Mr. BENNETT:

Excuse me; it is. When the Minister of Finance says that fixed charges are not included in the cost-

Mr. DUNNING:

I did not say that. Income tax is on earnings, after the cost of production has been met.

Mr. BENNETT:

Surely, but the manufacturer has to make allowance for these taxes in fixing the price at which he is to sell if he is to make a profit. Does anyone suggest that when I go to sell my goods I have not to consider the tax I have to pay on my earnings?

Mr. DUNNING:

Income tax is in a different class from the other taxes.

Mr. BENNETT:

It is a tax on profits that are shown. If no profit is shown, no one need be concerned; but if he makes a profit, the state taxes him fifteen per cent.

Mr. DUNNING:

Fifteen per cent of the

profit, which is determined after production costs.

Mr. BENNETT:

I include that as part

of the selling price if he is going to make a profit. We have the same view, but the minister desires to express it in another way. I am not going to get into a partisan discussion. I put it to you: As a matter of business what would you do? Suppose you were an executive, a member of a board of directors; suppose you had your own business; what would you do?

Mr. TUCKER:

I would not raise prices. I would sell less goods if I raised prices.

Mr. BENNETT:

If the hon. member would not raise prices, then he would continue to have a loss and he would be bankrupt at an early date. Surely the hon. member realizes that if you continue to sell for less than your cost of production you are going to be bankrupt at an early date.

Mr. TUCKER:

Are they selling at lower prices than in 1932 when costs were higher than now?

Mr. BENNETT:

I am just coming to that; it brings me to the point I am going to make. In 1930-31 we had occasion to consider this very matter. I said a moment ago, Mr. Speaker, that no matter had given me more concern as an individual or as a public man than the question of the cost of various commodities in this dominion, and I believed that if I could give the market of Canada- I said it standing in the Prime Minister's place over there-to the Canadian producer, I would increase his volume to such an extent that his unit costs would be less and he would be able to sell his goods cheaper. I took from the Canadian manufacturers a letter saying they would not raise their prices if this protection were given to them, not for exploitation, but that they might have this market and decrease their unit costs.

Mr. McLEAN (Melfort):

Would the leader

of the opposition permit a question?

Mr. BENNETT:

Certainly.

Mr. McLEAN (Melfort):

May I ask if the International Harvester Company of Canada, which is one of the largest manufacturers of the article under discussion to-day, signed a letter to that effect?

Mr. BENNETT:

My memory is, No. But

they did not raise prices.

Mr. McLEAN (Melfort):

They had no market. They were wise.

Mr. BENNETT:

Had they not? Well, we shall not discuss that phase of the matter. This is not for the moment a partisan discussion. How are you going to deal with that situation? How are you going to secure to the Canadian producer, manufacturer, the home market to the greatest possible extent and not permit him to raise prices? First, we got him to sign that he would not do so. Ah, but you say, you cannot rely oh that. We always become very doubting when we have to deal with that phase of the matter. But if hon. members will turn to chapter 30 of the statutes of 1931, they will see in section 17 how it was dealt with. It is referred to by . Mr. Justice Turgeon in the textile report. Let us read it:

17. (1) In the event of producers of goods taking advantage of any duty imposed under this act to increase the price of such goods to the consumer, or using any such duty to maintain prices at levels deemed by the governor in council to be higher than should prevail, having regard to general economic conditions in the country, the governor in council may reduce or remove such duty.

(2) In the event of any one such producer violating the provisions of this section, the governor in council may impose upon all the

Farm Implements Committee Report

products of such producer, or any of them, an excise duty equivalent to the amount of customs duty which would be paid by such goods if the same were imported into Canada under the provisions of the general tariff, and the same shall be collectible as a tax, and the provisions of the Income War Tax Act as to the collection of taxes shall be applicable hereto.

Provided, that neither subsection of this section shall apply to agricultural products.

There was the condition to which we were directing our attention. There is the remedy suggested. It divides itself into two phases. One relates to the individual who gets out of line, pays no attention to anything, but just raises his prices for his own purposes, having regard to his geographical location or some other such cause. What do we do? We impose an excise tax equal to the customs tax. Then there is the class as a whole, the agricultural implement producers as a whole. We say to them that if they do this, then we remove the duty altogether. What is more-

Mr. TUCKER:

Did the right hon. gentleman do it in regard to textiles?

Mr. BENNETT:

We did it with respect to glass, and we increased the tariff on textiles so as to give them the home market in this country. We did more; before we left office we took off, with respect to the British Empire, part of the specific duty and also, as perhaps the hon. gentleman will remember, the excise tax.

Mr. TUCKER:

Were they not exploiting the people of Canada?