July 25, 1917

CON

William James Roche (Superintendent-General of Indian Affairs; Minister of the Interior)

Conservative (1867-1942)

Mr. ROCHE:

The terms of the order in council are to the effect that any person who had made a homestead entry prior to enlistment has his residence duties counted while he is away. That is the point raised in the telegram read by my hon. friend (Mr. McCraney).

Topic:   QUESTIONS.
Subtopic:   DELAY OF HOMESTEAD PATENTS.
Permalink
LIB

Frank Oliver

Liberal

Mr. OLIVER:

Then that remission does not cover improvements?

Topic:   QUESTIONS.
Subtopic:   DELAY OF HOMESTEAD PATENTS.
Permalink
CON

William James Roche (Superintendent-General of Indian Affairs; Minister of the Interior)

Conservative (1867-1942)

Mr. ROCHE:

No.

Topic:   QUESTIONS.
Subtopic:   DELAY OF HOMESTEAD PATENTS.
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QUEBEC AND SAGUENAY RAILWAY.


On the Orders of the Day:


LIB

Rodolphe Lemieux

Liberal

Mr. LEMIEUX:

Does the Minister of Railways and Canals intend to bring in any legislation this session with respect to the Quebec and Saguenay Railway?

Topic:   QUESTIONS.
Subtopic:   QUEBEC AND SAGUENAY RAILWAY.
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CON

Francis Cochrane (Minister of Railways and Canals)

Conservative (1867-1942)

Mr. COCHRANE:

I made a statement to the House some time ago that we were going to bring in legislation.

Topic:   QUESTIONS.
Subtopic:   QUEBEC AND SAGUENAY RAILWAY.
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WAYS AND MEANS.

WAR TAX UPON INCOMES.


The House in Committee of Ways and Means, Mr. Blain in the Chair.


CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE (Minister of Finance) :

Mr. Chairman, the enactment of the Military Service Bill which has just passed through the House will result in material increase in and acceleration of the war expenditures of the Dominion.

By that Bill, provision is made for calling an additional 100,000 men to the forces of Canada. In view of the expenditure

involved, and in order to maintain the credit of the Dominion, it is necessary that we should adopt further taxation measures. Apart from this necessity from a financial standpoint, there has arisen, in connection with the Military Service Bill, both in this House and in the country, a very natural and, in my view a very just, sentiment that those who are in the enjoyment of substantial incomes should substantially and directly contribute to the growing war expenditures of the Dominion.

In view of these considerations, I desire to-day to lay before this committee proposals for a national measure of income taxation. I may say that the adoption of such a measure is a distinct innovation in federal fiscal legislation. Hitherto we have relied upon duties of customs and of excise, postal rates and other miscellaneous sources of revenue. It is true that since the outbreak of the war we have adopted the Business Profits War Tax Act which is a measure of direct taxation akin to income taxation, but not so wide in its scope. As the members of the committee are aware, the Dominion Government, under the provisions of the British North America Act, is empowered to raise revenue by any mode or form of taxation, whether direct or indirect. On the contrary, the provinces, and, by consequence, the municipalities which derive their taxation powers from the provinces, are confined, in the raising of their revenues, to measures of direct taxation. For this reason, since the outbreak of the war, I have hesitated to bring down a measure of federal income taxation. As I have stated, the provinces and the municipalities are confined to direct taxation, and I have not regarded it as expedient, except in case of manifest public necessity, such as I believe exists at the present time, that the Dominion should invade the field to which the provinces are solely confined for the raising of their revenue.

There is a further fact to which I have alluded in my Budget speeches since the outbreak of the war. Canada is not a country of concentrated wealth. We have a sparse population of some 8,000,000 people, scattered over an immense territory as large in area as the United States of America, almost as large as the continent of Europe. The result of that is that the cost of administration of an income tax measure will be quite substantial, and the cost of administration is always a factor which should be had in mind in connection with the imposition of taxation. Generally speaking, if the cost of administration of a tax is dis-

proportionately heavy, it is not a good tax. I do not say that the cost of administration of such an income tax as I shall propose to-day will be unduly heavy, but the fact that we shall .have to cover the entire Dominion in our administration of the measure has been an element to which I have given some thought when the matter of income taxation has been under my consideration and the consideration of the Government in the past.

Furthermore, Canada has been and will continue, during the lifetime of those present here to-day, to be a country inviting immigration. I have, therefore, thought it desirable that we should not be known to the outside world as a country of heavy individual taxation. There is another feature which has had some influence with me in hesitating to bring down an income taxation measure, and that is the fact that the people of this country, from the very outbreak of the war, have been most generous in contributing from their incomes to the Patriotic, Red Cross and other funds connected with the war.

We are, however, confronted with grave conditions arising out of .the war and with, as I have stated, an increased and accelerated war expenditure due to the measure which has just passed the 'House and which will enable us to continue to play our part in this great conflict. The war continues, not only on an undiminished, but on an ever increasing scale. I believe it is the will of the people of Canada that we should continue to exert to the utmost our human and material power to the end that final and decisive victory may .be obtained. I do not believe any other end than such final and conclusive victory will satisfy the high spirit and aspirations of the. free people of the British Empire. No matter what the cost may be in man-power or in treasure, I believe it to be the will of the people of this country that wre should persevere unto the end.

In view of what I have said as to the financial situation, as to the increased demands which will 'be made upon, us, and as to the purpose of the people of Canada in this war, it is manifest to me, as I think it will toe to most of the members of this House, that the time has arrived when we must resort to this measure o.f direct taxation. I am confident, Mr. Chairman, that the people of Canada whose patriotism during this war has been so often and so nobly proven will in the light of present conditions, which call for it, cheerfully accept the burden and the sacrifice of this additional taxation.

I shall nowr explain to the committee the nature of the proposals which I purpose laying before them. In framing these proposals we have had regard to certain conditions which I think ought to be taken into account in connection with a measure of this kind. In the first place, we must not be blind to the fact that the cost of living has materially, and indeed-, greatly increased in this country, as it h^s all over the world since the outbreak of this war, and that has a bearing upon the question of the exemption which should be allowed in>

an income tax measure. We have also borne in mind the fact that in most of the provinces of the Dominion there is a municipal tax upon income more or less heavy, running as high as two or three per cent. In addition to that, there is in some of the provinces a direct income tax levied by the province itself. So we must bear in mind that when this measure becomes law the people of this country whose incomes make them subject to the several income taxation laws in force in Canada will toe liable to three different sets of income taxation- first, income taxation by the municipality, secondly, income taxation by the province, and thirdly, income taxation by the Dominion.

There is another matter which I have thought proper to bear in mind, and that is the existing income taxation in the United States of America. For 3,600 miles the territories of the two countries adjoin, and there is a continual flow of population over the border. As I stated earlier in my remarks, we are inviting immigration to this country; we are inviting those of good character and capability from all nations in the world to make their home in Canada. The United States and ourselves occupy the northern half of this continent, and I think it would be undesirable, except for the gravest reasons of national necessity, that our income tax should be substantially heavier than that in .force in the United States. The American measure which I have had in mind for the purpose of comparison only when drafting this Bill is the measure which is now before Congress, and which provides for a very much heavier degree of taxation than is provided for by their existing legislation, or by the legislation which existed before the outbreak of the war.

In a measure of income taxation we should consider first, what 'amount oif exemption should fairly be altawed. On the one hand, we must toe careful that the entire burden of the taxation is not borne by

a particular class, and on the other hand, we must see 'to it that our taxation is not oppressive to those whose incomes are barely sufficient to enable them to sustain, the burden of 'the cost of living as it is to-day. It has appeared to us that it would be proper to fix the limit of exemption at $3,000 in the case of married persons, and $2,000 in the case of unmarried persons and widowers without dependent children. So that, so far as this measure is concerned, a married man who has an income of $3,000 or less will not be subject to its provisions. An unmarried man, or a widower without dependent children, having an income of $2,000 or under will not toe subject to its provisions.

We have also thought it advisable to adopt 'the principle of graduated tax. Within certain limits of income it is proper that an income tax .should be uniform, but when we reach the higher salaries I regard it as just -and propeT that the rate of taxation should increase as the scale of income increases. Our proposals are therefore as follows:

We propose Ito levy -an. income tax of 4 per cent upon incomes exceeding $2,000 per annum in the case of unmarried men and widowers without Children, and exceeding $3,000 in the case of other persons, and in addition thereto- -a supertax of 2 per cent upon the amount by which the income exceeds $6,000 and does not exceed $10,000; and 5 per cent upon the -amount by which the income exceeds $10,000 and does not *exceed $20,000; and 8 per cent u-pon the amount by which the income exceeds $20,000 and does not exceed $30,000; and 10 per cent upon the aimoumt by which the income exceeds $30,000 and d-oes not exceed $50,000; and 15 per cent upon the -amount by which the income exceeds $50,000 and does not -exceed $100,000, -and 25 per cent upon the amount by which the income exceeds $100,000.

Topic:   WAYS AND MEANS.
Subtopic:   WAR TAX UPON INCOMES.
Permalink
LIB

Edward Walter Nesbitt

Liberal

Mr. NESBITT:

Is that the net tax or

the supertax?

-Sir THOMAS WHITE: Let me recapitulate. First, there is the exemption of $3,000 *in the case of married men, and $2,000 in the case of unmarried men -and widowers without children. Subject to those exemptions there is a 4 per cent rate upon iaLl remaining income no- matter how large it may be, and in addition to that 4 per cent there i-s the supertax as I have stated.

Topic:   WAYS AND MEANS.
Subtopic:   WAR TAX UPON INCOMES.
Permalink
LIB

George Perry Graham

Liberal

Mr. GRAHAM:

Are all .salaries up -to $2,000 and $3,000 respectively exempt, no matter what the .amount may be?

Topic:   WAYS AND MEANS.
Subtopic:   WAR TAX UPON INCOMES.
Permalink
CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

All are free to that amount. If a man has an income of $100,000, $97,000 will be the amount unexempted. On this he will pay 4 per cent, plus the supertax.

Topic:   WAYS AND MEANS.
Subtopic:   WAR TAX UPON INCOMES.
Permalink
LIB

Alexander Kenneth Maclean

Liberal

Mr. A. K. MACLEAN:

Would the minister again recite the supertax figure from $5,000?

Topic:   WAYS AND MEANS.
Subtopic:   WAR TAX UPON INCOMES.
Permalink
CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

First, there is the 4 per cent and in addition thereto the supertax of 2 per cent upon the amount by which the income exceeds $6,000 and does not exceed $10,000 ; 5 per cent upon the amount by which the income exceeds $10,000 and does not exceed $20,000; 8 per cent upon the amount by which the income exceeds $20,000 and does not exceed $30,000; 10 per cent upon the amount by which the income exceeds $30,000 and does not exceed $50,000; 15 per cent upon the amount by which the income exceeds $50,000 and does not exceed $100,000, and 25 per cent upon the amount by which the income exceeds $100,000.

I was about to inform the committee as to how this tax works out in concrete cases. The following statement will show:

Topic:   WAYS AND MEANS.
Subtopic:   WAR TAX UPON INCOMES.
Permalink

INCOME TAX.


Unmarried men and widowers without All other Income of dependent children, persons ex- exempt $2000. empt $3,000. $ 4,000 $ 80 $ 405,000 120 807,000 220 18010,000 400 3G012,000 580 54015,000 850 81020,000 1,300 1,26030,000 2,500 2,46050,000 5,300 5,26075,000 10,050 10,010100,000 14,800 14,760150,000 29,300 29,260200,000 43,800 43,760


LIB

Emmanuel Berchmans Devlin

Liberal

Mr. DEVLIN:

If the question is not

premature, might I ask the ministerwhether the income tax will apply to the

revenues derived from industrial profits already taxed?

Topic:   WAYS AND MEANS.
Subtopic:   INCOME TAX.
Permalink
CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I will come to that a little later, under the exemptions.

Topic:   WAYS AND MEANS.
Subtopic:   INCOME TAX.
Permalink

July 25, 1917