July 3, 1944

NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Another

pseudo-remedy is that suggested by section 31 of the resolution to amend the Income War Tax Act, which provides that one-half of expenditures on maintenance and repairs incurred by any taxpayer, in a period to be at the whim of the government, be regarded as deferred maintenance and repairs and to be deductible as an expense at the option of the taxpayer in certain periods. For that concession, many thanks. But it is too little. We all know what deferred maintenance is, and there is a tremendous lot of it piling up to-day because of high taxation. Ask any industrialist and he will tell you. Obsolescent and worn-out machinery that cannot be replaced-every industrial company to-day has an immense quantity of deferred maintenance, and the need of repairs is great, taxation being what it is. But I ask the minister, why an arbitrary one-half? If it is a good thing and they need the money, why not give full allowance for deferred maintenance? If the principle is good, then it should be applied according to the needs of the industrial establishment itself. Some people may want seventy-five per cent; others may want twenty-five per cent.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Unless they pay half, there

is virtually no check on the amount.

4434 COMMONS

The Budget-Mr. Hanson (.York-Sunbury)

Topic:   QUESTIONS
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Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

That may be a mechanical or a taxation reason-

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It is not.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

-but that is viewing it from the point of view of departmental administration.

Topic:   QUESTIONS
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Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

No; it is not.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

It is not

viewing it from the point of view of the needs of industry. The minister's interjection indicates to me that expediency in administration has dictated this arbitrary half, and nothing else.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

The hon. gentleman does

not understand my interruption, but I will explain it later.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I think I understand what is meant by the proposal.

Topic:   QUESTIONS
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Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

But not my interruption.

Topic:   QUESTIONS
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

However, I will wait and hear what the minister says. I am not surrounded by a group of braintrusters. They do not tell me what is in the backs of their heads, nor do they tell the public.

There is one thing that has exercised my mind ever since I heard about it, though some may not consider it a very important matter, and that is section 32 of the income tax resolution. I would like hon. gentlemen to listen to me, because the matter is important, as I see it. Prior to the budget of 1942 provision was made that corporations might deduct from income moneys paid by way of donations to charitable and educational organizations. I am interested in both charitable and educational institutions in Canada, which by the way are suffering because of high taxation. These corporations were allowed to donate up to ten per cent of their profits-

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LIB

Colin William George Gibson (Minister of National Revenue)

Liberal

Mr. GIBSON:

Five.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Prior to 1942 it was ten per cent. If the minister will be good enough to follow me he will see that I am right, and we both mean the same thing. In 1942 the general limit of ten per cent was reduced to five per cent without any strings or limitations. That was the established policy of the administration, announced here. It was a tremendous reduction, but I have no doubt the ministry had good reasons for it. I questioned it somewhat at the time, but after all I do not think any of us raised very much controversy over it. Industrial companies were allowed to give five per cent of their profiits without strings or limitations at all. In the case of those in the 100 per cent excess profits brackets it was well understood

by industry, by the government and by the membership of this house if they followed the announcements of the Prime Minister, that such donations came out of the 100 per cent excess, and therefore wholly out of taxation- well, practically so. Now, what have we? I was astonished to read a few days before this house met an announcement by the minister that the settled policy of parliament was to be done away with by a stroke of his pen; and here we have retroactive legislation withdrawing the provision and substituting a new formula, the effect of which is a serious detriment. In fact, it is a knock-out blow to our educational institutions. Retroactive legislation, especially with regard to taxation, is wholly reprehensible. It is a bad principle; retroactive legislation is vicious at any time. I cannot visualize any more honorary degrees for the Minister of Finance. It is now proposed to withdraw the reasonably mild, I will not say generous, provisions under which institutions stood to benefit and to provide that the amount of donations made in excess of the average of the taxpayers donations, in the last two fiscal periods ending before July 1, 1942, shall be allowed as deduction for the purposes of the income tax and excess profits' tax only-and listen to this-to the extent that the total taxes payable by the taxpayer under those acts are thereby diminished by forty per cent of the excess, unless made before February 1, 1944, and paid, or evidenced in writing before that date.

That is an involved formula, and one has to sit down and study it carefully and have illustrations before one in order to know just what it means. But it is just as clear as daylight that it means a definite reduction in the amount that taxpayers may give to charitable institutions under the tax-free clause. In fact, for the reasons which I now give, there will be no further contributions to education from this source. The average of such donations in the two fiscal periods made by corporations which are within the excess profits clause before July 1, 1942, in most cases, was exactly nothing, and therefore in most cases the amount now allowed will be exactly nothing. The larger institutions were very alert. In one case millions were obtained in payments and written pledges. No wonder they gave the minister an honorary degree. The smaller institutions, not so well informed, less alert, not so well organized, got practically nothing.

I consider that the minister's action in changing the regulation and giving notice of the change on the eve of the meeting of parliament, and without parliamentary sanction, was % distinct breach of faith that merits the condemnation of the country. I cannot imagine any

The Budget-Mr. Hanson (Fork-Sunbury)

greater breach of faith with the educational institutions of the country than we find in the minister's actions.

I desire briefly now to refer to two special income tax problems to which the minister referred on page 4179 of his address. The first refers to the treatment of annuities and other like payments, and the second relates to the problem created by the combined incidence of income tax and succession duties upon the holdings of deceased persons in private corporations with accumulated surpluses, which holdings cannot readily be converted into cash, like publicly-listed shares, and because of too-heavy imposts falling at the same time on the same property, cause great hardship. I have not time to deal with the first problem except to say that it is acute and the cause of hardship in certain individual cases, and these hardships ought to be removed, in justice and equity. That they can be removed I have no doubt. It may mean a loss of revenue, and that is no doubt the real reason it has not been dealt with before or even now. Such cases have usually arisen out of wills made prior to great increase in taxation.

On the other point I have some observation to make. I have always taken the view that the federal government should never have entered the succession duty field. I still adhere to that view. The other view prevailed and we had the spectacle of the same dollar being taxed always by two jurisdictions, and in some cases I could mention, by three taxing authorities. I submit that this is an intolerable situation and should be remedied at once. We in the federal field could well afford to yield up the succession duty field of taxation to the provinces, because it yields only $15,000,000 a year. This double taxation endangers the whole future of private and family business. From the small community point of view, and from the point of view of local employment and decentralization of industry and business, the family businesses should and must be maintained. The present tax structure works directly against that view. I have some more material on that point that I should like to put on the record but I understand that my time is very short.

I now desire to say a word or two about the proposed amendment.

I entirely concur in the important principles enunciated in the amendment. Income tax forms and methods of taxation must be simplified and modernized. They are moving in that direction in the United States. Relief must be granted to taxpayers in the lower income brackets, not only because of the increase in the cost of living but also and more particularly to deal with the growing evil of

absenteeism in industry. I venture to assert, Mr. Speaker, that there are many hon. members sitting in this house who are in favour of the proposals enunciated in the amendment sponsored by the hon. member for Dufferin-Simcoe (Mr. Rowe) and who would, if left free, vote for them. That privilege is denied them and they will perforce be obliged to vote against their convictions and the known views of their constituents. Take the position of hon. members representing industrial ridings. Dare they vote against this amendment? I put it to them to-day. Well, they are on the horns of a dilemma. They must choose here and now. Vote against the amendment and face destruction at the polls, or vote according to the dictates of reason. I challenge hon. members from industrial ridings to vote against this amendment.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

There is nothing inflationary about the amendment at all?

Topic:   QUESTIONS
Subtopic:   THE BUDGET
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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

If I had the time I could answer that, but I have not. I desire to deal more particularly with the concluding paragraph of the amendment, which indicts the government for failure to deal effectively with the question of full mobilization of our financial, industrial and material resources as well as our man-power. For man-power is only one phase of this problem, albeit the most important.

As long ago as January, 1942, nearly three years ago, I made a speech in this house on this important problem. At that time I introduced an amendment to the motion for an address in reply to the speech from the throne. As I look upon that speech to-day I must have been a seer and a prophet, because everything I enunciated in that speech has been brought about by this government except one. If the house does not believe me I page the hon. member for Richelieu-Ver-cheres (Mr. Cardin) and the speech he made in this house in which he blamed the administration for accepting so many of the principles I proposed. I am not going to take up the time of the house to read that resolution, but I have lived to see the day, very shortly after January 26, 1942, when the government began to adopt one by one, piecemeal, every principle I advocated in the amendment, save one. It did not need the statements of the present director of national selective service to tell us that there was an acute man-power situation. There has been but one pool to draw from. After the plebiscite of unholy and unsavoury memory we had conscription and the draft. Have we had honest enforcement of the military draft laws of Canada? The

4436 COMMONS

The Budget-Mr. Hanson (Ycrk-Sunbury)

answer cries "no" to high heaven. The obligations of good citizenship demand that we face this position regardless of all considerations.

Then there is the disgraceful situation relating to the establishment and maintenance of a home army of trained, seasoned troops, said to be seventy or seventy-five thousand strong, costing the nation $150,000,000 each year, held immobilized, neither in the war nor out of it, neither in industry or agriculture nor out of it. This government has simply stalled on the whole question. I appeal to every member of parliament to examine his conscience and his regard for his own self-respect on this issue. Let us for the moment forget the dubious record of the past and with ringing resolution resolve to do the right thing before it is too late.

I appeal to the Minister of National Defence (Mr. Ralston), to his colleague the Minister of Finance (Mr. Ilsley), to his colleague the Minister of National Defence for Naval Services (Mr. Macdonald), to his colleague the Minister of National Defence for Air (Mr. Power). We well know what their position and principles are in regard to this matter. It is well known they have held opinions that coincide with mine, and they have practically so declared in this house. I appeal to them to comport themselves like men, not mice; to cast into oblivion the policy of appeasement which has too long disgraced this nation-

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Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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LIB

Thomas Vien (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order. The hon. member's time has expired.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

May I

have three minutes more?-and then I shall be through. I appeal to them to cast into oblivion the policy of appeasement which has too long disgraced this nation in the eyes of the allied nations, and particularly in the eyes of our neighbours to the south, who have marvelled times without number at the poltroon position which we occupy.

Our gallant sons, fourteen battalions strong, perhaps more, have assaulted the embattled fortress of Europe. Casualties so far have been moderate, but the assaults have hardly begun. They need and will continuously need a large and ever-increasing stream of able, strong, well-trained troops to take the place of casualties which will grow in ever-increasing numbers. Where are these men to come from if not from this immobilized force, Canada's home army? These men apparently never were intended to fight. The fact is they will fight if the government wills that they fight. This playing of partisan politics has been a foul blot on Canada's national effort and unity in this great conflict. This government has consistently not done that which it knew to

be the right and the logical thing to do, that is, enforce equal service and sacrifice everywhere in relation to the war. Let us end all this. If we do not, the verdict of history will be that as a nation we were poltroons and failed in our duty. On this whole question we have an inglorious record. Let us blot out that record, gird ourselves like men and once more lift up our heads, courageous and unashamed.

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CCF

Clarence Gillis

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

Mr. CLARENCE GILLIS (Cape Breton South):

I do not intend to deal with the many ramifications of the budget. The hon. member for Rosetown-Biggar (Mr. Coldwell) made a general survey of that subject, and I think set out clearly and specifically the opinions of the people we represent in this house. The only comment I have to make on the remarks of the hon. member for York-Sunbury (Mr. Hanson) is that, as usual, he took a left-handed' swipe at the members of this group, and his whole speech would indicate that he does not like the government or the C.C.F. Well, as long as the people of the country like us and recognize the fact that we are doing the best job we can, we are quite satisfied.

With regard to the budget, the minister did his usual good job in presenting it to the house. It was rather an easy job this time in that there were very few changes in it. He made one change that I think was very important and long overdue-the lifting of the duties, against agricultural machinery. But there was one thing I believe he overlooked. What he did in respect of importations of agricultural implements he should have done in respect of the materials and equipment necessary to the proper functioning of the fishing industry. They too should have been relieved of the heavy imposts levied against the necessary equipment they must import. I leave that thought with the minister, in the knowledge that representations, have already been made to him from different sources since the budget was brought down.

This afternoon in the time at my disposal I shall endeavour to straighten the record concerning certain statements that have been made in the house. First I wish to make the record clear in connection with certain comments of the hon. member for New Westminster (Mr. Reid), in the course of which he made a comparison of interest, debt and the like in Canada and New Zealand. His figures are not correct, and when he made the statement I pointed out to him that he was telling only licilf the story. In order that the record may be complete I shall now give the rest of the picture. I believe we do a

The Budget-Mr. Gillis

disservice to ourselves when we quarrel with any of the nations who are fighting this major conflict with us. Surely we should be most careful in any statements we make as to their internal economy. It is for that reason I correct the record so far as the statement made by the hon. member is concerned.

Only a few days ago we listened to a speech by the Prime Minister of New Zealand. In my view he made one of the best contributions I have heard since I came to parliament. His speech was steady and statesmanlike.

The statement of the hon. member for New Westminster to which I refer is to be found at page 4112 of Hansard for June 23. The hon. member gave no information as to dates, nor did he state the rate of exchange between New Zealand and Canada. He said he got his figures from the New Zealand and Canada year books. The only comparable information is to be found in the New Zealand and Canada year books of 1941-42, covering the year 1940. Information regarding Canadian provinces and municipalities in the 1942 year book covers 1940 only.

I shall not repeat the figures given by the hon. member for New Westminster; they are already on record. I wish to place on Hansard comparative figures for Canada and New Zealand, because the statement made by the hon. member is absolutely incorrect. The figures are lengthy, but I believe it is necessary that they be given. Of course if hon. members would permit me to place them on Hansard without reading them, I would not have to take the time to read them in full.

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LIB

Thomas Reid

Liberal

Mr. REID:

I object to their being put on without being read.

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CCF

Clarence Gillis

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

Mr. GILLIS:

Then I am sorry, but I shall have to read them, if the hon. member for New Westminster insists. These are comparative figures for New Zealand and Canada. The figures given by the hon. member were brief, and certainly they were not at all explanatory.

The direct debt of the dominion is $4,703,-

964,000. The direct and indirect debt, including government guaranteed loans and securities for Canada is $6,013,322,000.

Topic:   QUESTIONS
Subtopic:   THE BUDGET
Sub-subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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July 3, 1944