I should not wish the
hon. gentleman bo remain under a misapprehension; I do not want him to think that I am violating any of the rules. The fact is that a motion of want of confidence in the government has been moved by the hon. member for Shelburne-Yarmouth, and I, as a minister of the crown, am entitled to reply at length bo that motion.
Now to continue. There are, I say, two principles which any government or country should take into account when considering the question of income tax. One is the principle of revenue and the other is equity of baxation. Now. a tax that drives capital out of the country is on the face of it a bad tax.
I think we ought seriously to study this phase of the situation. If a tax is so onerous as to drive capital out of the country, it is certainly a bad tax for the country. My second point is this: that a sound tax must result in revenue to the country; otherwise, it is not desirable. What has happened? This is what has happened during recent years. The income tax, scaled up higher and higher, had a tendency to force those with higher incomes
The Budget-Mr. Stevens
to take a portion of their capital out of the country and invest it elsewhere, so that their earmings in Canada would be subject to a lower rate of income tax. Now who will say that anyone paying 25 cents of every dollar of htis income is not paying a fair tax to the country? If we fix it at a maximum of 25 per cent there will be a tendency to draw that capital back to Canada and the exchequer will receive a larger return. As I have pointed out already, in addition there is the increase of 25 per cent in the corporation tax and we get a larger revenue from that source.
I do not think the right hon. the leader of the opposition will deny that other finance ministers-I think this would apply to the late Mr. Robb, and also to Mr. Dunning who was the finance minister in the last session of the last parliament-recognized the equity of this. I think they recognized the unfairness of dual taxation, that is, taking eight or ten per cent in the way of a corporation tax and then taxing those who hold large portions of the stock of such corporation and receive dividends thereon. I think the principle was recognized as being unsound, inequitable, unfair, and what is more, likely to drive capital out of the country and to discourage investment. As we have indicated, this adjustment in the income tax will fall more lightly on the lower rates, to the extent of over 100,000 of those who are at present paying income tax. It will fall more heavily upon the rich owners of corporations but it will be stabilized to a point which will invite the return of capital to Canada.
We heard figures this afternoon in connection with the textile industry. My hon. friend quoted from the Labour Gazette, which publication prepares its figures from those supplied by the bureau of statistics. The bureau compiles its figures from information received from a certain number of firms to whom it writes and from whom it receives monthly reports. I desire to show to the house the effect of the tariff imposition of 1930, and I believe the information I will give to be instructive and enlightening. There are 67 establishments reporting, and 50 of these mainly produce goods which were protected by t'he September, 1930, tariff. These 50 establishments presented reports, not to us but to the secretary of the Canadian Woollen and Knit Goods Manufacturers' Association, Mr. Hallam, and from these reports he has compiled the information which I will present to the house. The average number of employees, not including salaried
employees, in 1930 was 5,516; in 1931, 6,798, an increase of 1,272 or 23 per cent.
The hours of labour for a four week period in 1930 were 843,878; in 1931, 1,136,130, an increase of 292,252 or 34.6 per cent.
The pay roll for a four week period in 1930 amounted to $332,273; in 1931, $420,643, an increase of $88,370 or 26.7 per cent.
Subtopic: CONTINUATION OF DEBATE ON THE ANNUAL
Sub-subtopic: FINANCIAL STATEMENT OF THE MINISTER OF FINANCE