May 24, 1930

LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I am prepared to hold them over. I am ready to proceed with any business, but if there was any understanding on the part of any of the leaders who are not present to-day that something should not be gone on with, I do not want to violate it.

Topic:   BOUNTY ON COAL FOR COKING AND SMELTING
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CON

Thomas Cantley

Conservative (1867-1942)

Mr. CANTLEY:

That is quite all right.

Resolution (coal bounty) stands.

Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 310, to amend the Income War Tax Act-.

Motion agreed to and bill read the first and second times.

Mr. DUNNING moved that the house go into committee on the bill.

Topic:   BOUNTY ON COAL FOR COKING AND SMELTING
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CON

William Alves Boys

Conservative (1867-1942)

Mr. BOYS:

I think we ought to have the bill in our hands before we are asked to consider it in committee.

Topic:   BOUNTY ON COAL FOR COKING AND SMELTING
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The bill is ready for distribution.

Topic:   BOUNTY ON COAL FOR COKING AND SMELTING
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CON

William Alves Boys

Conservative (1867-1942)

Mr. BOYS:

But that does not give us the slightest opportunity of familiarizing ourselves with its provisions. The minister is familiar with them, but we are not.

Motion stands.

Topic:   BOUNTY ON COAL FOR COKING AND SMELTING
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WAYS AND MEANS

SPECIAL WAE REVENUE ACT


The house again in committee of ways and means, Air. Johnston in the chair.


LIB

John Frederick Johnston (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The CHAIRMAN:

This resolution was

before the committee this morning. We are now considering section 4.

On section 4:

4. That section fifty-eight, as enacted by chapter fifty-seven of the statutes of 1929, sections fifty-nine, sixty, sixty-one, sixty-two and sixty-three be repealed and provision made that there shall be imposed, levied and collected upon every change of ownership consequent upon the sale, transfer or assignment of any share of stock of any association, company' or corporation, or any bond, debenture or debenture stock other than a bond, debenture or stock of the Dominion of Canada or of any province of Canada, an excise tax as follows:

(a) Three cents for every one hundred dollars or fraction thereof, of the par value of a bond, debenture or debenture stock;

(b) Five cents for every share of stock sold or transferred at a price over one hundred and fifty dollars per share;

(c) Four cents for every share of stock sold or transferred at a price over seventy-five dollars per share but not more than one hundred and fifty dollars per share;

(d) Three cents for every share of stock sold or transferred at a price over fifty dollars per share but not more than seventy-five dollars per share;

(e) Two cents for every share of stock sold or transfered at a price over twenty-five dollars per share but not more than fifty dollars per share;

(f) One cent for every share of stock sold or transferred at a price over five dollars per share but not more than twenty-five dollars per share;

(g) One-quarter of one cent for every share of stock sold or transferred at a price of one dollar to five dollars per share, but not more than five dollars per share;

(h) One-tenth of one per cent of the value of every share of stock sold or transferred at a price less than one dollar per share;

that the said tax shall be payable in excise tax stamps by the vendor, transferor or assignor;

that every person liable to collect or pay the said tax shall keep records and books of account;

and that any enactment founded on this paragraph four shall come into force on the first day of July, one thousand nine hundred and thirty.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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CON

William Alves Boys

Conservative (1867-1942)

Mr. BOYS:

This forenoon I asked the minister whether he could not, opposite paragraphs (a) to (h) inclusive, give the prevailing rates under the former legislation.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The present rates are-

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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CON

William Alves Boys

Conservative (1867-1942)

Mr. BOYS:

It would be a great convenience if the minister would give us the old rates and the existing rates side by side.

Special War Revenue Act

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

The old rates were one-tenth of one cent on shares of 50 cents and under; oner-quarter of one cent on shares between 50 cents and $1. The new rate on all shares less than SI will be crae-tenith of one per cent, calculated on the money total of the transaction, instead of the fixed rate of one-tenth of one per cent on the share value. That will cut the tax down very materially indeed. On shares from $1 to $3 the old rate was one cent; the new rate is one-quarter of one cent per share from SI to S5. The old rate on shares between $3 and $20 was two cents per share; the new rate is one cent per share on shares from $5 to $25. The old rate was three cents per share on shares between $20 and $100; the new rate is two cents per share on shares from $25 to $50, three cents on shares from $50 to $75, and four cents on shares from $75 to $150. On shares over $100 the new rate is four cents, and on shares over $150, five cents.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

I might add to the minister's statement by giving some instances of the reductions as applied to certain companies. I have here a schedule which has been worked out for me by a reliable accountant, and I submit it as being approximately correct. The schedule covers thirty companies and shows a reduction from the old tax of 33 per cent on the shares of such companies as Noranda and International Nickel, increasing in the case of the penny stocks up to as high as 98 per cent reduction of the old tax. For instance, in Thomson-Cadillac the old tax has been reduced 96 per cent. The so-called penny stocks are reduced from 64 to 99 per cent. The average reduction might be said to be 75 per cent. In the higher priced stocks the reduction is from 33 per cent up to 50 per cent. The tax on Hollinger, for instance, selling at the present market price of $6.55, is reduced by one-half, while on Teck-Hughes selling at about the same price, $6.75, there is a similar reduction. I think that is a fair statement of the general application of this new schedule.

There is another matter that I would bring to the attention of the committee. It has to do with the question of the share tax in Canada as compared with the share tax in the United States. In that connection, exclusive of provincial tax I find that a stock such as Hollinger, selling at a price of $6.55 per share, carries a tax on a sale of one thousand shares in New York of $2, while the tax in Canada under this new schedule is $10.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Does that $2 include the state tax in New York as well as the federal?

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

I understand so. It does

not include the provincial tax in this country. The $2 is the tax if the deal was made on the New York stock exchange. The other figure is exclusive of the provincial tax in this country. If my figures are correct, it would appear that the tax on a purchase of Hollinger in New York would be less than 25 per cent of the tax which would be charged on the purchase of the same number of shares in Montreal or Toronto. The point I want to put before the minister is whether by this tax we are not driving certain business to the New York stock exchange to the disadvantage of our own Canadian exchanges. I know that in my own city those connected with the stock exchange business feel that the taxes have already driven a great deal of business to 'Seattle. I oan quite appreciate that this amendment to the schedule will result in recovering some of the penny stock business 'for our Canadian changes, but when it comes to the higher priced stocks such as Noranda 'and International Nicked, I think the government should consider carefully whether the present schedule is not driving that business to New York.

As I am not clear on the point myself I would like to ask the minister this question: When an agency of a New York house in this country sends a transaction to the New York stock exchange to be executed there, does Canada get any revenue from that transaction or not?

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I have a great deal of

interest myself in the answer to that question [DOT]for quite frankly I have been trying to find [DOT]means in the interest of revenue of taxing [DOT]under the existing law transactions of that kind. I cannot say that, up to the present, within the short period the new machinery 'has been at work, that is being done. My hon. friend knows the machinery which has 'been operative through the Canadian exchanges. There is a very grave question as to whether we can do it, but the matter is being gone into at the present time.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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CON

Alexander Duncan McRae

Conservative (1867-1942)

Mr. McRAE:

I appreciate what the

minister says, and that brings home the point that I want to get before the house. It is this, that by this higher share tax in Canada we are driving our business to the American exchanges because a man trading in large blocks of Canadian stacks will make a very material saving in the tax alone by having the transaction executed in New York. I do not believe it is in the interests of Canada, and certainly it is not in the interests of those

Supply-Buildings-Quebec

who are engaged in that business in this country, to have to operate at such a disadvantage. You have the results. If you deal in New York, it takes money out of the country, takes the profit on the transaction out of the country, and the government as well loses the revenue. It seems to me that some method should be found of dealing with the situation. Whether a man buys shares through Canadian exchanges or through the New York exchange, in either case he uses exactly the same credit and should pay the same tax. I hope the hon. minister will find some way of dealing with the matter, otherwise I have reason to believe that a great deal of the business, particularly the large transactions, those which can get credit in New York, will drift to that exchange.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Thank you.

Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 311, to amend the Special War Revenue Act.

Motion agreed to and bill read the first and second times.

Topic:   WAYS AND MEANS
Subtopic:   SPECIAL WAE REVENUE ACT
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PUBLIC WORKS DEPARTMENT

May 24, 1930