July 16, 1942

LIB

Ralph Maybank

Liberal

Mr. MAYBANK:

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

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$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

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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

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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.

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PC

Alfred Henry Bence

Progressive Conservative

Mr. BENCE:

Would the execution date not be the correct date?

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LIB

Ralph Maybank

Liberal

Mr. MAYBANK:

The execution date of any document which established the existence of that condition; that is, the fact that the man committed himself, or any evidence which would definitely show that a man had entered into an arrangement such as I have described.

There is only one other point I should like to mention, and that is a minor matter with regard to insurance premiums. Take the case of a man whose insurance falls due in March. A great many men do not pay promptly, nor do they arrange any loans to take care of the premium. They just let it run for two or three months. Almost always their policies contain extended insurance clauses, or whatever they may be called, under which the policies carry on automatically. Then let us say that in June the individual makes the payment that was due in March. His receipt will not show that he paid the premium; it will show that he repaid a loan. If a man repays a loan on his policy, I do not know whether it is intended that this shall be treated as though it were a refundable payment. If it is, all right; but if it is not, I wish to draw to the minister's attention the fact that many people pay their premiums a little late. They do not make any arrangement for loans when the premiums fall due; they just let it ride, knowing the policies to be all right by reason of the deferred payment provisions. But when they pay the premium they do not get a receipt showing payment of the premium itself; the receipt shows repayment of a loan, because automatically, in the bookkeeping of the company, when the premium was not paid on the due date it became a loan, though no special action was taken by the policyholder to obtain that loan. I submit that in such instances these payments should be treated as payments of premiums, which would relieve the individual of the payment of tax on that portion of the refundable deposit.

I think these are the only questions I had in mind. I thought it well to place these various matters on record at the one time rather than speak three or four times during this discussion.

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CCF

Joseph William Noseworthy

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

Mr. NOSEWORTHY:

Mr. Chairman, when I was called out of bed by a newspaper man at one o'clock on the morning following the

introduction of the budget, I unwittingly made the remark that this budget came as close to being a Cooperative Commonwealth Federation budget as anything we could expect from a Liberal government. I think I must have been still asleep when I made that statement, for nothing I have said since coming to Ottawa has brought me so much grief. However, since then I have had an opportunity over two week-ends of discussing the budget with a considerable number of people, with a wide range of incomes, and I am still satisfied that there are several very commendable features in this budget. I am amazed at the spirit of cooperation and stoicism with which the people to whom I have spoken accept this budget. I have heard complaints from very few. Those with whom I have discussed the budget have taken the attitude that we are in this war, that we must win it at any cost, and that we are fortunate if these are the greatest demands that are to be made of us in order to win the war.

I want to commend the minister for the compulsory saving feature, which I think has met with general approbation throughout the country, particularly in view of the deductions which are made possible. There are one or two matters on which, if possible, I would like the minister to give the committee some information. In connection with the deduction that is allowed in regard to repayments of principal under mortgages, it has been called to my attention that a great many people had entered into agreements prior to the date fixed in the regulations, but that these mortgages were not officially registered. I have been asked whether payments made on such mortgages may be deducted. In connection with the returnable portion, or the compulsory saving feature, I have been asked when the deductions that are to be made with regard to insurance, superannuation and so forth, are to be collected. The general impression seems to be that one-third of those amounts will be collected at the source. I have had letters from people complaining that if this portion of their savings is deducted at the source, they are going to be placed in financial difficulties, so that they will be unable to meet their payments. I think there has been a great deal of public confusion over this point, and a public statement should be made at once.

I want to compliment the minister upon fixing a maximum for the returnable compulsory savings part of the tax. I think that maximum might very well have been fixed at $500 instead of $1,000. According to my calculation, a man will need to be in the position of having an income of $10,000 a year before

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he will make that maximum contribution of $1,000. I think the maximum might well have been made $500 instead of $1,000.

I have received some complaint from married men with families. This budget has already been called a bachelor's budget. I have thought of it as being uneugenic. Some nights ago the Minister of Finance spoke of the incentive that is required by industrialists to maintain production. I fail to see any incentive in this budget to encourage the production and raising of children. When you consider that according to the Labour Gazette the index of wage rates since 1939 has moved up from 105-3 to 118-9, or 13-6 points, which figures out at 12-9 per cent, and that the cost of living according to the same records has risen 15-2 per cent; and when you consider further that wages have been frozen at a level which gives wages a lower increase than the increase in the cost of living-

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Those are wage rates, not total wages.

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?

Hugh Boulton Morphy

Mr. NOSE WORTHY:

According to the

information in the Labour Gazette for May, 1942, at page 633, these wage rates include the cost of living bonus.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is right, but they are still wage rates. That does not take into account the larger number of hours which they have the opportunity to work.

Mr. NOSEWORTHY': The wage rates

including the cost of living bonus had risen 12-9 per cent since 1939 as against an increase of 15-2 per cent in the cost of living. When you consider that wages have been frozen at that level and take into account certain other features of this budget, you will see what I mean by the lack of any incentive to raise families.

There are two features of this budget to which I would call the minister's attention and which, I presume, he may have studied already. One is-this may have been intentional on the part of the minister, and it may be good from the point of view of eugenics and from his point of view; I do not know- that there is much more incentive given to the man in the higher-salaried brackets to raise children than there is to the man in the lower-salaried brackets. If you take the difference between what is left to the married man with two children and what is left to the single man, both with the same income, you will find that the married man with two children has, on an income of $1,250, a margin over the single man of $235; on $1,500, a margin of $308; on $1,750, a margin of $366; on $2,000, $386; on $4,000, $446; on $7,500,

$516; on $20,000, $766; and if by any chance a man has an income of $1,000,000, a married man with two children has a margin of $10,000 over the single man. In other words, the lower the married man's income, the smaller the difference between what is left to him after his tax has been paid and what is left to the single man.

There is one other feature which I think is worthy of consideration. We have often heard it said that the thing that matters in taxation is the amount that the man has left after the tax has been taken, but I think it is important that we consider the effect of this taxation upon the income left as compared with the income left after the tax had been levied in the previous year. In other words, it is interesting to note just how much of an adjustment an individual will have to make in his. standard of living as compared with last year by reason of this budget. A man receiving $1,500 a year 'or $30 a week, taking into account the returnable portion of the taxes, will have to step down his scale of living by one per cent from his scale of living of last year. A married man with two children receiving an income of $1,750 will have to adjust his standard of living by 3-3; with an income of $2,000, he will have to scale down his standard of living by 8 per cent, and with an income of $2,500 he will have to scale it down by 13-4 per cent. That appears to me to make a considerable demand for adjustment in one's standard of living.

Those are features to which I think the minister might give consideration. I hope that he will let us know whether he has already considered the effect of the budget in that regard and the income taxation increases on the married man with two children or more.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

I had not intended to take part in the debate to-day, but in view of what was said by the hon. member for Winnipeg South Centre (Mr. Maybank), I feel I should say a few words. The bulk of his time before the committee was occupied in a personal tirade, in personal abuse of myself, in delicately veiled sarcasm. I know that at this stage of the session the committee is not interested in any individual's mode of attack, particularly when I suggest that _ in nothing I said did I use any personalities. Apparently the hon. member for Winnipeg South Centre had to base his case against me on the grounds, as he said, that there are those who are always so spoiling for a fight that they will turn round and hit anybody at any time. Another choice morsel was, "he had the crowd under his spell". Then followed an expletive, "good Lord", with which he attempted to drive home his

Income War Tax Act

argument. I do not know what the practice is in the Winnipeg police court, but I do not think this is the time to introduce into this court, when you have a bad case, the practice of abusing counsel on the other side.

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NAT

John Ritchie MacNicol

National Government

Mr. MacNICOL:

We do not want police court stuff here at all.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

I hope the hon. member who just interrupted me will bear me out when I say that I did not conduct my share of this debate on any such grounds at all. I think it is a pity that hon. members cannot deal with the problem before us more fairly. My hon. friend undertook to make some reference to a man having insurance and so and so, but he did not answer at all what the hon. member who has just taken his seat emphasized, and he probably missed the point of my remarks, as far as a married man with children was concerned. Let me tell him that any ease that I attempted to make out for an alteration was based on the fact that there was discrimination against a married man with two children, having regard to the allowance that was made to him and the allowance made to the bachelor. Surely by this time that has been made pretty clear to everybody else, except the hon. member for Winnipeg South Centre. That is all there is in that criticism; there is nothing more.

We welcome the young Lochinvar from the west, but he should not occupy the time of the committee in abusing another hon. member, in slurring him in that manner. I do not propose to waste the time of the committee in answering such statements. I want to make reference to just one of his bons mots or arguments. I do not know where he got his information, but he took us over to Germany. From what he said I gathered that Germany is having some trouble in holding down prices, and, therefore, because German character, which we have surely found out by this time is filled with selfish trickery and evasion, is not such that they are willing to keep the laws of their country, he is indicating with all that defeatist attitude that the Canadian people are not prepared to keep the laws of Canada with regard to rationing and price control.

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LIB
LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

Of course they have. In any new law which is as drastic as this there will be some people who will be fined. But if there is another member with a defeatist attitude, as it would appear that there is, let me tell him that I have great faith in the courage, in the honour and in the desire of the

people of this country in the main to submit to every law that has been imposed upon them. I do not propose to succumb to any such argument as that which has been advanced, although there seem to 'be two members of this house who want to advance it. I do not believe we can assume that in the main the people of Canada are not cooperating and will not continue to cooperate in the effort to win this war in accordance with the restrictions that have been placed upon them. I think it is a silly attitude to take to suggest that in the main the people will not cooperate. My hon. friend interrupts to say that somebody has been prosecuted.

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LIB

William Henry Golding

Liberal

Mr. GOLDING:

The minister told us that last night.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

I heard him, and I heard

the hon. member speak now. Are you prepared to stand up and condemn the people in your riding? Has anybody in your riding been prosecuted? Nobody in my district has been prosecuted. I am not prepared to argue the wisdom or the lack of wisdom in the method by which we raise our money on the basis that we must assume that a black market will prevail, that the people of Canada are crooks and will be ready to disobey the laws of Canada in war time.

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LIB

William Henry Golding

Liberal

Mr. GOLDING:

That is about as sensible as your illustration was.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

My hon. friend is quite

glib with his condemnation of the sensibleness of my illustration, but I have not heard him venture any remarkable expositions as to why a bank with $5 in its strong box should be allowed to write up $100 in credit and take in a bond which will bear 3 per cent interest for twenty years.

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LIB

William Henry Golding

Liberal

Mr. GOLDING:

I have not been converted as you have.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

That is another glib remark. I really cannot get very far in discussing the real facts surrounding this matter if I have to reply to the smart-Aleck interjections that are thrown in in that way. A man will make a greater contribution if I am wrong by rising in his place and discussing the facts and showing wherein I am wrong. I had not intended to say anything until the new Moses appeared on the horizon to lead us out of the wilderness.

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LIB

William Henry Golding

Liberal

Mr. GOLDING:

You made a wonderful

contribution; you are getting better all the time.

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LIB

Arthur Graeme Slaght

Liberal

Mr. SLAGHT:

That sort of minstrel

show end-man business is played out in this House of Commons; it does not get us any-

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where; it is not an earnest attempt to contribute to the discussion of a very serious problem.

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July 16, 1942