July 12, 1947

REGULATION OF TRAFFIC AND PARKING


Hon. ALPHONSE FOURNIER (Minister of Public Works)1: On June 9 two hon. members of the house complained of traffic conditions on parliament hill. The hon. member for Waterloo South (Mr. Homuth) put the following question: I wish to ask the Minister of Public Works if something cannot be done to stop cars from speeding around the parliament buildings and on the roads leading to the gates of the parliament buildings. The leader of the C.C.F. group (Mr. Cold-well) added this: May I ask the Minister of Public Works if he will at the same time take into consideration the strengthening of the hands of the mounted police who look after the automobiles around this building. At that time I replied that some doubt had been raised as to the authority of the mounted police to enforce these regulations, and said I would submit this question to the justice department. The question was studied by the Department of Justice and yesterday I received their opinion, which reads as follows: With reference to the act to provide for the regulation of vehicular traffic on dominion property. I have come to the conclusion and so advise that this extends and applies to the roadways situated on parliament hill. An examination of the authorities persuades me now that the courts would be obliged to hold that these roadways have not been dedicated as public highways. Consequently it is not necessary to amend the statute. Following this advice I may state that it is the intention of the government to enforce these regulations. We hope all hon. members and officials of the government will cooperate with the police so they may carry out their duties. We have had quite a bit of trouble in the last two or three months, but I hope this announcement that we will enforce these regulations will reestablish satisfactory conditions on the hill.


REPORTS OF COMMITTEES


Eleventh report of standing committee on banking and commerce.-Mr. Cleaver. Third and fourth reports of standing committee on miscellaneous private bills.- Mr. Maybank. . Third and fourth reports of standing committee on miscellaneous private bills.-Mr Maybank.


INCOME TAX ACT

GENERAL REVISION APPLICABLE TO 1948 AND SUBSEQUENT TAXATION YEARS


Hon. DOUGLAS ABBOTT (Minister of Finance) moved for leave to introduce Bill No. 454, respecting income taxes. He said: Mr. Speaker, in my budget speech some weeks ago I expressed the hope that I would be able to place before the house this session a revision of the income tax law. It is, perhaps, unnecessary for me to repeat that it is not the intention of the government to press this bill for enactment at the present session. Nor, indeed, is it my wish to invite debate on the measure at this time. The purpose of introducing the bill now is to give members full opportunity to study it before next session, to explore thoroughly various aspects of the legislation, and to be in a position to give parliament the benefit of their views when the bill is presented for enactment next session. It is hoped that this bill will receive wide circulation in the hands of the public. Various organizations throughout the country, such as the Canadian Bar Association, the Dominion Association of Chartered Accountants, and the Canadian Tax Foundation, are well equipped from the technical point of view to render a useful service to the country through an exhaustive analysis of this legislation. I can assure all interested groups that suggestions for improvement in the statute will be welcomed and given careful study by the government. A bill of this kind is, of course, definitely non-political. I think all parties agree that we must have an income tax. We are unanimous in our desire to see the best possible law on our statute books. All agree that we should strive for simplicity and certainty. The law should lend itself to efficient administration. We are, I think, all on common ground in seeking these objectives. Once the best possible instrument has been forged, it then, of course, becomes a political matter as to how far the instrument will be used as a revenue measure and how the total burden imposed by it will be distributed among taxpayers. It is not my intention to delay the business of the house at this time with a detailed account of how the new bill differs from the present Act. I think, however, it might be helpful if I briefly indicated the general plan of the revision, giving some of the highlights of the new measure, and pointing out certain methods used to secure greater simplicity and directness. To assist in getting a picture of the new arrangement of the law I have had Income Tax Act a comprehensive table of contents prepared and inserted at the beginning of the bill. Also, in addition to marginal notes opposite each section or subsection, members will find on each right-hand page references to the corresponding provisions in the present law. This will readily enable comparisons to be made between present and proposed legislation. The bill divides the subject matter into eight parts as compared with eighteen parts in the present Act. Part 1 covers the general income tax on individuals and corporations which, of course, is the main body of the law. Part 2 imposes the taxes on non-residents, which taxes are deducted at the source on payments leaving Canada. These two parts cover the fundamental part of the taxing statute. The content of the remaining parts can easily be determined by running through the various headings. As I have stated, part 1 deals with income tax proper, and it is set up under eight divisions. It will be seen the bill starts off directly with what is known as the charging section. It commences by stating who is liable for tax. This direct way of starting a piece of legislation of this kind may be regarded by the house as a perfectly obvious and logical way to open such a statute. However, under the present law the charging section is not reached until thirty-eight pages of other material have been presented. Perhaps the house would bear with me if I read section 2 of the bill, because I think it offers a fair sample of the simplicity of language and the directness of the approach in the new law which have been among the main objectives in the revision. 2. (1) An income tax shall be paid as hereinafter required upon the taxable income for each taxation year of every person resident in Canada at any time an the year. (2) Where a person who is not taxable under subsection one for a taxation year (a) was employed in Canada in performing the duties of an office or employment at any time in fhe year, or (b) carried on business in Canada at any time in the year, an income tax shall be paid as hereinafter required upon the part of his taxable income for the year that was earned in Canada (3) The taxable income of a taxpayer for a taxation year is bis income for the year minus the deductions permitted by division III. Division II starts in by giving general rules for computing income. I should perhaps mention here that after exhaustive study of the legislation of other countries and of the nature of the problems involved, it was decided not to attempt a specific definition of income. So far as I know, no country has achieved a satisfactory definition. Accordingly, the general scheme of the law, as will be seen by section 3 is to tax jdl income and to indicate the general sources of income, that is, income from businesses, property and offices or employments. Section 4 follows up this general indication by stating that income from a business or property shall be determined in accordance with generally accepted accounting principles. We believe that by providing a general formula of this kind the best practical common sense results will be achieved. The income tax division in making assessments will interpret the legislation and the taxpayer, if he disagrees, may have his case heard by the new income tax appeal board and, if still not satisfied, take it to the exchequer court. I should like to call particular attention to division VIII at the end of part I. The house will observe that it provides for what might be called a set of boxes for exceptional kinds of taxpayers or special provisions not of general application. In the previous law these items cluttered up the main body of the law. A separate division for these unusual cases or situations greatly simplifies the part of the statute which is of general interest to the ordinary taxpayer. Special attention has been given in this revision to the question of ministerial discretion. The house may recall that the income tax legislation of last year provided for an ad>-visory board to review cases where ministerial discretion had been exercised under forty-three designated provisions in the law. The house may be interested to know that of these forty-three ministerial discretions only two remain in the new bill. Furthermore, these remaining two do not affect the amount of any tax payable. One requires the concurrence of the minister upon the change of a fiscal period of a taxpayer, and the other gives the minister power to determine who shall be the taxpayer where multiple trusts are set up in favour of the same beneficiary. In cases where some degree of flexibility is felt necessary we provide that rules shall be determined by regulations fixed by order in council, which will be subject to review by the courts and will not involve the objectionable principle of ministerial discretion, as is the case in the existing law. Possibly the house would be interested in the method adopted in eliminating discretions. This has been done by converting the discretion into a rule of law dependent on a question of fact. An example will make this clear. For instance, subsection 2 of section 6 in the present law states that the minister may disallow any expense which he in his discretion may determine to be in excess of what is reasonable or normal for the business carried on by the taxpayer... Income Tax Act



The corresponding provision in the bill provides that , Where a disbursement or expense or a part thereof is otherwise deductible, only such part thereof as is reasonable in the circumstances may be deducted in computing income. In practice the department in making an assessment may disallow a certain portion of an item of expense as being unreasonable in the circumstances. If the taxpayer is dissatisfied with hke assessment on the basis used by the department he can appeal the assessment and the mew income tax appeal board will pass judgment on the case, that is, the court will decide whether the department has acted reasonably. The government is prepared to give this system a thorough trial. It may be found, however, that certain discretions may have to be reinstated if experience shows that the subject matter is not appropriate to judicial determination. In view of the extent to which ministerial discretions have been removed from the law, it will now be unnecessary to proceed with the appointment of the income tax advisory board provided for in last year's legislation. I shall recommend, therefore, a.t the next session of parliament that the authority for this board and for appeals from ministerial discretion be repealed ab initio. I trust the house will pardon me if upon this occasion I express a certain pride in the work that has been accomplished in this revision of our income tax law. I should not, however, like to give the house the impression that I think this bill is by any means perfect. As a matter of fact I remain open-minded on some of-the changes in the new bill. It is probable that further study will require further changes. I should also like to make it clear that because of pressure on my time some important questions have not been finally settled. I quite realize, for example, that the various penalty provisions need careful examination. Some of these outstanding items will be dealt with later when the legislation is introduced for enactment in the 1948 session of parliament. In the- -meantime further consideration is being given to them. It would be my thought that when the bill is introduced in 1948 to make it retroactive to January 1st of that year. An attempt has been made by the translators to have the translation into French follow closely with the original drafting in English. I find, however, that the numerous last-minute changes in the draft have not yet fully been dealt with by the translators, with the result that -a few days may elapse before the French text of the bill is available. I am sorry about this, but I am assured that the copies in French will be available for circulation shortly. I should not like to close this statement without saying a few words about the officials who to a great extent are responsible for the work embodied- in this bill. Over the past year senior officials of the departments of justice, finance- and national revenue have, in addition to their regular work, devoted an incredible amount of time and effort to this revision. It has meant a great deal of night work and sacrifice of leisure. Unless a person has had some experience in attempting to revise an exceedingly complex statute of this kind he can have no idea of the difficulties involved in re-writing such a law. I have personally taken a great interest in the work, and speaking from my close association with the officials in this matter I wanted publicity to express appreciation to them for their excellent work.


PC

James MacKerras Macdonnell

Progressive Conservative

Mr. J. M. MACDONNELL (Muskoka-Ontario):

Mr. Speaker, for obvious reasons I shall make only brief comments on two things. I think we are all g-lad to know that this long overdue measure is now-not before us, but in sight of being before us for action. I do not propose to say anything more except that in the first budget speech I heard in this house, which was nearly two years ago, the Minister of Finance referred to this measure and said it was overdue. It was certainly overdue and I regret the time that has elapsed since without any general revision of the act. However, that is past.

Just a comment on what the minister has said. If this bill is successful, as the minister indicated, in introducing simplicity of language and directness of approach, then certainly the minister is entitled to the pride which he says he has in it. I was glad that he referred to his openmindedness, although with legal caution he qualified that by saying that he could not be expected to be open-minded on all questions.

I am sure we all agree that- we owe a debt to those civil servants who have worked on this and who have produced, in its first stage at any rate, a measure which has been so long needed.

Motion agreed to and bill read the first time.

Topic:   INCOME TAX ACT
Subtopic:   GENERAL REVISION APPLICABLE TO 1948 AND SUBSEQUENT TAXATION YEARS
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HUDSON BAY MINING AND SMELTING

*WORKS DECLARED FOR THE ADVANTAGE OF TWO OR MORE PROVINCES-CONDITIONS OF EMPLOYMENT


Hon. HUMPHREY MITCHELL (Minister of Labour) moved the third reading of Bill No. 452, respecting the Hudson Bay Mining and Smelting Company Limited. Motion agreed to and bill read the third time and passed. ___________Supply-Reconstruction and Supply



The house in committee of supply, Mr. Macdonald (Brantford City) in the chair.


RECONSTRUCTION AND SUPPLY


Atomic energy control board- 355. Administration expenses, $115,000.


PC

Howard Charles Green

Progressive Conservative

Mr. GREEN:

Just yesterday we received the first annual report of this board, which was authorized by a special act last session. There is a large increase over last year's figure for administration expenses which I should like the minister to explain. The minister will remember that during the debate last year there was some discussion as to whether it would be a full-time board or a part-time board, and apparently the decision has been reached that the board will act only on a part-time basis.

According to page 3 of the report the board has held only five meetings since it was set up. Meetings were held on October 16, 17 and 18, 1946; one was held on January 6, 1947, and a final meeting is shown here as having been held on March 15, 1946, but I presume that should be March 15, 1947. This board was given the most drastic powers that have ever been given to a board by any Canadian government. In addition to that, parliament was told: Hands off; the atomic energy control board must not be interfered with by a parliamentary committee; there is to be "no check at all of any kind; the board is supreme." The picture we have today is that this part-time board in effect has met only three times since it was set up, because the first three meetings were on consecutive dates. The members of that board are engaged on other duties; I believe that General McNaughton, the chairman, spends a great deal of his time at the united nations meetings, and quite properly so-

Topic:   RECONSTRUCTION AND SUPPLY
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LIB

Clarence Decatur Howe (Minister of Reconstruction and Supply)

Liberal

Mr. HOWE:

Or on atomic energy business.

Topic:   RECONSTRUCTION AND SUPPLY
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PC

Howard Charles Green

Progressive Conservative

Mr. GREEN:

The time has come when there should be some watchdog committee of the Senate and House of Commons with respect to atomic energy. We have been told by the minister that Canada is concerned only with the production of atomic energy for peacetime purposes, and that is another very good reason why there should be no hesitation in giving parliament some check over the matter. I do urge, as I did1 last year, that there should be some parliamentary check. This House of Commons, representing the people of Canada, is entitled to have a hand in the control of atomic energy developments. It is a thoroughly bad principle to give these very drastic powers to a board which is not

under control of the house, particularly a part-time board which is doing this work only as a sideline. The minister said last night that the operations at Chalk River were being carried on not by this board but by the national research council. I think the time has come, Mr. Chairman, when some effective method of control should be given to parliament.

Topic:   RECONSTRUCTION AND SUPPLY
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LIB

Clarence Decatur Howe (Minister of Reconstruction and Supply)

Liberal

Mr. HOWE:

The board was intended to be a part-time board except for the chairman, who is on full-time duty. Unfortunately his paramount duty in connection with atomic energy has been to represent Canada on the atomic energy panel of the united nations. General McNaughton has been in almost continuous session on that panel. He has been chairman of it from time to time and has been a very active member.

One reason why the expenditure will be larger next year is that when General McNaughton was appointed, chairman he was on the payroll of external affairs, and that is stiill the situation. His salary was not charged to the atomic energy board during the past fiscal year.

The members of the board, while they have not met together formally, have been very active on atomic energy work. Dean Mackenzie spends a good portion of his time at Chalk River and is engaged in matters having to do with the work of the board. My own deputy minister, who is also a member of the board, has visited Chalk River frequently and has devoted a great deal of his time to the board. The same applies to the other members. Mr. Bateman has been very active on the raw materials procurement side. To form a judgment of the board on the number of meetings it has held in its initial stages would be fallacious. Another factor to be taken into account is that one of the principal duties of the board is to deal with products and bv-products of the plant at Chalk River. It takes some months to recover those by-products, and therefore the problem of disposing of them has not become an active problem as yet, although it will so become before the end of this calendar year.

The board has carried out the duties given to it by parliament and has carefully protected the raw materials which are produced in this country. There again that task has been simple because only one company is producing the raw materials and that company is government-owned. I have no doubt however that production by private interests will appear and the production of raw materials will require control by the board,. I suggest that everything is under control. My

550S COMMONS

Supply-Reconstruction and Supply______

hon. friend has said that since they are producing the products for peace-time uses only, there should be no secrecy.

Topic:   RECONSTRUCTION AND SUPPLY
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PC

July 12, 1947