May 17, 1926

LIB

Samuel William Jacobs

Liberal

Mr. JACOBS:

Unless you wanted their support.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

The hon. gentleman is perhaps more interested in that than I am. I would also compliment the minister upon having simplified the income tax and, more than that, UPon the reduction he has made in that tax. He has not reduced the income tax as a whole, but he has done one meritorious thing on which we are all agreed. He has so modified the tax that no man with a moderate income will pay any income tax whatever That is as it should be. I find myself, however in accord with some of the criticism made with regard to one phase of the income tax proposals. I do not believe in the principle of double taxation of incomes. The minister, perhaps inadvertently, has applied a principle the effects of which possibly were not entirely appreciated. The proposals in the budget in relation to income tax are a direct, if an unintentional blow, at the theory of joint stock organizations. Under the budget proposals, every joint stock company in Canada will pay an income tax of 9 per cent on its profits. If the remaining profit be then disbursed by way of dividends, the individual recipient of such dividends will again pay a tax, thus paying a double tax, first through the company, and then as an individual. As I say, I do not believe the principle of double taxation is sound, I do not believe it is just. I realize that no man will popularize himself by apparently defending the wealthy or the well-to-do; but it seems to me that justice ought to be impartial, whether it applies to the well-to-do or to the poor, and it is for that reason I am mentioning the matter now. A joint stock company after all is a perfectly legitimate way of doing business, and I think no obstacle Should be placed in its way. I am not now particularly referring to large corporations-they usually can take pretty good care of themselves-although I think the principle

The Budget-Mr. Euler

is sound all the way through. I am referring to the thousands of smaller corporations. I suppose that in my own city of Kitchener there are probably a hundred small corporations in mercantile, manufacturing and other lines of business organized as joint stock companies, for them there is double taxation all along the line. I might perhaps give, an example to illustrate how unfair it is. We will say we have a dry goods business on one side of the main business street in my town trading as Brown Brothers with a capitalization of $100,000, and organized as a joint stock company. The principal owner of the stock is one man, with sufficient stock held by a few other individuals, possibly members of his own family, so that the business may be organized as a joint stock company. Across the street is his competitor Smith, who conducts the same kind of business with the same amount of capital. Both concerns make the same profit, say $10,000. The joint stock company is assessed 9 per cent on its profits, less the exemption of $3,000, or $630; the individual tax afterwards paid by Brown upon the dividend will amount to $345.90, or a total of $875.90. Smith pays only his individual tax on the profits he takes out of his business and transfers to his own pocket; in other words, he will pay an income tax of $290. That is surely unfair discrimination.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Would the hon. gentleman kindly elucidate what happens in the case of the joint stock company that is com-' polled to retain the profits in the business?

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

The individual shareholder in that case would get no dividend and therefore would pay no tax on it.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

But is it not a fact that the proposed legislation taxes the increment whether it is distributed or not?

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

It taxes the profits of the joint stock company.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

George Brecken Nicholson

Conservative (1867-1942)

Mr. NICHOLSON:

Whether distributed or not.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

Correct. I merely want to point out this discrimination, which it seems to me should not exist. I have taken the liberty of discussing it with the Minister of Finance, and while he is very reticent, as most ministers are, I have some hope that he will modify his proposals in such a way that the injustice will be removed.

I wish to discuss briefly the reduction of the tariff on automobiles. I should like to make my position clear because I think most hon. members who were in the last parliament know my attitude on tariff matters.

[Mr. Euler.l

My attitude in the House as well as during election has always been that of a moderate protectionist. I hope the word "protection" does not offend the ears of my good friends of the Progressive group. Indeed I think during this session I heard the hon. leader of the Progressives (Mr. Forke) say he would stand for a little protection because he wanted to see our industries grow, and 1 admired him for his candour. I have always believed in a tariff that will enable our legitimate industries to live and prosper and grow. It is also fair to say that I have always contended against a tariff so high that it enables the taking of undue profits from the consumer. Now, the ordinary member of parliament-and I suppose we are all ordinary members-

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Samuel William Jacobs

Liberal

Mr. JACOBS:

No, no, speak for yourself.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

I will except the hon. member for Cartier (Mr. Jacobs). He is far above the average. But members of parliament generally have not the information which would enable them to say what a tariff should be in order to serve the purpose which I have just stated. I have not that information. I doubt very much whether the Minister of Finance himself, able as he may be. is in a position to say just what the rate should be on every commodity in the tariff. For that reason in previous sessions I have urged repeatedly, as have other members, that a tariff board should be appointed clothed with the necessary power to make investigation and submit recommendations upon which an intelligent rate of duty could be established.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LAB

James Shaver Woodsworth

Labour

Mr. WOODSWORTH:

Would the hon.

member define a little more closely what he means by "an intelligent rate of duty?"

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

I would say such a rate of duty as would serve the purpose I spoke of-to enable industries to live and continue in this country. I should have thought this explanation hardly necessary after I had stated my position with regard to the tariff. We have had a tariff board appointed, and I want to congratulate the government on its action in that respect. I hope the members of that board will work absolutely without prejudice and to the satisfaction of all concerned. I say quite frankly that I would have preferred to see the reduction of the duty on automobiles referred to the tariff board. Certain reasons have been given why that was not done. For example, that the automobile business had been demoralized for some time because of rumours that the tariff would be reduced, and it was not felt

The Budget-Mr. Euler

desirable therefore to refer the matter to the tariff board and so continue that demoralization for another year. I give the reason for what it is worth.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Samuel William Jacobs

Liberal

Mr. JACOBS:

Does my hon. friend suggest that the government wanted to put the automobile manufacturers out of their misery at once?

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

I am afraid the hon. gentleman is reading something into my remarks that I never intended. But I also desire to say that for some time I have held the view, in common I believe with every member of this House, that the tariff on automobiles was higher than it should be, and that there was a greater spread between the price the United States purchaser paid for his automobile and the price paid by the Canadian for a similar car. I know that is the truth. We had a debate on the subject last year, and on that occasion a good many of my Conservative friends opposite, some of whom are not now present, including hon. members from the Maritime provinces, voted for the resolution in favour of a reduction of the tariff on automobiles. I believe that the cost of the Canadian car has been higher than it should be; I believe that of some of that cost has been on account of the tariff, and I am satisfied that the cut from 35 per cent to 27i per cent will still enable our automobile industries to survive and to progress. I do not pretend to know a great deal about the automobile business, but I have made some inquiries since the budget was brought down, and I believe that the cut to 27i per cent is quite justifiable. I say quite as frankly that I am not so sure about the cut to 20 per cent, and for my part I would play safe to ensure that the automobile industry will survive. I am quite certain the minister intends to do that.^ I do not know what plans he has in mind, I do not know that he is going to make any modification in his budget, but I have sufficient confidence in him to believe that he will not deliberately destroy the automobile industry or any other Canadian industry and that matters will be adjusted to the satisfaction of all concerned, consumer, manufacturer of cars and makers of parts. Having this conviction, and believing that the automobile tariff is higher than it should be when placed at 35 per cent, I am faced with this: Which is the more important, the thing itself or the method by which it is done? So far as I am concerned I think one can quite justify his action in supporting the thing which is right even though he does not entirely approve of the method by which it

is done. I say so knowing that possibly my statement is open to criticism. I am quite certain however that there are many members opposite who, though they are going to vote against the reduction in tariff on automobiles, would like to vote for it, and they are doing so contrary to their own convictions. In making that statement I am making no improper insinuations, because I know what the exigencies of party politics demand. If I were satisfied that ruin would follow the reduction in tariff on automobiles I would vote against the budget. I do not believe that, but I do hope that we will find, either in committee or in some other manner, that such an adjustment will be made as to enable the automobile industry to survive and that the condition, following the passing of the budget and the budget resolutions, will be such as to enable the manufacturers of automobiles, the makers of parts and the consumers to be reasonably well satisfied.

Now Sir, I am going to make the one statement which I think is of greater importance than anything else I have to say. The tariff is, I believe, a very important factor in the industrial life of Canada. Believing that, I also believe that we should have a reasonable stability of tariff.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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?

Some hon. MEMBERS:

Hear, hear.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

By that I do not mean that there should be no changes from time to time, but I would invite the Prime Minister or the Minister of Finance to make some declaration that we might henceforth hope for reasonable stability of tariff, except in so far as changes may be considered advisable after careful examination and recommendation by the tariff board.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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PRO

John Evans

Progressive

Mr. EVANS:

May I ask a question? Does

the hon. gentleman realize that the tariff is borne entirely by the basic industries or by the lowering of the standard of living of the working people?

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

I am sorry I cannot follow my hon. friend at the moment into a discussion of the tariff in all its bearings. I think he understands the attitude I have taken, and I suppose the only conclusion we can reach at the moment is to agree to disagree.

In conclusion, Sir, I may say that I must take the budget as I find it, just as must every other member of the House. I have to either accept it in whole or reject it in whole, and, as I see it, the preponderance of merit in the budget, in the things I have enumerated and which I strongly favour, is so much greater than the demerits which I

The Budget-Mr. Euler

hope to see corrected in due course, that I will support the budget.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

Before my hon. friend resumes his seat I would like to point out that he said he would later show how the budget was going to benefit the people as a whole. Would my hon. friend elaborate that remark?

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

William Daum Euler

Liberal

Mr. EULER:

I would refer, for instance, to the great mass of people who will find relief in the reduction of income tax. The people will be able to buy automobiles a little cheaper, and are doing so right now. They will get the reduction in postage.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   CONTINUATION OF DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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May 17, 1926