July 23, 1940

SPECIAL WAR REVENUE ACT


Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of Bill 103, to 'amend the Special War Revenue Act. Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Vien in the chair. On section 1-Taxes on matches.


NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

What

revenue is derived to-day from this tax, and what increase is expected?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The revenue for the fiscal year 1939-40 was $2,040,726.55. It is expected that the increased tax will provide an additional $500,000 revenue in a full year.

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Section agreed to. Section 2 agreed to. On section 3-Excise tax on cigarette paper tubes made in or imported into Canada.


NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

The increase here is very large. What is the revenue now, and what increased revenue is expected?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The revenue for 1939-40 on paper tubes was $1,877,985.27. It is expected that the revenue will be increased by this change to about $4,500,000.

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Section agreed to. Sections 4 and 5 agreed to. On section 6-By whom and when tax is payable. Mr. HANSON (York-Sunbury) According to the press, the minister has had written representations made to him with respect to the tax on the higher priced cars. What is the reaction of the department?


LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The automobile dealers,

through their associations, have made two sets of representations. They have really made more than that, but their representations have pretty well crystallized into two sets. One class of representations is that there should be no tax on the cars in dealers' hands.

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NAT
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is a minor thing.

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NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

They seemed to consider it a big thing yesterday.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The representations that I

have received have been, generally speaking, under the heading that there should be no tax on cars in dealers' hands. This section is very much more lenient towards the dealers in any but the lowest priced cars than the original budget provision, which imposed high rates on the cars in the dealers' hands. Consideration was given to the question whether there should be some amelioration of these burdens, and it was decided that this was as far as the government ought to go, and that it was substantially just that there should be a flat rate of ten per cent on all cars whether high or low priced, in the dealers' hands.

The reason for making a concession to dealers in the higher priced cars is that undoubtedly the very high taxes imposed on the higher priced cars provided for in the budget will hurt the sale of these cars very much. Moreover, in the future the taxes will reduce the business done by the dealers in high priced cars to a very low ebb, and in some cases practically to the vanishing point. It was therefore thought that the dealers in the higher priced cars should be given this degree of consideration, although the budget by imposing these taxes really in one sense adds very considerably to the value of the high priced cars in the dealers' hands.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

In a

very limited sense, I suggest.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Not so very limited. There will be a market for high priced cars.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

A very

narrow one.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It was thought in view of

the considerations I have indicated that the tax should be reduced to a flat ten per cent.

Special War Revenue Act

The other class of representations is that the highest rates are entirely too high; that we should not move at all into these high rates of taxation such as 80 per cent of the excess over $1,200, and that we should be more considerate of the automobile business. To these our answer has been and must be that while this is serious taxation and will have a serious effect upon the dealers in high priced cars, the emergency is a grave emergency, and we are being asked to place our taxes on luxuries, particularly imported luxuries, for the purpose of conserving exchange. Members from all parts of the house have urged us to do that instead of imposing some of the taxation that we have imposed. At the present time there cannot be very much excuse for encouraging the use of high-priced cars, particularly imported cars, by the people of this country.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I agree

with a good deal of what the minister has said, but there is a law of diminishing returns and I am afraid that he may not get any revenue at all. The market for high priced cars even in good times is a narrow one, and this new taxation will wipe it out altogether, I should think, especially in the smaller communities. The minister I presume has given consideration to the effect this taxation will have on the fortunes of a substantial element of our community. It is going to put a lot of them out of business. They are even now reduced to the status of second-hand dealers. That is the effect of this legislation.

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NAT

Howard Charles Green

National Government

Mr. GREEN:

The minister mentioned

something about cars in transit. Apparently recommendations have, been made to him along that line also. I know that in British Columbia it is a serious matter for dealers who have cars on order and in transit, and I would suggest that they also be taxed at the rate of ten per cent where it can be shown that the cars were actually in transit at the time the budget provision was brought down. The more distant parts of the country, those furthest removed from manufacturing plants, are entitled to receive that consideration.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I do not like to reopen this whole question if it is not necessary. A great deal of time was devoted to it when we were in committee of ways and means. I went over the law that applies and dealt with representations such as these just as fully as I was able to do at that time, and I have not anything to add now to what I said then.

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July 23, 1940