June 3, 1941

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

-while away from home in pursuit of a trade or business, shall be permitted as deductions. But of course it is a principle that should not apply generally. It could not, for example, be applied to a person who is working at home. He has lodging and living expenses, but it would never do to permit him to deduct those from income for income tax purposes, because the income tax is upon the income which he receives for the purpose, among other things, of meeting his living expenses. As I say, it is hard to know where to draw the line. It has always been the law since the inception of the income war tax act that sessional indemnities are income and taxable as income, and that no deduction is allowed for the cost of meals and room in Ottawa any more than deduction in respect of living expenses is allowed for the great mass of the population of the country.

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IND
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Travelling expenses are pretty well provided for by statute. The statute provides a fairly generous allowance for travelling expenses, at least for one trip here and one trip back.

Whatever the abstract or theoretical rights in the controversy may be, it would be thoroughly impracticable for us and undesirable to make any change of this kind at the present time or under existing conditions.

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NAT

Joseph Leonard O'Brien

National Government

Mr. OBRIEN:

I should like to refer to a paragraph of a letter I received from an official of the national revenue department dated July 29, 1940, when I asked a question last year for information. He says:

As the elected representative of the people in the constituency of Northumberland, New Brunswick, you receive an "indemnity" which is paid by the dominion government. Under the definition of "employee" referred to above you are therefore an employee of the dominion government and as such you personally should file two copies of form N.D.T.l with the representative of the treasury, House of Commons, Ottawa, so that the proper amount of national defence tax may be deducted from the moneys payable to you.

Therefore there seems to be a difference of opinion between the Minister of Finance and the Department of National Revenue.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

From whom did the letter

come? Is it the local office?

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NAT
NAT
IND

Alan Webster Neill

Independent

Mr. NEILL:

The Minister of Finance has taken a very narrow view of the argument I used, in confining it to meals and hotel. There are other expenses such as I enumerated, the cost of a stenographer and so forth; and as regards travelling he has surely forgotten the days before he was a cabinet minister when he talks about the expenses being fully or even reasonably met by the allowance to come to Ottawa once a year. I suppose my travelling expenses in covering my district throughout the year will reach $300 or $400, apart from coming to Ottawa, and surely he would not say that is amply provided for. That is hardly the position.

As regards all other income, you pay on your net income, not the gross. You are allowed to take off the cost of obtaining the income, and part of the cost of obtaining this income, or wage if you choose to put it on that low plane, is what I have spoken of.

Running all through the argument of the Minister of Finance on these bills, and apparently a prominent consideration in the minds of his advisers seems to be the trouble of administration. If it is easy to administer, slam it on; if it involves a little trouble, avoid it. .

British Columbia finds a way of dealing with this. For many years they put a flat rate on; they used to allow us $2,000 a year in recognition of the cost of being a member of the dominion parliament, and then we paid income tax in the province on the remaining $2,000. They have since reduced that to $1,000, and now it will disappear altogether. A flat rate is a simple way of doing it, and it would be a recognition of the situation. I remember hearing Mr. Bennett say in this house that he paid his income tax gladly. I would hardly go so far as that. I pay it willingly, but I do not like paying income tax on something which is not income. I believe we should pay on net instead of on gross remuneration.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I can

hardly go as far as the hon. member for Comox-Alberni. I do not think I should ask the government to allow a deduction for the food I eat; but certainly there is a principle involved in connection with the indemnity of a member of parliament. Certainly he has to incur out of pocket expenditures that he would not incur if he were not a member of parliament. I am not going to labour the point; the hon. member has made out a good case and the minister has recognized that there is something in it, so that perhaps before another session something may be done.

fMr O'Brien.]

At the risk of incurring the indignation of hon. members who want to get this bill through I want to return for a moment to the other point. I object to being classed as an employee. It is true that under a technical construction of this act we are not declared expressly to be employees and therefore with earned income, but we are put in the same category, and that is not the theory of representative government in Canada. I suggest to the minister that we let it go for this year, but that between now and next session he give consideration to a recognition of the true position of a member of parliament, that he is here as a representative of the people under constitutional authority. He gets an indemnity against the loss that he sustains by coming here, and for other things of the kind; and we might be taxed by way of deduction from that indemnity just the same as the judges were taxed in 1931. Some of them, though not many, took the view that there was a contract in connection with their appointment and that therefore they should not be required to pay income tax. Parliament said, "All right; we will recognize the principle of that position, but we are going to deduct from the salary paid you by the crown 10 per cent as a contribution to the state." That was in a time of economic warfare. I am not sure just what the position is with respect to judges to-day; I have not looked it up, but I think there is some tax on them.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

They are subject to the payment of income tax.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

On the theory that it is a salary to an employee?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The difficulty in connection with judges, under Mr. Bennett, was this. Mr. Bennett objected to reducing their salaries because he felt they should not be subject to reduction, and he held the same view with regard to the salaries of officers and men in the armed forces. There was much to be said for that view, but on the other hand it appeared unfair to reduce the salaries of civil servants and the indemnities of members of parliament by 10 per cent, as was done, and at the same time leave the judges and those in the armed forces untouched. The constitutional position, or something akin to it, was preserved by another plan. A tax of 10 per cent was imposed on the salaries of judges and those in the armed forces, so that it could be said that their salaries having been given them for life, and the independence of the judiciary being extremely important, their salaries had not been reduced, but they were being asked to pay a tax.

Income War Tax Act

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IND

Alan Webster Neill

Independent

Mr. NEILL:

In view of the statement of the minister that he cannot see his way clear to consider the point I have raised, I would ask whether he would be in favour of withdrawing the allowance of $2,000 a year given each cabinet minister in lieu of an automobile?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I do not think that is relevant to this discussion.

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IND

Alan Webster Neill

Independent

Mr. NEILL:

I think it is highly relevant and clearly a case in point, involving your car versus my car.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

It may not be quite relevant, but this matter crops up from time to time and we might as well face the situation first as last. What was the position? Prior to the institution of this grant of $2,000 a year to cabinet ministers and the leader of the opposition, ministers of the crown were supplied free of charge with luxurious motor cars, and all kinds of expenses were incurred until it was felt that the cost to the country was exorbitant. The hon. member for Comox-Alberni says it was a scandal. Perhaps that is too broad a term to use generally, but I do think perhaps it approximates the position in certain instances.

Because of that fact it was determined to set up a new position. It was recognized that cabinet ministers and the leader of the opposition of the day-my right hon. friend the Prime Minister occupying that position at the time-should not be supplied at the public expense with a new motor car every year or every second year, with chauffeurs paid by the government, gasoline and oil bought by the government and all that sort of thing, but that they should be given a lump sum in lieu of the amount which had been expended in this way prior to that time. That was done, and I am satisfied that a decided saving to the treasury resulted.

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LIB
NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I am sure there was a decided saving to the treasury, and the minister agrees with me.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I have always understood there was a saving.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

I have no doubt about it. It would take quite a lot of trouble to demonstrate it mathematically, but I am quite sure it could be done. I recall the instance of a Speaker of this house who got practically a new car by way of repairs, and it was charged up to the government. I am not going to go beyond that, but that sort of thing did develop in isolated cases. I would not have anyone think I believe it was general, but in some instances it did develop into something approaching a scandal.

What is the position to-day? Cabinet ministers and the leader of the opposition are voted by statute the sum of $166.66 per month in lieu of a motor car. What does that mean? If you have not a motor car it means that you absorb it into your general income, which I do not think is right. But if you have a motor car; if you keep a chauffeur; if, as in my position, you have to rent a garage or garage space, you have nothing left. I have kept an account of this thing, and I know that I am distinctly out of pocket. If I did not receive this allowance I would not maintain a car in Ottawa, and I think I would be better off. Then when I went home I would drive my own car, as other people do. Let us be fair about this thing. This is intended to expedite the business of cabinet ministers and the leader of the opposition, and to do away with a position which to say the least was not satisfactory. If it is the desire of the House of Commons in war time that this allowance should not be made, I should be very glad to hear it. Then I would at once dispense with the services of my chauffeur and send my car home.

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June 3, 1941