattle business? This would be the accrual system in the computation of taxable income. Can the minister answer that question?


Colin William George Gibson: I am not prepared to answer it offhand, because it amounts to suggesting that the rancher should go back and antedate his tax return or his method of accounting for several years back, change the method under which he has been carrying on up to the present time.


Roy Theodore Graham: He never had to file returns before because he never had any profits.


Colin William George Gibson: I would not want to give a definite answer without consideration, because it is an important item.


Richard Burpee Hanson: I should like to point out to the Minister of Finance, if I may in passing, that in the budget speech delivered by the Chancellor of the Exchequer, Sir Kingsley Wood, in Britain to-day he laid emphasis on taxing goods rather than incomes in an effort to, curb spending, prevent inflation and conserve supplies for the war effort, and a change was made in the personal income tax of the taxpayers with dependent relatives.


Mr. FAIR:: I have a few remarks to make and a few questions to ask. But first I would ask the Minister of Finance whether he took into consideration the suggestion I made on Thursday night last just before eleven o'clock, that in order to save time and expense and recompense to some extent the farmers for the treatment they have received in years gone by he should remove farmers from the income tax classes?


James Lorimer Ilsley: I must say that a suggestion to remove any class of the civilian population from liability to income tax is one to which I am not disposed to give favourable consideration. The income tax in its nature is a tax on persons in accordance with their income regardless of their occupation, and if exceptions are made of those in any particular occupation they would be extended degree by degree to include other occupations until we should have a mass of discrimination throughout the country which would be indefensible. I have had some experience, and 
I know whereof I speak. Two or three years ago I listened to the importunities and suggestions of members of this house and introduced a provision in the budget of that year exempting from income taxation members of the armed forces overseas, those on the seas, and those whose duties normally take them in the air. Nothing has caused me more worry; nothing has caused the income tax administration and the government more trouble than that. We did something at that time that Great Britain has never done and that the United States has never done, and apparently for very sound reasons. Immediately borderline cases appeared where the taxpayer said: I am just as much entitled to exemption from income tax as that man, and nobody can convince me to the contrary. And nobody could convince him to the contrary because it was true. For this government to exempt from taxation farmers who have heavy incomes and at the same time maintain our heavy taxation on persons in the same community who have small incomes would be a discrimination so glaring that we could never defend it, nor should we undertake to try. The hon. gentleman is making a request which the farmers themselves generally are not making in this country. Even the hon. member for Qu'Appelle put forward the suggestion tentatively. I think he seemed anxious to make it clear that he asked for this before t'he hon. member for Battle River did, but apart from that he was not emphatic about it.


Ernest Edward Perley: I made the suggestion on March 15. I do not think anybody was in before that.


James Lorimer Ilsley: He is putting it on the date rather than on the merits, and perhaips he proved his case there. But he said: If the government thinks they cannot accept that suggestion, *well then, do something else.
The point I am trying to make is that we must not start exempting from taxation a particular class or occupation of the civilian population in this country, or we shall be getting on to a slippery slope that will take us down to the destruction of our taxation system. The experience we have had with the armed forces, and the patching up we have had to do, the extensions and the exceptions we have had to make and so on, has taught me that the English are right in the rigour of their taxation system, which is to tax income wherever they find it and to tax it on a fair basis, but not to start making these exceptions.

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Robert Fair: I shall have more to say at eight o'clock, but in response to what the minister has just said let me say that discrimination has already placed the farmers in a very bad position, so bad that many of them have been forced right out of existence.
At six o'clock tile committee took recess.
After Recess
The committee resumed at eight o'clock.


Robert Fair: When the committee rose at six o'clock we had just been advised by the Minister of Finance that farmers would not be exempted from the income tax class, and during his reply he stated that he did not want to discriminate against any class in this country. That, I believe, is a reasonable stand to take, provided it applies all the way around, but in a number of cases we find that the shoe is on the other foot, and on different occasions during this and several sessions in the past we have tried to point out how farmers were discriminated against. My reason for asking that they be exempted from the income tax was, in part at least, to find out some of the reasons for this discrimination and the directions in which it is applied.
Before the dinner recess the question of wages for the farmer's wife and family came up, and we learned that the policy of the government is the same as it has been. I might point out that a married man in the city who works in industry is entitled to an allowance of $1,200, which is the married man's allowance, while at the same time his wife, also working in industry and getting a good salary, is entitled to an allowance of $6(50, or a total for both of $1,860 exemption for income tax purposes. I am wondering whether it is not discrimination when this treatment, extended to the man in the city, is not applicable to the man on the land, I might point out also that the man on the land and his wife work time and a half compared wTith those in the city, so that, again, a little discrimination arises there, with no financial allowance being made for it.
I come to the question of board for help on the farm. Fifteen dollars a month or fifty cents a day is allowed. With present prices in the city and present costs on the farm, I do not think that SI a day for board is too much to allow in computing income tax returns; and as soon as I have finished the few remarks I have to make, I would ask one or other of the ministers to tell us what he intends to do in connection with that item.
The question of soil depreciation was brought up. The Minister of National Revenue told us that there was an allowance for fertilizer to keep the land in good condition, but I would point out to him that fertilizer is, as a rule, used up in the same year in which it is applied, and does not in the long run take care of soil depreciation. This, I believe, is another case in which depreciation should be allowed.
In connection with the prices we are receiving for a number of our products to-day, I might remark that when the prices of our grains and other products were set and frozen, no worse time of the season could have been picked as far as the farmer was concerned. The time set was September 15 to October 11, and that, as we all know, was the time when the crops were being taken off, when hogs and other stock were being finished and made ready for market. The effect as far as farmers are concerned was extremely detrimental, because prices were frozen at one of the lowest levels of the year.
Another matter I should like to bring to the attention of the Minister of National Revenue is that of the farmer collecting tax from his help. Only this morning I had a bitter complaint from a farmer in the northern part of my constituency who had hired a man last year at S40 a month, that when he went back this year to hire him the man refused to work for him because he had collected that income tax last year. On Thursday last I pointed out that a number of farmers had lost their help to other farmers because the one who first hired the man collected the income tax or national defence tax. That is not being applied all round, and for that reason the man who is trying to live up to the law is penalized.
I would point out once more that the farmer's net income is not really net income. As a result of government policy in the past we were forced to produce at far below cost of production. On that account we were not able to pay our debts as we went along, and now that we have a few dollars to spare and apply on our debts, that should go out as expense, and it should, to some extent at least, be charged to expense because it is not in reality a net revenue.
I know, and 1 think everybody knows, that the farmer pays directly or indirectly the income taxes and all other taxes of most of the people in Canada. These taxes are unloaded and included in prices to the farmer, and he is compelled to pay them all. I might say that it is my desire, expressed on another occasion here this afternoon, to see every farmer in the income tax class; then, neither I nor anyone who has spoken for the farmer in the past will need to advocate his case in the
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future; but until prices are fixed so that the farmer can get cost of production and a little profit besides, we are bound to continue to present the farmer's case.
I do not know whether there is much use in my saying any more. I am quite satisfied that the government well knows the condition of the farmers. I am also satisfied that the Minister of Agriculture and the Minister of Trade and Commerce are doing their share to try to get a little more for the farmer; but, because of the powers they have to contend with, they are not able to get anything better, and because farmers are not organized as are labour and other groups, we are compelled to take exactly what is handed us.
In conclusion, might I say that it is not in the best interests of this or any other country that we should have one part slave and the other part master.
I would ask the ministers concerned to give answers to the questions I have raised.


Mr. LEADER:: Mr. Chairman, I hesitate, of course, as all hon. members should, to delay the passing of these budget resolutions, but since my name was mentioned this afternoon I would feel that I was not living up to my reputation if I did not offer some remarks pertaining to the taxing of our agriculturists.
The hon. member for Souris was kind enough to mention my name and use my case as an example to point out the serious situation which is developing in Canada on account of the liquidation of our pure bred herds of live stock. He presented my case fairly well. It was a case of sacrifice on my part. After spending twenty-five years in endeavouring to build up a herd of superior cattle, I was compelled, on account of my own disability and my son's action in joining the army, to sell this great herd of cattle. I am not blaming anyone, certainly no member of the government or of this house, because we were compelled to take that action. But I wish to point out that hon. members may think this is a good time to disperse one's herd, on account of the high price of beef. That consideration enters in to a certain extent, but the serious part of it is the years of effort which have been put into this business and are lost to that individual, causing also a loss to the agricultural industry and to the nation at large.
I think the hon. member for Souris suggested that proceeds from these dispersion sales should be classed as capital, not as income. With that I have some sympathy. In our own case, after years of building up this herd and the sacrifices we made, we paid to the government as income tax about one-third of what we received. I am not finding

any fault with that; I think under the regulations we were properly taxed, but I wish to. point out to the two ministers sitting here, to-night that if it is possible by any means to treat this as a capital item instead of income, it would compensate in some smalll measure the breeders who have given so much, of their lives to this great industry.
I discussed this matter with the tax officials-in Winnipeg. They pointed out to me that during the years we were building up this-herd we were feeding them grain which would.' otherwise have been marketed. They also>
told us we were getting some revenue from, this herd from time to time. Of course we-were. Therefore I think the regulations as-they now are warrant the imposition of this-tax. But 'coming back to that one specific-suggestion which appeals to me,, I think the-regulations should be changed to allow such-receipts to be treated as capital instead of,' income.
Take a man who is in business; he sells-his store, sells his stock. That is capital and is so treated by the income tax officials. He can take that capital and buy another store-and re-stock it. But a man in the cattle business cannot do that.
But they go this far-I will give a personal1 example again. I became so tired of seeing empty pastures and empty barns that I am, getting a few of my old favourites back, paying much more for them than I received: at our sale, and I am allowed to treat that as a deduction from my income. That seems to me to be fair. Therefore I cannot say I have very much kick on account of the imposition of the tax.
I agree absolutely with the Minister of Finance when he said this afternoon that we should not treat any class differently from any other class. I do not think the farmers,, or at any rate the great majority of them, are asking to be treated differently. The farmers would be happy if they were in the income tax-paying class, and speaking for the farmers of my riding and for agriculture in genera], I believe they do not object to paying their fair share of income tax.
However, that was not my purpose in. rising to-night. I rose to discuss another-matter which is of far more vital importance to the farmers of Canada. I refer to the decision of the government as announced by the Minister of National Revenue that our cooperative elevator companies shall be taxed on the earnings they make from doing business for the farmers. If I have your permission, Mr. Chairman, and it is in order I should like to discuss that now.

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James Lorimer Ilsley: I do not think that is in order under this resolution. I think I shall have to take that point of order, because I have reluctantly come to the conclusion that latitude should not be allowed on any of these items, or we shall not make any progress.


Harry Leader: If it is not in order to discuss it on this resolution, would the minister indicate when we shall have an opportunity to discuss this matter of pool elevator earnings?


James Lorimer Ilsley: The hon. member knows the rules of the house as well as I do. There are occasions from time to time; I hesitate to suggest them. I hope he will not do it on a motion to go into committee of ways and means. I do not think I should be asked to designate an occasion. But it is not admissible under this resolution.


Harry Leader: May I proceed until I am called to order. It will really take forty minutes to do the matter justice.


Some hon. MEMBERS:: Go ahead.


Joseph-Arthur Bradette: I do not wish to deprive the hon. member of an opportunity to present his point. I do not see how I can give a very strict ruling. I believe he has the right-


James Lorimer Ilsley: Before you give a decision, Mr. Chairman, will you permit the point of order to be argued? .
The point the hon. gentleman wishes to argue deals with a section of the Income War Tax Act that relates to exemptions and deductions, and excepted incomes.	It is paragraph (p) of section 4, which reads:
4. (p) The income of farmers', dairymen's, live-stockmen's, fruitgrowers', poultrymen's, fishermen's and other like cooperative companies and associations, whether with or without share capital, organized and operated on a cooperative basis, which organizations
(a)	market the products of the members or shareholders of such cooperative organizations under an obligation to pay to them the proceeds from the sales on the basis of quantity and quality, less necessary expenses and reserves;
(b)	purchase supplies and equipment for the use of such members under an obligation to turn such supplies and equipment over to them at cost, plus necessary expenses and reserves.
Such companies and associations may market the produce of, or purchase supplies and equipment for non-members of the company or association, provided the value thereof does not exceed twenty per centum of the value of produce, supplies or equipment marketed or purchased for the members or shareholders.
This exemption shall extend to companies and associations owned or controlled by such cooperative companies and associations and organized for the purpose of financing their operations.
That is an exemption of certain cooperative companies and associations from the provisions of the Income War Tax Act. An answer to a question asked in this house indicates that it is the intention of the Department of National Revenue to assess certain organizations or companies in western Canada which have in the past claimed to be exempt under section 4 (p), but which it is now contended by the Department of National Revenue are not within the provisions of section 4 (p) and therefore not exempt from taxation.
I understand the hon. gentleman wishes to raise the point as to whether these companies should or should not be taxed.
The item that we are now discussing provides:
That taxpayers whose chief business is that of farming shall in respect of the year 1943 and for each year thereafter pay two-thirds of their income tax liability for the current year on or before the 31st day of December and the remaining one-third on the following 30th April.
This deals with the manner in which farmers shall pay individual income tax, with the time when they shall pay their individual income tax for the current year. It has nothing to do with the taxation of bodies corporate, which is the question the hon. gentleman wishes to discuss. Resolution 7 will be an amendment to section 48 of the Income War Tax Act, or will be connected with the subject matter of section 48, which deals with the time when individual taxpayers make their returns. The two subjects are entirely separate and distinct, and standing order 58, subsection 2, reads as follows:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
My respectful submission is that the question of whether certain incorporated companies are subject to taxation under section 4 (p) of the Income War Tax Act has no relation, is not strictly relevant nor is it relevant.at all, to the resolution now under discussion in the committee, and I raise the point of order. I do not do so because I want to shut anybody out of a legitimate discussion, but the hon. gentleman says he will make a forty-minute speech on the subject, and, if he does so, I presume ten other members will have to make speeches on this matter in self-protection. Then we shall be launched into a debate, which may last for several days, in connection with this question of the taxation of the pools, when it is not relevant to the matter before the committee. The ruling in this case is a matter of considerable moment.


Richard Burpee Hanson: I am not speaking to the point of order, but for the purpose of information may I ask-
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Harry Leader: Let me finish what I was saying. I do not challenge your ruling, Mr. Chairman, but the minister himself has taken exception to what I was about to say. I do not wish to be guilty of holding up the work of this house by discussing points of order. Therefore I feel that I should agree to the minister's request that we do not discuss this matter. Of course, if the subject is brought up by other hon. members on either side of the house, and they are allowed to discuss it, I will claim the same privilege.


James Lorimer Ilsley: I will raise the same point of order.


Richard Burpee Hanson: I should like to ask the minister whether under these resolutions there will be any amendment to section 4 of the Income War Tax Act.


James Lorimer Ilsley: I do not think so.


Mr. RICKARD:: I have been very much
interested in the discussion that has taken place with regard to the income tax of the farmers, for I believe this topic has been discussed among the farmers in our rural municipalities as much as anything else ever since they had the idea that farmers were to be taxed. A great many farmers have asked me questions about this income tax, wanting to know how to fill out this long form covering some five, six, seven or eight pages. I have tried to tell them that it was not very difficult, that everything would work out all right, that it could be filled out with not too much trouble, and so on, but some things contained in the return might very well be eliminated. The other night the hon. member for Muskoka-Ontario suggested that the item "produce consumed on the farm" might very well be left out. I agree, because it is almost impossible for any farmer to say how much of his own produce he has consumed. As all hon. members know, very few farmers keep books. They have no idea how much they consume, how many eggs, or what quantities of vegetables; in fact many of them do not know how much they sell. They probably know how much money they have at the end of the year, but they have not kept books in order to keep track of just what they sold and what their expenses were. So that it will be a hard job for the average farmer to fill in this income tax form, and it should be made as simple as possible. I cannot agree with the hon. member for Battle River that the farmers should not be taxed at all. I believe any farmer who is eligible to pay income tax is willing to do so, but he should be given a form reasonably easy to understand.

Another matter that is very much discussed among farmers is why they are not given some exemption from income tax in connection with the work done by their wives and families. It seems to me hardly fair that a farmer's wife should be expected to look after the chickens, milk the cows and do a dozen and one other things without receiving the same consideration that would be shown if the farmer had to hire a man to do those jobs. In a great many cases if the women did not do this work it would not be done. It seems to me essential that this work should be done, so that I think it is only reasonable to suggest that some consideration should be given the farmer's wife in respect of the income tax.
There are many different kinds of farmers: grain growers, stock raisers, fruit growers and so on. I have not heard anyone mention the fruit growers. It is contended by many people that the fruit-growing industry should be given some consideration, that depreciation should be allowed in connection with the replacement of fruit trees, and all that sort of thing. There is a good deal to the argument, because it takes a long time to bring an orchard into production, and perhaps you no more than get it in proper shape when something unforeseen comes along and you lose many of your trees, which are very valuable. Some consideration should be given in that regard.
The whole question has been discussed very thoroughly, and I shall not take up a great deal of time on it. However, if we had referred the matter of the drafting of these forms and, in fact, the whole income tax question to a committee of this house, where it could have been thoroughly discussed, we might have made better progress with this legislation. I agree with the Minister of Finance that we cannot legislate for any particular class, and the farmers are not asking for that. I believe that the farmers who are eligible for the payment of income tax are willing to pay it, but they consider that they should have a simpler form and that they might be given some assistance in filling it out. I had the idea that perhaps someone might be sent to the offices of the various agricultural representatives for a day or two, to show the farmers how to fill out these forms. Perhaps consideration might be given this suggestion.


Richard Burpee Hanson: Apropos of the question I asked a moment ago, would not resolution 23 involve an amendment to section 4 of the act, dealing with exemptions?


James Lorimer Ilsley: Yes; I think it does.

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Mr. BLACK (Cumberland) :: I should like to ask the ministers if due consideration has been given the position of the mixed farmer, more particularly in eastern Canada, and this would apply also to apple growers. Farmers are as willing as any other class to pay their taxes, and I believe that over the years they have been paying a larger percentage of their earnings in taxes than other classes. But they have been passing through a series of unprofitable years; for ten or twelve years there has been little or no profit to our farmers in eastern Canada. They have not come into the income tax class. Fortunately some of them now hope to be in a position where they will have to make a report, and pay income tax. But it has been represented to me that consideration should be given these farmers by the department, on account of the losses they have sustained in recent years. Their debts have increased; their buildings have depreciated; their stocks have been depleted; their fences and machinery have deteriorated, and their first profits should be applied toward paying their debts and reestablishing themselves on their farms.
It is felt that consideration should be given to their special position. I received a letter only to-day from the hon. member for Victoria-Carleton (Mr. Hatfield) who, unfortunately, is not able'to be in his seat on account of illness. I believe he understands the needs of the farmers of eastern Canada better than any other hon. member, because he is more intimate than any other hon. member from eastern Canada with the problems of our farmers. It is his view that a sum up to S3,000 of the first profits which would otherwise be payable as income tax should be left the farmers to rehabilitate themselves by discharging their debts, restocking their farms, renewing machinery, and repairing buildings. These earnings would not be used as ordinary profit by the farmers, or retained as cash, but would be actually spent by them for the purposes I have enumerated in connection with their farm operations. They could get receipts for these expenditures, in the same manner as a person making charitable donations gets receipts. These payments would be considered by the department as necessary expenditures to enable such farmers to strengthen their positions on their farms rather than pay their first profits as taxes. Increased farm production is one of the most important requirements of the war, and I believe this procedure would give our farmers the encouragement they deserve.


Mr. DIEFENBAKER:: Now that under the present income tax regulations many farmers who heretofore have not been paying income tax will be liable, I should like to bring to
the attention of the minister the necessity for clarification of the definition of the word "income." With that in mind I would draw several matters to the attention of the minister in order to ascertain from him whether under the circumstances I recite there would be liability for income tax.
For example, let us take a farmer in the western provinces who this year has 5,000 bushels of wheat. Under the quota in effect all he may sell is 3,000 bushels. In arriving at his income, will it be defined by the amount realized on the sale of the 3,000 bushels, or must he take into consideration the value of the 5,000 bushels?
Supposing that under similar circumstances a farmer raised 5,000 bushels of wheat. He may dispose of the whole amount, but for reasons best known to himself he disposes of only
3.000	bushels. Upon what basis must be compute his income tax?
Then, finally, there are many farmers in Saskatchewan who have large quantities of wheat left over from 1942. Some of that wheat will be sold in 1943. In which year will the farmer be required to take that sale into consideration, when arriving at the amount of his income tax?
From a perusal of the definition of "income" I can find no section or subsection covering cases such as these. "Income" is defined as follows:
For the purposes of this act, "income" means the annual net profit or gain or gratuity, whether ascertained and capable of computation as being wages, salary or other fixed amount . . .
Then follows an immaterial portion. Then, the words:
... or as being profits from a trade or commercial or financial or other business or calling, directly or indirectly received by a person from any office or employment. . . .
It is of very great importance that this be made perfectly clear and, if necessary, an amendment to the definition of "income" should be brought in at this time.


Colin William George Gibson: In reply to the questions asked by the hon. member for Lake Centre, the farmer in the first case had raised 5,000 bushels of wheat. If he sells 3,000 bushels he would take the proceeds from the 3,000 bushels sold, carrying that into profits for that year. He would of course offset the expenses incurred in that time. The same applies in the second case.


John George Diefenbaker: Would he take into account the expenses in connection with raising
5.000	bushels?


Colin William George Gibson: The expenses incurred in the year of sale.

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Harry Rutherford Jackman: The year of sale of the first 3,000 bushels.


Colin William George Gibson: He raises wheat and sells it in that year; that is the case under discussion.


Harry Rutherford Jackman: But surely if he spent money to raise 5,000 bushels of wheat in 1942, selling 3,000 bushels in that year, he would still have the cost of raising 5,000 bushels in 1942, as against the sale of 3,000 bushels.


Colin William George Gibson: As I said, the expenses of the year are offset against the income or receipts received in that year.


Harry Rutherford Jackman: On the 3,000 bushels?


Colin William George Gibson: Yes, on the 3,000 bushels. In the second case the farmer raised 5,000 bushels and sold 3,000. There again he takes in, as income, the amount received from the sale of the 3,000 bushels.
In the third case he has wheat left over from the previous year, and sells it all with the amount grown in the year in question. In that case all the sales made in that year are income for the year in which he sold that amount of wheat. He is on a cash basis there, and he is taking into income the profits he makes from any cash sale.


John George Diefenbaker: As I understand it then, the amount of his income in any one year regardless of what he produces is determined by the amount he sells.
I should like to bring to the attention of the Minister of Finance a situation to which I think he should give some consideration in connection with the victory loan campaign. A concrete instance has been brought to my attention. A farmer raised last year a considerable crop, but of that crop he has sold or intends to sell sufficient to secure him an income of $2,500 net. He is using part of that to restore his farmstead which had fallen into disrepair during the years when he had no crop. The victory loan campaign is coming along. He would like to assist by subscribing $1,000, and he must dispose of sufficient crop to buy that $1,000 bond over and above the amount sold to net him $2,500 income. But if he does so, his income tax will be increased by $473.60. The position he then finds himself in is that for the $1,000 bond he will receive only $526.40. Would it not be possible for some arrangement to be made whereby farmers would not be liable for payment of income tax during the current year under those circumstances, particularly when extra sales are made with a view to assisting with the loan?
Mr.SLAGHT: What about the lumberman?


John George Diefenbaker: I appreciate that situation.


Arthur Graeme Slaght: You could drift off into a dozen different callings.


John George Diefenbaker: This matter has
been brought to my attention on a good many occasions, and I realize the difficulty that has occurred to the hon. member for Parry Sound. But I do think some scheme could be worked out which would permit a greater contribution being made to the victory loan campaign by farmers.


James Lorimer Ilsley: We are anxious to sell victory bonds, but we would not want to do it at the cost of breaking certain fundamental principles in our taxation system. Very many people on salaries would say, " If you will relieve me of part of my taxation I will buy more victory bonds than I am able to buy now with the heavy taxes." It would be impossible to accede to a suggestion of that kind. Similarly the business man would say the same thing.


John George Diefenbaker: The position is different here. The farmer determines his own income by the amount he sells. He-will not havd income this year unless he chooses to sell extra wheat.


James Lorimer Ilsley: He will have income at some time. If he does not sell the wheat this year, he will have income next year. In effect, the suggestion is to relieve him of part of his tax so that he may have a greater amount to invest in victoiy bonds. To accept that suggestion would be too great a violation of principle for the government to countenance.


Richard Burpee Hanson: I should
like to say a word with respect to another branch of farming to which no reference has been made. There is in New Brunswick what is called the potato belt where the farmers specialize in the raising of seed and table-stock potatoes. Many of them operate on a very large scale. For a long period of years until they got into the raising of seed stock it was, I believe, a losing venture. During the years of the depression many of these farmers went behind,, their buildings depreciated and the farmers went into debt. Many of them had to mortgage their farms. When the Farmers' Creditors Arrangement Act was put into effect they were in a position where they could not borrow any new money. Their credit was gone, and some of them had to go through the wringer, so to speak.
As a result of improved conditions in farming and the fact that more money is afloat in the country, these fanners are now approaching a period, to use the words of the hon. member for Cumberland (Mr. Black), when they hope to be in a position where they can

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pay income tax. It has occurred to me that some allowance might well be made for the man. who is struggling to pay off his indebtedness. The minister will recall that in the answer I made to his budget speech last year I suggested that some consideration should be given to the man who was struggling to pay off his indebtedness instead of going through the bankruptcy court. I did not follow up that suggestion because the minister rather ignored it.
Could the minister not give some consideration to these farmers who have had more years in the red than they care to recall? Could he not give some consideration to the man. who has endeavoured to keep afloat, who has endeavoured to pay off his liabilities? A man may have one good year out of four or five. He must pay an income tax in that good year, and he receives no consideration for the losses he sustained in the other three or four years. I realize that this may be pleading for special privilege, but some consideration is being given to. farmers by these resolutions, and I contend that consideration should be given to the man who is endeavouring to pay off some of his indebtedness.
This may be a new principle in income tax, but I do not mind telling the minister that it was suggested to me, not by a farmer but by a man who is interested in the farmers from the position of a creditor. He would not get any benefit from this himself, but he wanted to see the farmer put back on his feet. One method would be to help him by making some allowance for debt reduction. The principle is not new because it was adopted in the budget of last year when an allowance was made in connection with compulsory savings when the carrying charges on mortgages were allowed as an offset.
Some encouragement ought to be given to our primary producers in the matter of allowance for debt. After all, the plight of the farmer in eastern Canada, and particularly of those in the potato belt, has been-a grave one. I have urged the farmers in my constituency and in the adjoining county of Carleton-Victoria to cut out specialized farming and go into mixed farming, and I am glad to think they are doing that. They are now raising more dairy products. For the first time in the county of Carleton, in my time at all events, they have now a cheese factory. Just fancy! One of the finest agricultural counties in New Brunswick did not until recently have a cheese factory. That was because it was more profitable to go in for other dairy products. They have looked with longing eyes at their confreres across the international boundary in Aroostook county who in a good
72537-132J	.
year make a killing out of potatoes. It is an easy crop to raise. It is hard work but not nearly as hard1 as the work of mixed farming. That is one reason why they went into this specialized production in the hope of making big money, but it has not resulted in that in New Brunswick for various reasons. Would the minister undertake to give some consideration to ameliorating the position of a man who perhaps for the first time in his life is now in the category of an income taxpayer, a man with debts to pay? Under the present income tax law no allowance is made for debts; the man must pay the full income tax that is due. I hope the minister will give consideration to a special class in our country.


James Lorimer Ilsley: I do not think I can hold out any hope that anything of that kind can be done in this year's budget legislation. I would not say that I would not give consideration to a suggestion of that kind. It has been put forward very moderately and reasonably by the hon. gentleman. But he showed that he understood the seriousness of creating such a precedent.


Richard Burpee Hanson: And the difficulties.


James Lorimer Ilsley: Yes. But it is not only the farmer who owes debts. The business man owes debts; the salaried man owes debts; the wage-earner owes debts, debts in many cases incurred during the depression. For instance, some men who worked on the railways did not have much work a few years ago and ran up debts. They did not go on relief but incurred debts instead. It is a fundamental principle of our income tax system that debts cannot be deducted from income for income tax purposes and I cannot see at the moment how such a concession could be so circumscribed that it would not spread. It is not only the receivers of small incomes who owe debts. The receivers of large incomes do, too. I received not exactly representations but information from a man who had an income, I should judge, of forty or fifty thousand dollars a year, an able man practising his profession, but he felt that he would perhaps have to make an assignment, go into bankruptcy, because he was so heavily encumbered with debt that with these heavy income taxes now in effect he could not live, pay his taxes and his heavy debts. There is that class of cases. Some people get hurt in any taxation system. We have gone very far in our income tax act and in our regulations to try to effect justice and adapt the provisions to the varying circumstances of individuals. But the more one does that, the greater the complications. We have a fairly complicated system now, complicated forms, a complicated
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act, and so forth. One cannot introduce too many complications. These are the difficulties. The hon. gentleman understands them; the members of the house understand them, and I would not offer any hope that we could make any concessions along that line this year. It might be that something could be worked out if there were more time to be given to the matter, but we have said so often that we cannot allow debts as a deduction from income for income tax purposes. That is so fundamental.


Richard Burpee Hanson: That is past debts.


James Lorimer Ilsley: That is right; past debts which resulted from losses in certain years. We are going some distance in allowing an offset of losses against profits of future years. It is provided here that losses in the case of farmers can be carried forward two years; Losses in ordinary business can be carried forward one year for excess profits tax and income tax purposes. As I have said, in the case of farmers we are providing that losses can be carried forward two years. That will afford some relief for the future. We provided that for the first time last year, beginning with 1942. With regard to losses incurred in previous years it would be absolutely impossible to ascertain them.


Richard Burpee Hanson: I would not agree with that I think they could be ascertained.


James Lorimer Ilsley: I do not think so at all. You could ascertain the debt probably, but you could not ascertain with any accuracy in what year the losses occurred.


Richard Burpee Hanson: I am
willing to let the matter stand on the minister's assurance that he will continue to give some consideration to the problem. I realize that it is rather late for him to do anything about it this year. Therefore I will not press it at this time. As a matter of fact my colleague and I are carrying out a promise that we made to our colleagues that we would bring this matter to the attention of the committee. I hope that the minister will keep it in mind and see if something cannot be done.
If it is in order, I should like to make some inquiry of the minister with respect to the matter of income tax policy. I preface my remarks by saying this. We are on the eve of the greatest campaign to raise money for the war that this country has ever experienced. I was looking over the allotments for my little province, my county, and my own city, and the amounts are huge, but I

have no doubt whatever that they will be raised and exceeded if we have the proper team work. I am preparing to go home at the end of this week-I have been honoured with a place on the special names committee -and I expect to spend my Easter holidays in promoting the loan. I shall not ask the minister to give a snap decision or statement here to-night, but I suggest to him that he take into consideration the idea I am presenting by announcing to the Canadian people -and I am speaking carefully now-something in relation to the question of future income taxation. I do not wish to be put in the false position I was put in this afternoon of being singled out as a champion of special interests, because I am not. I am just one of the plain people like the rest of the members of the committee, and I was thinking this afternoon only in terms of the small income taxpayer with an income of up to $3,000. But if the minister during the passage of this legislation could give some intimation to the Canadian people of the plans of the government with respect to income tax policy, it would, I believe, go a long way in helping him to raise the loan. If he could tell us he considers that income tax has reached its peak in Canada, as his colleague is reported to have said in the course of his journey to the west last summer-


Colin William George Gibson: That was just a report.


Richard Burpee Hanson: Well, I have the report in my hand, and I have never seen that it was repudiated by the minister. In a dispatch to the Toronto Globe and Mail of September 14, from Sudbury, under date of September 13, the Canadian Press reports the Minister of National Revenue as having declared on that day that "taxes in Canada are now as high as the people can afford to pay, in the opinion of the government." If he used that language or anything like it, that is a reassuring announcement. I should like to know in the first place if the minister made it.


Colin William George Gibson: No; I did not make that statement at that time.


Richard Burpee Hanson: "At that time." Did you make it at any other time?


Colin William George Gibson: No; I did not.


Richard Burpee Hanson: You did not make it at all?


Ian Alistair Mackenzie: Cross-examination!


Colin William George Gibson: I did not make it at all.

Income War Tax


Richard Burpee Hanson: I know it is cross-examination. That is what we are doing here to-night. The budget, I think, bore it out. The minister repudiates that press report.
Then, I hold in my hand an extract from a speech of Mr. Spinney, now president of the bank of Montreal, and chairman of the victory loan committee. There was a report in the press that Mr. Spinney had spoken to the same effect in the course of the campaign for the last loan. I saw Mr. Spinney, and he said that he had been incorrectly reported, and in one newspaper only, I think, and that he never said anything of the sort. But in an address which he made in Hamilton on October 7 last, Mr. Spinney, speaking for himself I am sure, and not for the cabinet, but occupying a veiy important position in relation to the government, said this:
I am not losing sight of the possibility, even the probability, that when the war is over the government may be subjected for a time to a policy of expenditures, looking to the reestablishment of our armed forces into civil life and to cushion the transfer of our war-time enterprises into enterprises of peace. Of this I am absolutely sure, that if we as a nation will exert real self-denial and save like we have never saved before, this cushioning process will largely take care of itself, because after long deprivation a demand for consumer goods will not only come actively into play but the people through their savings will have the money to pay for them. I am satisfied that the very logic which calls for high taxes-
This is the part of his statement to which I call attention:
-in war years will dictate a reversal in postwar years.
I should like to know if the minister is prepared to make any announcement like that, because that was a rather reassuring announcement. I do not suggest that it was inspired by the minister; I would not like to go that far; I have no authority for going that far; but I would think that probably the chairman of the victory loan committee, Mr. Spinney, had, shall I say, an intelligent anticipation of what was in the minister's mind-"an intelligent anticipation of the minister's wishes." I think that was a celebrated term which was used here in parliament on one occasion in connection with the customs scandal, and went down in history. Would the minister care to make any statement, if not now, then at some time, because I believe it would have a reassuring effect on the loan? I am anxious to see some such statement made.


Joseph-Arthur Bradette: Order. A few moments ago the hon. member for Portage la Prairie tried to introduce a discussion on the taxation of cooperative wheat pools. I have taken
occasion to warn the committee several times since I have occupied my present position that we should follow the procedure of the house. All hon. members know that I am bound by parliamentary procedures, and I desire now, having in mind the fine statement made this' afternoon by the leader of the opposition, that we shall get on with the business of this house. The committee will readily realize that I have to follow the rules of parliament. The Minister of Finance, also, mentioned this afternoon standing order 58, section 2:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
I do not wish to be dogmatic. This is not a court of law; it is a committee of ways and means. At the same time I believe it is the desire of every hon. member that we should have coordination and cooperation, and in order that the discussions of the committee shall have useful and coordinated results we should absolutely stay with the item which is under discussion. I feel that the committee has that aim alone in mind.


James Arthur Ross: I should like to get
an explanation from the minister.


James Alexander Marshall: Who has the floor?


James Arthur Ross: On a couple of occasions the hon. member for Battle River has stated that a married couple, both working in industry, are allowed ah exemption of $1,860. I recollect the Minister of Finance stating a year ago that there had to be some extra exemption given to married women in order to keep them working in offices, and such like. I should like to have a statement from the minister as to whether this married couple, both working in industry or in offices in cities, are allowed this joint exemption of $1,860, and if they are why should the farmer's wife not be allowed exemption when she puts in much longer hours on the farm besides having to do her housework. We have before us a programme of food production in excess of anything in the past history of this country. I am sure that the farm woman, who works at milking cows and does all sorts of outside work on the farm, puts in quite as long hours and is contributing quite as much to the war effort as any married woman in an office or elsewhere in the cities, and if these married couples are allowed $1,860, why should the farmer's wife not be entitled to a similar exemption?


James Lorimer Ilsley: In the case of a man whose wife works in industry, or works at all and receives an income, the husband is entitled to
Income War Tax

the married man's exemption, $1,200, and the wife is entitled to the single person's exemption of $660. If they have a family, the chances are that the wife has to get some woman to come in and look after the house or the flat or the children. That has happened, I believe, in a great many cases. Some of these extra expenses may be incurred where the couple have no children. The case of the wife on the farm is not that of a woman who is putting in full time on the production of the farmer's income. It is true that in some cases she gives some assistance to her husband, but ordinarily her case is much more nearly comparable, I believe, with that of the wife of the working man who stays at home. That woman works, especially if she has children, a good part of the day or all day. She has her household duties and her children to attend to, her cooking to do, and probably also the washing, ironing and everything of that sort.


Mrs. NIELSEN:: Mr. Chairman, if the minister will permit the interruption I must protest against that statement. When spring work comes on, many farm women-


James Arthur Ross: Many thousands.


Dorise Winifred Nielsen: -will have to take over completely what has been previously done by hired men. They will spend the whole of their day out in the fields driving a team or a tractor, leaving to the children the housework or the work about which the minister was speaking. They definitely will be taking over the whole-time duties of the hired man, and their efforts should be acknowledged.


James Lorimer Ilsley: That is true, I presume, in a number of cases. I have no doubt it is.


An hon. MEMBER:: Many thousands of them.


James Lorimer Ilsley: Well, it would take some checking to know how extensive it is. But the working man does not get any deduction or exemption for the services of his wife, as is being asked for the farmer by virtue of the fact that his wife does this work. Neither does the shopkeeper's wife nor the wife of anybody in business. She assists her husband to make the income, and the husband is taxed on the income.


James Arthur Ross: Not to the same extent. Mr. ILSLEY: It is a matter of extent, of degree. I hear what is being said. It is a matter as to which conditions would perhaps vary in different parts of the country.


Richard Burpee Hanson: The only exception I know of to that is the case of the town postmaster whose wife takes her trick in

the post office, certain hours of the day, for which he pays her a salary. I do not know whether he is entitled to take that off his income, but there is such a position.


James Lorimer Ilsley: Is the wife not contributing to the family income whether she is working indoors or out? Is it not a cooperative enterprise in which the husband is doing some work and the wife doing some work? In some cases the wife works hard and the husband not so hard, and in other cases the husband works hard and the wife not so hard. But whether it is a labouring man with a wife who is working in the house or a farmer whose wife is working partly outdoors and partly indoors, with some of the children doing work indoors, is it not in all cases a matter of a man and his wife working together, both contributing to the family income?


James Arthur Ross: Except that in one case you allow $1,860, and in the other $1,200.


James Lorimer Ilsley: She is working for a stranger there.


James Alexander Marshall: In connection with the income tax on farmers I should like to ask the minister a couple of questions based on an article which appeared in the Financial Post last summer. The article is headed:
Probe farm income tax situation.
Committee named to find why returns are not being made by enough farmers.
It states:
Alarmed by the moderate response of Canadian farmers to federal income tax requirements, a small committee headed by Ronald Sharp, chief inspector of income tax, has been named to survey the whole field of agricultural income tax in Canada. Preliminary' meetings have already been held in Ottawa in recent days.
Eventually it is expected that the committee will make recommendations to the department looking toward simplification of forms, issuance of special rulings and possibly a country-wide educational campaign.
Behind this new and important move is the fact that Canadian farmers (despite present tax low exemptions and record-breaking farm income) are not making tax returns. In 1942 some 8,500 of Canada's 700,000 farmers paid income taxes. These taxes were paid this year on the basis of income received in 1941. Actual returns were filed by about 25,000 but only 8,500 paid taxes. This figure compares with about 4,000 farmers who paid taxes the previous year and between 1,200 and 1,500 who paid in the pre-war years.
So far, Ottawa is not optimistic that there will be any bonanza uncovered as the result of this committee's efforts. The farmer has long been an income tax problem, and will probably always remain so.
The Ottawa committee now studying this question includes (in addition to chairman, Ronald Sharp) the following: W. E. Haskins, secretary of the Canadian Federation of Agri-

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culture; Dr. J. F. Booth, chief, economic branch,' Department of Agriculture; R. F. Kennedy, editor, Montreal Family Herald and Weekly Star, as well as departmental experts.
Serving in an advisory capacity are: H. H. Hannam, president of the Canadian Federation; a French Canadian nominee Henri Bois of the Cooperative Federee, Montreal, and Doctor Drummond of the Ontario Agricultural College, Guelph.
The question I wish to ask the minister is, Has this committee submitted a report to him; would the minister be prepared to give a resume of that report now, or would that report be available to members of this house?


Colin William George Gibson: The committee spoken ' of was set up by the Department of National Revenue in order to do whatever was possible to make it seem simple for the farmer to fill in an income tax return. A survey had been made among the farming community, and it was found that there was not an aversion on the part of farmers to paying income tax, but they did indicate that they were finding difficulty in filling out the returns. Now the department said, We are prepared to use any return that will meet the needs of the farmers, and if there are any suggestions that would simplify the returns formerly used we shall be glad to adopt them. This committee was set up and got in touch with the departments of agriculture in the different provinces, communicated with the farmers' journals and the various agricultural associations and received a number of suggestions as to how the form could be simplified for farmers. As I say, the department undertook to accept it if the committee could bring in * a suggestion as to a simplified form.
After the committee had completed its work they brought out a form. It was a very complete form; it had all the items included so that the farmer could see exactly what he should include as income and as expense. But when we got the form set up it covered six pages. When some farmer members of parliament saw it they said it was far too complicated. Others who studied it thought it was a great improvement and recommended that it be put into use. Although a farmer might be frightened when he saw it they thought that when he read it through he would find it of great assistance.
Since that time we have brought out, or are bringing out, what is known as a simplified form. I do not know whether I should say that any form can be simple, but my staff has prepared a simplified form. It is simplified not in the computation of the income, but in the computation of the tax. It is considered that if a man knows what his income was he
can fill in the form and find out what his tax is in ten minutes. That form is applicable to farmers as well.


Gordon Knapman Fraser: What does the minister mean by "to farmers as well"?


Colin William George Gibson: This simplified form is
applicable to taxpayers with incomes up to S3,000. Consequently it can be used by farmers who have incomes below $3,000. It may be necessary to have additional pages that can be attached to assist the farmer in estimating his income.


James Alexander Marshall: Does the minister mean net income of $3,000, or gross income?


Colin William George Gibson: Net income of $3,000. He may need some forms to assist him in working out his income, because I think that is one of the difficulties; sometimes a farmer does not know how to classify the various items as income, and he loses track of some of the things that should be included. At the same time I admit that often a farmer does not claim deductions to which he is entitled, such as depreciation. Consequently, if we can help the farmers in that way, I think the simplified form probably will meet their case better than putting out a six-page form which might frighten them off at the very outset.


James Alexander Marshall: Are any of those forms available now?


Colin William George Gibson: They are not available yet, because the table which is included in the form must be approved by the house before the forms can be put out.


George Henry Ross: The minister explained to the hon. member for Lake Centre the method of calculating the income tax on the basis of cash income. Is there not an alternative method by which the farmer can calculate his income tax? Has the farmer not the right, like the merchant or other business man, to value his assets, say as of January 1. 1942, and again value his assets as of January 1, 1943, with the difference representing his income for the year; and can he not-pay on that basis? Is he not entitled to make out his income tax return on that basis?


Colin William George Gibson: The case to which the hon. member for Lake Centre was referring was on the cash basis. A farmer can go on the accrual basis if he wishes, and in that case he takes his inventory at the beginning of the year and again at the end of the year.


George Henry Ross: He can do it on either basis?


Colin William George Gibson: Yes.
Income War Tax


Gordon Knapman Fraser: Is the department putting out instruction books containing examples for the information of the farmers, showing how to deduct what they consume on the farm, and one thing and another? Is the department getting out a booklet containing instructions of that kind?


Colin William George Gibson: Yes, we got out such a booklet last year, and it is being revised and will be made available again this year.


Gordon Knapman Fraser: It contains examples showing the farmer how to work it out?


Colin William George Gibson: Yes.


Harry Rutherford Jackman: Would the minister explain this accrual item? I am not familiar with the farm forms, but I understand there is an alternative to the cash basis, under which you can take your inventory at the beginning of the year, take the stock you have sold and the stock you have added, and get your net inventory. How does it work out when you have arrived at your net income tax payable? Is there any change in the actual cost figures on the books of the farmer under this accrual method? Would the minister give the committee an explanation, because I am sure some of the farmer members do not understand how it works.


Colin William George Gibson: It is the same as any other business; if the farmer keeps his books as they are kept in other businesses, he would be on the accrual basis.


Robert Fair: Coming back to the question of the married woman working in industry or in an office,, I am not sure that I understood the explanation given by the minister. He said that the farmer's wife may be working part of the time inside and part of the time outside. I would suggest to the minister that if he got up early enough he would find the farmer's wife up at about five o'clock in the morning; and if he happened to be around about ten o'clock at night he would find her still working. Therefore she does the work of the home and as much additional work as the city woman working in a factory or office does, if not more. For this reason I believe that if the married man and woman in the city are entitled to an exemption of 81,860, then the same exemption should be extended to the farmer and his wife, and there should be no discrimination at all.
That is the first question I should like to ask. The second is whether the minister considers fifty cents a day an ample allowance for board for a hired man on the farm. 
If the minister will answer those two questions, I shall have one or two more to ask him later.


Colin William George Gibson: The allowance for a hired man might easily vary in different localities. The rule is that the value of the board and lodging may be deducted as an expense and added to the wages received by the hired man. It might vary in accordance with the type of board and1 lodging being furnished. The amount of fifty cents has been set down as a guide for people, as an indication of what allowance should be made. It has been suggested that the allowance should be $1. If you turn round and suggest to the farmer that he should include in his own income SI a day for the produce he consumes from his own farm, he might say that was considerably too high, while at the same time he might say it would be all right to charge SI for the hired man. It works both ways.


Robert Fair: I do not agree with that, because the man in the city is getting exactly the same allowance as the man on the farm, and I merely asked the minister whether he considered 50 cents a day was enough for board and room for a man on a farm. I may say that I have been checked up. In my own case I charged $20 a month, and I was cut down to $15, so that this seems to be a hard-and-fast rule rather than a guide.


Colin William George Gibson: They must have thought the board and lodging you were giving was not worth more than that.


Percy Ellis Wright: Does the minister suggest that the 50 cents a day is only a guide as to what a farmer may charge for board and lodging, or is it a fixed amount? I should like a definite answer to that.


Colin William George Gibson: The income tax department cannot set down any definite amount. We give that as an indication as what would be considered reasonable, but circumstances might vary. Under the act it is supposed to be the actual amount expended.


Gordon Knapman Fraser: In the case of domestic servants do you not fix an amount of $17 a month, or something like that?


Colin William George Gibson: There is a figure that has been put out as an indication, but we do not hold ourselves to any one definite figure in all cases.


Gordon Knapman Fraser: It is set at $17.


George Hugh Castleden: In the case of a farmer who is going on the cash basis and who puts down his assets and his liabilities, is he allow-

Income War Tax
ed to include his debts, namely his bills payable, among his liabilities to balance against his assets in determining his profits for any year?


Colin William George Gibson: That is rather a broad question, when you refer to bills payable. If they are bills payable in connection with the carrying on of his business of farming, he would be able to offset them.


George Hugh Castleden: Then debts would be bills payable.


Colin William George Gibson: It would depend when they were incurred.


Robert Fair: Might I again ask for an answer to my question as to whether or not, when a farmer's wife works outside on the farm and inside the house, that man and wife will be entitled to an exemption of $1,860, to which the man and wife who are working in the city are entitled?


James Lorimer Ilsley: That is a different situation. My hon. friend keeps referring to the man and wife in the city, but there may be married women in country places who are working for people other than their husbands. It is rather hard for me to say whether or not there is discrimination. I should not like to say there was, but it seems to me that if demands were to be allowed in a case of that kind, there would be discrimination as between the farmer and the wage-earner. In the case of the wage-earner I assume that the wife is working; she is in the house, but she is working.


Robert Fair: She is w'orking in an office, a factory or something of that kind.


James Lorimer Ilsley: In that case she is getting pay from a stranger, and is entitled to a single person's exemption. But that is not what the hon. member is suggesting. He is suggesting that there should be something akin to that on the farm, and that if a wife works for her husband on the farm the husband should be enabled to pay her something for that work, and get that as a reduction from his income. There certainly would be discrimination at once between the farmer and the business man. Section 31 of the act states:
31. (2) Where a husband derives income as an employee of his wife or vice versa any remuneration paid to the husband or wife shall not be chargeable as an expense of the business in determining the net profit thereof.
That has always been in the act. But, apart from that altogether, when the working man is earning wages, his wife is working, too. I cannot get away from the fact that the two of them are working.


George Hugh Castleden: One is in the nature of an industry or a business, and the other a wage-earner.


James Lorimer Ilsley: Right. On both scores discrimination would arise, if he were to accept this suggestion. I think it would arise between the farmer and the wage-earner, but it certainly would between the farmer and the business man. The situation the hon. member is talking about, where they are both working for somebody else in industry, does not arise here at all. I do not know how to get at the rights of the thing, any better than that; but I do know there would be a great amount of discrimination if we were to follow the suggestion made.


Robert Fair: I do not understand why. The farmer's wife works for about twice as many hours as the other lady. She is discriminated against, and the farmer should have that extra allowance of $660. I am wondering why the farmer and his wife are not allowed the exemption of $1,860, to balance up with the wage-earner and his wife.


James Lorimer Ilsley: Would the hon. member
allow an exemption of $1,860 for a married couple?


Robert Fair: If they are both working, yes.


James Lorimer Ilsley: Do they not both work? If they are in the lower income brackets do they not both work, in every case? Of course they do.


Robert Fair: I could point out to the minister right in this city several ladies who put in full time in their offices, and then go home and look after their housework. That is happening right in Ottawa, and it is also happening on the farms. But the fact that one lady works for eight hours a day and the other works for sixteen hours proves to me quite definitely that unless extra allowances are given to them there is discrimination against those who work for sixteen hours a day.


James Lorimer Ilsley: I do not think so. If the farmer's wife went out and got a job the farmer would not lose his married man's exemption because she earned more than $660 a year. That would be a. parallel case.


James Arthur Ross: He might lose his wife.


Robert Fair: On the other hand the wife produces crops on the farm, and then the farmer has to pay income tax on the amounts he receives from the commodities his wife helps to produce. So that I say we shall have to get some common sense into this



Income War Tax
legislation, and have it straightened out. I have several letters from farmers in connection with this matter, pointing out this discrimination. Therefore I am not the only one who is dissatisfied. I must say I am not satisfied with the minister's explanation.


Mr. CARDIFF:: In many cases the farmer's wife has become the hired man, through force of circumstances. There are dozens of farms in Canada where only the husband and wife are left. They are carrying on in the best way they can. The farmer's wife has been forced to become the hired man; yet she cannot receive any remuneration for it.


James Arthur Ross: If I followed the minister correctly, he said that if a farmer's wife went to work for somebody else they would be entitled to the exemption of $1,860. That is, if the farmer's wife went across the road to work for a neighbour, the farmer and his wife would be on the same basis as a married couple in industry; is that correct?


James Lorimer Ilsley: Yes; that is correct.


James Arthur Ross: So that if they
exchanged wives they would come under this $1,860 provision. That is hard to understand, because I recollect the minister's stating a year ago that in order to keep these married women working they had to give them this consideration; is that not correct?


James Lorimer Ilsley: I think I did say that, yes.


James Arthur Ross: It is a difficult problem, I realize, to have incomes filed for farmers' wives who do work; but this is a matter worthy of consideration. I am wondering whether there could not be some system worked out whereby the wife would make a joint declaration with her husband to the effect that she had done this outside work. I see some difficulties in connection with filing the returns, but I do think the farmer's wife deserves this consideration. Perhaps in some instances she is more deserving than the woman in industry, because she works longer hours and much harder. The fact would be recognized that they would be entitled to an exemption of $1,860, as a couple. The minister has said that if she worked for a neighbour, coming home in the evenings, she would have this consideration.


Gordon Knapman Fraser: The Minister of National Revenue has said the farmer's wife would be exempt from any sidelines, such as a sale of eggs, or commodities of that kind. If her income from that source was over $660, the farmer and his wife would have a deduction of $1,860, would they not?


Colin William George Gibson: That would hardly be classed as a side-line, if the income went up to $660.


Gordon Knapman Fraser: Some of these farmers' wives have stands at the side of the road from which they sell eggs, and commodities of that kind.


Colin William George Gibson: That is part of the main portion of the farm.


Percy Ellis Wright: Oh, no; in many cases they are not. These women operate the stands as a side-line; they do it themselves. I know of many cases where the women are making $660 from their stands on the side of the road, where they have the full run of the dairy herd. It seems to me there is certainly an injustice here. The minister says that a woman can work for a neighbouring farmer and receive wages, and that the results would be perfectly all right. But if she stays at home and does the same work she cannot be paid for it. This looks like discrimination. The minister should give the matter serious consideration, so as to remove that difficulty. I can tell him there will be tremendous discontent in agricultural communities, unless something is done about the matter. The drafting of equitable legislation may offer some difficulties. I do not think any legislation can be made absolutely equitable to everybody, but certainly it would appear that there is discrimination in the regulations as they now stand.


[Stage Direction]
Amendment agreed to.
Resolution as amended agreed to.
8. That taxpayers whose chief occupation is that of farming may be allowed to carry forward for two years any farm losses, incurred by them in 1942 or any subsequent year;
George Hugh Castleden: It seems to me that the discussion so far has brought out the fact that farming is more or less of an industry. Apparently, however, the farmer is not to be treated in exactly the same way as the vrage-earner. If farming is an industry, then I say he is entitled to the same treatment as industry is receiving.
Industry is given a special exemption. A base period of from 1936 to 1939 is taken. In that basic period industry would show any arrangements for corporation or excess profits taxes. Industry takes that period, and from that you get the normal profit. If, through profits on war production, they increase their profits, then the increase is over that basic period. In the case of an industry which was busy arming Europe before the war the normal profits would be very heavy. The normal profits of industry were quite low in that period and naturally their excess profits are much higher. Farming is an industry which has been seriously depressed for the

Income War. Tax
past ten years, particularly in the west. Agriculture has suffered a most merciless depression. Under this legislation the farmer has no way of putting forth his broad position.


Colin William George Gibson: Oh, yes, he has.


George Hugh Castleden: If he had a board, he could go before that board and get particulars of his assets and liabilities. He might then receive some decent consideration. In Saskatchewan farm debt is now over 8600,000,000. That is an insurmountable burden. The farmer in many parts of the country has been bankrupt for years. If you go to a farmer and ask him how much he borrowed originally, he may tell you it was $1,600. If you ask him how much he has paid back, he may tell you it was $1,800. When you suggest that he must be pretty nearly out of debt, he says, "Oh, no; I owe $2,100." The interest charges have been so great .that he simply cannot get out from under.


Mr. KINLEY:: That is not right.


George Hugh Castleden: Come out there and
see, if you do not think that is right. Increased prices for beef, pork and other agricultural products have been a life-saver for many farmers. The farmer is having some income this year, but unless some consideration is given to his actual position, I do not see how he can be expected to accept the spread of losses for 1942 merely over the next two years, 1943 and 1944. If you would go back for four years, or take some basic year when conditions were nearly normal, say from 1926 to 1929, the farmer might be able to start on a basis where he could balance his liabilities against his assets, against everything of value on his farm, and from' that compute his profit. If he were taxed on that basis it would be all right. Instead of that, you are taking his losses for 1942 as the basis.
I think 1942 .was one of the best years agriculture has ever enjoyed as far as income is concerned. The farmer is being taxed on his income alone. It does not matter whether he has been able to place himself in a position where his liabilities come anywhere near to balancing his assets. For that reason I think there should be a basic period longer than
1942.	It seems to me that this taxation is unfair compared with the taxation imposed upon industry.
There is another person referred to in the income tax form. I am sorry the new form is not out because it would assist us greatly in carrying on this discussion. Particulars are asked of the amount paid in cash to the hired help. On many farms where the son is still working he is not paid any wages in cash, but
he is certainly hired help. He works very hard, and I would think that a wage of at least $660 a year should be deductible from the farmer's income for taxation purposes.


James Lorimer Ilsley: The hon. gentleman says
that there is discrimination in favour of industry, but I think he is mistaken on two or three points. It is true that in business a period of four years, 1936 to 1939, is taken as the period of ascertainment of the standard profit of the industry. That is true of agriculture just as it is of industry; there is no difference at all. As a matter of fact, practically no farmers have to pay an excess profits tax, because they are not in business in a large enough way. There is a provision in the Excess Profits Tax Act that standard profits shall be deemed to be $5,000; that is, they shall not be taken as less than $5,000. A business that had an average profit of $3,000, which went up to $5,000, would not be taxable on the $2,000 excess because it is deemed that the standard profit was $5,000. There would be no excess in that case.
There are other provisions which protect some businesses effectually against the excess profits tax. The excess profits tax is not a problem for the average farmer. It may be a problem for some of the large farmers, perhaps some of the ranchers, but it does not apply to the average man. These people would have reference to the same board of referees available to industry. There is no difference between the treatment given to industry and to agriculture. The only difference is in regard to the carrying forward of losses. Industry can carry forward its losses for one year, but we provide that the farmer can carry forward his losses for two years. The theory is that agriculture is a more variable business than the average non-agricultural business.
However, this differentiation cannot be carried too far. There is a wide variation in nonagricultural business as between different years. For example, in the thirties many non-agricultural businesses were in the red for some years, while in other years they made profits. In the years that they made profits they were taxed, and in the years that they suffered deficits they did not have to pay any tax. But they were not allowed to set off their deficits against their profits; they were not allowed to carry forward their losses.
This principle of carrying forward losses has been advocated by business for the last twenty or twenty-five years. Members of this house did not pay much attention to it, thinking there was nothing very unjust about it. It is only lately that examinations have been made into it, and last year we introduced the prin-ciole for all kinds of businesses of carrying
Income War Tax

forward losses for one year. There has been a differentiation in favour of the farmer who is allowed to carry forward his losses for two years. The difficulty of reaching back into the past to bring forward losses against present profits is that past losses cannot be ascertained with any degree of accuracy. Unless there is to be guesswork pure and simple, there would be gross discrimination between farmers. The only way to do it is to start with the year of your legislation, so that the farmer or the busi-. ness man who sustains a loss will know that the definite ascertainment of that loss will be important to him, and he may carry it forward against future profits.


George Hugh Castleden: Agriculture is an industry which has been depressed for a long period of time. The farmer is practically bankrupt, and he requires something by which he can build up his industry and put it into shape for more efficient production. Many farmers have suffered from ten years of depression, and they are taxed when in one year they are able to get, say, S3,000 of an income. This hits them very, very hard, and if some method could be worked out whereby the farmer could make some payment on his indebtedness or could be given some period in which to recover himself, that should be taken into consideration. He will resent this provision very much.
I might say in passing that I do not think it will affect more than ten or fifteen per cent of the farmers.


Dorise Winifred Nielsen: Mr. Chairman, under this resolution I wish to bring to the attention of the committee a situation which exists at the present time in Saskatchewan. Saskatchewan members may have been receiving letters, as I have recently, from farmers about the collection of seed, feed and relief debts. I have seen a number of the notices that have been sent out by the provincial government claiming the payment of relief, feed and seed debts away back to the year 1334. I should like the minister to understand that if the provincial government goes ahead with the collection of this debt, it will be one of the most damaging things to our war effort which has yet been allowed, and it will be damaging not only to our war effort but also to our war loan campaign which is presently to start. I wish the minister would make a statement about the collection of the 1938 seed and feed debts, because many of our Saskatchewan people do not differentiate a great deal between the provincial and the federal government, and the relationship of these relief loans is not very clearly understood by them. The majority of these loans carry interest of from five to six per cent. This spring any 
amount of small cash which our farming people have is needed to set them up and get them ready for the coming season, and it is a terrible thing for them to be presented at this time with these old bills. Personally I think it is scandalous that any one group of Canadian citizens who suffer, say, from fire or flood or drought, an act of God for which they were not responsible, should be expected to assume the burden of that disaster which should have been placed on the shoulders of all Canadian citizens.
At the recent municipal convention held in the city of Saskatoon the question of these notices that have been sent out by the provincial government received, I believe, more attention than any other item. Eight resolutions were brought forward on the matter, and a great deal of discussion took place upon it. Several of the delegates wanted complete cancellation, while others asked for a fifty per cent cancellation, with a ten per cent advance of the 1938 feed account paid with current taxation before exemption certificates could be issued, according to section 357 of the Rural Municipal Act. It seems to me that in this question of food production for the war effort the dominion government should take into consideration the needs of these farm people to equip themselves for the spring season. I would ask the minister and, indeed, I think he should make a statement to the effect that the payment at least of the 1938 debts should be held over for a time and that they will be finally scaled down to a very great degree. If the federal government is to press the provincial government for the payment of this debt, then I think definitely some proper bookkeeping should have been done by the provincial government. The notices now going out do not state in many instances what the people have already paid off the debt by doing road work. If the government does not intend to press for the payment of these debts, why all this time spent and bookkeeping done in sending out notices by the provincial government?


James Lorimer Ilsley: Mr. Chairman, 1 am not at all sure that the discussion of this matter is in order under this resolution. I did not take exception to it at the time the hon. member brought it up, because it did have some very remote connection with farm losses, I suppose. The hon. member asks me to make a statement to the effect that the dominion government is quite willing to have these debts remain unpaid for a time longer. I am afraid that I cannot make any such statement. The 1938 advances were very heavy advances for

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seed grain. They amounted to something like 818,000,000, if I remember correctly. The dominion government placed its guarantee behind $14,500,000. That was five years ago. That guarantee is still outstanding, practically in its entirety. The people who purchased the seed have not reduced the amount by more than a very small fraction. I have not looked it up recently, but I would be surprised if more than $3,000,000 or something like that has been paid off. So that if I were to say that I did not care whether these people paid these bills or not, it would simply mean that I would be saying to the great body of taxpayers in Canada: You must assume another fourteen or fifteen millions dollars of debt. I am not prepared to say that.
The hon. member is fair enough to say: Do not write the whole debt off; but say to the people, do not pay it now. Then, when shall we say they ought to pay? I think the only position I can take is that the persons who bought that seed should pay for it as fast as they can, as soon as they are able. I do not think I would be justified in taking any other .position. Otherwise, it would mean the assumption by the taxpayers as a whole of the Dominion of Canada of the price of that seed which was sold in 1938 to the persons who bought it. They have had many extensions already. There have been orders in council making extension after extension. I do not think I can give the undertaking for which the hon. member has asked..


Major James William Coldwell: I wish to say a word on this question. I was out of the chamber for a time this evening. While the minister may feel from the point of view of his finances that he is justified in making a statement such as he has just made, nevertheless I should like to bring to his attention that the year 1938 came at the end of eight years of exceedingly low prices for farm products, and not only exceedingly low prices but after a series of crop failures such as this country had never before experienced in any part of it. If, as the hon. member for North Battleford says, there had been a great fire or extensive floods in some part of Canada and the rest of the country had been called upon to assist, that assistance would have been given readily to help the distressed area to rehabilitate itself. While there was neither fire nor flood, there was probably the worst crop failure in the history of any part of Canada.
During the past two years better crops have been reaped and prices have improved to some extent, but in my opinion present farm prices do not yet return a sufficient
amount to enable the average farmer-and I use the word "average" advisedly-to meet all his carrying charges and operating expenses. In other words, for the average farmer present prices are still below his cost of production. We are now imposing an income tax which allows him to carry forward his losses for two years beginning with 1942.
I felt when the minister made that announcement, that while two years was better than a single year, it w'ould have been fairer to average the losses or the profits, as you will, over a period of, say five years. I think that is particularly true in regard to the prairie provinces. This pressure for the collection of old debts comes when heavy income taxes are being imposed. They are heavy, but we are not complaining about that. I do not know of any better wyay of spreading the taxation of the country over the community than by an income tax. I am not complaining about that. The minister has not heard us objecting to the general application of income tax; we do complain, perhaps, about the taxation on the lower income groups. But I wish to join the hon. member for North Battleford in the plea that debt pressure be eased at this time. I know that in Saskatchewan the provincial government is endeavouring to collect all kinds of petty debts that are owed by the people, and the farmers are now in a position where they see other industries being assisted financially very largely by the government, while they have to bear the whole cost of their new machineiy and all the equipment they need in order to make good the shortages of labour. Hence I think that, while the situation is better than it was, we are justified in making a plea for more lenient consideration, particularly in regard to the old debts, and in suggesting-I said five years, but even three years would be better than the two that are included in the present resolution.
Mr. SLAC.HT: I do not desire to stir up any sectional antagonism, but I would point this out to the hon. member for North Battle-ford, who I am sorry has departed, and to the hon. member for Rosetown-Biggar. Under this resolution those whose chief occupation is farming , are given two years in which to offset their losses. The minister has made it clear that the business man, the little storekeeper at the cross-roads who is a quarter of a mile away from the farmer, cannot have two years on account of his having been in the red and having taken losses. I think my hon. friends who are speaking on this matter know that the country storekeeper has his
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ups and downs, and that the welfare of the farmers is the barometer which makes for his good or ill in business.
Far be it from me to do anything but that which will help the farmer and the settler. Most of the men in the rural parts of my constituency are settler farmers, and I have the greatest sympathy with them in their struggle. But bear in mind that the western farmer, because his woes are put before us, particularly by the two hon. members who have just spoken, receives that discrimination as against the country storekeeper alongside of him. Bear in mind also, if you will look at it with me for a moment, the lot of my constituents of Parry Sound district. We have been contributing as taxpayers in the last three years to the $85,000,000 which has gone to the western farmer to help him in his troubles. We have not complained; we have "taken it"; we are paying our taxes, and we are contributing to the Red Cross and all war activities as loyally as any district in Canada.
Let me point this out, and I am raising it because I think our minister has multiple difficulties. We from various parts of Canada must realize that there must be give and take, and some particular section should not expect discrimination in its favour. The hon. member for Rosetown-Biggar has suggested that these farmers should have five years in respect of which they could go back and dig up losses. I do not believe the taxpayers of the rest of Canada would favour that. I am not sure that he himself would favour it if he would give it further consideration, thinking perhaps of my people in Parry Sound. Let me tell him that no district in Canada has suffered so much from the gasoline shortage imposed as a war measure, as have the residents of the district I represent. The great industry in that district has been the tourist industry. There are a hundred beautiful little lakes and five great rivers. Scattered through that whole district are farmer settlers whose revenue for the past ten years has been largely derived from the tourist industry. They have done a great deal for Canada in bringing United States money into this country. They have been in the red-terribly in the red-both last year and the year before, because the gasoline tax as an incident of war has put them there. I am not here to ask that the minister permit them as settler farmers to go back for two or five years and rake up their debts to set off against the income tax they must pay this year. I instance their case to my hon. friends only to show that we cannot and ought not 
to press such claims on our minister, who has great difficulty in preparing a broad-patterned scheme under which each part of Canada must take its problems and stand up to them. The people of my district will suffer, and suffer more than any western farmer, from the debts they have incurred in the last two years as a result of the practical stifling and strangling of the chief industry by which they supported themselves and their families. But if every hon. member singled out his own little grievance in his own district, and asked the minister to discriminate in his favour and let him go back two or five years to set off his losses, where would we get in this great war effort and in the' collection of income tax? I think it is time that somebody made it clear what this cry for the western farmer amounts to. I am in sympathy with him; I have been in the west.


Robert Fair: Mr. Chairman-


Arthur Graeme Slaght: My hon. friend who is inter-1 up ting me is one of those who, in all good faith, tries to see that the western farmers get the very last ounce of preference.


Robert Fair: I want what is coming to them.
I do not want any preferential treatment for the ones I represent.


Arthur Graeme Slaght: My hon. friend says he does not, but his record here indicates that he is never satisfied.


Robert Fair: That is not correct.


Arthur Graeme Slaght: What answer does he make to my statement on behalf of the people of Parry Sound, who are not goading me to rise in my place and squeal and ask for preferential treatment and discrimination and to be forgiven their income tax and allowed to rake up their losses for the last two or three years. If my hon. friend were among people who had been hit as my constituents have been, he might have something to talk about, but I have referred to their position simply in support of my request to him to consider these matters before he attempts to embarrass some minister.
Let me point this out to him. He was one of the loudest in suggesting that the fifty cents a day exemption in respect of the hired man was not enough. Let me ask him if he wants to go back to his farmer constituents-and I credit him with the utmost good faith in his desire to help them-and say, "You are a farmer, with a wife, who made last year $1,000 net, or, let us say $2,000 clear profit, on your wheat crop; reckoning what it cost you to sow and raise and reap and market it, your profit is $2,000. Now, I want you to add to

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that $365, being the profit you made on top of that, in feeding yourself at $1 a day, and also add $365, the profit you made on top of that, in feeding your wife at $1 a day, which means that you will add $730 to your $2,000, and pay the tax on $2,730, and, putting the hired man's expense at fifty cents a day, charge S165 off for him." Before my hon. friends advance this sort of argument, let them try to think it through. Let them remember that there are other parts of Canada than the western prairies, and let us not occupy all the time in this house with supposed special grievances that will not bear examination in the light.


Mr. JOHNSTON (Bow River):: I did not intend to say anything about this matter, but since the hon. member for Parry Sound is so confused in his figures he would probably appreciate a little correction. He compared the farmer and the little grocerymari at the crossroads. I am sure the hon. member has never farmed or conducted a little store. The hon. member knows or should know that the two cases are not comparable. The farmer has been producing at a loss, at a price less than the cost of production. The hon. member knows very well that no storekeeper carries on business in that manner. When the little country storekeeper or any storekeeper puts goods on his shelf, all his overhead, including the rent and his own wages and the cost of his help, is included in the price of that article that he sells.


Arthur Graeme Slaght: Does my hon. friend not know that in a bad year the storekeeper extends credit to his customers, the surrounding farmers, and yet he has to pay his wholesaler in cash? He goes into the red because he is good enough to extend credit. Surely my hon. friend knows enough to know that.


Charles Edward Johnston: Yes, and I know that the little storekeeper is not compelled to extend credit.


Arthur Graeme Slaght: But he does it.


Charles Edward Johnston: When the little storekeeper sees that the risk is not good he does not extend credit, no matter how badly off the farmer may be. But all these items enter into his cost of doing business. Therefore, if at the end of the year he has a profit, it is proper that he should pay the tax. If the farmer were in the same circumstances, I would agree with the hon. member. If the farmer were given his cost of product and a fair commission or profit, if you put it in that way, then he should pay tax, and there is no one ' on this side of the house who would
contend otherwise. But our main objection is that over this great number of years, the last ten or fifteen years, the farmer has been forced to produce at less than cost.
The hon. member went on to say that the east 'had done so much to help the west.


An hon. MEMBER:: Had done the west for so much.


Charles Edward Johnston: Yes, if he had said "done the west for so much," it would have been putting it better. But the fact is that the hon. member's statement is- not correct. He knows that the farming community in western Canada has been the market for eastern manufactured goods. In fact the west was created as a market for eastern goods, for that very purpose, and it has been the endeavour of the east to keep the west for that purpose ever since. If it had not been for western agriculture and western Canada in general, where would industry, small or large, of eastern Canada have been? There would not have been any room for lawyers in eastern Canada, because there would have been no debts to collect and they would not have had a living. As it turns out, however, they have made rather a good living out of it.
The hon. member spoke of gasoline shortage and the tourist industry. He was badly out on that. Certainly the province I come from has added more to the tourist industry than Parry Sound ever thought of. That was one of the largest sources of revenue of Alberta in the last few years, and the fact that gasoline has been cut off has practically ruined that industry. As we were told in the reconstruction committee the other day, the reason why gasoline is being rationed is not the shortage of gasoline; it was transportation. They pointed out that it would not be fair to allow western Canada to have gasoline when eastern Canada, did not have it. That waa pointed out by one of the so-called experts. Surely that does not line up with ^ what the hon. member for Parry Sound is trying to tell us. He said that his constituency particularly had contributed so much to the war effort. I shall not deny that; the facts speak for themselves. If the people of the hon. members constituency are so wealthy that they can afford to do it, they should do it. If they have the money available and wish to invest in war loans that is the only proper thing for them to do. But how can you compare a constituency like that with western Canada, when the people there have not the money because they have been producing at a loss? They have not accumulated profits over the past years to invest in war loans, and if they
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have not the money to buy war bonds as the hon. member would like to see them do, surely that is no cause for criticism. If he investigated he might find that western Canada has contributed just as much per capita as the east. I think the hon. member's figures are far from accurate.
With regard to the question, raised by the hon, member for North Battleford, if the minister cannot see his way to give these farmers some relief on these back payments, rather than cutting off the debt, which might be a bad precedent, if they are paying their seed loans back in 1938, could there not be an arrangement by which there might be some deduction from their income tax? I do not think that would be creating any precedent. There would be no question as to what their loss was, because the provincial government would definitely declare what is owing and they could just exempt that from income tax.


James Arthur Ross: Supposing a farmer has a loss of S2,000 in 1942; would the minister explain how that is carried on in the next two years? Supposing in 1943 he has a profit of $2,000, and a neighbour who also had a loss of $3,000 in 1942 has a profit of $4,000 in 1943; would the minister explain how that is carried on?


James Lorimer Ilsley: What crop does he have in 1944?
Mr. ROSb (Souris):	I have not come to
1944.


James Lorimer Ilsley: It goes forward two years.


James Arthur Ross: He knows his loss
was $3,000 in 1942. He has to file a return, for
1943.	One man has a profit this year of $2,000; his neighbour has a profit of $4,000. WTe do not know 'yet what either will have in 1944.
Mr. ILSLEY; Both start with a loss of $3,000 in 1942. What profit does the hon. gentleman want me to take for 1943?	.
Mr. ROSS (Souris); In one case, $2,000.


James Lorimer Ilsley: Give me 1944 also, because
this carries forward for two years.


James Arthur Ross: We do not know what they will have for 1944.


James Lorimer Ilsley: All right; leave out 1944.
The first man has no income tax to pay in 1943, because his loss in 1942 was greater than his profit in 1943.


James Arthur Ross: What about the man who has a profit of $4,000 in 1943?


James Lorimer Ilsley: He would pay on $1,000.
He would set off the $3,000 loss against the $4,000 profit.


Gordon Knapman Fraser: In
the first case he would carry $1,000 over?


James Lorimer Ilsley: Yes.


James Alexander Marshall: One subject I do know something about is seed grain and seed grain loans. Am I correct in assuming that if a farmer pays, say $100 on a seed: grain note, he would get that much taken off his income tax, for the simple reason that the greater part of that amount would be a payment of interest?


James Lorimer Ilsley: The current year's interest
would be a deduction,


James Alexander Marshall: Just one year's interest?


James Lorimer Ilsley: I am always a little worried about these rulings given on the floor of the house on short notice, but the commissioner is of opinion that all the interest paid in the year, even though it were not confined to that year's interest, could be claimed as a deduction from his income if he were on a cash basis, which normally he would be.


James Alexander Marshall: My understanding is that if money is paid in interest in any one year, that amount is deducted from the income tax.
I have seen it. done in many instances; as a matter of fact I have had it passed by the income tax inspector in the city of Edmonton.


James Lorimer Ilsley: That is exactly what I have said, if the taxpayer is on a cash basis. Did the hon. member say that the amount was deducted from the tax? It would be deducted from the income for tax purposes.


Mi. HEIR:: Just in case a wrong impression should get abroad following the remarks of the hon. member for Parry Sound as to the amounts of money that have been contributed to western agriculture, I might point out that the cheese bonus goes largely to Ontario; that the freight assistance on feed grain, the assistance in regard to fertilizer, the ceiling price on coarse grains as a means of assisting live stock producers, are all of particular importance to this part of the country and not of the same ad\ antage to us in the west. I mention these points as having some bearing on the remarks of the hon. member in regard to the contributions that have been made by the federal treasury to the farmers of western Canada.
I suppose under this section of the act we should be grateful for small mercies. I say to the minister without hesitation that the carrying forward of the income tax of the farmer over a period of two years is the

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recognition of a principle that is important. At the same time I submit that it does not go far enough, considering the industry as a whole and the hazards that are involved in it. I am not unmindful of the difficulties with respect to the principle of taxing agricultural incomes, from the point of view of the industry itself. The industry is hazardous; there are many things beyond the control of the farmer which influence his income in one year as against another, to a much greater degree than is the case in connection with ordinary business. Here under resolution 8 we are dealing particularly with the income of 1942 as a base, which represents a substantially higher income in the case of most farmers than they have enjoyed for some time. With the base so high this year there will be more farmers paying income tax than in any other period, certainly within the last ten or twelve years. Therefore I submit that this matter is of such importance as to deserve added consideration; I do not mean this item alone but the whole basis of taxing agricultural incomes. I will not urge the point, but I will go so far as to suggest that this is a matter which might be given to a committee of members of the House of Commons for particular study outside the house, where they might call in experts and review the whole question in minute detail.
I realize that there are different conditions in different parts of Canada. I submit that if the farmers are taxable they are willing to pay their tax, but there is so very much involved in the principle. I agree with the hon. member for Yorkton, and I believe there is plenty of argument in support of the suggestion, that it would be much fairer if the farmer's income could be spread over a base of about five years. I do not think that is unreasonable. I quite appreciate the argument put forward by the minister a few moments ago as to the difficulties involved, but I am told that in the old country they have a means of equalizing the income tax as between one year and another. If we could devise a scheme whereby the income tax could be spread over a period of, say five years, dropping off the fifth year and adding fhe new year and taking an average, it would provide a much more equitable basis.
I wish to go one step further, because in my opinion the business of the farmer is entirely different from any other business. I think we must recognize the principle that the farm is not only the business of the farmer; it is also his home, and when you consider the two together you have a situation very different from that of any other business.
There is, however, another feature with respect to this matter which I believe is of
some importance. During the period from 1930 onward the western farmer went heavily into debt, either through unsecured liabilities which he created or by placing heavy mortgages on his farm. Certainly at this time his income tax provision will not permit him to pay very much off his accumulated indebtedness. Perhaps he is not entitled to any more consideration in that regard than anyone else, but having regard to the difficulties the industry has experienced and the desire to see it on a reasonably satisfactory basis when this war is over, I submit that this point has particular significance at this time. Moreover, as an added thought-and with this I shall close -we have gone out and asked industry to expand their plants. We have assisted industry to do so, financially, by writing off taxation, and in other ways. Now we have come along and asked the farmer greatly to expand his production, which in turn means that he has been obliged to incur additional expense, perhaps by way of extra fencing or new buildings or a new well to provide for more live stock; but we are not giving him any consideration either financially or from the point of view of his income tax. Therefore I submit that he has a pretty good case in this matter and that we should not say he is merely comparable with other forms of industry.
I just advance these observations with the suggestion that the minister might be well * advised to make provision at some stage whereby this whole matter might be reviewed in minute detail, utilizing the expert advice of his departmental officials as well as of others who pay particular attention to matters of this kind.


Major James William Coldwell: I am very glad the hon. member for Macdonald has spoken in this way, because he has emphasized the needs of this industry. A short time ago the hon. member for Parry Sound spoke with a great deal of heat and compared the east and the west, which I think is always a dangerous thing to do. I know there are people on the farms of eastern Canada who have suffered losses, but may I just point out to the hon. member that the situation in western Canada was quite unprecedented. We are speaking not for any particular corner of a province but for a whole area which is subject to hazards worse than those existing in most agricultural communities throughout the world. We are subject to periods of prolonged drought and prolonged crop failure, and I wish to point out to the hon. members that this was not the result oi a war or of anything over which we had control. It was an act of nature. I thoroughly
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agree with the hon. member for Macdonald that careful inquiry should be made into thia matter of agricultural taxation. It covers a much wider field than income tax. And may I say that if one looks at the census figures for the prairie area he will realize that something must have driven not only thousands but several hundred thousand people away from that prairie region. What was it? It was a prolonged period of depressed, conditions when men and women could not find the wherewithal to make a decent living. That was the reason, and it should be kept clearly in mind.
None of us wants to set one section of the country against another. Indeed, agriculture all across Canada has suffered from depressed conditions. It is an industry which requires perhaps different treatment from other types of industry. As I have said, during the war we have been very good to certain types of industry. Agriculture happened to be caught at a time when its price levels were not high; in fact they were low. Many of us believe that in the main the prices then set were below average costs of production on the average farms of the country. Let us keep that clearly in mind.
We are not asking for discrimination against any industry or in favour of any other industry. But we do want to try to place before the committee our ideas of a certain measure of justice; that is all.


James Lorimer Ilsley: The hon. member for Rose-town-Biggar and also the hon. member for Yorkton said that 1942 was a better year for agriculture than any other year for some time past. I think someone went so far as to say that it had been better than "any" year. That is what I fail to understand. I just fail to understand. that- inconsistency,


Major James William Coldwell: As a matter of fact I do not think I said that.


James Lorimer Ilsley: Perhaps it was the hon. member for Macdonald.


Major James William Coldwell: I did not say that; but I am prepared to admit there is a considerable amount of truth in the statement, if it has been made. But the minister is singling out one year from the last fifteen years, a time during which a very large area received practically no income at all. Even if last year were a good year, it was good because we had unusual weather conditions, conditions which we may not have again for a good many years. I do not think we can take 1942 as a basis for agricultural taxation. We may not see another year like that for a long time.


Mr. WEIR:: The minister has drawn attention to the statement I made regarding the greater buoyancy of farm income in 1942.

That is correct. That leads me again to draw attention to the provision in resolution 8 wherein that year is taken as the base from which one is to write off a loss, for income tax purposes, into two future years. That is the point I make.	,
But the other feature I would point out to the minister, one which also is part and parcel of the principle of applying this tax to agriculture, is that in 1941 we were under a system of delivering quotas. Much of that year's crop was marketed in the succeeding year. Likewise, we are still involved in the position of not being able to take advantage of marketing conditions, due to circumstances outside the control of the farmer.
There is another feature which is of some importance, and of which I saw some evidence last year. On account of this added buoyancy of income there were a few shrewd farmers who were attempting to take advantage of the situation by holding up live stock shipments, and particularly those of hogs, until after the calendar year, in order to keep the receipts out of their income tax returns for the previous year.
All these things are involved in the picture. They are of particular significance in showing the difficulty of arriving at a policy which can be made applicable throughout. That is the reason why I suggested in the first place that a study should be made, in support of the principle of attempting to devise some means whereby the tax could be spread over a period of several years.
I wish to make only one further observation concerning a point which has arisen in the debate. This is another instance where people attempt to make comparisons between different classes in the community. Reference is made to the produce the farmer gets from his own farm. I believe it will be found that the la.'mer uses the small or the cracked egg, or those of low value. It is true that he has a garden; but the commercial value of that garden is low, compared with those who carry on market gardening as a business, or compared with prices people without gardens would have to pay. It will be noted that in small towns throughout most of the country large numbers of business people have gardens behind their houses, sufficient to provide for their needs. Those gardens are worked after business hours. So that we find this contrast entering into the picture again.
I am only advancing the idea that there is merit in the suggestion that income tax on agriculture should have a more widespread application.

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Mr. GILLIS:: I wish to make just a few remarks. My farmer friend from Parry Sound saw fit to do so, and I think I am just as reliable an authority on agriculture as he is.
As I understand the situation, the government lent to the farmers of Saskatchewan a considerable sum of money in 1938 for seeding purposes. The main point at issue now is the pressure being put on those farmers for the purpose of having them pay back the money lent at that time. I believe it amounted to something like $600 per farmer.


James Lorimer Ilsley: That was only incidental, and I do not know whether it was in order. I did not take exception to it at the time; but that is not the point under consideration.


Clarence Gillis: That point was raised. It should either have been ruled out of order, or permitted to remain for discussion, because it is a legitimate grievance. In his observations the hon. member for Parry Sound was unfair. I have sat in the house long enough to hear many discussions with regard to agriculture in Saskatchewan, and I do not think in any section of the country there is any other industry in a similar position. The farmers of the maritime provinces do not receive incomes which would warrant the payment of income taxes, because I believe the average income is only around $300 a year.
It would seem that as a result of conditions which developed in the west and over which the farmer had no control the government was compelled to lend money so that the farmers might get back into production. That being so, I say that those farmers should be given the same consideration as is now being given to those industries to which moneys are being lent for purposes of plant extensions. Those industries are permitted to write off those loans in periods of four or five years, and my submission is that the farmers should be allowed to do the same. They are overcoming the effects of the days when Saskatchewan was taken out of production in- that particular field. If a precedent like that is set for one section of society, it is only fair to make a declaration to the farmers to the effect that debts contracted for seed in 1938 should be wiped out.
I should like to ask the hon. member for Parry Sound a question. When the explosion in Halifax occurred people from coast to coast contributed most generously to the rehabilitation of that city. Does he think it would be fair to ask the people of Halifax to pay back by way of taxation to the Canadian people the money which had been expended
in reestablishing that city? I think the situation is absolutely analogous. In this con- s-tion the farmers of Saskatchewan were merely bringing that province back into production, and they should not be taxed at a time like this. They are entitled to the same consideration as is given to industry. The Dominion Iron and Steel company has been given a certain number of millions of dollars to extend their plant for war purposes, and they are being allowed to write off this sum over a period of years. The same thing is being done with International Nickel. I do not think these companies were broke. Perhaps they did not need all the assistance they were given. It is a gift more or less from the taxpayers of Canada. The farmer has been producing at a low cost. He and his family are slaves. He is not working; he is slaving. There is nothing in it for the farmer; yet agriculture is a necessary industry at this time. It will be more necessary in the future if the forecasts about the need for food are correct.
It is necessary to build up the morale of the farmer in view of the contribution he is making to the war. After listening to the argument on this point-and I think it is the only point at issue-I say to the minister that serious consideration should be given to it. A moratorium should be declared on this particular debt, or it should be wiped out altogether.


Arthur Graeme Slaght: The hon. member for Cape Breton South said that my observations were unfair, and then he propounded the suggestion that I was endeavouring to dun the hard-pressed people of the west to pay their debts incurred five years ago for the purchase of seed grain. If he had followed what has been done in the west, he would know that any pressing that is being done is by the municipalities, not by this government.


Major James William Coldwell: Under pressure.


Arthur Graeme Slaght: No, not under pressure. They have not been obliged to pay anything for five years. That does not look very much like pressure.
My hon. friend asked me about the Halifax explosion. I am most sympathetic with the suffering caused by the Halifax explosion, but it was nothing like the explosion he created a few weeks ago in a theatre in Hamilton. I do not think that sort of thing will do my hon. friend any good.


[Stage Direction]
Resolution agreed to.
9. That in the case of a single person or person with equivalent status whose taxable
Income War Tax
[Stage Direction]
income is less than $820, the tax payable shall not exceed two-thirds of the amount by which such taxpayer's taxable income exceeds $660;
Resolution agreed to.
10. That in the case of a married person or any person granted an equivalent status under the act whose income is less than $1,570, the tax payable shall not exceed two-thirds of the amount by which such taxpayer's taxable income exceeds $1,200.
Harry Rutherford Jackman: I understand that this resolution and the preceding one are a change from the existing law, and that this change has been made in order that workers in factories who find themselves earning an income where they will have to pay a tax will not have perhaps half of that extra earnings taken away in the form of tax. Under this change a single person who earns $660 or a married person who earns $1,200, will retain one-third of any increase up to the designated amount. One-third is taken in the form of tax; one-third will be a refundable tax for which the worker will receive a certificate, I hope immediately, and one-third will be a net gain to the person. In reality there are two net gains -the part represented by refundable certificates and the one-third which will be cash in pocket.
I should like to ask of the minister what assurance he has that this will prove an adequate incentive to keep workers working after they come into the taxable brackets. Will it be sufficient to stop absenteeism, or is it just a trial-and-error method which he is presenting to the committee? In my remarks on the budget last year I suggested that this house should be given facilities for discussing the budget and have available experts who could suggest alternative means of raising the money for financing the war, instead of having certain definite suggestions brought down with no alternative schemes being considered. I said at that time that the house was entitled to know what consideration had been given by the minister and his advisers to increasing the sales tax or imposing a purchase tax. I should like to quote the press report of Sir Kingsley Wood's budget, which was brought down in the old country to-day. It states;
The budget laid emphasis again on taxing goods rather than incomes, the chancellor explained, in an effort to curb spending, prevent inflation and conserve supplies for the war effort.
And later on:
Certain luxury goods were hit hardest with the total tax now to be a flat 100 per cent to discourage their sale.
Certain essential goods and foods, called utility goods, were exempted, because some 
incomes in the old1 country are exceedingly low. The amounts set forth in the two resolutions, $660 for a single person and $1,200 for a married person, is the barest minimum with which a person could get by. In fact it would be utterly impossible to have a decent standard of living in our cities. If the minister had seen fit to raise these levels of income so that the people could have a better standard of living, and at the same time put a tax on certain items which are purchased1, exempting necessities, I think he would find that the workers would spend their money but they would have been able to earn the money and have it in their pockets, at least for a time. There would be a great incentive for them to work full hours and possibly the sixth day in the week. But as they spent this extra money the minister would be able to get adequate revenues from that spending through the imposition of higher sales tax or a purchase tax, particularly on luxury articles.
I think this committee is entitled to know what consideration the minister gave to this, and I hope he will not answer in one or two short sentences, saying it was considered and turned down. We find that there is a whole list of items in the British schedule, most of them outside the absolute utility class, upon which the old tax was 66| per cent. Under the present budget the tax is being raised to 100 per cent on many of these items. I believe the war effort would be helped greatly if the minister were to raise the exemptions on the incomes of these lower paid workers so that they would have some incentive to work a full five or six-day week, with overtime if necessary, and not have their money taxed away. Then, when they came to spend the money, if they did not care to save it and buy victory bonds or war savings certificates, they should have to pay a sufficient tax to the government to compensate for any loss of revenue which the government would find itself incurring through having raised the exemption. Would the minister kindly explain?


James Lorimer Ilsley: The hon. gentleman is raising the whole issue now of purchase or sales taxes versus income tax. I do not know whether it is in order under this item, but perhaps it is and I will not raise any point of order. The hon. gentleman will remember that I dealt with the matter in the budget speech. I take it that he is not advocating a general increase in the sales tax.


Harry Rutherford Jackman: The members of this house are hardly in a position to advocate anything. They have no access to expert information. The business of taxation to-day and financing the war effort is one which goes into the

Income War Tax,
regulation of the life of every individual, and it is impossible even with a considerable amount of study to form any opinion which one cares to support unless one is able to get the opinions of people who spend their entire time studying and are in constant touch with the effects of the various taxation measures on the people.


James Lorimer Ilsley: I come back to what I said before. I gather that the hon. gentleman is not advocating an increase in the sales tax generally, and he does not wish n>e to discuss that.
If he does, I can readily do it. I think what he is suggesting is that we should have imposed upon certain articles, mainly those of a luxury nature, although he did not name any-


Harry Rutherford Jackman: I refer the minister to schedule 7 of 3 and 4 George V of the British parliament.


James Lorimer Ilsley: He still has not named any articles but I will have a look at the schedule, on which there should be a substantial purchase tax. What I said in the budget speech was this:
There are serious arguments to-day in favour of a very substantial purchase tax on all but the most essential goods and services, buen a tax would mop up a considerable amount oi excess purchasing power, and would assist m securing the orderly distribution oi scarce supplies. It would make those who will spend on non-essentials pay dearly for the privilege. Such expenditure in itself is evidence of ability to pay. However, there are several serious objections to such a plan. In the first place, there are not going to be enough really nonessential goods and services to provide much revenue unless either we apply such a tax also to what are fairly essential goods, or put a tax on at exceedingly high rates. Probably, we would have to do both if we were to get enough revenue to meet any large proportion of our prospective deficit. I do not feel prepared to do this. I don't believe there are many goods to-day which should in effect be reserved for those with the longest purses.
That is the effect of a very high purchase tax.
That would be the result of putting very heavy taxes on such articles.
In saying that, I wish to point out that we have very high taxes now on a good many non-essential articles, and the imposition of these taxes invariably causes an immense amount of trouble. They are extremely difficult to administer. The jewellery tax, for instance, is twenty-five per cent on the retail price. That is equivalent to sixty per cent or perhaps sixty-six per cent at the manufacturer's level. In, other words, it is equivalent in many instances to a sixty-six per cent sales tax. I am not in a position to say how that tax has worked, but I know it is subject to
quite a bit of abuse and is very, very difficult to administer. I have no doubt that it is not 100 per cent or anything like 100 per cent effective. We have quite a list of high taxes which are very much higher than eight per =ent-the tax on spirits, wines, malt,, the tax on amusements, the special tax on night clubs, the tax on soft drinks, taxes on such articles as refrigerators, radios and electrical appliances of all kinds. I do not know whether many of these articles are being sold now; nevertheless the tax is very much higher than eight per cent on quite a range of articles.
If we were to go into these taxes in a big way, we would deny their use to people *with small incomes, because they would have to pay so much for them, and the effect would be that they would be reserved for the people with long purses. That is inconsistent with our system of price control, because it would mean the raising sharply of prices on a certain class of non-essential commodities. We have always taken the view that if our cost-of-living index is to be a fair index of prices generally

perhaps it should not be a fair index of prices generally-but if it is to be a fair index of the cost of living, the price of some or most of these commodities should be held down as well as the other prices. These are the main considerations that led us not to impose heavier sales taxes than we have at the present time.


Harry Rutherford Jackman: Labour C onditions-Arvida Plant
articles given in the schedule to the British act which I mentioned which the minister could tax heavily. He would find that a fruitful source of revenue, and the administrative difficulties should not be any greater here than they are in Great Britain at the present time. The purchase tax has always been looked upon as a sound source of revenue here and in Great Britain, and this year the Chancellor of the Exchequer has seen fit to impose greatly increased purchase taxes on these articles.
Resolution stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, April 13, 1943