May 20, 1921

CON

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

Conservative (1867-1942)

Sir HENRY DRAYTON:

As a matter of fact, one month would be ample. The American market is very largely similar to our own so far as the character of consumption is concerned. In order that there may not be the slightest possible difficulty, however, I have no objection to making

it October 1 instead of September 1. I therefore move to amend the resolution accordingly.

Resolution as amended agreed to.

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L LIB

Georges Henri Boivin (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Laurier Liberal

The CHAIRMAN:

Before I report this resolution, I miay state that the hon. member for Hull (Mr. Fontaine) has requested me to obtain the unanimous consent of the committee for him to ask a question concerning resolution No. 2 which was passed during his absence this afternoon. There was a question of returning to and reopening the clause for discussion, and this, of course, would also require unanimous consent. The ends desired, I think, would be better met by unanimous consent being given that the hon. gentleman have leave to ask the question.

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L LIB

Joseph-Éloi Fontaine

Laurier Liberal

Mr. FONTAINE (Hull):

(Translation.) Mr. Chairman, if I make that request, it is because I have received to-day many protests from druggists claiming that they have to pay high duties on alcohol, while manufacturers of pharmaceutical products are not obliged to pay that tax. Will the hon. Minister of Finance (Sir Henry Drayton) be kind enough to let me know if it is a fact that the manufacturers of the pharmaceutical products have not to pay $10 per gallon for alcohol, while druggists, who prepare themselves many prescriptions of which alcohol is a part, are forced to pay that tax?

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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:

The tax that the hon. gentleman has referred to-to the extent that I have been able to follow him -is the excise duty that druggists have to pay and which is covered by the resolutions we have not yet considered. We have been considering, the hon. gentleman will see, the customs regulations. We come down in the next resolution to the excise duties and bonding privileges, at which time the consideration the hon. gentleman desires to have given to that question can be given.

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L LIB

Joseph-Éloi Fontaine

Laurier Liberal

Mr. FONTAINE:

(.Translation.) I am willing to wait, as has been asked by the hon. minister. I understand, however, that druggists are dissatisfied, for they have to pay a very high tax on alcohol which they need for their pharmaceutical products, while the manufacturers can obtain alcohol free of that duty. If that be the case the druggist, who prepares all the elixirs which are included in the medicines, would be greatly discriminated against. Then Mr. Chairman, druggists sell their

products to consumers. Such people call at the drug stores for the prescriptions which they need, and if the druggist is obliged to pay such a high duty he must necessarily sell his product at a high price. It would certainly be a grave injustice and it would show that what has been said yesterday during the debate on the Budget by the hon. leader of the Opposition (Mr. Mackenzie King) that the Government seems to be on good terms with the big interests is absolutely true, as about thirty manufacturers at the most would be protected and could secure the alcohol for their medicines in paying a comfortably low tax, while three or four thousand druggists could not get the same favour from the Government, being obliged to pay that duty, which would force them tc charge a higher price for their medicines.

That seems to me to be a very serious situation, as you know, Mr. Chairman, that the buying of remedies is a daily need. It would be a crying injustice, if I am inclined to believe that the hon. Minister of Finance will do justice to whom it concerns. Once more I say that I am willing to wait for the proper moment in order to better discuss that resolution, but I want to state right now to the hon. minister that I will not allow without raising my voice that privileges be granted to thirty trusts or so while three or four thousand druggists will have to suffer from that situation and be obliged to sell their products to the consumers at a much higher price than they should.

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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 is not right in thinking there is any distinction made in the resolutions Nve have been considering, and which are customs resolutions, between the retail druggist that he speaks of and the patent medicine manufacturer; the tax of $10 is the same on all imported alcohol. The supplies of alcohol for the patent medicine manufacturer are dealt with under the resolution which immediately succeeds the present resolution. It is not touched at all by what the House has done.

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L LIB

Georges Henri Boivin (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Laurier Liberal

The CHAIRMAN:

Shall I report the

resolutions?

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Motion agreed to. Resolutions read a second time and concurred in. Thereupon Sir Henry Drayton moved to introduce Bill No. 199 to amend the Customs Tariff, 1907. Motion agreed to and Bill read the first time.


REVISED EDITION. COMMONS WAYS AND MEANS-INLAND REVENUE


On the motion of Sir Henry Drayton the House went into Committee of Ways and Means on the following proposed resolutions, Mr. Boivin in the Chair: 1. Resolved, That it is expedient to amend The Inland Revenue Act as amended by Chapter 6 of the Acts of 1914 (second session) by repealing section 154 thereof and substituting therefor the following:- 154. There shall be imposed, levied and collected on all spirits distilled, the following duties of excise, which shall be paid to the Colector,, as herein provided, that is to say:- (a) when the material used in the manufacture thereof consists of not less than ninety per centum, by weight of raw or unmalted grain, or when manufactured from sugar, syrup, molasses or other saccharine matter not otherwise provided for, on every gallon of the strength of proof by Sykes' hydrometer, nine dollars, and so in proportion for any greater or less strength than the strength of proof, and for any less quantity than a gallon; Ob) when manufactued exclusively from malted barley, taken to the distillery in bond and on which no duty of customs or excise has been paid, or when manufactured from raw or unma ted grain, used in combination, in such proportions as the department prescribes, with malted barley taken to the distillery in bond and on which no duty of customs or of excise has been paid, on every gallon of the strength of proof by Sykes' hydrometer, nine dollars and two cents, and so in proportion for any greater or less strength, and for any less quantity than a gallon; (c) when manufactured exclusively from molasses, syrup, sugar or other saccharine matter, taken to the distillery in bond and on which no duty of customs has been paid on every gallon of the strength of proof by Sykes' hydrometer, nine dollars and three cents, and so in proportion for any greater or less strength, and for any less quantity than a gallon. Provided however that any person licensed by the Minister of Customs and Inland Revenue to manufacture patent and proprietary medicines and pharmaceutical preparations by the use of spirits in bond subject to The Inland Revenue Act and regulations thereunder, the following duties of excise shall be imposed, levied and coleeted, that is to say:- (a) when the material used in the manufacture thereof consists of not less than ninety per centum, by weight, of raw or unmalted grain, or when ' manufactured from sugar, syrup, molasses or other saccharine matter not otherwise provided for, on every gallon of the strength of proof by Sykes' hydrometer, two dollars and forty cents, and so in proportion for any greater or less strength than the strength of proof, and for any less quantity than a gallon; (b) when manufactured exclusively from malted barley, taken to the distillery in bond and on which no duty of customs or excise has been paid, or when manufactured from raw or unmalted grain, used in combination, in such proportions as the department prescribes, with malted barley taken to the distillery in bond and on which no duty of customs or of excise has been paid, on every gallon of the strength of proof by Sykes' hydrometer, two dollars and forty-two efrnts, and so in proportion for any [The Chairman. ] greater or less strength, and for any less quantity than a gallon; . (c) when manufactured exclusively from molasses, syrup, sugar or other saccharine matter, taken to the distillery in bond and on which no duty of customs has been paid, on every gallon of the strength of proof by Sykes' hydrometer, two dollars and forty-three cents, and so in proportion for any greater or less strength, and for any less quantity than a gallon. Provided further that when such spirits testing not less than fifty per centum over proof are sold delivered in such limited quantities as may be prescribed by the Minister of Customs and Inland Revenue to any university or scientific and research laboratory for scientific purposes only, or to any bona fide hospital, certified to be such by the Department of Public Health, for medicinal purposes only, a drawback of ninety-nine per centum of the duty paid may be granted, under regulations to be made by the Minister of Customs and Inland Revenue. 2. Resolved, That any enactment founded on the preceding resolution shall be deemed to have come into force on the tenth day of May, nineteen hundred and twenty-one.


CON

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

Conservative (1867-1942)

Sir HENRY DRAYTON:

Mr. Chairman, there is a lot that is very technical in the wording of the resolution, hut it follows the regular form of keeping the duties properly in line. Shortly, what is done is this. The excise duty is raised to $9 a gallon-

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UNI L
CON

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

Conservative (1867-1942)

Sir HENRY DRAYTON:

From $4.40. It may he compared to the raise in customs from $5 to $10. Two exceptions are made, and I can assure the committee that they were not made because we would not have liked to get the revenue. They were made because it was felt that a good deal of hardship had resulted from the higher tax level, even having regard to the rate of $4.40 of last year. Hospitals, of necessity, use for medicinal purposes a great deal of alcohol, and it was not a particular complaint here or there, but generally hospitals represented that they were having great difficulty in making both ends meet, and that this new tax aggravated the difficulty. We propose in the present resolution to help the hospitals materially. Under the old law they paid, on a basis of $2.40 a gallon, and last year they paid as I have stated, on the basis of $4.40 a gallon. Our proposition now is in view of their difficulties in properly carrying on, and recognizing the great value of their work, to give them a refund of 99 per cent of all duty paid on spirits which are used by them for medicinal purposes.

Another matter in connection with which we have had a lot of complaint is as to the added cost of all pharmaceutical compounds and preparations in the manu-

facture of which alcohol plays a part. Not only did it apply to patent medicines as we generally understand them, but also to the regular standard pharmaceutical preparations of usual acceptance and use by physicians. We propose to provide that, under the regular policing which has to take place whenever special privileges are granted in connection with liquor taxation, the tax will be reduced to the old standard of $2.40 a gallon. The result will be that, so far as our taxation is concerned, these preparations and patent medicines return to the former level of cost.

There is also another matter which has arisen with insistence since the resolution was printed. It appears that essences and extracts are not entirely manufactured by pharmaceutical chemists, but by manufacturers who are not at the same time manufacturing any pharmaceutical goods. So in order to put them on a parity with manufacturing chemists, I beg to move that the resolution be amended by adding to the second paragraph of subsection (c) after the word "medicines " on the third line the words " extracts, essences."

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

Representations have been made that the operation of these changes is very much to the disadvantage of the druggists, as the resolution which the hon. gentleman has proposed would apply, to the larger operators, but would not affect transactions of the ordinary druggist who uses alcohol in the making of many preparations. Do I understand from my hon. friend that the druggists get the full advantage of this: that they

are not penalized as they think they are?

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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:

It is a matter for the druggist whether or not he accepts the provision enabling him to carry on the manufacture. Of course, the taking advantage of the provision involves expense. An Ottawa druggist came to me and asked me about it the other day and I pointed out to him that he could get the full advantages given to larger manufacturing chemists if he was willing to go to the expense. He said that it would not pay him; that he could buy practically all these things ready prepared by manufacturing chemists, and do so more cheaply than he could make them himself. But if any chemist desires to bond his premises for the purpose, it is open to him to do so. I am afraid though, that it would not pay him.

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

Is there any change in the present regulations.

236J

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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:

I think so, for this reason: under the former regulations all manufacturing chemists had to pay the full rate. Very strong representations were made last year by manufacturing chemists that they could not possibly carry on business at these high rates; that the price of proprietary and patent medicines, which they described as the poor man's medicine, would have to be tremendously increased. Under those conditions all were in the same position; the man who wanted to use only a dram of alcohol was in exactly the same position as the man who had to use gallons in large manufacturing operations. Obviously, if you are going to make a specially low rate for these patent and proprietary medicines, hospital requirements, and so on, they must come in under the bonding privilege and a man must be kept on the premises for police purposes.

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

I am not complaining of anything that my hon. friend is doing for the large manufacturing concerns; still less am I complaining of the concession he is making to hospitals. But if the druggists, who are a very numerous body in the country, doing a work which is certainly of value, are to be made subject to difficulties which they have not had to experience hitherto, then I am afraid my hon. friend is not considering the greatest good of the greatest number. I have in my hand a telegram-I do not need to read it-in which the representation is made that while my hon. friend's proposed changes may favour a few large manufacturers, it will penalize all the druggists of the country. That is the representation which is made; I do not state it of my own known knowledge. But if it be a fact, then the explanation that this provision will help a few large manufacturers will not be a satisfactory explanation to the druggists.

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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:

I assure my hon. friend that there is not the slightest intention of helping the manufacturer particularly. Canada is a country of large distances and sparse population, and rightly or wrongly the Canadian people do rely on proprietary medicines. Indeed, in many districts where there are no chemists the people have to rely on these proprietary medicines and the regular pharmaceutical preparations. I would say at once that the provision does make a difference to the chemist who desires to use alcohol in the preparation of his prescriptions; it is the difference between $2.40 and $9. It is hard to get any approximate idea of how much

alcohol the chemists use, but the gentleman to whom I was talking said that he was using about three gallons a year. The truth is that the great majority of chemists buy from the large manufacturing concerns, because in that way they can get it cheaper and better.

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UNI L

William Stevens Fielding

Unionist (Liberal)

Mr. FIELDING:

My hon. friend is

giving a very good advertisement for the patent medicines. I do not object to that. Some of them are said to be of a trashy character, but a great many of them are very excellent especially for use in the country districts where there is no chemist or doctor near at hand, and in that respect I appreciate their value. But if in the changes proposed my hon. friend is putting new burdens and new taxes upon the druggists of the country, the fact that he is making it a little easier for the large manufacturing concerns is not going to be a satisfactory explanation.

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May 20, 1921