May 12, 1921

UNION
?

An hon. MEMBER:

All manufacturers.

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UNION

Walter Davy Cowan

Unionist

Mr. COWAN:

What manufacturers?

I just want to ask that question.

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle) :

My hon. friend is not entitled to interrupt me unless I give him permission to do so. However I refer him for an answer to the hon. member for Maple Creek (Mr. Maharg), the hon. member for Mackenzie (Mr. Reid) and the hon. member for Marquette (Mr. Crerar).

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UNION

Walter Davy Cowan

Unionist

Mr. COWAN:

You are making assertions that you cannot prove.

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appeile):

I am

making assertions on the basis of what I have been told by thoroughly reliable people, and that is all the assertion that my hon. friend can make at any time. In fact, he is often ready to make assertions when he has no such authority.

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UNION

Walter Davy Cowan

Unionist

Mr. COWAN:

The hon. gentleman cannot answer the question.

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?

An hon. MEMBER:

He has answered it a dozen times.

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appeile):

I say

that under the present tariff we shall be paying to the manufacturers of Canada a bonus equal to $500,000,000 a year.

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UNION

John Allister Currie

Unionist

Mr. CURRIE:

That is not true. You are paying no bonus.

Mr. THOMSON (Qu'Appelle) : My

hon. friend is not entitled to stand up in this House and tell me that I am saying was it not true.

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UNION

John Allister Currie

Unionist

Mr. CURRIE:

The hon. member knows very well that he is not telling what is true.

Mr. THOMSON (Qu'Appeile): My

hon. friend knows very well, if he has studied the question at all, that what I am telling is the truth. In receiving such bonuses as this, they should see that they give steady employment to their men.

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UNION

John Allister Currie

Unionist

Mr. CURRIE:

The hon. member does not help any unemployment.

Mr. THOMSON (Qu'Appelle): That

is a duty in which they have lamentably failed. I must say that the present Budget is not to my liking at all. It not only, in effect, makes a great increase in the protective tariff, but provides for the dropping of the business profits tax and replaces that with an addition to the Sales

tax. Taxes'may be divided into classes in various ways. We may class some as direct taxes and some as indirect taxes. If it true that both the tax dropped and the additional tax are direct taxes and, therefore, they are preferable to indirect taxes such as the customs duties. We may also, however, divide taxes into those that are based on the expenditure of the person who pays them and, on the other hand, those that are based on his income. I believe the taxes should, as far as possible, be levied on those best able to pay them, and in order to make the persons best able to pay do their part, only one course is possible and that is to base our taxes, as largely as possible, on income rather than on expenditure. That is something that we should always keep in mind. The poor man expends all his income and, according to the system of taxation which has obtained in the past, he must pay a tax on all of his income, while the rich, who do not need to pay out all of their income, escape taxation on the part of their income which they do not need to spend on their living. The Minister of Finance is apparently anxious to get back to the old system. His predecessor somewhat reluctantly adopted the plan of levying part of his taxes on income, in other words, taxing those who were best able to pay; but the present minister seems anxious to depart from that principle, when he drops the business profits tax, which is chargeable against income, and adopts in its place taxes of another description which are based upon the expenditure of the person paying. Therefore, it is plain that he is relieving the rich men of the country at the expense of the poor.

The United States Secretary of the Treasury has recommended to Congress the repeal of the excess profits tax, but he also advocates that the excess profits tax should not merely be repealed but be replaced by some other tax upon corporate profits. He wants to keep the tax still against income instead of expenditure.

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UNION

John Harold

Unionist

Mr. HAROLD:

Does the hon. member not know that under present regulations all business profits are taxed 10 i per cent with an exemption of only $2,000 on each company's profits?

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle):

I am not discussing that point.

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UNION
UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle):

I am dealing with the fact that the Minister

of Finance is dropping a tax on income and is putting in its place a tax on expenditure. I am trying to produce some arguments in favour of taxing income rather than expenditure. I am not dealing with the point that my hon. friend is dealing with at all. I was referring to the recommendation made to Congress by the United States Secretary of the Treasury.

I notice that he makes another recommendation which I think might be taken to heart by the minister. He says that the nation cannot continue to spend at " this shocking rate." In his opinion, the proposed expenditure for the coming year of $37 per capita is expenditure at a shocking rate. I wonder what he would say of our per capita expenditure of $60 to $70.

We have before us not only the Budget, hut an amendment with which I propose to deal very briefly. I might say that the amendment that I should like to see adopted in this case would set out the fiscal policy laid down in the platform of the Canadian Council of Agriculture. I think it would be much better than the proposed amendment; but according to our Canadian rulings, we can have only one amendment, and we have to deal alone with that. In some respects, this amendment is better than that presented to us last year. It expresses regret that the Government has made no proposals for any reductions in the tariff, and I thoroughly agree with that. It also regrets that the tariff is based upon the principle of protection, and I also agree with my hon. friend (Mr. Fielding) in that regret. The amendment claims that the aim of legislation should be to make taxes as light as circumstances will permit, and it also claims that encouragement should be given to industries that may reasonably be expected to create healthy enterprises giving promise of success. That is one of the most important things which we must keep in mind in dealing with our fiscal legislation. We have been trying to pamper and pap-feed industries which never should have been established in this country. If we had adopted the principle laid down by the hon. member for Shelburne and Queen's, we would stop that sort of thing and we would encourage industries that the Almighty intended to be carried on in this country.

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CON

Henry Lumley Drayton (Secretary of State of Canada; Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

My hon.

friend has referred to pap-fed, improper industries, industries that never should have been started in this country. Would he be kind enough to give the House the names of the industries to which he refers?

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UNION

Levi Thomson

Unionist

Mr. THOMSON (Qu'Appelle):

I have

not undertaken to give the names of the industries. My hon. friend should be very much better posted than I am in that regard. I will say this, that any industry that asks my hon. friend for a protection of 25 or 30 per cent should never have been established. My hon. friend should tell them to get out That is the best test I can give to him. Let him find any industries willing to work on a 10 or 12 per cent customs tariff and let him encourage such industries in any way he can. He will then be encouraging industries that can be carried on successfully in Canada and that the Almighty intended to be carried on in Canada. That is the best answer I can give to my hon. friend, and I hope he will take it to heart.

The amendment further advocates such legislation as will reduce the cost of implements of production required for the efficient development of the natural resources of the Dominion. That is also a very good point, and the best way to reduce the cost of those implements, and amongst them agricultural implements, is to put them on the free list. In that way the chances of the farmer to make a living fin these serious times will be very much increased. On the whole I think it is an amendment that should be accepted by me although it does not go as far as I would wish.

Some of my hon. friends opposite have had a great deal to say about free trade and free traders in this House during the last few years. The term "free trade" has been used rather loosely in this country- I can remember, as no doubt can other hon. gentlemen something of the old election campaigns in this country in 1876 and 1878, when the National Policy came before us for the first time. We remember that those who supported a tariff of an average of 12 and 13 per cent were called free traders, while those who wanted 20 per cent all around were called protectionists. That is how the term first came to be used, and it still hangs on to some extent. We apply the term "free trader" to those who want free trade or a low tariff. Hon. gentlemen opposite are now trying to create the impression that even the Progressives are rather indefinite on this question of free trade, and are rather undecided as to what their attitude on the question should be. I do not think that is so; I think there is no justification for that criticism. Let me give my own position on the question of free trade, if you will, or low tariff, and I believe that my

.position is one that has been generally accepted by the Progressive party. My ideas along that line are -well set out in the fiscal plank of the Canadian Council of Agriculture. No one need have the least doubt where the Progressive party stands on that question. No party that ever existed has made its position so clear when out of office as the Progressive party has done with regard to that particular plank, and any one who wants to know where the Progressive group stands can look up that plank and find out without any trouble at all. If any one does not know, there is no excuse for his ignorance; it is simply unjustifiable and inexcusable.

We have heard a great deal about the Liberal platform of 1893, and particularly about one thing that was suggested at that time, namely, that the goal of the Liberal party was free trade as they have it in England. I think that was a very good gftal, and that we should, do well always to keep a goal of that kind before our minds. I am sorry that the Liberal party did not make greater exertions to reach that goal more quickly. Hon. gentlemen opposite seek to leave the impresion that we are divided in our views on this question on this side of the House-that many of us would like to retain a certain amount of customs tariff, while others want the whole thing abolished at once. I have never heard any member of the Progressive group suggest that we should do away entirely, at one fell swoop, as the hon. member for Marquette (Mr. Crerar) has put it, with the customs tariff. The hon. member for Red Deer (Mr. Clark) has frequently directed attention to the fact that it took some twenty years in England to accomplish actual free trade, and I have always heard him advocate in this House that we must proceed along these lines gradually, although always keeping the goal in view. It may be necessary for a time to retain some customs duties on certain lines of manufactures, but I do not think there is any such need as our hon. friends opposite would have us believe. As a matter of fact, we know that in at least four particular lines of goods used generally throughout the country we have adopted the policy of free trade, not by any agreement with our manufacturing friends, but in answer to a great clamour from the public and in the face of tremendous opposition by the manufacturers. Those four lines to which I refer are cream separators, binder twine, barbed wire and flour. I shall not take up the time of the

House to repeat what was predicted at that time, but we all remember how ruination was predicted. In every one of those lines we are not only manufacturing goods for Canadians in Canada, but we are exporting to a very large extent, even barbed wire, though not to such a great extent as in the other lines.

While it may be true that it would not be wise to do away at once with all customs duties, I say that in so far as agricultural implements are concerned there is not one bit of justification for retaining a single jot of customs tariff on any of them. I think in all our leading lines of agricultural implements our manufacturers are not only able to supply our home demands, but are exporting largely in competition with the world, and if they can face the competition of the world outside of Canada, why cannot they face competition inside Canada?

I want to repeat what I said in answer to my hon. friend the Minister of Finance on a previous occasion, that an industry that cannot thrive on a 10 or a 12, or at the outside a 15 per cent tariff, is not suited to this country, should never have been established in this country, and is a curse instead of a benefit to this country. I believe that our experience has shown that those industries which it was predicted could not possibly thrive under free trade, have thriven. The first and most important thing we demand is that food stuffs and the agricultural implements necessary to produce those food stuffs shall be freed.

I think more might be done in the way of looking after wider markets for the things we produce. I have said something in this House before as to the necessity of having trade agents in the United States and elsewhere, to do something in the way of finding markets for our agricultural as well as our manufactured products. We export more agricultural than manufactured products, and I think they should receive more attention than they have in the past.

We have had a serious situation in Canada for some time on account of the ending of the war. We have been passing from war to peace, and we are experiencing a period of depression. We have no objection to bearing our share of these trying times, but we feel that the farmers of Canada have had to bear more than their share, and that the manufacturers, who have been bonussed so extensively by the treasury, have not done anything like their share. The hon. member for Red Deer (Mr. Clark) has drawn attention to the fact that one of his constituents sold two cattle hides

weighing 129 pounds at 1 cent a pound; that he got $1.29 for them.

I know of a worse case than that. I saw a report in the paper the other day about a farmer at Melita who shipped two hides to Brandon and received in return, after paying freight and commission the magnificent sum of 16 cents-just a little more than enough to buy a pair of shoe-laces. It would take about 100 or 150 of these beef hides at that price to buy a pair of boots for the farmer made out of just one little corner of one of the hides. Is there any justification for that?

I have known of worse cases than that, where people sent in hides and there was not enough received from them to pay the commission and freight. I have known of cases where people were compelled to sell cattle this fall-good canners-because of the shortage of food. They shipped the cattle to Winnipeg on commission and did not get enough to pay the commission and freight. But we have not seen any wonderful reduction in the price of canned goods, or any wonderful reduction in the price of boots and harness. It is unfair that it should take from 100 to 150 hides to buy a pair of boots, and from 400 to 500 cow hides to buy a set of harness, but that is about the position in which the farmers^ of Canada are placed because the Canadian manufacturers refuse to do their share in restoring rational conditions.

Without wishing to take up very much more time, I might refer briefly to one or two suggestions in regard to the raising of revenue. My hon. friends say that we should not only criticise the present system of taxation, but that we should suggest some other means of raising money, because we all admit that large sums of money are necessary. Well, it is quite true that a tremendous sum of money must be raised, but we must get that money in such a way as will ensure, as far as possible, that every dollar shall go into the revenue of the country, and not, as under the present system of customs tariff, have one dollar out of every four go into the treasury, the other three finding their way into the manufacturers' pockets. That is not the way to raise a revenue, especially when we are so heavily taxed.

Now, we have made some suggestions as to new methods of taxation, and they have been adopted after a tremendous amount of kicking on the part of the Government. But we have made other suggestions that have not yet been adopted, and I am glad to see the Minister of Finance in his place

again. Perhaps he will try to take them into consideration. For instance, we have suggested an inheritance or death tax, or whatever you like to call it. That would no doubt bring in a great deal of money, and, it seems to me, it would be a much fairer way of raising revenue than our customs tariff. The suggestion is also made that there should be a tax on the unimproved value of lands. Our protectionist friends are very anxious to scare the farmers on this question. I do not know whether the minister has tried to intimidate them or not, but I have seen a great many scare headlines on the question, and I have heard a great many arguments advanced to frighten the farmers into believing that this tax would operate entirely against them. Surely it is a queer system of taxation that would apply only to farm lands. We could assuredly adopt some fair system of taxation on the unimproved value of lands, a system that would be fair to every one. If any one should ask me, as my hon. friends just now seem to be very fond of putting questions, I am not in a position to say just what the unimproved value of lands in the city of Winnipeg would be in comparison with the unimproved value of farm lands in the province of Saskatchewan.

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UNION

John Allister Currie

Unionist

Mr. CURRIE:

Are you in favour of a tax on improved lands?

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L LIB

Joseph Archambault

Laurier Liberal

Mr. ARCHAMBAULT:

Stand up, please, when you ask a question.

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May 12, 1921