June 16, 1944

ALCOHOLIC BEVERAGES

REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"

LIB

Colin William George Gibson (Minister of National Revenue)

Liberal

Hon. C. W. G. GIBSON (Minister of National Revenue):

Mr. Speaker, my attention has been drawn to the editorial in to-day's Globe and Mail entitled "An Unfair Basis." The editorial is the latest move in what appears to be an organized campaign of misrepresentation of the federal government's wartime alcoholic beverage order-

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

Are you charging that?

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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LIB

Colin William George Gibson (Minister of National Revenue)

Liberal

Mr. GIBSON:

-by representing that the federal government is responsible for the fact that the monthly ration of spirits, authorized in Ontario is thirteen ounces, and in Quebec eighty ounces.

No detailed reply to its allegations is required.

On June 5 I gave to this house a statement showing the exact quantities of liquor allocated to the provinces of Ontario and Quebec, and showed that there was a difference of only 1-2 per cent between the quantities available in those provinces. It was also shown that the quantity available for Ontario had permitted a ration in that province of 160 ounces a month on the basis of permits outstanding in January, 1943, but that the increase in the number of permits issued by the Ontario Liquor commission from 155,295 in January, 1943, to 1,282,938 in March, 1944, had necessitated a -reduction in the individual ration.

The federal government has nothing whatever to do with deciding what the ration shall be in each province. Each province is entitled to receive 70 per cent of the quantity of spirits released for sale in the year which ended October 31, 1942. In other words, each province receives exactly the same proportion of the quantity consumed in the base period.

While it is true that the per capita quantity of spirits available is very slightly higher in Quebec than in Ontario, the editorial entirely ignores the fact that the per capita quantity of beer available in Ontario is considerably higher than it is in Quebec. The unfair basis, in other worlds, proves to be the editorial itself.

I have also had my attention drawn to a cartoon entitled "Federal Dispensary" which appeared in the same newspaper on June 13, and which suggested the same idea. Under the circumstances, it can only be assumed that the editorial and the cartoon have been published with the deliberate intention of distorting the facts and misleading the public. The Globe and Mail cannot consider that it is assisting the war effort of this country by falsely representing that one province receives preferential treatment over another province, and it can only be assumed that its anxiety to obtain political advantage overrides its interest in our national welfare.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

Mr. Speaker, may I ask the minister a question with respect to the statement he has just made?

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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LIB

Ian Alistair Mackenzie (Minister of Pensions and National Health)

Liberal

Mr. MACKENZIE (Vancouver Centre):

This is on motions.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

Is the government going to take the position that I must not ask a question? Surely, Mr. Speaker, I have the right to do that. The government know they are wrong on this question and that is why they are so touchy about it.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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?

Some hon. MEMBERS:

Order.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

If I cannot make myself heard, I think Mr. Speaker will protect me, and this is not the first time that I have had to ask for his protection. Surely I have some rights in this house. I am going to ask the minister why there is a difference between the system of rationing liquor and the system of rationing other commodities throughout the dominion. That is the basis of this editorial, if I read it correctly. Why is there this difference?

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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LIB

Ian Alistair Mackenzie (Minister of Pensions and National Health)

Liberal

Mr. MACKENZIE (Vancouver Centre):

The minister has just told you.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

No, he did not, and he is not telling me now.

3876 , COMMONS

Canada-United, States Double Taxation

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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LIB

Colin William George Gibson (Minister of National Revenue)

Liberal

Mr. GIBSON:

The system of issuing permits is based on the amounts consumed in the base period.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

That

ignores the question entirely.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

For some reason or another there is a distinction made by this government between the rationing of liquor and the rationing of other commodities.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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LIB

Ian Alistair Mackenzie (Minister of Pensions and National Health)

Liberal

Mr. MACKENZIE (Vancouver Centre):

That is conceived by Tory minds.

Topic:   ALCOHOLIC BEVERAGES
Subtopic:   REFERENCE TO EDITORIAL AND CARTOON IN TORONTO "GLOBE AND MAIL"
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TREATIES AND CONVENTIONS

CANADA-UNITED STATES-AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION

LIB

Colin William George Gibson (Minister of National Revenue)

Liberal

Hon. C. W. G. GIBSON (Minister of -National Revenue):

Mr. Speaker, as was

announced by the Prime Minister (Mr. Mackenzie King) last week, a tax convention was signed at Ottawa on the 8th of June, 1944. between Canada and the United States of America having for its objects the avoidance of double taxation and the prevention of fiscal evasion in the case of estate taxes imposed by the United States and the succession duties imposed by the parliament of Canada.

I am now tabling the convention, and in the course of a few days a bill will be introduced for the purpose of ratifying the convention by parliament.

For the information of the house I will give a brief outline of the convention.

Both countries have in the past applied the principle of the deceased's domicile as well as the principle of the local situation of the assets of deceased persons in the taxation of estates. The result has been that in many cases the personal property of deceased owners has been subject to dual taxation-once by the country in which the deceased was domiciled at the time of his death and again by the country in which some or all of his assets were situated at that time.

Real property was the only type of asset which escaped this dual imposition, as both the United States and Canada make no attempt to tax realty situated outside the boundaries of the taxing jurisdiction.

The problem of double taxation was intensified by the fact that the rules applied by the United States of America in determining the local situation of shares and stocks of corporations differ from those applied in Canada. In the United Slates the principle applied was that this class of property was subject to taxation if it was in any way regarded as being under the control of the taxing authority. tMr. Graydon.l

For example, the shares of companies incorporated under the laws of the United States or any of the states and owned by a non-domiciled decedent and physically situated outside the United States at the time of death were deemed to have a situs within the United States regardless of whether the certificate was in the name of the deceased, or in street name, or other bearer form.

In Canada, on the other hand, stocks and shares were regarded as being situated where they coil'd be effectively dealt with, namely, at the place of registration of the securities. Although this principle was much less sweeping in its operation than that in force in the United States, it nevertheless gave rise to considerable trouble in relation to companies having duplicate or multiple share registers.

Some cause of complaint has arisen in the past as to the method of determining the rates of taxation applicable to estates of non-domiciled decedents by reference to the entire value of such estates. Representations have been made that each country should fix the rates of taxation in such cases by the value of the property situated in the country which imposes the tax.

While Canada grants exemptions from taxation in estates of non-domiciled decedents in the proportion that the value of the property in Canada bears to the total value of the deceased's estate, this method of exemption has not been applied so far in the United States. That country grants only a nominal exemption of $2,000 in all cases of non-domiciled decedents, notwithstanding that an exemption of S100,000 is granted in the case of domiciled estates.

With a view to removing these causes of complaint, and particularly in order to avoid double taxation of estates in future, conversations recently took place between the taxing officials of both countries with the result that the tax convention was finally agreed upon.

The main features of the convention may thus be summarized:

Real property is to be taxed exclusively by the country wherein it is situated.

The country of domicile to have the right, at the outset, to tax all the personal property of the deceased, as heretofore.

The country of situs to have the right to tax the property situated within its boundaries.

The taxes paid in the country of situs are to be allowed as a credit against the taxes payable in the country of domicile which includes the same assets for tax purposes. The credit, however, is to be limited to that portion of the tax in the country of domicile that the value of the taxable property abroad

Canadian Forces

is of the total value of the deceased's estate.

There is to be a uniform rule in determining the situs of shares of corporations. These shares are to be deemed to be situated and taxable in the country where the corporation is organized.

While the rules as to situs of other properties vary somewhat in the two countries, it is agreed that for the purpose of the convention, the situs of such other properties is to be determined by the laws of the country imposing the tax.

Each country is to take into account only the property therein situated when taxing the property of persons dying domiciled in the other country.

Exemptions to be granted estates of non-domiciled decedents are to be the same as those granted to estates of domiciled decedents, reduced, however, in direct proportion that the value of the property taxed abroad bears to the total value of the property wherever situated. Canada will benefit considerably by this provision, as, at the present time, the United States only allows an exemption of $2,000 in the case of persons dying domiciled here, but this benefit is now only reciprocal to the benefit Canada always granted to the United States.

Articles VII to XIII of the convention are designed with a view to the exchange of information to prevent fiscal evasion. They are quite similar in scope to the provisions already in force with respect to income tax. By article XIV the convention is given a retroactive operation to 14th June, 1941, being the date when the original Dominion Succession Duty Act came into force. The convention is to remain in force for a period of five years from that date, and indefinitely thereafter, but may be terminated upon six months' notice at the end of the five year period or at any time thereafter.

Topic:   TREATIES AND CONVENTIONS
Subtopic:   CANADA-UNITED STATES-AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

May I ask the minister a question arising out of this statement with respect to the taxation of' shares? If I gathered correctly what he said, they were to be taxed in the jurisdiction in which the corporation had its head office?

Topic:   TREATIES AND CONVENTIONS
Subtopic:   CANADA-UNITED STATES-AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION
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June 16, 1944