March 29, 1945

NAT

Gordon Knapman Fraser

National Government

Mr. FRASER (Peterborough West):

Thank you very much.

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NAT

Heber Harold Hatfield

National Government

Mr. HATFIELD:

Is the report published in the press correct? It says that the payment in New Brunswick was only $449. I know of one farmer who paid $2,500 in 1943.

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LIB

James Angus MacKinnon (Minister of National Revenue; Minister of Trade and Commerce)

Liberal

Mr. MacKINNON (Edmonton West):

He may not have been classed as a farmer; I cannot say. I shall be very glad to have the name of this individual so that I can look it up and report to the hon. member.

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NAT

Ernest Edward Perley

National Government

Mr. PERLEY:

I did not say as much as I should like to have said with respect to the special inspector, because the hon. member for Souris came near to saying what I had in mind. I understand that the special inspectors are working in some constituencies in Saskatchewan more than in others. I am not going to name the constituencies, but I wish to protest against these special inspectors and the temporary assistants. How many are working in Saskatchewan and in what areas or constituencies? We may not have the opportunity until late this fall to say anything further on this.

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LIB

Ian Alistair Mackenzie (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MACKENZIE (Vancouver Centre):

Perhaps not even then.

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NAT

Ernest Edward Perley

National Government

Mr. PERLEY:

I venture to say that we may have more to do with it than the hon. members sitting opposite now. A number of farmers have come to my office, after travelling quite a few miles, complaining about the income tax that they are paying and of their having been put into a higher bracket this year on account of the products they have raised on their farms, the stock, and so on. They ask me to bring it to the attention of the minister. This may not be the proper time, but I should like to mention it now. I am thinking of one farmer who is short of help. He has no sons. He was not able to get a man, but he was able to conduct his farm operations by tractor and combine and do all the work himself with the help of a man in the fall when he was combining and trucking it away. His wife and two daughters milked the cows, fed the

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chickens and hogs. The result of their work in milking ten cows and feeding the hogs increased his receipts some $1,500, along with the wheat and other products. That put him into a higher bracket, so that he paid nearly $800 more tax. This is what he asked me to put before the minister. Consideration should be given to the type of farmer who was carrying on farming operations such as his. He claims that the milk and cream from those ten cows put him into a higher bracket and cost him $700. He said, "Do you think that my wife and daughter are going to milk those cows this summer? Not at all. We will' allow the calves to suck the cows." A farmer such as the one I have mentioned should be given some consideration. He might be exempted in respect of the income from the dairy products. If he had a certain number of cows he should be taken out of the class of a dairy farmer who milks twenty or thirty cows. Because his wife and two daughters milked those ten cows he had to pay an additional $700 or $800 income tax. He told me that his wife and daughter would do no milking this summer. One of his daughters is not very well. I have two or three other similar cases that I could bring to the attention of the committee, but I am not going to take the time now. Consideration should be given to farmers such as the one I have mentioned, so that they will not lose the whole income by being put into a higher bracket.

I should like the minister to give me information as to where the inspectors are working in Saskatchewan. I know he has not the information at hand at the moment, but if he can get it for me I shall appreciate it. It is not necessary to put it on Hansard, but I should like to have it.

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LIB

James Angus MacKinnon (Minister of National Revenue; Minister of Trade and Commerce)

Liberal

Mr. MacKINNON (Edmonton West):

I shall be very glad to look it up and give it to the hon. member. I may say for his benefit, and for the benefit of a couple of other hon. members' from Saskatchewan who have interjected remarks, that I have been approached by my colleagues, not in the government, but representatives from Saskatchewan sitting on this side of the house, who have complained to me that they believe the inspectors referred to by the hon. member for Qu'Appelle have been concentrated in their constituencies, working to their disadvantage.

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CCF

Angus MacInnis

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

Mr. MacINNIS:

They may have gone in there inadvertently.

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LIB

Harry Leader

Liberal

Mr. LEADER:

If I am in order I should like to make a few comments with regard to farmers paying income tax. I hope you will

be a bit lenient with me, Mr. Chairman, because I may not have the opportunity of addressing the committee again on this or any other important matter.

I came into the chamber a few moments ago in time to hear the last part of the statement made by the hon. member for Rosetown-Biggar. He said that he had been asked why the farmers of Saskatchewan were paying most of the farm income taxes in Canada. Well, I can suggest this to him-

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LIB

James Angus MacKinnon (Minister of National Revenue; Minister of Trade and Commerce)

Liberal

Mr. MacKINNON (Edmonton West):

In 1941.

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LIB

Harry Leader

Liberal

Mr. LEADER:

I think it applies to the present day, Mr. Chairman. I suggest to him that he answer the farmers of Saskatchewan and of any other province in this way, that if they would go into the more intensified system of farming they would have some expenditures to set against their income. That would help the people of our country, give them a more secure foundation and make for permanent agriculture than constantly growing wheat and doing all the work with the combines, and not even having hired help to pay as they would have on those diversified farms. That is the answer I would give to the Saskatchewan wheat farmer and also to the wheat farmer of Manitoba.

We are concerned about the question of farmers paying income tax in Portage la Prairie. We have an assessor and I think he gathers up quite a lot of money there. I think he is trying to carry out his duties to the very best of his ability. I believe the farmers are agreeable to paying income tax; if they are in that category I myself think they are very lucky.

I wish to tell you, Mr. Chairman, that when the assessor meets a farmer they meet on this basis. The assessor asks the farmer some questions and the farmer admits he did not keep an account, that it is more or less guesswork. This gives the idea to the assessor that the farmer is trying to beat the government. Then he questions the farmer further and asks him why he has not kept records. The farmer gets the idea into his head that this assessor is trying to make out that the farmers are all crooked. That is the basis on which they work when they start- to review their income tax returns. I think that we as farmers should keep proper records, and if the assessors were doing their duty-and I think they are-a lot of dissatisfaction which now exists would disappear.

We in Portage la Prairie are quite concerned about this, and we had two or three meetings. I have some resolutions that were passed at meetings dealing with farmers' income tax. With your permission, Mr. Chairman, and with

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the indulgence of the committee, I should like to read these resolutions and perhaps make one or two comments. There are four or five of them.

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LIB

Joseph-Arthur Bradette (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The CHAIRMAN:

This discussion may come up again on the war appropriation resolution. I am afraid if it continues now we shall have it repeated.

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LIB

Harry Leader

Liberal

Mr. LEADER:

I am aware of that, and it was because I wanted to be fair that I asked the indulgence of the committee. If I can get that indulgence and am in order I will take perhaps five or six minutes to deal with these points.

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?

Some hon. MEMBERS:

Go ahead.

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LIB

Harry Leader

Liberal

Mr. LEADER:

The first recommendation is:

That the income of farmers for income tax purposes be averaged over a period of four years.

I know the farmers have asked that their income be averaged over a period of five years, and I was rather surprised that our local of the federation of agriculture in Portage la Prairie had cut that down one year. I did not say anything but this just Shows their anxiety to have something done to take care of the losses which they suffer during the bad times. The second recommendation reads:

Whereas the application of income tax to the proceeds of live stock dispersal sales is causing severe hardships; therefore be it resolved that seventy-five per cent of such proceeds of dispersal sales of live stock raised on farms be exempt from income tax as return of capital and twenty-five per cent be recognized as current income.

I believe that is exactly what was submitted by the federation of agriculture two or three years ago, that seventy-five per cent of the proceeds of live stock sales be classed as capital rather than income, but the department persists in classing it as income. I can cite one case, that of a man who over a period of thirty years built up an excellent herd of dairy cattle. When he got older and was unable to get help, he disposed of his herd together with his farm equipment. The cattle brought a return of $5,000, and he is still fighting with the income tax department because they are asking him to pay tax on the $5,000 worth of cattle which he sold. He gathered that herd together over a period of years, and if anything is capital I submit that should be classed as such. Oh, I know the assessors can spread it over a period of five years, but certainly that is not good enough. The farmers have to pay the tax in the long run; there

is a great deal of bookkeeping to it and not very much saving to them. The third recommendation is:

That the farmers be relieved of the requirement of deducting income tax from wages paid to hired help, as past experience shows that the farmer has to bear this tax by paying higher wages.

In the discussion on this point I was given to understand that if a farmer goes out to hire a man-and they are hard to get-offering him the going wages, the man will say, "What about deductions from my wages for income tax purposes?" The farmer replies, "Well, I have to do it," to which the man says, "Then you will have to 'pay me what you deduct." So the farmers claim they are paying higher wages as a result. The assessor comes right back and says that can be charged as wages against your income. So it can, but in many of these cases it will mean that the farm labourer will not pay any tax, and he should not pay any tax, and it all makes unnecessary work for the farmer. The next resolution is:

That discrimination exists between a farm couple who are only exempt $1,200 and a city couple who may claim exemption up to $1,860. Therefore the exemption should be at a parity with the city couple, provided such amount is earned on the farm.

I see the Minister of Finance in his seat, and he may wonder what they are driving at. On the printed form it states that a man's wife can get a job and claim the exemption of $660 which is given a single person, without the husband losing his status as a married man, with an exemption of $1,200. Therefore the total exemption they may claim is $1,860. That is being done right along. The farmer's wife cannot leave home and get a job. They have not a restaurant right around the corner, like people living in the city, and they are allowed only $1,200. But, as the hon. member for Qu'Appelle stated a short time ago, it is the farmer's wife and his small boys and girls who are milking the cows and feeding the hogs, trying to keep up production in this country when hired help cannot be found. They would be glad to pay hired help, but it is unprocurable. So the farmer's wife, his daughters and small boys undertake to do this work, yet that couple are exempt to the extent of only $1,200. If they were living in the city the wife could get a job somewhere else, and their total exemption would be $1,860. Is it not possible to give that to the farmer whose wife stays on the farm and helps maintain production in this country, instead of seeking a job somewhere else? I say it is possible. The farmers

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of Portage la Prairie are asking for this, and I endorse their request whole-heartedly. The next recommendation is:

That a fixed price of $1 per day be allowed for board of hired help on the farm.

I think at present an allowance of up to SI a day may be made, but many of these assessors interpret that provision in different ways. They may allow 75 cents a day, 85 cents a day or perhaps SI. They have the authority to allow up to that amount, and the farmers are asking that this be placed on the income tax form, so that the assessors will not be able to interpret it differently, as they are doing now' in many districts.

The sixth recommendation is:

That the income tax should be so clear and specific that all decisions of assessors should be uniform in their application.

These assessors are given discretionary powers, and they make different adjustments. Sometimes these people get together and wonder what is the reason for the difference.

I got this right from the head office in Winnipeg. One man may be allowed only $15 as pin money for his wife, while another assessor may think a farmer's wife should be granted $100 to $150 as pin money. When that situation exists you can see the confusion it causes in the minds of these people. They are asking that this be made statutory and placed right on the income tax form, so that the assessors will not have this discretionary power, though I think they use that power to the best of their ability. From the experience I have had with the assessors I believe they are trying to do their best.

The seventh recommendation is:

That dependent children under eighteen years of age paid up to $400 per year (board included) be exempt. This should be inserted in the income tax form.

That is something a great many of the people in Portage la Prairie did not know a thing about. I believe it was only through my own efforts that they found they could allow as much as S400 to a dependent child, including board, which could be charged against income as expense. Some of them were getting that; others did not know a thing about it.

I do not think the assessors are very much concerned with pointing out these things. They are concerned with how to get hold of the money which they believe the farmers are trying to gyp them out of, in a good many cases. So they are asking that this be stated plainly on the income tax form.

I want to apologize for having said this much, Mr. Chairman, though it really was not such a great deal after all. However, I have only done my duty as I see it, and I thank the committee for its indulgence.

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REVISED

NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

In addition to what I have said already and the questions I have asked, I want to support the arguments advanced by the hon. member for Portage la Prairie. When the budget was under discussion a year ago we argued these same matters pretty strenuously. This is perhaps the next important item, as far as the farmers are conr cerned, to the shortage of farm labour which has brought about the reductions I mentioned last evening in the production of hogs and dairy products. I can assure you that in my part of the country the percentages I mentioned last evening do not begin to give a picture of the reductions that have taken place in hog and dairy production.. I have met farmer after farmer who, after interviewing the tax inspector at the municipal offices, have said, "We are going to put the calves on the cows as quickly as we can," and they have done so. I have one neighbour whose wife and children help him with the milking of twenty cows. After he interviewed the tax inspector last fall and received his assessment, he commenced milking only enough for his own family and delivering perhaps a little can of cream once a week; the calves got all the rest. That situation prevails throughout my part of the country. Where farmers were raising perhaps more than a hundred head of hogs, they have cut down to one brood sow. These people say, rightly or wrongly, that milking these cows and feeding these hogs, without help, is on the same basis as overtime work for organized labour. In the busy seasons at seeding and harvest time they have to milk the cows and feed the hogs before daylight and after sundown. We are not going to do it and be assessed to the extent we are by the federal government, although we are agreeable to paying our share.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Labour pays income tax on overtime, and for the most part they do not refuse to work overtime on account of the tax.

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NAT

James Arthur Ross

National Government

Mr. ROSS (Souris):

I have known a lot

who do, and some of them belong to the best paid and best organized trades. They not only do not work overtime, but more than that, they take a holiday. They do not admit why they are doing it, but I know why; it is to avoid the heavy income tax. I know you have to have the money, but you have overdone this thing. I cannot see how you are going to overcome it so that it will not be a racket, but I do say that where you are satisfied that a farm couple are working and doing so much they should be allowed the same exemption as the married couple in the town gets where both husband and wife are working. Farm production is definitely on the decrease, and you are

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EDITION

March 29, 1945