Mr. Knowles:

Is the minister aware of the fact that statistics produced by the Department of National Health and Welfare show that illness is more prevalent among those in the lower income groups than among those in the higher income groups, and that the argument the minister is now employing is that these people in the lower income brackets must be denied this benefit because if you give it to them you must give it to others as well?

Mr. Garson:

Mr. Speaker, I know the hon. gentleman does not like these facts, because this idea of his is strictly a "phony."

Mr. Knowles:

Then why did the government with such fanfare reduce the figure from 5 per cent to 4 per cent a number of years ago, and from 4 per cent to 3 per cent in 1953? Was the minister's government producing a "phony" when it did that?

Mr. Garson:

No, it was not. Perhaps the hon. gentleman would go to the trouble to find out the facts; it is a very good idea to have some of the facts before launching on arguments of this kind. He will see that the United States and Canada, starting out with 5 per cent, have reduced to 4 per cent

and then to 3 per cent, at which point it is a matter of judgment whether any further reductions along that line would be better, than their cost in some other form would be to the people of Canada. My point is that if we are to forgo from $50 million to $60 million of revenue in this country we can do it in a form which will be much more beneficial to those in the lower income brackets than this grand idea of my hon. friend from Winnipeg North Centre.

I have not finished with my analysis, and as these figures are rather complicated I wish my hon. friend would hold his question until I am finished with them. I want to demonstrate how beautiful this idea of his is. Take a married man. In order to exhaust the full benefit of this idea we have to use up the entire ceiling of this medical exemption which is $2,000 for a married man. Then if he has four dependents he can get $500 for each one, making a total of $4,000. For such a man to realize the entire amount of that benefit he has to have medical expenses running up to $4,000 to get up to the ceiling for himself his wife and four dependents; and as far as income is concerned he has to have an income of $133,333.33 per year. That amount at 3 per cent produces a $4,000 exemption.

There are some individuals in Canada who have such an income. If the man is in that position then, in as much as he gets a deduction from his income of the full amount of the $4,000, and as he pays income tax at the rate of 68 per cent, he would enjoy a benefit per year of $2,729 compared with $13.50 in the case of the man in the $3,000 bracket about whom my hon. friend from Winnipeg North Centre is so solicitous.

A married man with no dependents at all other than his wife, who had an income of $66,666.66 per year and whose rate of taxation would be 58 per cent would get a benefit of $1,160. When my hon. friend is going around during the election campaign and expatiating about the great virtues of this scheme of his I hope he will make these comparisons-

He will not.

Mr. Garson:

-between what the poor people he is so worried about will get under it on the one hand and what the very rich people are going to get upon the other.

As I said a moment ago, it is really a very simple business. If we have as we do have in Canada, I will not say a steeply progressive tax, but a very progressive tax, levied according to ability to pay, then when you start knocking off 3 per cent of it you get in favour of the wealthy a steeply progressive reduction

in taxation. This of course brings back great benefits to the people who have to pay large amounts of taxes, namely the rich, and provides small benefits to the people who pay small taxes, namely the poor.

In that connection there is one point that should be emphasized. Of all these countries with which Canada is comparable there is not one which, either in its rates or in its exemptions, is nearly as favourable to people with taxable incomes of $5,000 or less as is Canada. As to those above $5,000, if my hon. friends will examine our income tax provisions they will see that the taxation upon Canadians above the $5,000 limit is somewhat more than in the United States, though not greatly so; but is still a lot less than in any of the countries which, as I have said before, have enjoyed the inestimable benefits of labour governments that really knew how to spend money.

It is for these reasons that, so far as I am concerned, I cannot work up any enthusiasm whatsoever for this brilliant idea of my hon. friend.

Mr. Knowles:

Will the minister permit another question? In view of the research he has done on this matter, can he say what proportion of the $50 million or so that this would cost would be rebated to the wealthy people whom he now wants to tax, and what proportion would be rebated to the people in the $3,000 or $4,000 class?

Mr. Garson:

Mr. Speaker, I did not think that was relevant to any remarks I was going to make, and I do not have these figures here.

I will say, however, if this is any comfort to my hon. friend, that under the policies of this government, commencing with the policies of war finance during the war and continuing since the war, the financial policy of Canada has been such as to bring about a much more just distribution of the national income than has ever been achieved before at any time in Canadian history. That being so, my hon. friend is making a very good point which I wish he would develop when he gets up to speak, namely-

Mr. Knowles:

If I get the chance.

Mr. Garson:

-that a very large percentage of the Canadian national income is owned by the great mass of the Canadian people, and therefore he is quite right in the implication of his question that more of this money in total would go back to the people in the low income brackets. But that does not make my hon. friend's idea any better, because other ways of rebating it or dealing with the income tax could be pursued under which they would get not only a larger amount in

Income Tax Act

the aggregate but the benefits to every individual would be better relatively than they would be under his scheme.

Mr. Murphy (Lambton West):

Mr. Speaker, my question is quite simple. The minister spoke about principle. If the principle that he objects to here is wrong, why was the floor previously reduced from 5 per cent to 4 per cent and then from 4 per cent to 3 per cent?

Mr. Garson:

I did not undertake today to defend the reduction from 5 to 4 and from

4 to 3, though I have no doubt it was possible amongst the alternatives which were available at that time to show that amongst all those alternatives these two reductions were probably the best. I say that because I have confidence not only in my colleagues in the government but in the experts in the Department of Finance and the Department of National Revenue who would be advising upon these matters. But it does not necessarily follow that because you reduce from

5 to 4 and from 4 to 3 there are not better methods than wiping out the 3 per cent entirely. It does not follow at all.

Mr. Murphy (Lambion West):

That certainly does not answer my question. I am talking about the principle.

(Translation):

Mr. Hector Dupuis (St. Mary):

Mr. Speaker, it is only natural that as the member for a constituency made up of workers whose means and income are, to say the least, below average, I should rise to take part in a discussion on the improvement of conditions for those who have barely enough to provide for their families.

As I said, I represent a working-class constituency, and I know what it costs when illness comes upon a family. I know all the problems it means for the majority of the families I represent. That is why it would be unthinkable for the member for a constituency such as mine not to take part in this discussion.

I myself have been sorely tried as, in less than two years, I have required medical attention. I also had to have two particularly dear ones hospitalized and I am therefore in a position to know something of the cost of medical care.

There is not the slightest doubt that I will approve any measure designed to improve the lot of those I represent, specially those whose homes are visited by sickness. Moreover, there is not the slightest doubt that members of this house will bring particular attention to any amendment likely in such circumstances to lighten the burden of people in the low income brackets.

Income Tax Act

Nevertheless I still think that some confidence must be placed in the wisdom of the present government and in that of a party which also represents the people. This party has in the past initiated all the social security measures from which we now draw so many benefits. Yet we have seen the leaders of the various groups who sit on the other side of the house, as well as their followers, oppose the adoption of certain social security measures. In spite of that the government- which in fact represents the Liberal party- has not hesitated to give this country social legislation which many other countries in the world would very much like to have.

Mr. Speaker, demands can always be made of the government; it is always extremely easy for the opposition to ask for all kinds of legislation but, on the other hand, it is also a good thing for the government to study these demands very carefully before following them up.

I would not like to see this matter put off or forgotten, for it deserves serious consideration. I repeat that I am in favour of it and I do not hesitate to congratulate the hon. member for Winnipeg North Centre (Mr. Knowles) for having introduced this measure so that the government may review the situation of those whose burden it is urged to alleviate. I support that measure without any reservation. I will fight for it anywhere but I wonder, as was suggested by some members of this house, I wonder if we could find a still more generous formula for the people whom the hon. member for Winnipeg North Centre wishes to protect.

Mr. Knowles:

Would the hon. member

allow me a question?

Mr. Dupuis:

First, it would be appropriate . . .

Mr. Knowles:

Mr. Speaker, . . .

Mr. Dupuis:

In my humble opinion ... I am sorry . . .

Mr. Knowles:

Would the hon. member allow me a question?

Mr. Dupuis:

Certainly.

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