December 6, 1940

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

They are included. There is no exclusion of lumber companies, or any kind of company for that matter.

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I am

just calling the minister's attention to that.

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Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I am anxious to get ahead, but let me say a word in respect to what the leader of the opposition says about taxation of companies. I am interested in hearing him take that stand, because hon. members cannot take two different stands-I am not talking about the hon. gentleman particularly. The feeling of this house last year certainly was that business interests were not to be allowed to use the war or the war period as a means of making profits in excess of ordinary normal profits. Now a doctrine has arisen-it may be a good one; I am not prepared to condemn it now. but it is certainly contrary to the former one. We find it in the financial press; to-day we hear it from the lips of the leader of the opposition. The sentiments he now expresses are very different from his stand last spring, when he was in favour of taking away from these companies all the excess profits that they earned during the war. If we are going to do that we cannot put them in a position to build up reserves against undefined losses in the future.

With regard to inventory reserves, the hon. gentleman referred to the probability that their inventories would suddenly drop in value at the end of the war. That was the experience at the end of the last war, and for that reason we embodied in the Excess Profits Tax Act a section providing, within certain carefully thought-out and defined limits, for inventory reserves. I do not see how we can possibly provide for general reserves against loss of profits due to some undefined circumstances that may arise in the post-war period. That would be equivalent to enabling them to prosper during the war, something to which the house was certainly opposed last session and to which I think it is still opposed.

There may be some middle ground. I pleaded for moderation last spring in this house; I said that in view of the fact that a great deal of our capital in this country had come from outside, and that a great many of our own people would do better if some profit incentive were left, I pleaded for moderation in this regard, and we were confronted by our friends of the Cooperative Commonwealth Federation who said. "No, take it all away from them." And my hon. friend, and many of the members of his party, joined them. What has happened is exactly what I expected would happen. I knew that at every session we would have more and more members who, having in mind the experience of certain companies, perhaps companies in their own districts, would say, "Be a little easier on those

War Exchange Conservation Act

companies." Now, I am prepared to listen to all requests of companies, but I am not prepared to abandon the principle we laid down at the beginning, namely that companies during this war period shall not be allowed to strengthen or buttress their positions, or to build up reserves and make themselves prosperous, thinking that later there may be a loss of prosperity.

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

The minister made one very interesting admission, if I may say so, during the course of his remarks, namely, that the incentive which must be provided for industrial expansion is some additional profit. I want to draw the attention of the committee to that statement. We are appealing to our people to make sacrifices in a war period, yet the minister tells us that the government cannot take excess profits to the extent I believe they ought to be taken, because if that were done we should be providing no further incentive. Therefore the required incentive must be the incentive of profit, for that is what makes the wheels of industry go round.

In order perhaps to provide a little balance, the leader of the opposition having spoken as he did, I would say that we disagree with the point of view he has expressed. We object, too, to the powers given to the government under this proposal, whereby they may interfere with the excess profits tax. The house agreed this summer-members of this group dissenting-that the profits over and above the base period should be taxed at the rate of seventy-five per cent of the excess profit. That still left twenty-five per cent of the excess to the company.

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Just to keep the record

straight: That, combined with the Income War Tax Act, left only 20-5 per cent. The combination of the two amounted to 79-5 per cent.

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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

I am dealing with the excess profits tax, and the minister is bringing in some other tax. But we have left the companies with 20-5 per cent of the excess profits after excess and other taxes have been paid, an amount which, to my mind, is a considerable increase over what they had before.

I repeat now what we said in the summer, namely that to my mind the base is not equitable for the imposition of that tax. If we examine the records of some companies we shall find they made profits in 1939 as high as forty per cent, and their average would be around that for several years before. I would refer at this time to companies such as the Consolidated Mining and Smelting company, or Canadian Industries Limited.

Yet the proposal is that these plants shall be allowed to retain, if the government so permits, a percentage of the excess profits larger than that now allowed. I wish to register a most emphatic protest against the adoption of such a policy.

At the present time the gold mining industry is relieved from several forms of taxation. The ground given is that we require the gold. Of course, under existing circumstances, we require the gold in order that we may obtain the necessary dollar exchange in the United States. But in my opinion the necessities of this country, arising out of war effort, ought not to be the excuse for allowing corporations to escape taxation.

The other evening the minister said that the group to which I belong want to take over and to socialize all industry. That is not so.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Pretty

nearly.

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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

No, it is not. We would take over at this time the industries essential to the carrying out of our war effort. We would take over the munitions industry, and if necessary the mining industry, and any others-

Topic:   WAYS AND MEANS
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

And the banks.

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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

-essential to our war effort.

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LIB

Édouard Lacroix

Liberal

Mr. LACROIX (Beauce):

And the paper industry?

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Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. COLDWELL:

At the present time that industry is not essential to our war effort. I believe that by progressive steps this nation, and other nations too, will take out of private hands and operate for the good of the community those industries which to-day are private, profit-making monopolies. Indeed, as I have often said, and as I shall repeat this afternoon, we believe that more people should own more property and that a few people should own a great deal less property than they now own. That is the basis of our plea. Whether we like it or not, it is coming, and coming fast.

One of the factors which will bring this condition about more quickly than any other is the type of class legislation implied in this particular item. I protest against it on behalf of the group with which I am associated. I protest, because I believe when we are calling upon our men to relinquish their homes, their jobs and everything else, we have the right to ask these industries to do without the profit motive or profit incentive.

War Exchange Conservation Act

Last night the minister gave the hon. member for Weyburn something in the nature of a verbal castigation because that hon. member had suggested that there were people in the country who were looking for profits and who ought to be controlled. Now we find, on the minister's own statement, that there are industries in Canada that we cannot expect to operate unless they show increased profits during war time.

Topic:   WAYS AND MEANS
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

No, that is not a fair statement.

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Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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?

Thomas Miller Bell

Mr. COLD WELL:

Yes, it is a fair statement; and if the leader of the opposition and the minister will read Hansard to-morrow they will find that that is the effect of the statement made in committee this afternoon- namely, that they want a further incentive.

Let me proceed to the next thought in that connection. We are told that we must put those industries in a position whereby they may give after-war employment. But our experience in the past has been that there was no employment unless industry could see a profit.

Topic:   WAYS AND MEANS
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

That is not right.

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Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

That certainly is not

right.

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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?

Thomas Miller Bell

Mr. COLD WELL:

It is true.

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Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Half the paper companies in Canada-

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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?

Thomas Miller Bell

Mr. COLD WELL:

I have the floor.

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Then may I ask a question?

Topic:   WAYS AND MEANS
Subtopic:   WAR EXCHANGE CONSERVATION ACT, 1940
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December 6, 1940