Mr. Murphy (Lamblon West):

Thank you

very much. Then I ask if the hon. member does not know that from 1945 to 1949 we pursued the same policy-

Mr. Garson:

So what; what difference

does it make?

Mr. Carter:

If my hon. friend will ask

his question when I finish I shall be glad to give him an answer.

Mr. Murphy (Lambton West):

I am afraid

you could not.

Mr. Carter:

Mr. Speaker, most of the

arguments made in support of this resolution today were based on the fact that charitable donations are fully deductible and that industries are permitted to deduct the cost of repairs to machinery. As far as deductions for repairs to machinery are concerned, I think they perhaps help the workers to earn better wages and thereby put them in a better position to pay their medical bills.

I said, Mr. Speaker, that there is a better way to handle this problem than the way suggested in this resolution. The best way of all is a national health plan, and I think that is the solution we should be working toward. When it comes to humanitarian feelings, we have as great a humanitarian in the Minister of Finance as any member in this house.

Mr. Knowles:

The applause at that point is pretty weak.

Mr. Carter:

And he does not need to be pressured by this house to do anything that is financially possible, having regard to all the demands, all the commitments, and all the priorities that must be given to those demands that are possible within the budget. I think it is much safer to leave it in his hands than to pressure him by passing this resolution. He may just find it possible to reduce the percentage of deductibility, I do not know; but it may not be possible to remove the floor altogether. Let us leave well enough alone; let us leave it to the Minister of Finance.

As far as I am concerned, Mr. Speaker, this resolution will not help 1,700,000 Canadians. It will not help the 1,393,000 Canadians who do not pay taxes, and it will help very few of the other 3 million who are in the $3,000 income bracket, who make up 50 per cent of our taxpayers, because 50 per cent of our 82715-88

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taxpayers are included in the range of $3,000 and under. Were I to vote for this resolution I would be voting for something which would benefit me personally but would benefit hardly any of the people I represent.

Mr. Clarence Gillis (Cape Breton South):

Mr. Speaker, I do not wish to take up any more time than is necessary on this resolution, because it is a debate that has been carried on in this house for a long time and has been listened to by most hon. members. My colleague the hon. member for Winnipeg North Centre introduced it, and I agree with everything he said on the matter. There is no need for me to repeat it. However, the hon. member who just took his seat was very honestly mixed up, because I believe he did a lot of home work on his speech.

Mr. Cardiff:

Are we not all?

Mr. Gillis:

A lot of people are mixed up but not honestly. I believe the hon. gentleman who just took his seat was honestly mixed up. He obviously did a lot of work on his speech, but I just could not follow his argument. If he is going to run in the next election I would not advise him to use the low Canadian average income as an argument against this resolution. He emphasized several times that over 1,300,000 Canadians work for incomes that keep them under the income tax exemptions.

Mr. Benidickson:

We have higher exemptions than any other country.

Mr. Gillis:

Well, the exemptions are not so high.

Mr. Garson:

They are the highest in the world.

Mr. Gillis:

The incomes of that group are small and if I sat on the government side of the house I would not use them as an argument.

Mr. Pickersgill:

But this hon. member, as you said, is honest.

Mr. Gillis:

That is what I said a moment ago; I said he was honestly mixed up. He is doing the best he can with a bad cause.

I think a lot of government members are mixed up concerning the question of the proposed national hospital insurance, which they feel is the cure for the ills described in the subject matter of this resolution. Hospital insurance will not have anything to do with the situation dealt with in the resolution. If the type of hospital insurance that is talked about is brought in it will merely be hospital insurance, and it will have no effect on the question of the exemption of medical expenses for income tax purposes.

Income Tax Act

There is no one in this house who is foolish enough to think you can get something for nothing in this world, or that you can continue demanding more and collecting less to pay for it. Everyone realizes that.

Mr. Winters:

Except the hon. member for Winnipeg North Centre.

Mr. Gillis:

Two points have been raised here today. One is the exemption of over 3 per cent of all medical expenses including drugs. The hon. member for Red Deer pointed out that this is not only a hardship on some people, but there is also a piece of rank discrimination in the administration of the act in so far as hospital expenses are concerned. Those who are hit the hardest in this respect are those who live in the big cities. You do not have to go out of Ottawa to find an illustration. There are hundreds and thousands of people in the larger centres who are paying hospital insurance at the present time and who cannot be admitted to hospital because there is no bed space available.

If a person enters a hospital in a large centre which has its own dispensary and complete pharmaceutical set-up, the cost of drugs required by the patient is included in the total hospital bill; but people who are on waiting lists and have been ordered to hospitals by doctors but cannot be admitted through lack of space, who have to be treated at home perhaps for months, who have to hire a nurse and purchase their required medicines and drugs from commercial drugstores, are not able to include these costs in their exemptions for income tax although medical expenses incurred in that way are a legitimate deduction. The hon. member for Red Deer described this situation very clearly this afternoon. The same might be said of the smaller hospitals that do not have their own dispensaries but which purchase their drugs from outside and charge the patient for them. In instances like this there is no provision for exemption for income tax purposes.

Regardless of whether or not the government are prepared to lower the 3 per cent floor, I think they should take cognizance of the element of discrimination that was so thoughtfully described by the hon. member for Red Deer, who unfortunately had a personal experience of this nature in the very recent past. The government should take into consideration those people who are paying hospital insurance but who cannot be admitted to hospital and are obliged to undergo treatment at home. In some cases a chronic case is kept at home for psychological reasons. The expense involved in maintaining a miniature hospital in the homes of such people should be given careful study by the

government. This is a matter that has never been poined out before to my knowledge, and the hon. member for Red Deer deserves commendation for his excellent presentation of the problem this afternoon.

Someone on the other side suggested that this resolution's effectiveness is open to question. I suggest that this is the only way a private member can achieve a discussion on these matters. You cannot bring in a resolution that would involve the expenditure of money; all you can do is ask the government to give consideration to a certain problem.

Private members' day provides a forum where opinions can be exchanged and the good sifted from the bad. In this way those ministers who are responsible for estimates and changes in regulations at times receive a bit of good advice, and if nothing more it certainly provides them with an opportunity to make a speech in rebuttal and serves as a good mental exercise. The only way a private member can instigate a discussion of a problem is by introducing a resolution; in fact, the consideration of the resolution of private members is one of the important functions of parliament.

I do not think anyone should criticize the hon. member for Winnipeg North Centre for proposing this resolution year after year. He thinks it is right and many of us agree with him. Some of us have the courage to say so and others have not, depending on where we are sitting in the house, of course. The hon. member in my opinion is to be commended for digging into this kind of problem and giving us the benefit of his research. You know, research is his recreation. While some of us are looking at television he derives a great deal of pleasure from reading Beauchesne and probing into dark recesses containing musty tomes of facts, figures and statistics.

I merely rise at this time because I want to say for the benefit of my colleague that I appreciate his efforts and am willing to support him. I have argued in favour of the principle of this resolution on several occasions, and there is no need to repeat what I have said previously. I am sure that at this time every hon. member in the house is ready to vote for this resolution, and I do not want to hold up the vote any longer.

Mr. Ambrose Holowach (Edmonton East):

Mr. Speaker, I wish to speak briefly in this debate and join with those hon. members who have strongly supported the resolution:

That, in the opinion of this house, the government should give consideration to the advisability of introducing legislation amending the Income Tax Act so as to remove therefrom the 3 per cent floor in relation to the deductibility of medical expenses for income tax purposes.

Sir, in my view this resolution merits the support of every conscientious member in this house because it has as its broad objective removing once and for all a discrimination of the worst kind, namely a tax discrimination, which in reality penalizes those who have medical bills to meet. One might ask by what moral precept does this government retain in the Income Tax Act a provision which in practice penalizes those people who are restoring themselves to good health. One might ask what is -the purpose of a law which is so lacking in common sense and is in contradiction to the will of the people themselves. I just cannot imagine why the department itself has not brought in an amendment to remove this inequity. One arrives at the sad conclusion that while we members can rise on the floor of the house and ask that help be given to our people, the government does far too little in this respect.

The resolution before us proposes in an extremely practical way to make all medical bills deductible for the purpose of income tax.

We feel very much that it has a humanitarian concept, that it is morally right, that it will help those in the lower income groups who can least afford a continuation of high taxes and receive little relief from them.

The facts and history of this resolution are well known. It has been introduced year after year and on every occasion either has been voted down or talked out by Liberal members. Those are the same members who run up and down the country expressing themselves as being sensitive to the needs of our people. One of the disheartening features of this stubborn opposition to the adoption of this reasonable recommendation is the fact that the government is constantly inconsistent in its own policies.

One of the great social needs of our civilization is the necessity of inducing our people to endeavour to maintain good health. We believe the best way to do that is to assist them to provide for themselves. Surely no one will quarrel with that statement. On the one hand the government claims it is interested in implementing a national health scheme which if all the provinces participate will cost about $400 million per annum; yet on the other hand the government is indifferent and stingy when it comes to making a tiny concession to individuals so they may be encouraged to make voluntary efforts for the betterment of their health.

It is ironic that last week we should have debated the setting up of the Canada Council to promote the arts and humanities in Canada, 82715-88i

Income Tax Act

and yet see this government remaining indifferent to the fact that basic to the enjoyment of the arts, basic to the creative efforts of our people, is sound health. I submit that the most glaring inequity is demonstrated by a recent decision of the Exchequer Court of Canada to the effect that membership dues in social service clubs paid by large corporations on behalf of their officials may be deducted. Surely if a tax write-off is justified for the promotion of business contacts it should be allowable for the essential business of keeping in good health. The following article appeared in the Montreal Gazette of January 23, 1957:

Court Allows Tax Deduction For Club Fees

The Exchequer Court of Canada yesterday ruled that social and service club membership fees paid by the Royal Trust Company on behalf of its officers can be legally deducted from its income tax.

The judgment, given verbally by Mr. Justice J. T. Thorson, reversed a decision of the income tax appeal board.

The judge said the company encouraged its senior officers to join social and service clubs, having paid 78 memberships in 48 clubs throughout the country in 1952.

The company had submitted the policy was consistent with good business practice and was carried out by other trust companies.

Mr. Justice Thorson said that during the court hearing one of the company officials claimed he had gained many valuable investments for his Arm as the result of a luncheon meeting with a client at a club. Similar examples were given by other senior officials.

The basic issue was whether the policy was good business practice, he added.

We in the Social Credit group strongly support this resolution. We want to see a halt called to some of the insensible features of our income tax law. In this present instance we believe these provisions are inhuman and represent a long-standing injustice.

Mr. A. J. MacEachen (Inverness-Rich-mond):

Mr. Speaker, I have followed the discussion this afternoon on the resolution moved by the hon. member for Winnipeg North Centre, and like my colleague the hon. member for Vancouver South I do not have any strong bias either pro or con, nor do I think I can reach the high level of moral indignation evidenced in some of the speeches we have heard from the other side of the house.

One of the interesting phases of the discussion this afternoon is the reference to the inconsistencies and anomalies which exist in the taxing system and the taxing laws of Canada. One desirable feature of a taxing system is simplicity, but as you give more and more exemptions and expect the taxing system to accomplish more and different things, there are bound to be a greater number of anomalies and inconsistencies in the

Income Tax Act

system. I suppose the historical purpose of the taxing system was to collect revenue and the taxes were revenue producers alone.

However, in recent years there have been other virtues attributed to the taxing system, mainly the possibility of affecting the level of investment and income and employment by the raising or lowering of taxes at the proper intervals. Many people find it anomalous that the government should have a surplus, and certainly it is anomalous if taxes are to be considered as revenue-producing only; but it is not anomalous when the taxing system is used to do something else.

During the discussion it has been made very clear that some hon. members feel that the taxing instrument should be used to achieve objectives other than the collecting of taxes and combating depressions. One of the inconsistencies referred to was the fact that contributions to charitable institutions or approved charities are deductible for income tax purposes. Presumably the purpose of that regulation or practice was not to assist the taxpayer, particularly, but to assist the charitable organizations by encouraging charitable giving.

This resolution attempts to give particular recognition to the taxpayer who in a particular year may spend money on medical bills. The taxing instrument is becoming more complex and has to do more things, and as a result we have what seems to be anomalies and inconsistencies. I am puzzled why it should be felt that donations to charitable institutions or approved charities should be used as an argument for the adoption of this resolution.

I think each of these questions stands on its own feet and should be discussed on its own merits, and I do not believe the case of the hon. member for Winnipeg North Centre is improved by referring to the practice followed in respect of charitable donations.

I think it should be apparent to all of us that the practice at the present time does take into account the fact that individuals may make exceptional or extraordinary medical expenditures in the course of a particular year. The position is that any individual who spends on medical necessities an amount greater than 3 per cent of his total income can deduct the amount that is in excess of 3 per cent for income tax purposes. To go beyond that would be to state that we should give special consideration to medical expenditure and make it completely deductible.

I think it to be true that outlays for medical and dental care are a normal part of a man's spending. It is expected that each year an

individual will have to undertake a certain expenditure for the protection of his health; the consumption of medical or dental services, from the economic point of view, is no different from the consumption of housing or the consumption of fuel or the consumption of clothing. For this reason I was interested in the opinion expressed in the debate last year by one hon. member who said that all expenditures made on medical supplies were a dead loss. It may be that expenditure on food is a dead loss because the food is permanently destroyed in the process of eating. Nevertheless I do not believe that any of us would suggest that expenditure on health does not contribute very positively to an individual's welfare in the course of any year, or that it should be singled out for special treatment. I do agree that in certain instances extraordinary and unexpected expenditures are made by individuals for medical purposes, and the special character of these extraordinary cases is reflected in the present practice which provides for the situation when these expenses amount to more than 3 per cent of income.

The hon. member for Winnipeg North Centre suggested in his opening speech that the adoption of this resolution would mean that the house was paying some attention to a real grievance of the Canadian people. I suppose all hon. members in this chamber are conscious of the wishes of the Canadian people and, in particular, of the wishes of our constituents; and we are particularly conscious of their needs with respect to health care. As far as I am concerned I have received no representations from any voter in my riding over the past four years asking me to support this particular resolution, nor have I in discussion with citizens in my province found that they regarded this as a very real grievance.

I was interested, too, to hear the hon. member for Winnipeg North Centre suggest that the introduction of a universal system of hospitalization would not affect the treatment that should be afforded this particular resolution. I agree that if the present proposals in this direction are implemented they will provide a universal free hospitalization and diagnostic service; they would not cover medical services. But I believe also that the introduction of universal hospital insurance would have a very definite bearing on the capacity of the individual citizen to undertake the payment of his medical expenses, because I think it is true to suggest that hospitalization and medical bills are closely related and often are incurred simultaneously. If the burden on the individual citizen were to be reduced through the introduction of a universal hospital plan, then his capacity to

provide for the payment of his own medical expenses up to this floor of 3 per cent certainly becomes greater. Whether this should be used as an argument against the resolution is another matter, but it certainly is a fact that it will have this particular effect.

There was another subject to which the exemplary research of the hon. member for Winnipeg North Centre did not address itself, and that is what seems to me to be a very important part of this discussion, namely the changing group of citizens who are liable to be affected each year by the scope of this particular resolution. If extraordinary medical expenses were chronically incurred by the same group of citizens over a long period of time, then I would think the case for the resolution would be improved. But it may be that the type of relief projected in this resolution will affect a different group each year, and I suggest that if this is so it reduces the argument in favour of the resolution.

Mr. Speaker, I was impressed not only by the remarks of the hon. member for Winnipeg North Centre in general but also by two other views put forward in the debate. One was that an effort should be made to provide some assistance or some relief to chronic sufferers or to those persons who each year, year in and year out, must buy expensive drugs or undergo extensive medical treatment. I think there is a case for assistance here, and I share the view expressed a year or so ago by the hon. member for Westmorland (Mr. Murphy) when he asked that the list of drugs with regard to which exceptions are made for deductibility purposes should be widened.

In the province of Nova Scotia we are not in a position where we can say that the provincial government is ready to embark on a system of health insurance. The government of Nova Scotia is not yet in that column which lists the names of the governments which have agreed to enter the hospital plan. They have stated that the province will enter the plan if and when it becomes available, notwithstanding the fact that the availability of the plan depends to a great extent on the decision of a province such as Nova Scotia to enter it.

There is one final feature of this resolution that I might mention, because it seemed to me of importance. It emerged during the remarks of the hon. member for Burin-Burgeo. At present the same tax relief is given to all taxpayers; the practice of applying the 3 per cent floor gives the same progressive relief to all those who must pay income tax. I suggest that if the 3 per cent rule were completely removed, though this would, of course, assist all taxpayers, it

Income Tax Act

would assist taxpayers in the upper brackets more than those in the lower brackets, because it is certainly true that the same operation costs approximately the same whether an individual earns $3,000 or $8,000 a year.

I think the adoption of the resolution would help those in the upper brackets more than those in the lower brackets. Briefly, my attitude to the resolution is that at present weight is given in the regulations to the incidence of medical expense beyond a certain level. If evidence had been presented in the addresses this afternoon that the adoption of the resolution would remove what I would consider to be hardship or abnormal burdens, then I would be ready to support it. In the absence of such evidence, I feel that the present system seems reasonable and equitable, and whatever inconsistencies may occur in the system are more the fault of the increasing demands made upon the taxing instrument to do so many different things, with the result that in doing these different things there are bound to be all sorts of anomalies and inconsistencies that might be absent in a simpler tax system and a simpler world.