March 7, 1938

RIGHT HON. R. B. BENNETT REPORTED RETIREMENT FROM PARTY LEADERSHIP -OBSERVATIONS OF THE PRIME MINISTER

LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

Mr. Speaker, before we begin the afternoon's proceedings may I be permitted to say to my right hon. friend the leader of the opposition (Mr. Bennett) how sorry I have been to learn that because of an impaired condition of his heart he has found it necessary to inform his party that he will not be able beyond a few months to continue to hold the position of its leader which position he has held during the past ten years. I know this expression of regret will be equally felt by all hon. members, and I hope that the right hon. gentleman will permit me to express this feeling toward him on behalf of the house.

I have often marvelled that my right hon. friend found it possible to assume the great amount of work he has undertaken, knowing something of the tremendous strain which, as leader of a political party, part of the time leader of the government and part of the time leader of the opposition, he has had to endure. Knowing how completely my right hon. friend's life has been devoted to public affairs, how conscientiously he has performed his duties as leader of his party and in the house, I can imagine how distressing it must be to him to feel that, because of the condition of his health, he is obliged to relinquish some part of those duties. In the decision which has become imperative he has my sincere sympathy.

I would express the hope that with release from extra strain, and some of the exacting burdens he has borne my right hon. friend's health may be speedily restored; that the

Civil Service-Special Committee

greater freedom thereby assured, may serve to increase and prolong the enjoyment of his days as well as afford opportunities of useful public service in other ways which otherwise might be denied.

Topic:   RIGHT HON. R. B. BENNETT REPORTED RETIREMENT FROM PARTY LEADERSHIP -OBSERVATIONS OF THE PRIME MINISTER
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Right Hon. R. B. BENNETT (Leader of the Opposition):

Mr. Speaker, I am sure it is not expected that I should do more than thank the right hon. gentleman (Mr. Mackenzie King) and those associated with him for the very kind observations he has made touching my own relations with the party with which all my life I have been associated. I realize that the strain of five years of stress left an effect upon me, but my general health has been far better during the last few months than it has been for some time. Unfortunately that is no index as to the condition of one's heart, and I was told last year that I must abandon these duties that I have been endeavouring to perform. I was slow to believe that that might be necessary, for reasons which I dare say the right hon. gentleman can understand and every hon. member of this house will appreciate. Nevertheless, a general election being within reasonable sight, I was told that it would be quite impossible for me to carry the burden and strain of such a time. So I felt it was my duty to acquaint my political friends with that fact.

I am not delivering any valedictory; that will be left for another occasion. But I would be less than human if I did not express to my right hon. friend my very warm appreciation of his kind thoughts which, as a matter of fact, he expressed in a letter which he sent to me yesterday. I am deeply sensible of the kindness with which the house has received his words of sympathy, as well as his words of regret. I can only say, Mr. Speaker, that I would like to thank the house for this manifestation of good will, which, perhaps, if it had been expressed in more strenuous times, might not have been necessary at all.

Topic:   RIGHT HON. R. B. BENNETT REPORTED RETIREMENT FROM PARTY LEADERSHIP -OBSERVATIONS OF THE PRIME MINISTER
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LIB

Jean-François Pouliot

Liberal

Mr. JEAN FRANCOIS POULIOT (Temis-couata):

Mr. Speaker, as one who never agreed with the policies of the right hon. gentleman who has just spoken, I heartily join the house in extending to him my very best wishes for happiness, good health and a full enjoyment, of life outside the house.

Topic:   RIGHT HON. R. B. BENNETT REPORTED RETIREMENT FROM PARTY LEADERSHIP -OBSERVATIONS OF THE PRIME MINISTER
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CIVIL SERVICE

SPECIAL COMMITTEE TO INQUIRE INTO OPERATION OF CIVIL SERVICE ACT MOTION FOR CON- CURRENCE IN FIRST REPORT


Mr. JEAN-FRANQOIS POULIOT (Temis-couata) moved concurrence in the first report of the special committee appointed to inquire into the operations of the Civil Service Act. Hon. CHARLES A. DUNNING (Minister of Finance): I intended to refer the other day to the provisions of this report, to which we are now asked to give concurrence, dealing with the printing of evidence to be taken before the special committee appointed to deal with civil service matters, but the chairman of the committee was not present at the time. I should like to call attention to the great expense which would be involved in producing what I am sure would be a second Hansard for a considerable number of days. I do not know how we should deal with it in the house, but surely some discrimination could be shown as between evidence of real value given before the committee and that great volume of other evidence and discussion which will not help to clarify the issue but which may even help still further to confuse it. In the interests of economy I do hope that the committee will endeavour to make some arrangement to make unnecessary the production of a voluminous and continuous Hansard.


LIB

Jean-François Pouliot

Liberal

Mr. POULIOT:

I regret very much that

the Minister of Finance (Mr. Dunning) did not mention this matter before, because I feel sure we could have come to an amicable understanding. First of all, let me say that the evidence given before all other civil service committees has been published for the information of hon. members. I am not in a position at the present time to state just what evidence will be given this year; that matter is to be discussed to-morrow morning by a subcommittee which is to draw up a kind of agenda of the witnesses to appear before the committee. We had voluminous reports of the proceedings of the committee to investigate the prices of farm implements, and the same is true of other committees. I submit respectfully that the printing of the evidence of this committee which is to deal with matters of interest to all members of the House of Commons is deserving of consideration. I realize that some members will never look at the reports that will be published, but even if only ten or twenty members read them, I submit it would be useful to have them printed. I do not want to have any restraint placed upon the relevant evidence that may be given, but I believe the members of the committee are in earnest in their intention to ask only pertinent questions of the witnesses; therefore, the evidence will be much shorter and less costly.

Topic:   CIVIL SERVICE
Subtopic:   SPECIAL COMMITTEE TO INQUIRE INTO OPERATION OF CIVIL SERVICE ACT MOTION FOR CON- CURRENCE IN FIRST REPORT
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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

Might I suggest that

Canada Evidence Act

this motion be allowed to stand until the chairman of the committee and the minister have had an opportunity of conferring.

Motion stands.

Topic:   CIVIL SERVICE
Subtopic:   SPECIAL COMMITTEE TO INQUIRE INTO OPERATION OF CIVIL SERVICE ACT MOTION FOR CON- CURRENCE IN FIRST REPORT
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PENITENTIARY ACT AMENDMENT

COMPUTATION OF TIME SERVED BY CONVICTED PRISONERS PENDING APPEAL


Right Hon. ERNEST LAPOINTE (Minister of Justice) moved for leave to introduce Bill No. 36, to amend the Penitentiary Act. He said: The purpose of this bill is to harmonize the provisions of the Penitentiary Act with those of the criminal code with regard to the computation of the time served by convicted prisoners who are detained in gaol pending the determination of appeal. Motion agreed to and bill read the first time.


CANADA EVIDENCE ACT

HUSBAND OR WIFE COMPETENT WITNESSES IN CERTAIN PROSECUTIONS-SUBMISSION OF CERTAIN PROOF BY AFFIDAVIT


Right Hon. ERNEST LAPOINTE (Minister of Justice) moved for leave to introduce Bill No. 37, to amend the Canada Evidence Act. He said: This bill involves three changes in the act. The first amendment is to make a wife or husband competent and compellable witnesses for the prosecution in charges of theft by either the husband or the wife of the property of the other while living apart. This is a special offence under section 354 of the criminal code. The other two changes are for the purpose of avoiding cost in proceedings. The first is to permit proof by affidavit of the sending of a notice or an order by any branch of the public service instead of compelling witnesses to go from Ottawa to all parts of Canada to make that proof. The other amendment is for the same purpose but with regard to banks. It is to permit proof by affidavit that there is no account where a cheque has been issued, if such be the case. Under the law as it is, it is permissible to prove by affidavit that there is an entry on the books of a bank, but there is no permission to prove the negative. This is to make both the same. Motion agreed to and bill read the first time.


QUESTIONS


(Questions answered orally are indicated by an asterisk).


INCOME TAX EVASIONS

CON

Mr. CHURCH:

Conservative (1867-1942)

1. Has the attention of the government been called to the evasions of income tax in Canada by wealthy evaders who have left Canada?

2. Is the government aware of several rich millionaires moving to the West Indies and other places outside Canada, with their wealth, to escape taxation, and, if so, what action has been taken?

3. What has been done to effect such a proposal and for a registration system to check evasions, and will any select committee be appointed to go into the matter?

4. Is the government aware that scores of wealthy Canadians are taking up residence in the Bahamas in order to escape tax levies?

5. Will any register be established of income tax?

6. Is any list of delinquents published in the blue book form, or has the auditor general asked leave to cheek up same?

7. Will correspondence, if any, between the auditor general and the Department of Justice on this subject, be tabled?

8. What action has been or will be taken in the matter ?

9. What does Ontario pay federal government for collecting its income tax, or is it collected at cost?

10. What steps are being taken to amend either (a) the criminal code; (b) the Immigration Act, or other statute law, to prevent Canadians in Canada crediting all their assets to companies they own or control and then escape income tax by investing surplus abroad?

11. Have any representations been made by the government of Ontario to either jointly with federal power or separately take action herein, and will all correspondence, if any, be tabled?

Topic:   QUESTIONS
Subtopic:   INCOME TAX EVASIONS
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LIB

Mr. ILSLEY: (Minister of National Revenue)

Liberal

1. The words "evasion" and "evaders" are not precise. If they be taken as implying default under the Income War Tax Act, the answer to the question is in the negative. If they refer to persons who have left Canada, wholly abandoned their residence in Canada, and are permanently resident abroad, the answer is in the affirmative.

There are such persons. They are, however, not within the purview of the Income War Tax Act. They are required to pay only in respect of income which has its source in Canada, in the same manner as other nonresidents of Canada who have the source of their income within Canada.

There are a number of persons, said to be well-to-do, who continue to maintain a residence in Canada but who also have a residence abroad in which they spend a considerable portion of their time. The government is not aware that any of these persons evade their Canadian income tax liability. They are all liable to income tax on the total income from whatever source derived throughout the world, whether directly or through the holding of shares of personal corporations incorporated abroad, because they have a residence in Canada, which brings them within the purview of the law whether they are personally in Canada or not.

Questions

Therefore there are two groups of persons,-

First, those who have a residence in Canada and also may have a residence abroad, and

Second, those who have no residence at all in Canada and reside wholly abroad.

The government is not aware in either case of evasion of the Canadian income tax law. The former pay, as stated, on their total income from all over the world. The latter do not evade, they simply are not within the purview of the income tax law as residents of Canada. They only pay, as all nonresidents of Canada throughout the world pay, namely on the income which has its source within Canada or on the profit, if any, from the carrying on of any business in Canada.

2. The government is aware that some persons give up their residence in Canada and take up residence outside of Canada, just as some persons give up their residence abroad and take up residence in Canada. Persons leaving Canada move into jurisdictions some of which have higher and some lower taxation laws than exist in Canada. The government is aware that some persons said to be well-to-do have left Canada and abandoned all residence therein.

3. A tax roll continually amended so as to keep it up to date is maintained in the income tax division showing all persons resident, ordinarily resident or carrying on business in Canada and as such liable to income tax.

4. The government is aware of a number of Canadians who have taken up residence in the Bahamas and other places and who at the same time maintain a residence in Canada. Such persons continue to pay tax in full as residents of Canada on their total income from sources throughout the world, even though they be personally absent from Canada for a substantial portion of each year.

The government is aware that some Canadians give up their residence in Canada and reside entirely abroad. Non-residents of Canada throughout the world are not liable to Canadian income tax except in respect of income that has its source in Canada.

5. See answer to Number 3.

6. If by "delinquents" is meant those who are delinquent in filing income tax returns, the tax roll section of the income tax division requires the filing of returns and if not filed the delinquents are prosecuted for failure so to do.

If by "delinquents" is meant those who do not pay their taxes in full, the collection section follows up the outstanding amount, demanding payment from the taxpayer and may enter upon such legal action as may be necessary to effect collection. All ledger accounts are open to the auditor general for checking purposes.

7. See Auditor General's Report-1937, Vol. 1, p. 253, et seq.

8. Answered by Number 7.

9. At the rate of 880,000 a year.

10. Steps were taken, to prevent personal companies incorporated abroad from being used to minimize taxation by requiring all persons resident or ordinarily resident in Canada who owned, directly or indirectly or through trusts, shares of companies incorporated in any part of the world outside of Canada, when the income of such company is derived from interest, rents, royalties, dividends or other similar income, to declare under the Canadian law in their individual income tax returns the income of such company or companies, whether the same is or is not in fact distributed, and as well all personal income from whatever source derived and to pay tax on the combined income. This was passed in 1926 applicable to 1925 and subsequent years. Any person who files a false return is subject to prosecution under Part 15 of the criminal code. No further steps are being taken to amend the acts referred to in the question.

11. No such representations have been made, therefore there is no correspondence to table.

Topic:   QUESTIONS
Subtopic:   INCOME TAX EVASIONS
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March 7, 1938