July 12, 1946

PC

Harry Rutherford Jackman

Progressive Conservative

Mr. JACKMAN:

Managed economy.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

Yes, managed economy, the fetish of bureaucrats; that is what We have been given. How on earth are we to accomplish or achieve the high production which the minister now claims to be so necessary to fend off the peril of inflation? How is he to do it; how on earth could it be done by the kind of budget proposals which have been introduced by the Minister of Finance? Look at them. First, look at the

The Budget-Mr. Fleming

income tax rates; rates which were discouraging people in the factories, workshops and elsewhere from working overtime. They are still in effect this year.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Less sixteen per cent.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

That is what the government told us last October, that they were reducing taxes by sixteen per cent. Why did they not tell us quite frankly that last year the taxes were reduced by only four per cent? They did not say that. Is this some more of the two-in-one juggling of public finance, juggling of budgets? How about having one clear statement for one clear year at a time?

What is the next feature of this contribution of the budget to the increase in production that is so urgently needed? The minister proposes to increase the tax on married men by reducing the income the wife is allowed from $660 to $250, wdiich is bound to have a discouraging effect on farmers' wives and all part-time employment by married women. It is going to affect a great many of them; make no mistake about that.

Let us have a look at the corporations. The Minister of Finance has indicated that he is putting his hopes on private enterprise. He made that abundantly clear in what he had to say in this chamber on June 27. How is he encouraging private enterprise in the corporations? Well, he says to them, I will reduce your corporation tax; I will reduce the tax effective January 1, 1947, and he says he wants production now. Is it reasonable to expect that corporations are going to take many risks in expanding production this year when, by waiting or withholding the marketing of their products until January 1 next, they can expect to increase their profits? Does that make sense? I say that it is most senseless when it is put alongside the minister's statement that we need expanded production.

Look at the partnerships and other proprietorships which are now subject to excess profits tax. The minister says, Oh, if you wait until January I next you will no longer be subject to excess profits tax. Is it reasonable to expect that many of them are going to take long chances in expanding production between now and December 31 when, by withholding products from the market until January 1 and af^er, they can benefit in the form of increased gains? The whole proposal of the minister has only to be stated to manifest its complete absurdity. What is needed is some relief now, and some encouragement to private enterprise.

In passing, I would suggest to the Minister of Finance that it is high time he took aside

some of the hon. members who sit behind him and gave them a little instruction in government policy. If he does not do that he will find more and more hon. members running wild in respect of government policy, as the hon. member for Algoma East (Mr. Farquhar) did the other evening, as reported at page 3294 of Hansard, when he advocated the continuation indefinitely of the excess profits tax. The hon. member thought it was a pretty good tax, and that corporations should continue to be taxed under it, not only now but in future. In that connection, I should like to read just a remark and I shall give the reference later. It may be found at page 1004 of Hansard for 1945:

The Excess Profits Tax Act is a wrar measure which has commanded overwhelming support as an important and necessary instrument of war finance. Unmodified, it seriously wreakens the stimulus toward the investment of capital and the efficient operation of enterprises. In this period of reconstruction it is becoming a barrier to expanding employment.

Those are not the words of anyone on this side of the house. They are the words of the Minister of Finance. So I suggest that the hon. members who sit behind the minister either refrain from the discussion of forbidden topics of that kind or at least take the trouble to be instructed on what the Minister of Finance has already declared on previous occasions in the name of this government. Yes, we have had many samples of contradiction as between what the government talks about and what it actually does, but I dare say hon. members will look a long time before they will find a more complete example of contradiction than is to be found between the government resolutions on the one hand and the speech of the Minister of Finance on the other.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Does my hon. friend take instructions on the party line before he makes a speech?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

Donald Methuen Fleming

Progressive Conservative

Mr. FLEMING:

This is a party, Mr. Speaker, to which I am very proud to belong, led by a man I am very proud to follow. It is not a party ruled by an iron hand. It is a party which in the House of Commons stands on the principles of consultation one with the other and of freedom within the proper lines of policy as they have been laid down for the people of Canada, and on which the people of Canada elected those of us who sit here. We do not have to put ourselves in the unhappy position of being simply choristers singing the praises of a government sitting in front of us.

I wish to make one observation as to trade, Mr. Speaker, because in one of the earlier

The Budget-Mr. Fleming

remarks I read from the address by the Minister of Finance you will find some reference to external trade. The fact of the matter is that the government, which is always ready to take credit to itself because this country stands in a leading position in the field of external trade, in which we are the fourth nation in the world, tells us in effect now that we are simply marking time until others are prepared to take some action in the international field. If we have reached this enviable status, I suggest that is not a good enough answer from the government. We should know precisely what this government proposes. We should know something about the plans this government proposes to lay before any conference called for this purpose. We have not been given the slightest inkling; in this case we have not even been permitted a glimpse of any phantom plans on behalf of the government. May I remind you, Mr. Speaker, that this summer two important conferences are being held to which, this government will soon be sending delegates. They are conferences being held in London by the Imperial Economic Committee and the Imperial Shipping Committee. The Imperial Economic Committee has been assembling data on trade within the empire, making reports and fulfilling a useful function in connection with the extension of trade within the units of the commonwealth and empire. That conference this summer is to decide, according to what we were told in the external relations committee on July 9, whether or not the Imperial Economic Committee shall continue hereafter. I suggest that is a serious matter. If our external trade is so important-and it is important; it may be the lifeblood of this nation before we are through -we should know from this government immediately what instructions they are giving their delegates with respect to the views to be presented to the Imperial Economic Committee. Before this budget debate ends, I trust we may have an authoritative pronouncement from the government on this score.

In the limited time remaining, I wish to say a word about a subject which has been neglected in the budget proposals and in the budget speech of the Minister of Finance. That matter is income tax reform. I do not know whether hon. gentlemen opposite have forgotten quite what reform means; perhaps I shall have to speak in relatively simple terms.

In the first place, there is one reform which is long overdue. I suggest that it is about time we eliminated one particular word, one conspicuous word, from the title of this measure. It is called the Income War Tax Act. Enacted during the last war, in 1917, it has . become a permanent part of the taxation and

fiscal fabric of this country; so let us have some realism and get rid of the fiction of the word "war."

I turn now to the subject of the machinery of collection and assessment. Again I may have to refer to some remarks of the Minister of Finance on other and perhaps happier occasions. In his budget speech on June 27 of this year the minister had this to say on the subject of our personal income tax, at page 2914 of Hansard:

Our personal income tax is now unnecessarily cumbersome . . .

That is a masterpiece of understatement. He added: .

Not only is the tax structure itself complex but as the house well knows its drafting leaves much to be desired.

Another masterpiece of understatement! I recall the remark of the right hon. gentleman in his budget speech last fall, at page 1006 of Hansard for 1945:

There are clear and obvious reasons for as early a reorganization and simplification of this tax as is practicable.

You know, Mr. Speaker, we all expected after that speech, which the minister made on October 12, 1945, that he would seriously take in hand this problem of revising the income tax, eliminating all the complications and absurdities in the procedure of assessment and collection; but they remain. The minister has apparently been too busy, and all the house has been given this year is another apology for delay. Everything remains for another year. The 1946 returns, to be made out in April, 1947, will still be the same old returns containing the things with which we have become so unhappily familiar: the normal tax, the graduated tax, the surtax, compulsory savings, and all the other headaches. That return will be made out next year, as it has been made out in recent years, not only by all those who made it out this year, but it will now have to be made out by all the farmers and fishermen who hope to qualify on the new basis of averaging their incomes over a three-year period. Yes, all the complications remain; the complicated procedure is still there.

But the minister trots out for our view something that apparently is intended to dazzle the house. He has two proposals, the first for an income tax appeal board and the second for an income tax advisory board. Let us look at these for just a moment, taking first the income tax appeal board. We are told it is to be set up for this purpose: to hear appeals from assessments made by the Minister of National Revenue in respect of the year 1946 and subsequent taxation years.

The Budget-Mr. Fleming

Just what does that mean? This appeal board will go to work on assessments for the year 1946, and subsequent years. We may be sure this suggestion was not brought forward by the Minister of Finance until there had been a great deal of criticism of the existing procedure, an outcry from outraged taxpayers throughout the length and breadth of this country. The generality of taxpayers have been crying for years for some reform of the present procedure in connection with assessment and collection. But let us see how far this proposal goes. It begins with the 1946 assessment. Well, Mr. Speaker, you will make out your return on your 1946 income-and I hope it will be substantial-in April, 1947. If the slow-motion procedure now in full flower in the Department of National Revenue continues to flourish, assessments on the returns made in 1947 on 1946 income will probably begin to be issued in 1950. So that this appeal board will begin to go to work about 1950, or perhaps 1951. I am sure the taxpayers of this country will be grateful to the Minister of Finance for coming to their rescue with such a timely measure!

As. the minister well knows, there has been strong criticism about the multiplicity of discretionary powers vested in the Minister of National Revenue under the Income War Tax Act and the Excess Profits Tax Act. As a matter of fact, if hon. members have perused the report of the special committee appointed in .the other place (the senate) to review the workings of the Income War Tax Act and the Excess Profits Tax Act-and I hope they have, because they will find it a most interesting and valuable document-they will find at page 386 that the committee catalogues the discretionary powers vested in the minister under those two acts. The figures as L add them up total eighty-eight under the Income War Tax Act and twenty-four under the Excess Profits Tax Act.

These discretionary powers cover a variety of subjects, such as the allowance of reserves; limitation of expenses; determination of the true nature of transactions where lessening of tax may be involved with reference to companies and individuals; determination of the nature of income; determining the nature and effect of certain legal documents and reciprocal acts; approval of pension schemes; minor administrative discretions; regulations to carry the act into effect; waiving of penalties; determination of standard profits; adjustment of standard profits, and references to board of referees in the case of new or substantially different business.

The Minister of Finance offers, as an answer to this injustice, one which is crying for reform, a recommendation for an income tax advisory

board. It will be recalled that the committee appointed in the other place recommended that those discretionary powers should not be final and absolute in the hands of the minister, but that there should be an appeal from them.

The officials of the department came before the committee and said, "No, we are opposed to that." The committee in the other place was not overcome by that opposition, and still made its recommendation. Of course, when it got to the department and the officials set to work advising the minister, hon. members will know what happened. Hon. members know what would always happen under those circumstances, with the present government in office. The officials won out, of course.

So we have the situation wherein the income tax advisory board is to have power only to advise the minister; and the minister in turn retains full power either to accept or reject that advice. In the second place, there is no appeal from the exercise of any discretionary powers. In the third place, there is not the slightest reduction in the number of discretionary powers; they continue in full number.

Mr. Speaker, my time has expired. I had hoped to touch upon dominion-provincial relations, but time does not permit. In closing let me add this thought. This is not the kind of budget the people of Canada had been led by the government to expect, in the light of the lavish promises the government made. In the second place, it is not the kind of budget the people of this country deserve, after the sacrifices they made in the war years. In the third place, it is not the kind of budget which will help the people of this country to carry on, to expand production, to increase employment and fo convert to peacetime economy. Lastly, it is not the kind of budget the people of this country will approve. Indeed, in the light of this budget, so far as the taxpayer is concerned, the war is still on.

At six o'clock the house took recess.

After Recess

The house resumed at eight o'clock.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink

PRIVATE BILLS

LIB

Ralph Maybank

Liberal

Mr. RALPH MAYBANK (Winnipeg South Centre):

Mr. Speaker, I move that bills Nos. 254 to 298 inclusive be now read a second time.

Topic:   PRIVATE BILLS
Permalink
CCF

Joseph William Burton

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

Mr. J. W. BURTON (Humboldt):

Mr. Speaker, it is not my intention to delay the second reading of these bills unduly, particularly in view of the fact that on a number of occasions both this session and in previous sessions serious objections have been raised

Private Bills

against the manner in which these bills go through the house. There is nothing much that I can add, except that I recall that on the last occasion on which this question came up the Minister of Justice (Mr. St. Laurent) gave in my opinion a good explanation of how these divorce cases might be disposed of in the future. I sincerely hope that the Minister of Justice will not delay unduly in bringing down a bill for that purpose, so that these divorce cases can be dealt with in a proper manner. Just to give an example of the position we are in-and this is another reason why I protest now against these bills going through in this manner-the printing of these bills is not all it should be. In one of them, for instance, the name "Burton" is mentioned; I believe that should be "Turton". I give that as an example of how parliament has got into the habit of passing these bills carelessly, and I wish to register my protest along with others that have been made previously against the manner in which these divorces are granted.

Topic:   PRIVATE BILLS
Permalink

Motion agreed to, on division. - ' SECOND READINGS Bill No. 254, for the relief of Jessie Violet Louise Stargratt Burton.-Mr. MacLean. Bill No. 255, for the relief of Helen Louise Mitchell Meyer.-Mr. Maybank. Bill No. 256, for the relief of Donald Dale Carr-Harris.-Mr. Maybank. Bill No. 257, for the relief of Eugene Ernest Hubert George Colnaghi Williams Waterfield. -Mr. Maybank. Bill No. 258, for the relief of Gratia Lauzon Rousseau.-Mr. Maybank. Bill No. 259, for the relief of Laura Olive Byers Manley.-Mr. Boucher. Bill No. 260, for the relief of Vera Gertrude Horder Fournier.-Mr. Maybank. Bill No. 261, for the relief of Julia Patricia Byrne Cote.-Mr. Maybank. Bill No. 262, for the relief of Dorothy Adelaide Grace Vennor O'Toole.-Mr. May-bank. Bill No. 263, for the relief of Lillian Doris Howard Clark.-Mr. Maybank. Bill No. 264, for the relief of Helen Agnes Stuart Colt.-Mr. MacLean. Bill No. 265, for the relief of Alma Gosselin Carbonneau.-Mr. Maybank. Bill No. 266, for the relief of Florence Cleveland Smith des Baillets.-Mr. MacLean. Bill No. 267, for the relief of FlorenceWinnifred Dunlop Starkey.-Mr. Stuart (Charlotte). Bill No. 268, for the relief of Francis John Stone.-Mr. Maybank. Bill No. 269, for the relief of Mary McCallum McNamara.-Mr. Stuart (Charlotte). Bill No. 270, for the relief of Leah Helen Shute Main.-Mr. MacLean. Bill No. 271, for the relief of Cecile Simonne Robert Turgeon.-Mr. Boucher. Bill No. 272, for the relief of Edward Cotapschi.-Mr. Maybank. Bill No. 273, for the relief of Catherine Young Rivard.-Mr. Maybank. Bill No. 274, for the relief of Mary Jane Michelle Ahern de Brabant.-Mr. Maybank. Bill No. 275, for the relief of Jean Ethel-wyn Marshall Ross. Mr. Maybank. Bill No. 276, for the relief of Frank Ernest Smith.-Mr. Baker. Bill No. 277, for the relief of Cleora Elizabeth Doyle Mastine.-Mr. Senn. Bill No. 278, for the relief of Elizabeth Carr Johnstone.-Mr. Emmerson. Bill No. 279, for the relief of Marie-Rose-Yvette Breton Philips.-Mr. MacLean. Bill No. 280, for the relief of Barbara Laing Robertson MacNab.-Mr. Maybank. Bill No. 281, for the relief of Anne Goldsmith Glick.-Mr. Maybank. Bill No. 282, for the relief of Jean Alexandra Oughtred Scott.-Mr. Maybank. Bill No. 283, for the relief of Charles Horatio Baldwin.-Mr. Maybank. Bill No. 284, for the relief of Mary Slo-bodzian.-Mr. MacLean. Bill No. 285, for the relief of Edward Charles McKerness.-Mr. MacLean. Bill No. 286, for the relief of Ivy Anderson Lobb.-Mr. Maybank. Bill No. 287, for the relief of Yvonne Rachel Mayer Richard.-Mr. MacLean. Bill No. 288, for the relief of Nellie Izbitsky Abracen.-Mr. Maybank. Bill No. 289, for the relief of Ellen Margaret Price Garvie.-Mr. Baker. Bill No. 290, for the relief of Sophie Shoob Natovitch.-Mr. Casselman. Bill No. 291, for the relief of Madge Aileen Hunter Parker.-Mr. Maybank. Bill No. 292, for the relief of Claire Yaro-slawa Lytwyn Pendiuk.-Mr. Maybank. Bill No. 293, for the relief of Henry Wallace Argali.-Mr. Baker. Bill No. 294, for the relief of Mary Norma Wickens Baker.-Mr. Maybank. Bill No. 295, for the relief of Mildred Emily Rogers Thoms.-Mr. Maybank. Bill No. 296, for the relief of Pauline Gregoire Girard.-Mr. MacLean. Bill No. 297, for the relief of Marjorie Maxwell Cleghorn Pope.-Mr. MacLean. Bill No. 298, for the relief of Marie Charlotte Arsenault Leonard.-Mr. MacLean. 341S The Budget-Mr. Dionne


THE BUDGET

DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE


The house resumed consideration of the motion of Right Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell and the amendment to the amendment of Mr. Maclnnis.


LIB

Ludger Dionne

Liberal

Mr. LUDGER DIONNE (Beauce):

Mr. Speaker, in the Budget speech which was delivered in. the House of Commons by the Minister of Finance (Mr. Ilsley) on June 27, I noticed a sincere desire to meet the conditions imposed on us by the reconversion from war to peace, but I failed to see a real effort to meet the wishes of the Canadian people.

In the first part of my remarks I shall deal with the unsuccessful results of the dominion-provincial conference. Has the federal government the right to tax the population to meet its obligations without asking the consent of the provinces? It w'ould seem that the federal government has this privilege, if one may judge by the legislation which the minister is submitting for the consideration of the members of this house. If the federal government can tax the population without the consent of the provinces, why then consult the provinces? No doubt I shall be answered that the federal government is trying to avoid double taxation on the population, namely, taxation by the federal government and taxation by the provinces. This scheme is an economical and practical proposition, but as the provinces do not want to accept such an agreement, I do not understand the reasons for the federal government insisting so much.

The system of direct taxation followed by the federal government is disagreeable to the Canadian people. Why then insist on the provinces collecting their taxes directly from the people and then giving it back to them on the basis of $12 to $15 or $20 per capita? Why relieve the provinces of this unpleasant job? Why not let the provinces tax their own people in the manner they think fit and forget about this? In other words, why not mind our own business? I think we have enough to do here without doing the work of the provinces against their own will.

Personally, I am sick and tired of this bargaining with the provinces which, owing to the influence of the press in each province, is detrimental to the constructive ideas which this house has in mind. What have we gained to date with the provinces? Nothing practical. The federal government has been

accused by the press in practically every province of aiming at centralization and monopolization of the privileges of the provinces, to their detriment. Our ministers have done a tremendous amount of work on this problem, but it has proved fruitless. I submit that we have devoted too much time already to this matter. On the other hand, df we do not have the right to tax the people under the heading of income tax, succession duties, et cetera, we should take some means to legalize this form of taxation or to enter other taxation fields so that we may obtain the results wre are seeking.

I should like to refer now to the items of taxation which appear in the budget. I contend that our system of taxation is unjust and unfair to our people. In analysing our income tax legislation from a practical point of view I notice that only part of our population pay any income tax, namely, the working class and commercial institutions. Labour cannot escape this tax because it is deducted at the source, and commercial institutions who have to keep complete sets of books with accountants and auditors must pay it. But what about the thousands of other large and small businesses, those in the professions and many other classes of citizens too numerous to mention? How are taxes collected from these people? Most of them pay no tax. Those who do pay a tax are at the mercy of the income tax collector, or the inspectors must accept whatever they can get from them. It is a direct invitation to dishonesty. Most of these people are dreaming of nothing else but ways and means to hide their income. If they are successful in this they must live lives of fear of being caught and penalized. I know of no better way to educate our population to become professional scoundrels and rascals.

Is this the kind of people we want to have in Canada? Certainly not. If we want to avoid this calamity we shall have to change our methods of taxation. Remember that we have exacted enormous sacrifices from our people during the last five or six years. Are the people not entitled to fairness and equity from their leaders? This exploitation of the classes who do pay taxes, in faxrnur of other classes who do not pay any, or pay only part, must cease. The present budget submitted to the house is inviting criticism and evading our responsibility. We must be honest with our people and with ourselves. We must be bold enough to tell them that we must get revenue to face our obligations and are prepared to enact whatever legislation is necessary to achieve this objective by fair and equitable means.

The Budget-Mr. Dionne

The mass of the Canadian people would like the exemption on salaries of single men raised to $1,500 and married men raised to $3,000. Why not accept this proposition? How many people earning $1,500 and $3,000 respectively do pay income tax honestly? I repeat, the workman because his tax is deducted from his weekly pay by his employer. How many other citizens are there who are earning similar amounts or more from whom the government collects nothing. Hon. members will admit the exactness of this declaration because their own experience tells them it is so. Is such a method of taxation fair and equitable? I leave the answer to them. If it is not, as every hon. member will admit, why not change it?

In most of the communities of this country we hear the same language, namely, that the cost of living has increased and is increasing; that labour is asking for increased wages, et cetera. This situation should not exist with the strict controls of the wartime prices and trade board. The increase in the cost of living is caused directly by the black market. Why not curb it? What is the use of having price control by the wartime prices and trade board if it does not achieve its purpose?

I understand that the wartime pricae and trade board cannot control the situation alone. It needs support. Here is what I suggest to help them. Let us impose an additional sales tax of ten per cent on the retail price of goods. Such tax would be paid by the manufacturer and recharged to the retailer and the consumer. The manufacturer would buy stamps and stick, sew, or stamp them on the manufactured article itself. This stamp of ten per cent would be a sure indication of the value of the article bought- by the consumer. Let me illustrate my thought by an example.

Suppose I am a shoe manufacturer. I know by experience that a pair of shoes which I sell to the merchant at $2.25 plus eight per cent sales tax, retails at $5, so that I will insert in the shoes a 50-cent stamp. I will charge this stamp to my customer in. addition to the price of the shoes, namely $2.43 plus a 50-cent stamp. When those shoes are bought by the consumer he will have the assurance, in looking at the 50-cent stamp, that the ceiling price of the shoes is $5. No salesman, merchant, or peddler can overcharge or cheat him. Every consumer will act as a policeman. Recently I was in Washington with some friends of mine. A lady in the group wanted to buy a pair of shoes. She returned to the hotel with a pair of shoes for which she had paid $23. She was elated with her purchase because similar shoes in the shoe case were

priced at $34. I examined the shoes and realized that they were similar to those manufactured in Canada to sell at around $2.50 by the Canadian manufacturer to the Canadian merchants. If these Shoes 'had borne a 50-cent stamp the lady would have realized that they were $5 shoes and would not have allowed herself to 'be robbed of the difference, $18. What applies to shoes applies also to dhirts, hats and other commodities of life.

Do you not think, Mr. Speaker, that the consumer would be satisfied and pleased to pay ten per cent more for the necessities of life and have the assurance that he is protected? It would cost the government nothing to collect this tax, with the exception of the cost of the stamps. On the other hand, look at the thousands of employees whom the government will have to hire to enforce the law as it is drafted and you will realize the saving the government will make. Do you not think we have enough bureaucrats in Ottawa? Many people talk of economy. I approve. But I am not satisfied with words only. I would like to get some action.

In accepting the increase of exemption of income tax on salaries to $1,500 for single men and $3,000 for married men, the government would, I will admit, lose many million dollars of revenue, but look at the revenue they would get from this ten per cent sales tax. The actual sales tax of eight per cent based on manufacturers' prices gave $404 million revenue to the government last year. A tax of ten per cent on the retail price of goods would yield at least one billion dollars and probably much more. This amount would certainly compensate for the loss the government would suffer in raising the exemption of single men to $1,500 and married men to $3,000. In accepting this suggestion the government would satisfy the Canadian people with fair and equitable treatment and would protect them from the black market which is spreading rapidly across our country.

This legislation should be enforced by drastic measures. In other words, if a merchant is caught selling goods at prices higher than ten times the amount of the stamps or selling goods without stamps', let him go to gaol. It would be better to put a few men in gaol for a month or two and protect our people from these exploiters. We may rest assured that not many people wdll risk being gaoled. If some are caught, they will take great care not to repeat the offence. Some will no doubt mention that this tax of ten per cent will be detrimental to large families. I am of the opinion that the family allowance and exemption granted in the present income tax for

The Budget-Mr. Cockeram

every child will more than offset this objection. Furthermore, these people will be so happy to get rid of the income tax that they will gladly accept the change. I had an opportunity of discussing the proposition outlined above with many prominent people around Quebec and Montreal this last weekend. After having thought the matter over, there was not one person who did not wish that this measure be accepted by the government.

There is only one way to handle the matter. We must protect our people against the black market by all means, and we must give the same fair treatment to everyone of our citizens without fail. If we forget this grave responsibility, I for my part, do not deserve to sit in this house any longer.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

Alan Cockeram

Progressive Conservative

Mr. ALAN COCKERAM (York South):

Like the member for Muskoka-Ontario (Mr. Maedonnell), I had thought there would have been some question of economy on the part of the government reflected in the budget; and I was amazed this afternoon to hear the Minister of National Defence (Mr. Abbott), who is to act as Minister of Finance in the absence of the minister, discard any thought of economy. The Minister of National Defence stated that no worth-while suggestion had been given or recommendations made from this side of the house and that only one question of economy had been brought up. I would suggest that since his department is one of the great spending branches of the government, it is a department that he might overhaul and economize, because I intend to give figures to show how ludicrous the expenses incurred by his department are at the present time.

When the hon. member for Lake Centre was speaking the other day the Minister of National Defence did a lot of interrupting, and at that time I thought it was time for someone to give figures showing the expenses of his department and ways in which they can be eliminated.

As of March 31 we find in the three defence services there were 29,824 civil servants. Compare that figure with 44,144, the total number of civil servants on the strength of the government on the same date in 1938. In other words, the Department of National Defence has approximately the same number of civil servants running its three branches to-day as conducted the whole government in 1938. I am going to give figures as to the relative strength of the forces.

As at June 30 there were 1,601 officers in the Canadian navy and 6,388 enlisted men, a great many of whom were petty officers. Therefore there is one officer to every four

men in the service. But how many civil servants do hon. members think it took to run that combined number of men?-7,989. It takes 10,187; that is to say, one and a half men in the civil service for every one enlisted man in that branch of the service.

Let us now come to the army. The total army figures as at June 30, in the interim force, show 2,309 officers and 10,510 men. That is, one officer to every five men in the interim force. Apart from the interim force, there are 6,642 officers and 48,524 men, or in the combined forces a total number of officers of 8,951 and a total strength of 59,034. The total number of civil servants it takes to look ' after those 59,000 is 13,701.

Let us now come to the air force, which is in better shape than the other branches. There are 3,633 officers for 25,873 men, or about one officer for every eight men.

Surely there can be a saving in these departments. I have here an article discussing the United States army, in which the statement is made that some 300 generals are slated for demotion between "now and the 1st of July". We are not attempting to demote people here. We are still promoting major-generals, or were within the last few weeks. Recently an officer was promoted to major-general to take over the head of the military mission in Washington.

Before the war, there was one major-general in Canada and he was chief of the general staff. We know that with the expansion of services and the additional money that is being spent on those services we must have higher ranking officers. I would point to some of the statements that were made in reply to a question of mine which I asked in the middle of April. I asked how many generals, major-generals, brigadiers and colonels there were in the Canadian army. There were five lieutenant-generals as against one major-general before the war. There were eighteen major-generals, five of whom were seconded to other departments of government doing civil service jobs to a great extent at high rates of army pay, rates higher than those of other civil servants. There were forty-six brigadiers and 121 officers with the rank of full colonel, thirteen of whom were seconded to other departments of government.

I asked a question regarding Canadian military establishments in Washington. The reply was that in the army there were 141 army personnel stationed there, forty-six of whom were officers-and remember that this was a year after the war was over. In the air force there was a personnel of seventy-three, fourteen of whom were officers. I am speaking of Washington, of course. The navy had a

The Budget-Mr. Cockeram

strength in Washington of, I believe, fourteen. In other words, of a staff of 226 in Washington, sixty-nine were officers getting special rates of pay and having special income tax allowances. Yet the minister comes to the house and says he cannot save money.

In my opinion these figures are ridiculous. There should be a saving, because it is absurd that there should be that military establishment of this size in Washington to-day. I cannot see why there should be one officer in the navy for every four enlisted men, and in the entire force of the army one officer for every five men. I am reliably informed that even if they get 25,000 men for the interim force they will still have a surplus of 1,300 officers recruited for that force. Surely there can be economy here. I know that in the old days, if a district officer commanding wished to spend more than $250, he had to go to the treasury board to get approval. Is the minister's department not checking up on this colossal overstaffing? That is one thing that could be done to save the people's money. There is, in my mind, no question about that.

Some days ago an atomic bomb was dropped in the Pacific. One would have thought the department would have sent as an observer one of their bright young officers, one who is going to be in the service in the days to come. Whom did they send? They sent Major-General Luton, who had been director of medical services and is now retired. They sent this retired officer to check up and report on the dropping of the atomic bomb. I say that that job should have been given to a young soldier, somebody who is going to be in the service for years.

If the Minister of National Defence (Mr. Abbott) wishes to do a job for this country he can clean out his department and do away with this colossal overhead for which the people of Canada have to pay. The Minister of Finance has some idea of what it costs to maintain an officer in the army, especially when there are so many higher ranking officers around. I venture to say that the members of this house have seen more major-generals and brigadiers at the Chateau and at various functions in the last few months than during the war. If the minister is serious in trying to keep down expenses-and I am sure he is- there must be some way in which he and his departmental officials can check this overstaffing of the force, because undoubtedly they are overstaffed; it is known to everybody. If you take the train to Toronto for the weekend you will find that it is still full of service personnel. I know the department will say that they are going to release from the services something like 20,000 men this month, but I

venture to say that there will not be a corresponding drop in the number of officers dropped from the roll. Unfortunately, so far as the services are concerned too many officers are making jobs and trying to maintain them not only for to-day but for the future.

I wish to say a few words about the steel strike which has been called for Monday in spite of the fact that the government has placed a controller in charge. The minister announced an increase in the exemption for married men and single men which is to come into effect some time in the distant future. I suggest that many of our labour troubles today are brought about by the fact that the men want to keep their "take-home pay" with which we all agree. Would it not be wise for the minister to bring these exemptions into effect as from the first of this month? Perhaps it would prevent a lot of labour trouble in this country, and a great deal of our difficulties might be eliminated. I suggest that the minister give consideration to this suggestion. If that were done, the workers in the country would have a greater "take-home pay." We know it would cost money; but, after all, money means nothing if you have a contented people. The amount lost would come back in many ways. Again I suggest to the minister that he give consideration to bringing these exemptions into force as from July 1 of this year. There is no reason why this should not be done.

I now come to the Department of National Health and Welfare. I find it difficult to get true and honest statements from the government on governmental expenditures. Some time ago I asked a question with regard to the expenses of administering family allowances. The figure I received was that for the first six months of operation the total cost was $783,141.43. It was obvious to me that that figure was incorrect. I also asked the question as to how many men were employed administering the act. The reply that came to me was that on December 31 there were 417 temporary employees and thirty-five permanent. In a court case in Toronto on April 17, Mr. Jackson, manager of the Toronto office of family allowances, made the statement that he had 300 permanent employees in Toronto and 100 temporary employees. It was therefore obvious to me that my question was not answered correctly. There was nothing in the statement for postage. On looking through the estimates of the Department of National Health and Welfare, one can see that the department pays postage on everything. If one takes the number of cheques that go out-and they were sending out 1,378,128-according to my reckoning the postage would be approximately

The Budget

Mr. Cockeram

The Budget*-Mr. Cockeram

fare is $40 return. The fifteen per cent tax adds $6 to that, which the worker in that area has to pay. If he travelled the same distance by railway he would pay a tax of only about thirty cents. The minister should immediately do away with this tax on air transportation to remote areas which have no other means of transport. This should be done to benefit those who are working in the mines because, when they come out for holidays, just that much more expense is involved.

The devastating effect of the minister's action at this time is bound to have repercussions in the future. If the mining industry is to survive, new mines must be found to-day. This was once recognized by the government, and I quote from the dominion proposals to the dominion-provincial conference:

The great export industries are agriculture, forestry, mining and, to a lesser degree, fishing. An accelerated resources development programme would provide alternative income to tnese great export groups if exports are low. Non-urban road development programmes will have the same effect as far as agriculture, forestry and mining are concerned, although it is not apt to help the fisheries industry directly to any great extent. Increased income of the primary export groups would, greatly help the remainder of the economy by maintaining both consumption and investment outlay.

A decline in private investment expenditure releases workers of various skills from employment and lowers the amounts of producer materials used. The resources development programme would help provide employment directly and indirectly to many of these people.

Records show that the Canadian mineral production from 1907 to 1944, inclusive, according to figures compiled by the bureau of statistics, reached the staggering figure of $10,005,699,893. This sum represents two-thirds of the Canadian government's bonded debt to-day.

Just in order to give a little encouragement to those who sit to my left, I should like,' if I may, to table a list of Ontario producing gold mines which ceased operations between 1939 and 1944, and which paid no returns to shareholders, and the total production value from commencement to date of closing. The total production of these 39 mines was $21,859,000. No dividends were paid, but production taxes of some kind were paid on all these mines.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

This would have to be with the unanimous consent of the house.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Has the hon. member unanimous consent?

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
?

Some hon. MEMBERS:

Agreed.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
PC

Alan Cockeram

Progressive Conservative

Mr. COCKERAM:

The table is as follows:

Table showing list of Ontario producing gold mines which ceased operations between 1939 and 1944 and which paid no returns to share-

holders; and giving'total production value from commencement to date of closing (in thousands of dollars):

Production Value in thousands

Mine of dollars

Algoma Summit

Centennial

Cordova

De Santis

Devon

Elora

Feymar

Golden Gate ....

Goldwood

Gold Eagle ....

Hiawatha

Hoyle

Jubilee

J-M Consolidated

Jellicoe

Jerome

Kenwest

Kenapo

Kenricia

Lebel Oro

Mayboro

Mace

Morris Kirkland

Nakhados

New Golden Rose

Orelia

Porcupine Lake .

Ranson

Ronda

Roven River ....

Regnery

Sandy Beach

St. Anthony

Straw Lake

Tianoga

Tyranite

Uchi

Upper Seine .... Yama

298 18 134 1,340 ' 2 49 841 984 114 1,484

1,785

966

2,190

6 94

2

615

1,657

46

99

112

1,977

82

1,156

4,363

102

Total-39 mines 21,859

* No dividends but paid a small return on capital investment on closing.

In the early days of the war, when gold was so necessary to enable Canada to buy goods and materials in the United States, the gold mines were asked by the then minister of finance to increase their production, with the result that gold production was increased from $166,205,990 in 1938 to $205,789,392 in 1941. This great increase in production was brought about as a general economic loss to the mines, because they mined their richest veins in order to get production.

Not only did they trespass upon their ore reserves, but they paid taxes on fictitious profits, because at that time they were unable to do the development work which normally a mine must do to keep ahead. The result was that the mines paid taxes on those profits, and did not get any relief from taxation at that time.

I say to the minister, in closing, that in spite of this body-blow which has been admin-

The Budget-Mr. Gour

istered to the industry those engaged in the industry, management, men, prospectors and everybody else connected with it are still good Canadians with a determination that the industry will survive and that it will continue to play its full part in the Canadian economy.

I would ask the minister to give consideration as soon as he can to some relief for this industry, not by way of subsidies, but by some real and considered relief which would be helpful to the industry in these difficult times.

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink
LIB

Joseph-Omer Gour

Liberal

Mr. JOSEPH OMER GOUR (Russell) (Translation):

Mr. Speaker, I am pleased to take advantage of the opportunity which is now afforded me to congratulate you on your elevation to your distinguished post and especially on the efficiency with which you are discharging your duties. I hasten to compliment also the government and all the ministers, especially the Right Hon. the Prime Minister (Mr. Mackenzie King) about the manner in which they have directed this country's affairs during six long years of war. I commend them for having so well prepared this country for the post-war period, through trade treaties, and the loans that have been made and those which will probably be granted in the near future. Such action ensures us for many years to come a market that will mean good prices for our farmers and employment for all our workers, owing to the fact that we shall have an export trade greater and more profitable than ever before.

In no country of the world, not even in the United States our great and prosperous neighbour, has inflation been better controlled, and the middle class, comprising the majority of the people, better protected than in Canada.

I think it behooves me to congratulate all the cabinet members. I must first mention the Right Hon. Mr. Mackenzie King, that great statesman, who is admirably leading our country in accordance with the high traditions set by our revered and lamented leader, Sir Wilfrid Laurier; I must also commend our Minister of Reconstruction (Mr. Howe) who arouses the envy of all other countries on account of his ability and his unmatched talents; our Minister of Transport (Mr. Chevrier), who organized his department so as to move through Canada and to Europe, more equipment, more soldiers and more civilians than even the most optimistic observer would have thought possible; our Minister of Labour (Mr. Mitchell) whose ability, consideration and absolute frankness for the worker have gained their esteem and who has obtained for them wages in keeping with a high standard of living; the Right Hon. Minister of Justice (Mr. St. Laurent) the 63260-216J

pride of Canadians, for his personality, his ableness and his great sense of fairness which no one ever questions; our Secretary of State (Mr. Martin) who has so worthily represented our country abroad on various occasions and who, lately, has piloted through the house a bill of which our country is justly proud;, our Minister of Health (Mr. Claxton) for all the social measures he has presented, especially family allowances, besides the numberless others he would so willingly support were our finances such as to warrant them; the Minister of Public Works (Mr. Fournier) who,-due to his integrity, is so successful in the administration of his department and attends to the erection of public buildings and numerous works contributing to the wealth of Canada, in spite of the inadequacy of the amounts voted for these purposes; our ministers of National Defence (Mr. Gibson and Mr. Abbott) who have so well organized our war effort, have proceeded with demobilization with so much speed, and have implemented more measures benefiting our veterans than any other country and all the other members of the cabinet who are so well qualified and of whom I shall have more to say later for the work they have done.

I feel it my duty also to commend the Minister of Finance (Mr. Ilsley) for the splendid budget he has brought down. He has shown evidence of unprecedented ability in thus balancing a budget of such staggering proportions not only without increased taxation but, on the contrary, allowing substantial reduction for people of modest means. We may therefore count on his finding means to repeat this performance in the future.

I should not want to miss this opportunity, Mr. Speaker, to express to the minister my whole-hearted admiration for the splendid way in which he has managed the affairs of his department. His financial ability has been of great service to his country and his fellow-citizens. By his courage he has established and maintained price control thus protecting the bulk of our population, our farmers, our workers, and people of low income, against the abuse of trusts, so that the public shall not be exploited as they were during the first world war. I hope that price control will be maintained until the return of normal conditions when offer shall again exceed the demand for all the commodities essential to a high standard of living for all Canadians and in order that competition shall prevent profiteers throughout the country to take unfair advantage of shortages and of every opportunity to exploit the people and satisfy their greed.

342b

The Budget-Mr. Gour

It may however become necessary to raise the prices of certain commodities, as happened recently in the case of farm machinery, a measure which I cannot criticize because we have had ample evidence that the manufacturers could not produce at a profit. We may be sure also that they would not have taken steps to increase their production. They might even have curtailed their production, thus depriving our farmers from machinery they sorely needed in view of the scarcity of labour.

Our farmers have a greater need of equipment than in the past and a shortage of farm machinery would impair increased production. I take this opportunity of congratulating our farmers on their splendid effort during the war years when they intensified production while

400,000 of their number had left the land to serve with the armed forces or in various other fields.

May I remind my hon. friends in this house, Mr. Speaker, that if we do not grant the farmers all the means of production, the whole country will suffer. I confess that I find the price of farm machinery very high. A farmer needs a great deal of capital to secure everything he needs for profitable operation. If [DOT]new increases raise production costs on the farm, the government must lend a helping ihand as was done when the government increased the prices of bacon, eggs, butter and .other agricultural products, or add to the -farmers' revenue by grants of some sort.

I submit, Mr. Speaker, that the farmers want a more generous agricultural loan, similar to that extended to veterans by the government.

I compliment the government for the fine legislation implemented in favour of our veterans which does credit to our country.

Mr. Speaker, I would now ask hon. members to consider the riding of Russell, which. I have the honour to represent, because it truly reflects the whole of Canada. In the first place, its population is made up of all creeds and all races, French-Canadians, English, Scottish, Irish and others, living in perfect harmony.

In think my constituency is one of the best agricultural districts of Canada, on account of its production of butter, milk, cheese, pork and eggs. A large part of our farm products is sold in the beautiful city of Ottawa, the capital of our country, of which we are so proud on account of its growth and of its attractions, and which is remarkable for its fine people and its distinguished visitors. *

[Mr. Gour.l

Although farming is the main occupation in my constituency, the district is noted for some very pretty small towns and attractive villages which hope for more industries. I take this opportunity of appealing to the government and to manufacturers and of informing them that they would receive a warm welcome in the county of Russell. To my mind, it would be beneficial to disperse our industries rather than concentrate them in large urban centres; since, in the event of another war, the atomic bomb could destroy a city in a few minutes, it would be advisable to scatter these industries throughout the rural districts where life is less expensive for the worker and where the farmer could sell his products closer to home.

In my constituency of Russell, one finds in Rockland, Orleans, Embrun, Russell, Cassel-man, Bourget, Clarence Creek, and elsewhere, ideal locations for any type of industry and capable workers who would certainly cooperate with any establishment set up in the district. The Rockcliffe and Uplands airports with which you are familiar are also in the vicinity, and you are well aware of the immense service thdy rendered the country in war time and of their present contribution.

I shall prove to you that we can rightly be proud of this fine constituency of Russell, because for 59 consecutive years, that is, since 1887, it has never failed to elect a Liberal member to the House of Commons in Ottawa.

We shall celebrate that diamond jubilee shortly and I wish to invite the Prime Minister and all the hon. members to join in with us in celebrating this glorious event and come back later when we celebrate the centenary. I do not think the representatives of Russell have taken too much of the time of the house and it is not my intention to abuse this privilege, as I believe that needlessly protracted discussions cost the country millions of dollars and tend to increase taxes.

The electors of my constituency feel that their interests are well taken care of by the Liberal party. A moment ago I congratulated the members of the cabinet for this unparalleled era of prosperity prevailing in my constituency and throughout Canada. This is proven by the fact that during the ninth victory loan the sum subscribed was higher than the total amount of all the loans launched during the first great war.

The Budget-Mr. Nicholson

In order to thank Providence- for the most prosperous era in the history of our country, which is unequalled in the whole world, I believe that the government could not find a better time to appoint an ambassador to the Vatican. We should be proud to do so, since ours is such a Christian country, and in view of the fact that forty other countries have already led the way, namely; France, Belgium, Great Britain, United States, Japan, China, Bolivia, Brazil, Chile, Argentina, Ireland, Colombia, Cuba, Haiti, Ecuador, Peru, Venezuela, Germany, Czechoslovakia, Rou-mania, Finland, Italy, Spain. Portugal, Luxembourg, Holland, etc.

(Text)

Topic:   THE BUDGET
Subtopic:   DEBATE ON THE ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
Permalink

July 12, 1946