Hon. R. B. HANSON (York-Sunbury):
Mr. Speaker, I am greatly indebted to my colleague, the hon. member for Davenport (Mr. MacNicol), for having given way to me this afternoon. I know he had, as always, a most distinguished contribution to make to this debate, and I trust that an opportunity will be given him at a later stage in these proceedings to deliver the message which he had for us this afternoon. Again I desire to thank him for his courtesy.
When I heard the Minister of Finance (Mr. Ralston) deliver his annual budget statement on June 24 I confess that I did so with very .mixed feelings. I realized then, as I do now, and as I am sure we all do, that this country is really at war. I have from the very beginning of this titanic struggle realized and visualized a war of long duration. I do not
The Budget-Mr. Hanson (York-Sunbury)
claim any superior vision, neither have I any special information, but having read all the relevant material on the subject which I could obtain, and having pondered deeply the whole position, especially since the failure of Munich, I came to the conclusion that this war, like the great war of 1914-18, would be of long duration, and that as a result a longterm point of view with reference to finance was the proper one to take.
In addition I have always held the opinion that Canada, as an integral part of the British empire, as one of the allies and a de jure as well as a de facto belligerent, should mobilize and use her man-power and her material resources in such a way as to give the maximum of effort to the allied cause. In holding this opinion I believe I am in accord with the views of all true loyal British subjects in this dominion, and in that regard I find my views also in accord with those which the minister expressed in his budget statement of the 24th of June.
I am aware, of course, that there are those in this country who do not share these views in their entirety. I am, however, inclined to think that those holding views at variance with my own in this regard have materially altered their own point of view, and this has been brought about by the force and trend of events as they have developed during the past six or seven weeks.
In one respect only do we differ in any substantial degree, and that is with respect to the method of marshalling our man-power for service overseas. Here again the trend of events has intervened and in a degree altered our position. It may well be that because of the cessation of fighting in the continental theatre of war, man-power overseas is not so pressing a problem as at first appeared. But because it may not be so yet, I suggest that our duty to assist with mechanical equipment such as planes, tanks and guns, with munitions and with foodstuffs and material supplies, is all the more pressing. In other words we should be utilizing our every resource to assist the mother country with all those material things of which she is in such dire need at the present critical juncture.
There is, too, the problem of the defence of Canada. On the 21st of June this parliament passed the National Resources Mobilization Act, which in addition to the legislation already on the statute books gives to the government of this country the most dictatorial powers ever conferred by this parliament on any executive, so that there is no longer any excuse on the part of the government for refusal or neglect to do anything and everything humanly possible to defend
this country and to bring the maximum of support and assistance to the mother country. Apart from the question of national leadership, the only consideration remaining to round out the whole orbit of defence and assistance lies in the realm of finance.
It is axiomatic to say that the right arm of a nation in time of war is its man-power and the necessary and essential equipment thereof for war purposes.
It follows without doubt that the next most important element in marshalling the fighting strength of the country for any and every purpose is finance. Our problem at this time is to marshal our financial resources in the wisest and best manner possible so as to achieve the maximum of results, and if possible at the same time preserve our corporate existence, so that after the struggle is over and after victory has crowned our efforts we may proceed not only to bind up the wounds of the nation but also to rebuild what may be a shattered structure.
This problem cannot be achieved in one budget, but the government, and especially the Minister of Finance, should have as long a vision as possible and chart out a course for the nation, looking not only to the immediate necessities for the day and hour but also to the time when we shall, if we continue to exist as a nation, have to prepare for the future or after-war period.
I quite agree with the minister that we must pay for the present peril. It will not matter much what becomes of our national wealth if we lose this war, but I do suggest that we do not approach in any defeatist spirit the consideration of the financial problems now confronting us. Rather should we approach their consideration on the theory that we shall win this war, as we must, and I shall discuss the problem in that spirit and with the hope that I may make some contribution of a constructive character. One thing is certain-the Canadian people will not withhold from the government the money necessary to win this war.
There may be differences of opinion, honest differences, as to how the money shall be raised, but I am as certain as I ever was of anything in my whole life that the Canadian people will give of their treasure as gladly and as wholeheartedly as our gallant fellow-citizens gave their lives in the last great struggle and as I believe the present generation are prepared to give theirs for the defence of their loved ones, their homes, their country, this Canada of ours, and the motherland in this struggle.
I was not privileged to be a member of this house in September last when the Minister of
The Budget-Mr. Hanson (York-Sunbury)
National Revenue (Mr. Usley) at that time delivered his financial proposals, but I read and have re-read his statement with great care. In that speech he indicated that the government proposed:
1. A policy of pay-as-you-go, as far as possible and practicable;
2. A policy of borrowing, preferably on short-term obligations.
3. Inflation was definitely taboo.
Generally speaking, I am in agreement with
the principles enunciated. I am perhaps not so pronounced in my views against inflation as I -was some years ago. I believe that a reasonably limited amount of inflation will, cn a given occasion, help to start the wheels of industry and the interchange of currency. That may sound like heterodoxy to some of my sound-money and more orthodox friends, but the difficulty is to know what is a reasonable limitation. If such a limitation is exceeded, the result may be disastrous. One immediate result of unlimited inflation is a rise in prices. This occurs always before a rise in wages, and as prices increase, wages lag behind. A vicious circle is established and sooner or later deflation, even collapse, may come.
So that I am not chiding the minister for not having utilized a limited degree of inflation. Its exclusion, however, leaves us, according to the tenets of the minister, only two sources from which we may obtain the necessary funds to carry on our war effort, namely, taxation and borrowing. And these are the two methods which the minister has invoked. Let us examine the government's proposals.
It seems to me that with respect to the taxation proposals the minister has proceeded for the most part, and speaking generally, upon lines which heretofore have been generally accepted and have proved useful for the purpose to be accomplished. There is no new radical departure from accepted principles of taxation, with some certain rather unimportant exceptions. This shows caution, and from that standpoint is to be commended. Generally speaking, it seems to me that our taxation proposals at this time should be based upon two principles: (1) Ability to pay; and (2) equality of sacrifice.
Let us deal first with ability to pay. The minister for the most part has utilized this principle as far as is practicable. His whole hypothesis as to quantum appears to me to be based upon the theory that the national income for the calendar year 1939 approximated $3,800,000,000 and for the fiscal year 1940-41 will approximate S4,500,000,000. I
do not know upon what scientific and mathematical data the minister bases his calculation, but I very gravely doubt whether the national income in 1939 approached $3,800,000,000, and if I am correct in that doubt, then I feel very certain that our national income for 1940-41 will fall far short of $4,500,000,000.
I say this for various reasons. While Canada is in a substantial degree an industrial country, and many of us have been striving for years to increase her industrial activities and thus increase the size of her payroll, yet primarily Canada is an agricultural country, and the sum total of the value of her agricultural products exceeds in sum total the value of her mining, fishing and industrial production. It that be so, and with a very large wheat carryover and a large wheat crop in immediate prospect, and no market in sight beyond the domestic requirements of Canada and those of Britain, it would appear, to me at all events, that any large immediate cash return such as could be justifiably included in the category of national income is rather remote, and a substantial allowance on that account will have to be made from this estimate of $4,500,000,000 of national income.
While this wheat situation is the largest of the marketing problems, it is by no means the only one. What about bacon? I understand that a substantial surplus is being piled up each week and that after October first the surplus will grow to enormous proportions. It has even been suggested to me that the price of hogs will fall as low as five cents. I do not wish to be considered an alarmist, but I do at all events believe in being realistic, and I have been obliged all my life to face facts as they are, not as I would wish them to be. This bacon situation sits very securely on the government's own doorstep. The much-vaunted Canada-United States trade agreement and the operations under it on the part of certain importers are directly responsible for the situation now confronting the Canadian hog producer. He is bound to lose money, and next year unless conditions are remedied he will not produce this commodity.
Then there is the apple crop, the situation in regard to which is well known. Just recently we have been told that we cannot find a market for our canned salmon and our canned lobsters. And what about the New Brunswick potato crop! There is a market for seed potatoes in Cuba, but just at present that market is more or less cornered by the activities of the minister of lands and mines of New Brunswick, who, by some means unknown to me, apparently has obtained control of that market for himself. There is opportunity, however, for the government to do something in regard to this matter in Cuba, in Central
The Budget-Mr. Hanson (York-Sunbury)
America, and in South America, and I urge the Minister of Trade and Commerce (Mr. MacKinnon) to get busy at once with respect to this matter.
All these considerations lead me to conclude that the national income will not approach the figure named by the minister, notwithstanding huge government spending on war effort. That, I submit, is not true national income. It is rather the reverse, and I shall have something to say about it later on. My own view is that it will not exceed four billions, and if so the results from the new taxation proposals will not yield as much in new money for the treasury as the minister anticipates, and we shall not be able to implement the pledge of "pay as you go" to the degree indicated.
I should like to point out to the house and the country certain things with respect to the national income and its effect on the standard of living in Canada. Assuming that our national income is $3,800,000,000 and will go to $4,000,000,000 in 1941, and assuming that the total dominion outlay, including both peace and war expenditures, amounts to $1,200,000,000, provincial and municipal expenditure aggregate about $600,000,000, and we have therefore a great spending programme of $1,800,000,000. Now, on the basis of $4,000,000,000 national income this is 45 per cent of the total national income being spent for public purposes. This leaves us just $2,200,000,000 or about $200 per capita for every man, woman and child in Canada with which to buy food, clothing and household goods, to pay rent, medical and similar services and all the other things human beings require. I suggest to the house and the minister that this represents a very low standard of living. It cannot be helped by further soaking the rich, or by any other unorthodox finance. The only way it can be helped is for the government to cut down its ordinary expenditure and by provincial governments and municipalities all determining to take less money from the taxpayers. This must be done. Raising the national income by governmental expenditure will help, but it will be a long time before it seeps through to business and comes back in some degree in the form of taxation. The only fertile field for immediate income is to be found in the provincial arena and in the municipalities. Certainly there must be no increase in the levy by either authority.
As I view it, there are two difficulties in the government's position. One is that the budget is based, as the government's financial policy has been based for some years, on the assumption that the volume of business can be stimulated by government expenditures and
that this can be very largely covered by the resulting increased taxation. The other difficulty I have already alluded to, namely, the government has not yet by any means been active in reducing non-wrar expenditure.
With respect to the government's first difficulty based on its past financial policy, having regard to its own failure to undertake large war expenditures at an earlier date, it now finds itself faced with the necessity of undertaking a programme of this character just prior to bringing down the budget. The result has been that the budget announcement will have a very serious effect on ordinary business before the stimulating effect of war expenditures is felt, but even their accepted theory of public expenditures to "prime the pump" requires that the expenditures should be made first and the resulting increase of possible taxation obtained later. For all effective purposes, the government has undertaken to obtain the taxation first and make the stimulating expenditures later, but I suggest that it will take months for war expenditures to filter down through the business structure, while the heavy taxation announced in the budget has led a great proportion of the population to take immediate steps for reducing expenditures. This is the only opportunity left to this government to do anything at all effective to relieve the situation. It occurs to me that even political expediency should dictate a revision of policy in this respect. Many new thousands of direct taxpayers created by the budget, as well as all those older taxpayers to whom their income tax was not a matter of vital importance, are now thoroughly alive to the fact, long concealed from or ignored by them, that the people pay for governmental expenditures.
Let me reaffirm that the people will not object to paying for the war, but every one of them who sees a single case of an unnecessary employee, or a wasteful expenditure for non-war purposes, or even an expenditure which could be postponed, is certain to feel vigorous resentment. At the moment I have in mind the failure of the government to halt the work on the Montreal terminal. It did halt construction work on certain public buildings, such as new postal stations in Quebec and Toronto, the supreme court building in Ottawa, and others of a similar kind, but the Montreal terminal seems to be sacrosanct. It will cost this country $12,000,000 in war time and it may even run to $15,000,000, money which can ill be afforded at this time. To me its continuation at this time is a shocking thing.
Mr. Hanson (York-Sunbury)
There are four good features in this budget:
1. Pay as you go, so far as possible.
2. Restrictions upon civilian buying, as indicated by the huge taxes on luxury motor cars.
3. Diversion of dollars away from the United States.
4. Avoidance of inflation.
These principles incorporated in the budget indicate, to me at all events, that the minister in these aspects has been soundly advised by the two very able men associated with him. But to say that this budget represents national sacrifice, or that there is equality of sacrifice, I suggest to him is far from the truth. There is not one single new tax which is designed to bear, however lightly, on the entire population. There is nothing comparable to the match tax imposed during the last war-we have returned to that position, of course-or to the sugar tax, which was imposed as a revenue measure but designed to be a national sacrifice paid by everyone in .a time of extreme economic warfare. Per contra, there are no nuisance taxes, for which I think we should all be grateful. However, national sacrifice, as I interpret the term, means sacrifice by all the people of the nation according to their respective abilities to make and sustain sacrifices. In fact all the national sacrifice that is made under this budget is concentrated upon a mere handful of the population, not on the whole population, as it should be.
What is the position? According to a chart prepared and published in the "National Revenue Review" for May, 1940, under the caption "Income Tax and Those Who Pay It," there were for the period 1938-39 individual taxpayers totalling 264,804 who paid a total of 846,937,205. I have tabulated the different classes, as follows:
Income paying paidUnder \ 12,000
119,346 $1,269,724$ 2,000 to $ 3,000
63,572 1,324,663$ 3,000 to $ 4,000
34,392 1,462,000S 4,000 to $ 5,000
15,902 1,296,625$ 5,000 to $ 6,000
8,627 1.234,400$ 6,000 to $ 7,000. .. .
5,563 1.260,057$ 7,000 to $ 8.000
3,674 1,144,597$ 8.000 to $ 9,000
2.612 1,107,188$ 9,000 to $10.000 . . . . 1,986 1.059,919$10,000 to $15,000
4,687 4,247,516$15,000 to $20.000 . .. . 1,775 3.210,835$20,000 to $25.000
816 2,551,849$25,000 to $30.000
469 2.132,006$30,000 to $35,000
353 2,156.943$35,000 to $40.000
234 1.732,270$40,000 to $45,000
182 1,656.133$45,000 to $50,000 .... 157 1,662,512
Those in receipt of taxable income of over '$50,000 numbered only 457, or -17 of one per cent of the total number of taxpayers, but contributed $17,289,365, an average of $37,882 each, or 36-17 per cent of the total collected.
On the other hand those in the class under $2,000 represent 45 per cent of the total taxpayers, and they contributed 2-66 per cent of the total amount paid by individuals. I am sorry to have wearied the house with these figures, but I think they ought to be put on record for the purpose of comparison with what these people will pay under this budget. Now under this budget all the sacrificial taxation is being concentrated upon a handful of people in the lower middle bracket. A total of about 22,000 individual taxpayers in the brackets between $6,000 and $50,000 are being asked to contribute next year a total of over $50,000,000 in addition to the sum of $22,254,000 or thereabouts which they are now paying. And this takes no account of their contributions under the national defence tax, which of course will be substantial. Thus these 22,000 odd taxpayers will pay nearly four times what they are now paying. Is there anywhere else in this budget any sacrifice comparable with the tax imposed upon this comparatively small element in our population?
These people will pay; make no mistake about that. They will of course have to adjust themselves to new conditions of life to meet these new burdens laid upon them, while the great mass of the people will be able to pursue their normal manner of living with little or no interruption. These people are not complaining, and I am not complaining on their behalf; I am just pointing out what I believe to be the true position.
I suggest further to the minister that this budget falls hardest upon those already hardest hit by the war. With respect to those who are actually benefiting in their standard of living from the war and war expenditures, the budget makes little demand, except through the corporation tax. I would have wished that the government had placed some imposts which would have had a psychological effect upon our people, making them realize more and more that Canada is at war. That is what I meant when on June 17 and again the next day I asked the Prime Minister to declare a state of national emergency in Canada. A sacrificial tax, which would affect even the humblest in Canada, would have had a tremendous effect in awakening our people. Others realize the necessity for such an awakening. Only two Sundays ago a great ecclesiastical personage in Canada sent out a letter to be read in all the churches under his charge, and it opened with these pregnant words:
At long last Canadians have been awakened to the imminent dangers which threaten our own country no less than Great Britain.
That is the sort of thing I mean.
The Budget-Mr. Hanson (York-Sunbury)
It is not my specific duty to suggest detailed measures. Rather should I indicate principles which I think should be followed; but I cannot refrain from inquiring why some additional impost was not placed on spirituous liquors. It was done under the last budget in England. If I were consulting my own views and principles alone-and I advance this suggestion with a feeling of temerity-I would do away with the sale and consumption of spirituous liquors for the duration of the war as a purely economic measure. The drink bill of this country is enormous, at least $200,000,000 per annum, if not more. I realize, however, that this may not be feasible, for reasons upon which I shall not enlarge.
Why was not a tax of say one cent a gallon placed on all gasoline sold in Canada? They have such a federal tax in the United States, and, mark you, that tax was imposed in addition to, not in substitution for, a similar state tax theretofore imposed in every state of the union, and as a peace-time measure. I suggest to the minister that such a tax was fully expected in this country. Why should there not have been a further elimination of exemptions under the sales tax, in order to raise more money? When I was at home over the weekend a wholesale grocer called me up and expressed great surprise that there had not been some further elimination of these exemptions. I asked what he had in mind and he mentioned condensed milk, on which not a cent of sales tax is collected, and of which huge quantities are sold in this country. I know the answer will be that this would come out of the farmers, but I do not believe it would. I believe the consumer would pay it just as he pays the tax in every other instance.
I now desire to refer briefly to the excess profits tax, which I think will prove to be an important revenue producer. I think the minister has acted wisely in eliminating option A as provided for in last year's act. At best that was merely a skeleton act. I made some examination of it for a client last October and in fact came to Ottawa for the purpose of interviewing the authorities and obtaining a clarification of certain points in relation thereto. To my surprise I was informed that study subsequent to the enactment had convinced the officers that the tax was inequitable and indeed unworkable, and I came away with the distinct impression that a wholly new act would be evolved this session. It was a classic example of hasty, ill-digested legislation. In effect the minister admitted this in his statement. He said one main feature which appeared to be undesirable was the right of the taxpayer to choose between two IMr. R. B. Hanson.]
options; that it had been found that many old firms would pay little or no tax while new firms in business since the war, or those operating in a depressed industry, or undergoing rapid expansion, would be subject to unwarranted discrimination. I agree with that analysis of the situation. Therefore, I understand, a new measure is to be submitted _ It is agreed that it will be much more drastic-I understand that after I left the house on Friday afternoon my friends to the left moved an amendment expressing want of confidence-in the government because this tax had not been made one hundred per cent. I had not intended to deal with that aspect of the matter; no doubt the minister will reply to that. But I should like to point out to the house and to the country that the situation here is not nearly comparable with the situation in the United Kingdom, because in England they have no corporation income tax; and a large sum of money will be paid under this tax, yoked up with the corporation income tax.
While we accept the principle of conscription of wealth in war time, it must be kept in mind that in times of peace excessive income and profit taxes and excessive succession duty on estates may work great injury to the state; that is if we are to maintain the capitalist system. It is no crime to accumulate a moderate degree of wealth. The accumulation of a large amount of wealth in Canada at least is exceptional, and in no sense proves the rule. I venture to suggest that most of us sitting in this house have striven as hard as we could to accumulate capital; and I venture further to say that most of the accumulated capital in this country has been attained by the exercise of the old-fashioned virtue of thrift, a virtue which all too many people have ceased to practise. Do not, then, in peace time penalize too severely those who practise this virtue. In war time it affords a reservoir from which the government may and will under this budget draw huge sums of money for the country's war effort. In peace time thrifty savings must be put back into business, which in turn will employ labour, utilize materials and supplies and employ more of our people. If not invested directly in industry it must be invested in securities, which largely represent industry.
I had not intended to go into the various ramifications of the new measure, but it is an intricate matter and one which I think hon. members should endeavour to understand, as I should like to understand it myself; therefore I think some reference should be made to the details. Like the September act, which has now passed into
The Budget-Mr. Hanson ( York-Sunbury)
oblivion, the new act takes a base period as a starting point, and this base period is the average of the net profits before deducting regular income tax-am I right there?-for company years ending in the years 1936, 1937, 1938 and 1939. All profits in excess of this four year average are subject to the new excess profits tax.
Taxable income is to be determined under the provisions of the Income War Tax Act. Deduction of the regular rate of corporation income tax, 18 per cent for unconsolidated returns and 20 per cent for consolidated returns, is permitted before calculating the annual tax under the excess profits tax. The amount by which the current year's taxable income, before regular income taxes, exceeds the four year average income tax is subject to excess profits tax at the new rate of 75 cents. I hope I have correctly stated the effect of the proposals.
There is another provision in this new tax bill, however, which in effect makes the minimum corporation income tax rate 30 per cent for unconsolidated returns or 32 per cent for consolidated returns. Under the new income tax act a minimum of 12 per cent is payable, in addition to the regular 18 per cent or 20 per cent rate, in cases where this amount would be larger than the excess profits tax computed at 75 per cent, and the amount by which the year's profits exceed those of the base period. That, of course, is a very heavy impost, as the minister knows better than I do.
No alteration is made in the provision whereby ten per cent of the cost of capital expenditure computed in the year 1940 may be amortized against taxable income over a period of three years, and I congratulate the minister on having left this concession in the law. I note, too, that the excess profits tax will not apply on income received by Canadian companies from subsidiaries or other investments in Canada. This, of course, guards against duplication. I am wondering if it is clear that this provision applies in respect [DOT]of income received by a Canadian company operating a subsidiary in the United States, or does it only apply to subsidiaries in Canada? I am hopeful that the minister will give some consideration to that point, and make it clear.
I am curious as to the reference to a board of referees, which the minister suggested would be appointed, and for which the resolution provides to assist in carrying out the provisions of the proposed measure "fairly and realistically," as he stated. Just what are to be the real functions of this board? Is it to be a court of appeal? If so,
then great care should be exercised in the selection of the personnel. Above all, political consideration must be strictly taboo, and only men of the highest integrity and judicial ability should even be considered. I warn the minister that his selection will be watched with great anxiety, because an arbitrary board could easily make or break any concern coming under its jurisdiction.
Then, in respect to gold mining: The minister made more than a gesture to the gold mining and oil producing industries. It is, of course, wholly desirable that any new ventures should be encouraged, but I would not think it desirable or in the public interest that proven ventures should be given special consideration. I have in mind the type of man who makes a lucky strike, and then because he is being taxed pretty heavily leaves the country. They must, without question, be treated liberally with respect to depletion and depreciation. It is being borne in mind, too, that our gold production is a most important item in our exports and helps mightily to maintain our trade position, and also our exchange position, but it must also be borne in mind that gold as a commodity for sale and export has come into its own to a greater degree than any other Canadian commodity. There is a tremendous unearned increment there, and this industry must, and I have no doubt will, bear its just share of the national burden, especially in war time. The difficulty has been, and I presume now is, to arrive at a wise and just conclusion as to the incidence of the taxes to be imposed. I know some of the difficulties of the past. I know, too, that every ounce of gold taken is just that much exhaustion of our estate, but providence has been reasonably kind to Canada in this regard, and we are indeed fortunate in having this huge reservoir upon which to draw in this hour of peril.
Then, with respect to the national defence tax. in theory this tax is a supplement to the graduated income tax. It will bring in an army of new taxpayers and to that extent it is all to the good, because I have found that any one who has to pay a particular tax for the first time becomes interested in the application of the tax moneys. This new war tax will help to impress upon the new taxpayer that he is in this war. The results from the tax, S20.000.000, for the balance of this fiscal year, and $35,000,000 estimated for 1941, are substantial and will be a welcome addition to our war effort.
While this is all true, yet may I remind the country that this sacrificial taxation is in a degree coming from the same source as that from which the increased income taxes
The Budget-Mr. Hanson (York-Sunbury)
are coming-in this case salaried or the wageearning classes, many of whom will be already found in the lowest income brackets. These will be obliged to pay both taxes. I am not objecting. I now desire to call attention to the situation with respect to the method of collection-at the source. I agree that the minister has taken the most practicable course; any other procedure would have resulted in great expense to the treasury and there would have been some loss. At the same time this has shown that he appreciates the fact that this tax will add another burden to executives and business generally. To offset this he proposes to make provision toward reimbursing employers for expenses so incurred.
So far, so good; but may I be permitted to make a suggestion to the minister. For years I have heard complaints-sometimes bitter complaints-that business enterprises have to make altogether too many returns to governmental departments. All this costs time and money and is frequently a source of irritation. Some people, you know, thrive on statistics. Is it not possible that with this new duty cast upon the accounting departments of firms and corporations some attempt can be made to reduce the volume of statistics and returns which they are now obliged to make? I know that statistics are important, but they never fed any one, and we are apt to allow bureaucrats to demand much more than is requisite and necessary. Some amelioration in this regard may be reasonably expected in war time.
I think, Mr. Speaker, I should make some reference to the new war exchange tax. Its primary importance is to conserve exchange. I have no means of judging as to whether it will be a revenue producer or not. I am prepared to accept the minister's estimate of $65,000,000 in the first full year, of which $50,000,000 will be collected in the present fiscal year. It does not apply to empire countries and will be subject to drawback for export, as in the case of customs duties. Cases of hardship will arise because of its imposition. I hope the minister has given full consideration to this aspect, and that he will see, if he has the necessary power, that such injustices as may arise and be properly established are corrected. Here again great care will have to be exercised.
I have in mind persons, firms, or corporations which sell United States made heavy goods, such as caterpillar tractors or other such equipment, of a class or kind not made in Canada, ordered for contractors having contracts with this government for the clearing of airport sites under a firm contract on a laid down duty paid price in the maritime provinces. It is quite clear from the
fMr. R. B. Hanson.]
new section 88-A (1) of the Special War Revenue Act, read in conjunction with section 13 of the resolution, that all such goods must pay this extra tax and that it will apply on all goods imported or taken out of warehouse for consumption on or after June 25, 1940, and on all goods previously imported for which no entry for consumption was made before that day.
Now, the case I want to put to the minister is this: What about goods in transit,
ordered in good faith, on a firm contract on a duty free basis laid down in Canada prior to the budget? It seems to me that some consideration at least should be given to importers who find themselves in this position. These machines cost a lot of money, they are usually sold at a laid down price at the point where the contractor takes delivery, that is to say, duty paid in Canada. Are these dealers to be penalized?
Subtopic: DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISITER OF FINANCE