July 21, 1942

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It is very small. I think there are onfy two which have been brought to my attention. I believe there are arrears due from one of them and they never knew they were taxed. We shall have to collect the arrears, but I do not think it makes much difference.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

The total premium income of two small parish companies would not be very much.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

They might not be so small. I do not know just what it is, but my impression is that it is not a very serious matter.

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CON

Norman James Macdonald Lockhart

Conservative (1867-1942)

Mr. LOCKHART:

Does that enable the setting up of new companies which may be relieved too?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Yes, if there are mutuals formed, 100 per cent of whose business is the insuring of these institutions there will be no tax on their premiums.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

What steps do you take to ascertain that it is a 100 per cent, that their operations are limited to this business? Is there any inspection? Does the superintendent of insurance make any examination of their books?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

He has to ascertain the facts in some way or other.

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CON

Mark Cecil Senn

Conservative (1867-1942)

Mr. SENN:

Do I understand that there is no tax on farmers' mutual fire insurance

companies?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

There is none if 50 per cent of their business is the insurance of farm property. That exception was inserted some years ago, at the instance of the late Mr. Cayley, who was the member for one of the Oxfords. He pressed very strongly that farm mutuals be relieved, and they were relieved.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

And that is maintained here?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It is maintained here, yes.

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Section agreed to. Sections 3 and 4 agreed to. On section 5-Tax on certain insurance companies upon net premiums.


CON

John George Diefenbaker

Conservative (1867-1942)

Mr. DIEFENBAKER:

Why is it that, for instance, Lloyd's are required to pay 3 per cent tax and other companies in the Domin-

Customs Tariff

on raw leaf tobacco there was an advantage of 25 cents a pound to the producers of that commodity, that being the amount of the duty on manufactured tobacco when there was no duty on the raw leaf. It became necessary to raise the duty on manufactured tobacco to 35 cents a pound, and it was felt necessary to maintain the old relativity by imposing a duty of 10 cents a pound on raw leaf tobacco. This still left a spread of 25 cents a pound. In this budget we are increasing the duty on manufactured tobacco to 51 cents a pound, and have increased the duty on raw leaf tobacco by 10 cents a pound. This increases the spread between manufactured and raw leaf tobacco to 31 cents a pound. It would give a great competitive advantage to raw leaf tobacco if we left the preference in favour of that commodity at 41 cents a pound, which is what the hon. member is advocating.

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LIB
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It is what we call an excise duty. The difference between an excise duty and an excise tax is that the duty is payable before the goods are released. While the committee may not be interested in the outlays of the manufacturing companies, it must be remembered that their initial outlay is simply enormous. We have had strong representations against our adopting the duty principle in regard to the manufacturers, because it forces them to have many millions of dollars tied up for substantial periods. They must pay the money to the government before they can sell, before their product can be released, and their money is tied up for months, sometimes for longer periods. I am afraid that it would be a violation of the principle applicable to competitive business if we left too great a spread between the tax on raw leaf and the tax on manufactured tobacco. Raw leaf tobacco is a competitive product because people put it in their pipes to smoke. We did not think we could go any further in increasing the spread.

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LIB
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

There is a heavy duty on

importations.

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LIB
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The hon. member was not

complaining about imported tobacco. I think there is sufficient protection against that. He was referring to the heavy outlay which the small man has to make to put himself into a position to sell.

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LIB

John Power Howden

Liberal

Mr. HOWDEN:

I gathered that the

farmers get only about 10 cents a pound for

their tobacco, and if this tax is going to run it up to 20 cents, it would seem to be a poorpaying proposition for them.

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July 21, 1942