The creation of atmosphere is, I believe, the name of that particular method. At any rate, it was well done, except that if one thought, as one
listened to the hon. member, it became apparent that it was not being so well done. Sometimes one can so lull one's audience that they will not think, and clearly that was the design of last night's performance. This was what struck me, for instance. The hon. gentleman dealt with the cases respectively of a bachelor and a married man, in the $3,000 bracket. He pointed out that the bachelor was taxed $1,064 and the married man $884, and that the difference for the purpose of supporting a wife was $180. He brought it out that what the government evidently intended was that a man should support his wife on. $180, the difference between the tax imposed upon the married man and the tax imposed upon the bachelor. That amounts to 49 cents a day, as the hon. member feelingly pointed out, to keep a wife and supply her with everything she requires. I felt that there was something wrong with these figures. After reading the budget, after hearing the minister make his main speech on it, I knew that I was going to have a more difficult time in my life supporting a wife and two or three kids than I had had before. But, good Lord, I never thought it was quite as tough as that, that I had only 49 cents a day for her, and I could not help [DOT]thinking in consequence, when the hon. member for Parry Sound spoke, that the moment any member of his audience started to think, that hon. member and his argument were lost. He was all right as long as he had a completely thoughtless audience.
In the first place, the bachelor is not taxed $1,064, and in the second place the married man is not taxed $884. Those, of course, are the figures of gross taxation. The married man with two children, he went on to say, is taxed $668, which means that all he is allowed is $396 a year to support his wife and these two children, which is $132 for each of them, and he went on to tell us just what could be purchased with the $132. As I recall, he got it down to the point where it was very doubtful if they could be brought up in the manner in which the Scotch are said to have brought up their children, on porridge and the shorter catechism. Even that was not possible. He did not put it this way, but I felt when he was speaking that he was telling us that we should have to stop giving them even the porridge, and that they would have to get along on the shorter catechism. The shorter catechism is excellent for the intellect, but it does not help the stomach.
The facts of the matter are these. The single man may pay $1,064, but he may pay only $824. If he has life insurance it is easily possible that the man with a salary of
Income War Tax Act
$3,000 a year would be paying $240 in life insurance, whereupon he would not be paying the sum of money which the hon. member for Parry Sound mentioned. Again, in the case of the married man, he would not pay the sum of money mentioned, $884, but $584. The hon. member made no remark about that at all. Obviously, as it seemed to me once I began to think, he was relying on the thoughtlessness of those to whom he was speaking, or possibly relying-I hope this is not true-on the thoughtlessness of people outside this house to whom the doctrine would be retailed.
Take the case of the married man with or without two children. It is altogether probable that a man on a $3,000 salary is putting away by mortgage payments on his home, or by premiums on insurance policies, the sum of $25 a month, and he is therefore not paying the amount of taxation which has been mentioned, namely, $884, but he is probably paying a tax of $584. The same remarks apply to the married man with two children, with the exception that the figures are a little different. In his case the actual tax would be $668 gross; $334 is taxation, and $334 of it is savings, and if he has that amount of insurance premium or mortgage payments he will not have that taken from him by the government. This means that the man does not have to keep his wife on $180; it means that he keeps his wife and himself on $2,116. If he is already saving $240 he keeps himself and his wife on $2,176. He does not keep his wife on $180, as the hon. member suggested, and I do not know whether he had in mind any particular wife or particular man who would do that. He might, of course, have had his reasoning warped regarding some particular individual, but I can assure him that the generality of men who have $2,176 and a wife, use the $2,176 to support themselves with their wives-their wives with themselves-and they do not allow $180 for the wife and gobble up all the rest of the money, roughly $2,000 for themselves. I am sure the hon. member himself, if he were to find any man attempting to treat his wife in that fashion, would be the first to rush forward to support that wife in an application to the courts that she be given decent alimony. I am sure that if he were to support her in her claim for alimony she would get it in any court, and no court would say that the Minister of Finance had laid it down on behalf of the Canadian government that $180 was enough for a wife.
My only purpose in drawing particular attention to this sort of thing is this. I felt that when the member for Parry Sound goes as far astray as that himself, and endeavours
to lead all the rest of us equally astray on a matter of this sort, it indicates clearly, if he believes what he was saying, that he has what I might term an economic short-sightedness which completely disqualifies him for giving any evidence at all upon any economic question. Any man who, after reading the income tax resolutions that are before us and hearing the speeches, will come to the conclusion and pronounce the doctrine that they spell $180 to keep the wife of a man who has $3,000 a year, is obviously, in an economic sense, myopic. There can be no doubt about it. That of itself seems sufficient to wash out any argument that came after what the hon. member for Parry Sound said in that regard. I think the minister made it quite clear last night that the proposals which the hon. member made are inflationary. You have the hon. member saying that they are not. You can look at the other judgments of the hon. member and estimate him as an economic expert in the light of the sort of discussion that 1 have detailed to-night, and take your choice between him and the Minister of Finance as to whether the scheme that he proposes is inflationary. I am convinced that it is.
The hon. member was relying a very great deal upon our control system. I confess that I had some doubts as to whether we could control prices in this country, even before I heard the testimony, given later, of the Minister of Finance. I have always had difficulty in believing that we can, over a long time, hold down prices by any form of control. I fancy we shall be able to do it for about as long as this war lasts. Of course I do not know how long the war will last, but I do not believe you could hold down prices by a control system for a ten-year period. We may succeed in holding them down fairly well during the war only because there is a war, for if it were not for the war we would not submit to these controls; no democratic people would. But I call attention to Italy with all its control. They have a great deal more control in these totalitarian countries than we have. They do not have all the bother of parliament and that sort of thing. They do not have any expressions of opinion, which are always bothersome to any government. We have not got them blockaded as well as we would like. I have some figures before me- I can give authority to anyone who wants it -showing some of the difficulty Italy is experiencing. The price index of some goods purchased by the farmer is in my hand. It would appear that the farmer in Italy has to purchase a great deal of fertilizer and insecticides. The prices for 1929 apparently are taken as the base. Last year the index figure
Income War Tax Act
for those articles was 137-4. This year it is 194-7, or a difference of nearly 60 points. I am not very good at mental arithmetic, but that represents a very high percentage of increase. Seed, which is of course highly important to the farmer, cost last year 163-1, but this year has risen to 192-4. Fodder is an article on which the agriculturist of Italy is best off apparently; the price has risen only about five points, from 135-4 last year to 140-2 this year. On agricultural machinery, something about which we of the west have heard quite a bit in this house, last year the price was 246-4 and this year it has become 287-2. Various industrial goods have risen from 222 to 279.
With all the controls they have in that totalitarian country their experience is that prices have gone up in the manner I have indicated with regard to certain basic goods. That in turn is bound-you cannot stop it- to bring about higher prices for other goods, even with all their controls. We can do a great deal with controls, but I am convinced that we cannot permanently or for any long time keep down prices even under the best of circumstances. Italy is a country in which every circumstance is favourable to keeping down prices, yet I imagine those increases will total up to an average of 30 per cent on certain basic articles, which increases will, in turn, affect a great many other articles within a very short time.
I gather that Germany is having somewhat similar difficulties in spite of all her controls. There they are apparently fearing inflation. They are struggling their utmost to keep it down. I hope they fail; we all hope for that. My point at the moment is that they are having trouble. It takes this form. When they hold down prices, people just will not put the primary products on the market, and even with their controls they cannot force people to do so. Last year some 14,000 tons of cherry harvest came on the market as against 60,000 tons the year before. Only 46 per cent of the strawberry crop reaches the market. They have had a new decree recently trying to force these things on the market and have now named minimum quotas in respect of apples.
These totalitarian countries are having all that kind of trouble. Surely, then, we must realize that we cannot rely entirely on controls in this country to keep down inflation. This is no time to try any kind of a "perhaps" scheme in this country. We can keep down inflation only if all things are favourable. We would be mad deliberately to put into operation in this country any kind of scheme as to the inflationary effect of which there is
any doubt. It is all very well for a minority to believe it is not inflationary; they may be right although I am convinced they are wrong, but that does not settle the question.
I wish now to turn to something quite different, chiefly for the purpose of asking a question. I want to ascertain just what the situation is with respect to these compulsory savings. As I recollect, money paid upon a mortgage obviates the need of taking the money from the taxpayer to be refunded to him after the war; that is, payments on capital, not interest. I am concerned to make sure that the instrument which is much in use in western Canada, which operates substantially as a mortgage, namely the agreement of sale, is included in that provision. I know it is not in the wording, but I would draw attention to the desirability of that being done.
I would also call attention to the desirability of not fixing a rigid date for the mortgage, agreement of sale or similar instrument in regard to registration. I think the way in which the minister put this particular doctrine was something like this, that instruments which were registered as of a certain date would be considered. I suggest to him that there might be some revision in that connection, and I will explain the circumstances of certain cases which lead me to make this suggestion. We very often have mortgages arranged for the purpose of building houses. We have not been doing quite so much during the last few months under the housing act, though for a while building in Winnipeg was comparatively brisk under the provisions of that legislation. However, we always do have' a certain amount of mortgage building. I know of several instances of people who have proceeded to arrange for the construction of houses, who have made arrangements for their mortgages and who are relying on progress payments from the mortgage company. Those people have everything arranged, but the mortgages may not yet be registered. Of course they will be registered before the mortgage company will give them any progress payments, but they have gone ahead with their building plans, having made all their mortgage arrangements. People like those are probably in the position now of having to pay something like $40 or $50 a month on their mortgages; yet if you insist on a certain date for the registration of those mortgages, those people simply will not be able to pay the mortgage and the income tax, and I do not know which they would let go. Therefore I think it would be well to take that situation into consideration. I am not suggesting that the date should be changed. I am suggesting that the government should
Income War Tax Act
accept evidence to prove the existence of a condition such as I have described as of that particular date. Accept some evidence that the condition existed, in addition to the evidence that you are already willing to take, namely the registration of the mortgage itself.
Subtopic: INCOME WAR TAX ACT