April 28, 1949

CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

I am glad to give that information to my learned and hon. friends. Not being a lawyer, I shall make no charge for it. The next group of people to which I wish to refer are teachers. Perhaps some more hon. members will be surprised at the information I am going to give and likewise I offer it to them without charge.

Income Tax Deductions

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

General counsellor for the country.

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?

Donald MacInnis

Mr. Maclnnis:

Why not?

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

What I am really doing is acting as aHw>os*te for a group that does not get the same privilege given to other groups.

I have in my hand the Saskatchewan Bulletin of February 1949, published by the Saskatchewan Teachers' Federation. On page 49 appears a paragraph with respect to income tax which ends with this sentence:

You are reminded that federation fees are an allowable deduction.

As most people know, doctors are allowed to deduct the fees they pay.

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CCF

Frederick Samuel Zaplitny

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

Mr. Zapliiny:

Perhaps the minister put it in himself.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

In reply to the hon. member for Dauphin I would say that I think that provision was in effect before the present minister took over the portfolio.

Yesterday I asked the Minister of National Revenue a question with regard to a newscast from Lethbridge, Alberta, a week or so ago in which the announcer stated that the chamber of commerce of that city had been informed that membership dues paid to the chamber could be deducted from the income of members before they paid their income tax.

Most of these fees that are allowed as deductions, assuming that the fees paid to the chamber of commerce are in the same class, are paid in connection with the carrying on of businesses.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Onlario):

Are

they obligatory?

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

That is my point. They are obligatory, particularly in the case of trade union members who have closed shop contracts. Such men simply could not work in a closed shop without being members of the union, a principle with which I agree. And don't forget the Rand formula. Similarly a lawyer cannot practise law in a province unless he is a member of the law society and pays his dues. I submit that, as all these people are permitted to deduct their fees from their income, the same privilege should be granted to trade union members.

I submit that there is a parallel between these various deductions that are allowed and the permission given to businesses to deduct certain amounts as business expenditures in connection with the carrying on of those businesses. The practice in the United States is quite clear. They permit trade union dues as a deduction. They are treated as an expense incurred in the carrying on of a business. I have on my desk a copy

Income Tax Deductions of a letter from the corresponding department in Washington to the international typographical union pointing out that their members have the right to deduct their union dues from their incomes before computing their income tax because it is regarded as an expense incurred in connection with the carrying on of their business. This is the practice with respect to trade union dues generally in the United States, whether the members are employed in closed shops or otherwise.

I think I have stated the case sufficiently. I do hope that the government will give consideration to the matter. I submit that it is possible for the Minister of National Revenue to deal with it administratively. I suppose the minister is deluged with requests of various kinds that certain things be considered as allowable deductions, particularly those that would come under the heading of charitable gifts. One frequently hears appeals to contribute to this charity or that benefit to which is appended a notice to the effect that the contribution will be allowed as an income tax deduction.

Because of the provision in the Income Tax Act requiring secrecy in these matters it is difficult to get complete information as to what allowances are being granted. If my Bill No. 10 could get through it would change that picture a little. I am simply saying now that it seems to me that the Minister of National Revenue could rule that these dues are in the same category as the fees paid by lawyers, doctors, teachers and even those paid by the members of the Lethbridge chamber of commerce.

The Minister of National Revenue must exercise similar powers of judgment in connection with pension plans. The act does not specify the pension plan contributions that are allowable as income tax deductions. All that the act says is that contributions will be allowed in the case of approved pension plans and the minister has the right to approve or otherwise.

I submit that there is nothing in the Income Tax Act to prevent the Minister of National Revenue ruling as I have suggested. He may argue that there is nothing in the act that states he must rule in that way, but I submit that there is nothing to prevent him from ruling as I have suggested. I ask him to give further consideration to the matter on that basis.

If the government still feels that it is a matter of policy which has to be effected by a change in the Income Tax Act, then I address my appeal to the Minister of Finance (Mr. Abbott), and hope that when we get to the stage of budget resolutions, whether it is in this parliament or the next, there will be proposed

an amendment to the Income Tax Act to provide this change. I repeat that the amount of tax that has to be paid because this allowance is not granted is not great, but that is not the point. I think I overheard some of my lawyer friends, when we were discussing their case a while ago, say that they did not bother to apply for the deduction. Probably that is so because some of them figure it would not save them very much anyway, but everyone knows how deeply people feel about principles, particularly when they feel they are being discriminated against. I strongly appeal to the government to resolve the matter one way or the other, either by an administrative decision by the Minister of National Revenue (Mr. McCann), or by the Minister of Finance amending the Income Tax Act, to make sure that trade union dues will be allowed as an income tax deduction.

The grievance, to which I wish to refer, is that as yet the government has done nothing, despite the fact that the matter has been raised a good many times, to introduce legislation in Canada comparable to the railroad retirement act of the United States. This matter was again highlighted in my own mind, and in the minds of railroad workers whom I know, by the announcement a couple of weeks ago that there was to be a rather substantial lay-off of Canadian National Railway employees. We were gratified when that announcement was followed by an order that these lay-offs were not to take place. I regret to say that the information I get from the Transcona shops at Winnipeg is that, although the huge lay-off that was predicted about two or three weeks ago was cancelled, small layoffs of fifteen or twenty employees a week are taking place. I hope that we will not be confronted with that sort of thing, and I urge that the government should not give the lead in the direction of unemployment as far as the Canadian National Railways are concerned.

It is my purpose now to discuss not so much the question of maintenance of employment for our railroad workers, which is extremely important, but rather the question of their security in terms of a proper pension system and other benefits. Frequent references are made in the house by myself and others to the need for a real advance in the field of social security. We recognize that to make that advance we must get, as soon as we can, a contributory over-all social security plan. The objection that members of the government raise to immediate action is that, as they see it, the British North America Act would have to be amended. I remind the government, however, that railway workers come under federal jurisdiction, and that that jurisdiction is provided for in the British North America Act itself. Here is a very large group of workers in Canada for whom such a plan

could be instituted without amendment of the British North America Act. I bespeak consideration of the case of railroad workers on their own behalf, but I also bespeak it because I am satisfied that if we could get started for our Canadian railroad workers something like the railroad retirement act of the United States it would not be long until that plan would be enlarged for all workers, and all people of the country.

Many people have the notion that railroad workers have good pension plans already. That notion is only partly true and is largely illusory. The two main railroads of Canada have each their plans. They are similar, although I do not think there is any doubt but that the plan of the Canadian National Railways is a little better than the plan of the Canadian Pacific Railway. I will not go into all the discussion that I have instituted in the past as to grievances about the way in which the Canadian Pacific Railway treated its employees in 1919. I still hope that case can be rectified before these men are all gone, as called for by a resolution of mine on the order paper, but at least we now have on the statute books legislation that will prevent such an injustice ever being repeated.

I said a moment ago that the Canadian National plan is in many respects a little better than the plan of the Canadian Pacific Railway, but even the situation with respect to C.N.R. employees is not so rosy as might be the general impression. The Minister of Transport (Mr. Chevrier) gave information, to be found in Hansard of March 28, in response to questions I had asked. That information shows that at the present time there are 14,368 retired C.N.R. employees on pension. Of that number of 14,368 only 2,526 have pensions of $80 a month or over. I mention that figure because, with the amendment we passed yesterday $80 becomes the old age pension for a retired couple. Out of the 14,368 C.N.R. pensioners only 2,526 have a pension equal to the amount of the old age pension for a retired couple. On the other hand, there are 2,743 whose pensions are only $25 per month. In fact there are fifty-five whose pensions are under $25 per month. There are another 4,016 whose pensions are more than $25 per month but less than $40 a month. That is really very poor.

Some of us welcome every advance that has been made in industrial pensions, and we are glad to see the number of those increasing, but we must not try to kid ourselves with the idea that even the railroads of this country-and they have perhaps the best large-scale industrial plans going-have solved the problem of old age security for the workers of Canada. I could go further into the figures of the Canadian National Railways, but I have

Pensions for Railway Employees given enough to indicate that their picture is not as rosy as it is sometimes thought to be.

As to the Canadian Pacific Railway, I have endeavoured to obtain comparable information. As a matter of fact, I addressed a letter to the Minister of Transport, thinking that he might have a little better stand-in with the officials of the Canadian Pacific Railway than I might be expected to have, and he very kindly wrote to the officials of that railway asking them for information comparable to that which he had given in this house with respect to the Canadian National Railways. For their own reasons the Canadian Pacific Railway refused to give that information to the Minister of Transport, but I am satisfied that if we had it the picture would not be any better than that of the C.N.R. retired employees, and would probably be much poorer.

Please bear in mind, Mr. Speaker, that that is about all there is in the way of social security for railroad workers in this country, and remember that they come under federal labour jurisdiction. On the other hand, there has been in existence in the United States for a long time what is known as the United States railroad retirement act. It was first brought into being back in 1935, although it has been amended since that date.

The railroad retirement act of the United States provides pensions for their employees roughly 30 to 35 per cent better than any pension plans provided by any of the Canadian railroads. In addition to that, the plan in the United States makes it possible for railroad workers to move around from one railroad to another without interfering with their pension rights. It will be noted that the pension is administered by a federal government board. The Minister of Finance (Mr. Abbott) will agree with me that mobility of labour is a good idea. He brought in an amendment to the Civil Service Superannuation Act-

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PC

John Thomas Hackett

Progressive Conservative

Mr. Hackeit:

It has all the characteristics of a private company.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

A year or two ago he brought in an amendment to the Civil Service Superannuation Act which provided for that sort of thing, namely for people moving into and out of the government service. In other words, he would agree with me that it is a good thing to encourage mobility of employment.

Under this pension scheme former pensioners whose pensions were too low had those pensions raised to a minimum of $60 a month.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Muskoka-Ontario):

What are the proportions of contribution?

Pensions for Railway Employees

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

I am afraid I have not those details immediately available. I may say, however, that it is a contributory plan, on a three-way basis: the government, the railroads and the employees.

In addition to the provision for retirement there are also provisions for disability, including the provision for pensioning off if disability occurs after fifteen years of service.

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PC

John Thomas Hackett

Progressive Conservative

Mr. Hackeit:

Whom is it administered by?

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

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

Mr. Knowles:

By the railroad retirement board, which is a federal government agency. And, when I am speaking of that, may I say that applications for pensions go to the railroad retirement board, and it is that board which awards the pensions. The only qualifications considered are years of service and wage rates upon which the contributions of the employees have been based.

The point is that the principle of pension as of right is felt at least by the workers to be much more clearly recognized by the government plan in the United States than by either of the railway plans here. In addition to the protection for railroad workers, both in terms of old age security and disability protection, there is a protection for the wives and dependents of railroad workers.

Hon. members might be interested in this. In addition to a copy of the act as amended,

I have some of the literature put out by the railroad retirement board. One would almost think that it was a private company with a product to sell, trying to show just how good that product is. Here is one-"The Railroad Retirement Act; what it does for widows, children, parents of railroad employees." Here is another: "How to compute retirement annuities under the Railroad Retirement Act"; and another: "How to compute survivor benefits under the Railroad Retirement Act"; and another, "Benefits for railroad workers and their families under the Railroad Retirement and Unemployment Insurance acts." Then, here is a colourful little booklet which bears on the front of it a design showing a railway train going down the track, and this booklet bears the slogan, "If you work for a railroad" -and then when one turns the pages he finds indicated those various things which might happen to him, and advice as to how to go about getting the benefits to which one would be entitled.

Then there is one other benefit I wish to mention, which applies to married women railroad workers. There is an allowance for maternity benefits. Then another of these benefits is a sickness benefit, in other words an allowance for loss of income as well as the money required to help pay hospital and doctor bills.

I am sure the Minister of National Health and Welfare (Mr. Martin) must have studied these plans, and he must be interested in the measure of over-all social security which has been provided in the United States for this large group of workers, namely the railroad workers in that country.

As I said a moment ago, the railroad workers in this country do have certain contact with those of the United States. They have those contacts through their international unions, and also contacts because certain trains operate across the international boundary line. As a matter of fact there is a particular difficulty or grievance which arises among our Canadian National Railways employees, some of whom travel partly in the United States and partly in Canada. Operating in the United States they qualify for a certain portion of the United States railroad pension as a result of their service in that country. These employees who do get that partial pension from the railroad retirement board in the United States find that this sum is deducted from the pension which otherwise they would receive from the Canadian National Railways. That is another grievance which I have taken up with the Minister of Transport (Mr. Chevrier) on a number of occasions. I have not yet been able to persuade him to rectify it, but I hope this may be done in due course. Of course this grievance could be wiped out if the government would place on our statute books a railroad retirement act for railroad workers in this country, similar to the legislation in the United States.

May I repeat what I said earlier, that many of us are keenly interested in seeing achieved here contributory over-all social insurance for all the people of this country. I do hope that that day is not far distant. But when I think of the difficulties which seem to beset dominion-provincial relations, and when I hear the government telling us that so-and-so cannot be done because it would require an amendment to the British North America Act, then I conclude that these things are still some distance off.

However, here is a field in which that commendable objective which government spokesmen say is their objective could be started. Railroad workers come under federal labour jurisdiction, and I say it would be a simple matter for the government to bring in this kind of legislation.

I thank ministers of the government and hon. members generally for the attention they have paid to my comments respecting these two grievances. I hope something may be done about both of them, and in the not too distant future. I hope that on the one hand

trade union dues will be allowed as income tax deductions, and on the other hand that it will not be long until the government will take this step toward over-all social security by introducing here in Canada an act like the railroad retirement act of the United States.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

Mr. Speaker, I rise on a question of privilege. This afternoon when I was speaking I referred to a statement made by the Prime Minister (Mr. St. Laurent) last fall, in which he had referred to the sum of $175 million as peanuts. I was challenged by the Minister of National Health and Welfare: (Mr. Martin) to produce the statement. I 'aid at the time that it was a press statement which I did not have with me at the moment. I have it now, and I find I was guilty of inaccuracy-

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LIB

James Sinclair (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. Sinclair:

As usual.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

That is about as sensible a remark as we ever get out of the smart aleck who has just made it. The inaccuracy was this: I thought the amount was $175 million to which the Prime Minister had referred as peanuts. I find that it was $180 million. I cannot be accused of prejudice in choosing the source of the report, because it is contained in the Toronto Daily Star of November 6, 1947. This is the paragraph-

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Peter Francis Martin

Mr. Marlin:

Make sure you have the whole text.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. Fleming:

I am reading it from the text in the Toronto Daily Star.

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Peter Francis Martin

Mr. Marlin:

Make sure you have the whole text.

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April 28, 1949