May 20, 1921


(2) The excise taxes as imposed by the preceding subsection one shall be payable at the time of importation or when taken out of warehouse for consumption in addition to the present duties of customs or at the time of sale by the Canadian manufacturer, but shall not apply on playing cards when exported, and shall- be accounted for to Hlis Majesty in accordance with such regulations as may be prescribed by the Minister of Customs and Inland Revenue. (3) (a) A tax of thirty cents per gallon on wines of all kinds, except sparkling wines, containing ,mot more than forty per cent of proof spirits; (b) A tax of three dollars per gallon on champagne and all other sparkling wines. (4) The excise taxes as imposed by the preceding subsection three shall be payable at the time of sale by the Canadian manufacturer, but shall not apply to such wines when exported, and shall be accounted for to His Majesty in accordance with such regulations as shall be prescribed by the Minister of Customs and Inland Revenue. (5) Every person selling or dealing in the articles upon which taxes are imposed as prescribed by this section may be required by the Minister of Customs and Inland Revenue to take out an annual license therefor, for which license a fee not exceeding two dollars shall be paid and the penalty for neglect or refusal to obtain a license shall be a sum not exceeding one thousand dollars which shall be recoverable upon summary conviction. 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.


L LIB

Jacques Bureau

Laurier Liberal

Mr. BUREAU:

There should not be a tax of $3 a gallon on sparkling wines. In days of depression we want to use these wines-they give a boost to the whole 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:

I would rather gather that my hon. friend already has his stock in. After all this is no higher than the rate of last year.

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L LIB

Jean-Joseph Denis

Laurier Liberal

Mr. DENIS:

These rates, if I understand correctly, are the same as last year?

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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 was referring to the point raised by the hon. member for Three Rivers. There has been a reduction in some items, for example, in the excise duty on cards.

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L LIB
CON

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

Conservative (1867-1942)

Sir HENRY DRAYTON:

Wines stand as they were exactly.

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L LIB
UNION

Edward Walter Nesbitt

Unionist

Mr. NESBITT:

They are all imported anyway.

19BBB (1) That in addition to the present duties of customs and excise there shall be imposed, levied and collected an excise tax of one and one-half per cent on sales and deliveries by Canadian manufacturers or producers, and wholesalers or jobbers, and a tax of two and one-half per cent on the duty paid value of the

goods imported, but in respect of sales by manufacturers to retailers or consumers the excise tax payable shall be three per cent and on goods imported by retailers or consumers the excise tax payable on the duty paid value shall be four per cent.

Provided that in respect of lumber an excise tax of three per cent shall be imposed, levied and collected on sales and deliveries by the Canadian manufacturer and further excise tax will not be payable on resale.

Provided also that the taxes specified in this section shall not apply to sales or importations of:-

Bread; flour and oatmeal when in packages weighing not less than forty-eight pounds each; animals living; live poultry; meats and poultry, fresh; milk including buttermilk; cream; butter; cheese; oleomargarine, margarine, but-terine or other substitutes for butter; lard, lard compound and similar substances, made from animal or vegetable stearins or oils; eggs; vegetables, fruit, grains and seeds in their natural state ; hay ; straw ; hops ; nursery stock; chicory, raw or green; bees; honey; sugar; molasses; other farm produce sold by the individual farmer of his own production; ice; fish and products thereof not canned or medi-oated ; ores of metals of all kinds; fuel of all kinds; gold and silver in ingots, blocks, bars, drops, sheets or plates unmanufactured; British and Canadian coin and foreign gold coin; logs and round unmanufactured timber; fence posts, railroad ties, pulpwood, tan bark, and other articles the product of the forest when produced and sold by the individual settler or farmer; newspapers and quarterly, monthly and semi-monthly magazines and weekly literary papers unbound; materials for use only in the construction, equipment and repair of ships; ships licensed to engage in the Canadian coasting trade; calcium carbide; electricity ; gas manufactured from coal, calcium carbide ; or oil for illuminating or heating . purposes ; ma-terials for use solely in the manufacture of oleomargarine or any substitute for butter or lard or for the production of oot-tolene; artificial limbs and parts thereof; artificial eyes ; donations of clothing and books for charitable purposes; settlers' effects; War Veterans' badges; memorials or monuments erected in memory of soldiers who fell in the Great War; articles imported for the use of the Governor General; articles imported for the personal or official use of Consuls General who are natives or citizens of the country they represent and who are not engaged in any other business or profession; Bibles, prayer-books, psalms and hymn-books, religious tracts, and Sunday school lesson pictures, and the Governor in Council shall have power to add to the foregoing list of articles exempted from the excise taxes on sales, as he may deem it expedient or necessary to exempt from the said excise taxes;

, Provided further that the excise taxes specified in this section shall not be payable on goods exported, or on sales of goods made to the order of each individual customer by a business which sells exclusively by retail, under regulations by the Minister of Customs and Inland Revenue who shall be sole judge as to the classification of a business; and a drawback may be granted of ninety-nine per cent of the said taxes paid on materials used, wrought into or attached to articles exported.

(2) That the Minister may require every manufacturer, producers, wholesaler or jobber to take out an annual license for the purposes

aforesaid, and may prescribe a fee therefor, not exceeding two dollars, and the penalty for neglect or refusal shall Ibe a sum of exceeding one thousand dollars.

(3) That any such tax, costs or penalties may, at the option of the Minister, be recovered and imposed in the Exchequer Court of Canada or in any other Court of competent jurisdiction, in the name of His Majesty,

(4) That the provisions of this resolution respecting a tax on sales shall be deemed to have come into force on the tenth day of May, nineteen hundred and twenty-one, and to have applied to all goods imported or taken out of warehouse for consumption on and after that day, and to have also applied to goods previously imported for which no entry for consumption was made before that day.

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UNION

Edward Walter Nesbitt

Unionist

Mr. NESBITT:

There are one or two matters to which I would like to draw attention in connection with this clause. Paragraph 1 provides for a 3 per cent tax on goods manufactured in this country. There is a belief in many quarters-and opposition to the idea-that this tax is to he absorbed in the price of the goods. I do not see in the resolution, however, any provision to that end. I have had several telegrams about the matter, and personally I think it would be a mistake to have the amount of the tax absorbed in the price of the goods. If the amount of the tax is shown on the invoice, one and one-half per cent by the manufacturer and one and one-half per cent by the wholesaler, everyone will know exactly what he is paying, but if the tax is absorbed in the price of the goods,' more than the actual tax might be collected. I think, therefore, that the procedure should be as it was last year. Another thing: taking bran as an illustration, if a man in Calgary buys a carload of bran from one of the mills near that city, he pays a 3 per cent tax on a price, which, for the purpose of illustration, we will put at $16 a ton, or 48 cents. But if he buys in Montreal, at Montreal rates of freight the price would be $31.50 and he would pay something over 90 cents on the ton. I think that the price, therefore, Should be charged as at the place of debarkation, because I understand it is the custom of many shippers of flour and feeds to prepay the freight and charge it to the customer. If what I suggest is not done, local millers in Ontario will be prejudiced, in my judgment. Then, it is provided that flour and oatmeal when in packages weighing not less than 48 pounds each shall be exempt. That means that flour and oatmeal in packages weighing less than 48 pounds each will have to pay the tax. Now, the great mass of the people buy flour, for instance, in what are called 25 and 50-pound sacks-really 24 and 48-pound

sacks, being one-eighth and one-quarter of a barrel respectively. When we tax these smaller packages and exempt the others we are putting the tax on the man who buys in the smaller quantities. Take, for instance, the case of oatmeal in packages. It is true that oatmeal can be bought in bulk at nearly all grocery stores, but packages are supposed to be more cleanly, and in these days when people are so much frightened by germs and so on they prefer to buy their oatmeal in packages. Very often-not always, hut very often-you go into a store and find the cat sleeping in the oatmeal barrel, if there is no lid on it.

I only give that as a rough illustration to indicate why the people prefer to buy the oatmeal in packages. Nearly everybody uses oatmeal, and I suggest to the minister that these smaller packages containing oatmeal and flour be also exempt from the 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:

Perhaps I

had better take the last point first. There are many different ways of trying to approach a very simple problem. For example, take that one problem of trying to make things cheap and trying to get people to buy cheaply. It is ridiculous how easy it is to twist anything which is said in that direction towards making something all the more expensive. Notwithstanding what has been said, the fact is that the exemptions under this sales tax cover all rough essential foods. The fact is that meats, milk, butter, bread are free; the essentials are absolutely looked after. There are some things which are bought, which .cannot be eaten and which cost money. Take the question of boxed goods referred to by the hon. member for Peterborough West (Mr. Gordon) in his speech on the Budget. The idea in question with boxed goods was to discourage the purchase of food products in cartons when a very considerable portion of the cost is on account of the carton which cannot be eaten. As a matter of fact, to-day clean oatmeal is selling at 5, 6 and 7 cents a pound. A carton containing 22 ounces of oatmeal sells for 15 cents a carton, resulting in a charge of something like 12 cents a pound as against 5, 6 or 7 cents if the food content is bought without the carton. In larger cartons, the discrepancy is not as great. I think the standard carton, is 56 onces, or practically 3J pounds, and it sells relatively, of course, at a lesser rate on contents than the smaller carton does. I think the provision as drafted originally was wrong in that it had a restriction of 48 pounds. I think this ought to be low

enough to cover the smallest sack or ordinary cheap container which is put up. My idea was to cover the smallest cheap container.

Another thing which has been entirely overlooked is in connection with the quantity of foodstuffs bought. This has been absolutely innocently, but nevertheless entirely misrepresented, because this tax is not a tax on the retailer whatever, and representations to the effect that the man's few pounds that he buys from the retailer are going to be taxed are absolutely beside the mark. He can buy in bulk, just as little as he wants, at any time without any tax at all. After having drawn attention to the fact that if you have things done up in cartons, you must pay for your cartons; that at the present moment standard oatmeal, just as good as that which is put up in cartons, can be bought at prices ranging from 5, 6 and 7 cents a pound, while some of the manufactured products are sold in cartons in this city at as high as 12 cents a pound, and in view of the fact that millers are turning out smaller sacks, I am inclined to think that, perhaps, the best thing to do is to amend entirely this present proposition. The amendment which, I think, would give full justice to the considerations urged by the hon. member for Oxford North (Mr. Nesbitt) would be to strike out the words after the word "oatmeal" on line 9 of page 8, "when in packages weighing not less than 48 pounds each," and to insert the words, "including rolled oats." I find that rolled oats are not covered by the definition of oatmeal, but, as a matter of fact, the food is practically the same; there is merely a difference in a primary process.

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CON

George Gordon

Conservative (1867-1942)

Mr. GORDON:

Do I understand the minister to say that that covers all package breakfast foods.

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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:

No.

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CON
CON

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

Conservative (1867-1942)

Sir HENRY DRAYTON:

Yes. It does not cover anything which is a trade patent formula. *

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CON
CON

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

Conservative (1867-1942)

Sir HENRY DRAYTON:

It covers

merely the rough essentials.

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CON

George Gordon

Conservative (1867-1942)

Mr. GORDON:

The custom throughout

the country has been that families reduce their buying of rolled oats and oatmeal in the hot months of summer. For probably six months in the year the sale of rolled fSir Henry Drayton.] [DOT]

oats and oatmeal to the ordinary family is nil and these other foods are

11 p.m. used because of the heating qualities of oatmeal and rolled oats. Therefore, there is a tremendous trade in this other class of foods and that is being taxed, although it is just as essential for the people to buy and use that as to buy oatmeal and rolled oats in the winter time. I would urge very strongly that these package foods be included too, because, although they may be patented foods, they constitute one of the most essential elements in the pantry of the family. In addition to that they are used for morning meal, noon meal, food for children, and evening meal. They are foods that are used very largely throughout Ontario and, indeed, throughout the whole of Canada.

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L LIB

James Alexander Robb

Laurier Liberal

Mr. ROBB:

It is getting rather late, and as this resolution is somewhat contentious, perhaps the minister would consent to letting it stand and reporting progress. It involves a very wide measure of taxation upon the food of the people, notwithstanding the statement of the minister that foodstuffs are free. I would like to enlarge somewhat upon that point, and I think I could convince the minister that he is taxing the food of the people, also that he is retarding, if not destroying, construction and development throughout this country. .

The minister, made the statement a few moments ago that this tax was imposed with a view to discouraging people from buying things which they should not buy

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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 have suggested that that should be dropped. Doe's the hon- gentleman desire to retain it?

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May 20, 1921