February 18, 1957

LIB

James Allen (Jim) Byrne

Liberal

Mr. Byrne:

Mr. Speaker, this afternoon the hon. member for Winnipeg North Centre sought to point out ways of making up the money that would be lost if the 3 per cent floor on deductibility of medical expenses were removed, but of course I understand that he does not like to have the debate take a turn against his arguments.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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CCF

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

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

Mr. Knowles:

Speak to the resolution. Say anything you want about it, but speak to the resolution.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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?

An hon. Member:

Speak.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

James Allen (Jim) Byrne

Liberal

Mr. Byrne:

There is another group of people who in my opinion are being discriminated against under the present regulations. It is a small group about whom I have rather intimate knowledge. This group is not even benefiting from the present regulations. The people in the group are members of a medical society called the consolidated employees' medical society. It has about 1,800 members who pay in to the society and in turn the society has a contract with certain doctors. The members of the society are unable to use any receipts from the doctors having to do with the cost of operations or attendances at home or in hospital. On the other hand the members of the medical services association in Kootenay West, employees of the same company, about which I have fairly intimate knowledge, do benefit by producing receints.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

Louis-René Beaudoin (Speaker of the House of Commons)

Liberal

Mr. Speaker:

Order. The hon. member

seems to be discussing other cases with respect to which he seems to think improvements could be brought about in the Income Tax Act. We are not talking about any other matter but that set forth in the resolution, namely the removal of the 3 per cent floor in relation to the deductibility of medical expenses for income tax purposes.

I understand that in a debate of this kind certain comparisons may be made and some have been made by the mover of the resolution himself, but the discussion one after the other of cases in which hon. members may find there has been or could be discrimination is not relevant to the resolution now before the house. I understand that latitude has been taken but that is no excuse for any irrelevancy continuing, and I would ask the hon. member to speak about the 3 per cent floor on deductibility of medical expenses.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

James Allen (Jim) Byrne

Liberal

Mr. Byrne:

Mr. Speaker, I certainly bow

to your ruling. I want to point out, however, that if we follow the line suggested

Income Tax Act

by the resolution there is no reason why we should not continue and take in all other possible contingencies. By so doing we would soon arrive at the point where we would no longer have any revenues from personal income taxes and would, of course, have to start all over again.

Perhaps I should not say that the hon. member for Vancouver East vilified, but he came very close to it when in his remarks he indicated that the hon. member for Vancouver South was stupid in not seeing the arguments presented by the C.C.F. party. The hon. member for Vancouver East said there should be no thought that this resolution could affect in any way any proposed federal health scheme.

Perhaps it would not do so. It has been pointed out that the federal health plan may cost anywhere from $200 million to $300 million. That revenue must be raised in one way or another. If we are to start hacking away at our tax system, then we should stop asking for more federal participation in what are essentially provincial affairs. It must have this effect. If the government are going to face from the C.C.F. opposition this continual harping to reduce the taxes, then they will have to give more serious consideration to the cost of this national health program and other welfare programs they may have in mind.

I have mentioned the fact that the hon. member for Winnipeg North Centre has suggested increasing old age pensions to an amount which would require an additional half a billion dollars. We need another $200 million to $300 million for the national health program. We need more money for pensions for the blind. We need more money for family allowances. We need more money for other social welfare projects. Where is the consistency in this resolution that is before us today? There is no consistency in it. There is only politics in it.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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CCF

Thomas Speakman Barnett

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

Mr. T. S. Barnett (Comox-Alberni):

Mr. Speaker, I am quite interested in the consistency of the speech to which we have just been listening, by the hon. member for Kootenay East. It seems to me that if one were to take his speech and stir it up well with those given by the hon. member for Charlotte and one or two others to which we have listened, we would have a good sample of what I would call Liberal porridge. To me it is a most amazing experience to listen to some of the things that have been stirred into the broth by hon. members opposite in their attempt to fend off what after all is a rather simple little resolution that is before this house at the instance of the hon. member for Winnipeg North Centre. We

IMr. Byrne.]

have even had the Regina manifesto put into the broth. I suppose that is in order to add a little bit of spice.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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?

An hon. Member:

It is all dishwater.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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CCF

Thomas Speakman Barnett

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

Mr. Barnett:

The thing that always amuses me is to hear these hon. gentlemen such as the hon. member for Kootenay East attempt to portray themselves as well intentioned individuals who are prepared to support measures for the welfare of the common man; yet every time a practical, simple proposal is put forward which will do that, they seem to spend most of their time drawing back and hedging against any support for it.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

James Allen (Jim) Byrne

Liberal

Mr. Byrne:

We face the facts.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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CCF

Thomas Speakman Barnett

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

Mr. Barnett:

The hon. member has been resorting to a favourite tactic in suggesting that we are asking for a lowering of taxes on the one hand and an increase in spending on the other, but he himself made reference to several extremely good sources of extra taxation that could be available. Of course in the rather lengthy discussion in which he indulged with regard to a national health plan he completely overlooked the fact that the hon. member for Winnipeg North Centre this afternoon indicated that he would be pleased to withdraw this resolution entirely if the government opposite would be prepared to announce a health plan in the sense that those of us at least in this group understand a comprehensive health plan.

The hon. member comes from the same province as I, and he knows perfectly well that, as far as the average individual resident of the province of British Columbia is concerned, this much-vaunted health plan about which he is talking, actually is not going to make very much difference. For him to argue that because of the coming into effect of the national hospitalization plan this resolution is thereby somehow or other rendered unnecessary is to me quite illogical. I can understand that argument coming from the hon. member for Inverness-Richmond or from the hon. member for Charlotte, because apparently they do not know much about what a public hospitalization plan can and will provide. It seemed to me-I might say that I am thinking of the hon. member for Inverness-Richmond -that perhaps the reason he has not had any representations on this matter is that not too many of his constituents, by his own admission and on the suggestion of his colleagues from the maritime area, have had any experience in deducting medical expenses, or their inability to deduct.

After all, I think the hon. member for Winnipeg North Centre, in his introduction to this resolution, made it perfectly clear that

in his estimation this is not the most world-shattering suggestion that could be put before this house, but that it is a simple method of taking a rather halting step toward the type of situation that woud exist with respect to medical expenses if we had a comprehensive health plan in this country.

He has put this resolution forward from year to year. The hon. member for Charlotte seemed to imply that this resolution was something new, that it had come as a bolt out of the blue since the last national convention of the C.C.F. But I think the facts, as they stand on the records of the house, will indicate that this is a long way from being the case. As I said, the measure is put forward as a halting step toward what we hope will some day be the provision of full access to health care by every citizen of Canada, regardless of the level of his income. The argument to the effect that if we are going to have a health plan this is not the sort of deduction that should be allowable is one that to me is really quite specious.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

James Allen (Jim) Byrne

Liberal

Mr. Byrne:

It is the fact that the health plan must be paid for. You realize that?

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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CCF

Thomas Speakman Barnett

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

Mr. Barnett:

I quite realize that fact. But the hon. member certainly cannot suggest that our realization of that fact has not been made clear on a good many occasions in this house, and that you do not get anything for nothing. It is just a matter of where it is coming from. Of course that is the basic weakness of the whole position taken by members like the hon. member for Kootenay East in this house, when he refuses to face up to the fact of where the money to pay for these things must come from. That is the basic weakness of the Liberal party in its approach to the provision of social security measures, no matter in what particular field we may be discussing them from time to time.

It is all very well to talk about the hon. member being a professor of economics and sociology, but let him get down and do a little real thinking in that field instead of mulling over things that were written by Adam Smith or somebody 100 years ago. Then we might have some of the private members who support this government coming up with something really constructive that would stir the government into some real action. But as long as they are content to go along and simply say "Well, the C.C.F. come up with all these brainwaves and never tell us where the money is to come from", they will not get up and tell the government where they can find some of the money to do these things. We would welcome a little help from them on this matter from time to time. Then we would

Income Tax Act

take some of their pious suggestions about their interest in the welfare of the common man a little more seriously.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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L L

William Moore Benidickson (Parliamentary Assistant to the Minister of Finance)

Liberal Labour

Mr. W. M. Benidickson (Parliamentary Assistant to the Minister of Finance):

Mr. Speaker, the mover of this resolution has himself suggested that it has appeared before us many times, and some of the arguments on both sides are, as somebody else has said, almost of a perennial nature. Having regard to that fact I do not intend to speak at any length, because I think if Hansard of the past two or three years is analysed it will be seen that most of the arguments pro and con are contained in it.

I say this type of resolution illustrates only too clearly how easy it is for a member of the opposition to make a suggestion in isolation which on the face of it sounds as if it has many advantages. It is true that this resolution, if adopted by the government, would involve the balance of ways and means. I think even the proposer will admit that it could involve the sum of $40 million or $50 million. My point is that any proposition of this kind, particularly when it involves either a loss of revenue or, as some other resolutions do, an additional expenditure, suggests to this house that our present system of having the executive first give these matters careful consideration and attempt to balance the ways and means is probably something that all of us would in the long run approve.

In terms of tax reduction the hon. member has a proposal that admittedly would be of advantage to a certain segment of our population. I have indicated that it would involve a certain loss of revenue to the crown, but all hon. members know that when that revenue is not received it is not available for something else.

I have looked at some of the things that have been done in this parliament during the time my hon. friend has advanced resolutions in terms similar to this. I indicated that this would be of benefit to a small segment of our population. I would just like to say that in 1952 a married person without dependents earning $3,000 paid income tax of $175 to the federal government. Two years later, in 1954, that tax was $150. Two years after that, in 1956, that tax was $130. Hon. members will recognize that in each of those two-year periods that involves a tax reduction of $20. Now, that applies to all persons of that income tax group all across Canada, whether or not they have any medical expenses.

My hon. friend's proposal as it is before us today was before us in 1952. Its value- and it is of value only to a person who has

Income Tax Act

medical expenses-would be $13.50 to a married man without dependents having an income of $3,000. I point out to the house that twice within four years this government has reduced taxation, by an amount of $20, and without any discrimination. I think that has greater value.

I think it can be said that within a period of five years 85 per cent or 90 per cent of our people have had an income tax reduction equivalent to 25 per cent and again, as I say, without discrimination.

The next point I would make is that this has been done without the necessity of asking civil servants to examine a terrific number of individual claims that would be advanced if we accepted the idea of having special exemptions for particular items, such as medical expenses.

I gave an illustration to a couple of my friends this afternoon. I said that if the first dollar of medical expenditure was to be considered by this government on the individual tax claim, and if we took as an example that each expenditure might total $20, that amount would have applied to it the rate of 15 per cent because, as we all know, the first $1,000 of taxable income has a tax rate of 15 per cent applied to it. Suppose the individual taxpayer has medical expenses of $20 during the year. If we apply the tax rate of 15 per cent it will be recognized that it would amount to $3. If he has no receipt attached to his tax form hon. members can realize immediately what it would cost in administration if it has to be followed up by correspondence. Hon. members know how much it costs today to write letters applying to the salaries of the people involved.

The principle of our income tax law is that we have a standard personal exemption, and I take some pride in saying to this house that the total of our personal exemption for any taxpayer in this country, namely $1,000 for a single man and $2,000 for a married man, with some exceptions and some additions, is a greater personal tax exemption than is applicable in any other country that I know of that has a similar social system to our own. It is certainly greater than the exemption provided in the United States, and we know it is much greater than what is provided in the United Kingdom, Australia, New Zealand and in other countries. These things have to be taken into consideration.

I have endeavoured to explain to the house the economy of having a flat rate of personal exemptions rather than the alternative of certain types of deductible expenditures which have to be considered item by item for

tax exemption purposes. We will all agree that medical expenses can be burdensome. We have in existence what has been described as a floor of 3 per cent, and items totalling under 3 per cent of total income are not sent to the tax administration for consideration. I think it will be admitted that our statistics indicate that 3 per cent has been proven to be about the standard of personal expenditure for medical and dental costs across the country.

Medical expense is an important matter. It is very easy to say that a family has to expend a certain amount of money in medical costs and to ask why they have to pay a certain rate of tax on that type of expenditure; but let us consider this problem in a practical way. I think all hon. members will agree that under certain circumstances it is just as important to buy milk and underwear as it is to make the usual outlay for dental, medical and other care, and those things are part of the personal income tax exemption which on a flat rate basis is a convenience in administrative work of a tax nature.

Another point I should like to put forward to the house is this. In the publication prepared by my hon. friend the Minister of National Revenue entitled "Taxation Statistics 1956" but having relation to 1954 tax returns, it is indicated that 3,410,000 Canadians were considered taxable but that an additional 1,393,000 filed returns, and by reason of the exemption of which I have spoken they were considered not to be taxable; in other words, a total of 4,803,000 Canadians filed returns. There were also a great many people who probably did not file returns at all because it was obvious that their incomes did not require them to do so. It is surely very clear that this proposal of my friend the hon. member for Winnipeg North Centre would be of advantage at most only to those who are taxable, and a great many people are not taxable.

I have heard some other suggestions this afternoon and evening concerning the general attitude of this party in the field of social welfare. Again I direct this question to my hon. friends; what would you do if you were handling $50 million? It has already been mentioned that within the last two or three years the Liberal government has made a standing offer that would involve the expenditure of $165 million in the new field of health insurance. I suggest that you cannot have your cake and eat it too.

In considering some other accomplishments of this government I could refer to one or two other measures that have been adopted in the last few years that have involved large

expenditures, and not necessarily to the taxpaying group or the people who are better off; indeed, to the contrary. I think if my friend the hon. member for Winnipeg North Centre would review his proposal he would come to the conclusion that over the past two or three years this government, when it has had a decision to make either to forsake revenue amounting to $50 million or to consider expenditures involving $50 million, has been very considerate to those people whom his colleagues this afternoon and evening suggested have not had proper consideration from this government.

1 have already indicated that approximately 85 or 90 per cent of the people in this country had an income tax reduction of 25 per cent in the last four years. In thinking of other constructive measures undertaken by this government I can refer briefly to the unemployment agreement with the provinces which represents something relatively new in federal-provincial relationships; old age security and assistance, the entitlement age for which recently was brought down from 75 to 65 years; disability pensions, with which we had not been associated until recently, and insurance for health, to which I have already referred. The latter represents a new forward step and involves a tremendous amount of money. If you were to give money away in another form such as is proposed here I question whether you would still be able to do something in the nature of health insurance despite its value.

I could extend the field widely, but I think I have cited enough illustrations to prove my point. The hon. member for Winnipeg North Centre can easily put forward a proposition, as he has done repeatedly, that on the face of it seems to have some merit; but I suggest to this house that over the period during which this or similar resolutions have been advanced the record indicates that this government has undertaken measures the benefits of which have been extended more universally and advantageously than anything that would be provided by a resolution of this kind.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

Andrew Wesley Stuart

Liberal

Mr. Stuart (Charlotte):

Mr. Speaker, I should like to ask the hon. member a question if I may. I believe the parliamentary assistant put on the record the exemption of a citizen receiving $3,000 a year; would he have any figures to show what the exemption would be of a citizen with an income of $50,000 a year?

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Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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L L

William Moore Benidickson (Parliamentary Assistant to the Minister of Finance)

Liberal Labour

Mr. Benidickson:

Well, I have not the exemption figure for an income of $50,000. I do know that for a taxpayer with an income of $100,000 the advantage would be about $1,850; and my friend across the way, the

Iricome' Tax Act

hon. member for Winnipeg North Centre, has always objected to anything in the nature of so many percentage points in tax reduction.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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CCF

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

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

Mr. Knowles:

Are not my hon. friends neglecting the ceilings that are in the act?

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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L L

William Moore Benidickson (Parliamentary Assistant to the Minister of Finance)

Liberal Labour

Mr. Benidickson:

My figure would apply despite the ceilings.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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LIB

Andrew Wesley Stuart

Liberal

Mr. Siuart (Charlotte):

I should like to ask one further question if the parliamentary assistant is willing to answer. A question has come to my mind from reading the wording of this resolution. If this resolution were passed could a Canadian citizen having obtained a doctor's certificate go to Florida and stay there for one or two months, and gain income tax exemption for his stay?

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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PC

Lewis Elston Cardiff (Chief Government Whip; Whip of the Progressive Conservative Party)

Progressive Conservative

Mr. Cardiff:

That is a silly question.

Topic:   INCOME TAX ACT
Subtopic:   PROPOSED AMENDMENT WITH RESPECT TO MEDICAL EXPENSES
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February 18, 1957