Silly.

Mr. Knowles:

The parliamentary assistant had better answer that question. If he does not know the answer, the rest of us do.

Mr. Benidickson:

The taxpayer might go to a particular place with an attendant or nurse or something like that, but I do not think there is any distinction about the location of his sojourn for health reasons.

Mr. Knowles:

Is the parliamentary assistant not aware that the income tax form contains a line which states specifically that travelling expenses incurred to receive medical attention may not be included as medical expenses?

Mr. Benidickson:

I was not referring to travelling expenses.

Mr. Knowles:

Is the parliamentary assistant aware of the fact that was brought out by the hon. member for Westmorland this afternoon, that if you have a sick cow you can get deductibility for the expenses of a veterinarian right from the first dollar, but if a member of your family is sick, a human being, you cannot get it until you go over the 3 per cent floor?

Mr. A. H. Hollingworlh (York Cenire):

Mr. Speaker, I should like to make a few observations which I hope will be shared by other hon. members of this house. We are torn between two desires, to remove taxes and also provide the best for the country. It seems to me the general principle is that we should keep taxes as low as possible and at the same tim'e have as good social security as possible, a social security system which will be as good as that of any country in the western world. In my opinion we have almost reached that stage.

The two aims are opposed to each other. You cannot have all the social security possible and at the same time keep taxes down.

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I am not criticizing the hon. member tor Winnipeg North Centre because I believe he is sincere in this, but I sometimes wonder whether he really realizes what all these additional social reforms he is advocating are going to cost the country. How are we going to pay for them?

For example, we are expending approximately $800 million a year for old age pensions and family allowances. I have heard the hon. member state in this house on several occasions that we should increase both. Indeed, many hon. members are insisting that the old age pension be increased this year. One can understand that, but how are we going to have an increase in old age pensions? How are we going to have an increase in family allowances? How are we going to do away with this 3 per cent floor? Where do we stop? Those are the questions I ask this house tonight.

In this country we have old age pensions, we have family allowances, we have unemployment insurance and we have disability pensions. We are going to bring in health insurance, God willing, at an early date.

Mr. Knowles:

Hospitalization.

Mr. Hollingworlh:

We have heard it stated by the parliamentary assistant to the Minister of Finance that a health plan would cost $165 million if implemented this year. That would be the federal contribution, and that represents only the start. It would increase more and more as additional people came to this country and as the country expanded. I believe it was two years ago when the hon. member for Winnipeg North Centre stated that it would cost only $35 million or $40 million to remove this 3 per cent floor. In the debate last year the parliamentary assistant stated that this amount would be increased to $50 million or $60 million, and the hon. member for Winnipeg North Centre did not deny it.

It is not a matter of $5 million or $6 million, it is a matter of $50 million or $60 million. I submit that that is a considerable amount, and it raises the whole question of exactly where are we going to go. I think the government has shown by this 3 per cent floor that it is interested in helping people who have considerable medical expenses. This afternoon the hon. member for Inverness-Richmond stated, I think quite rightly, that if this was removed it would help those receiving higher incomes rather than those in the lower income brackets.

There are many other things I could say, but I am not going to take up more of the time of the house because I know other hon. members wish to participate in this debate.

.

For example, in my opinion it would be better to provide some allowance for people who have retarded children. I think that is important, but just where are we going to draw the line?

There is another question that arises. I submit with the greatest deference to my hon. friends opposite, with whom I am in complete agreement as to the necessity of providing social security in this country and giving the average Canadian the best possible standard of living, that with the health insurance program, or the hospitalization plan according to the correction of my hon. friend a minute ago, which we hope to bring into being this year or certainly within the near future, this is not the year in which to remove this floor.

With these few observations I would support the parliamentary assistant to the Minister of Finance in his observations this evening.

Hon. Stuart S. Garson (Minister of Justice):

Mr. Speaker, I have listened with a great deal of interest to the debate which has taken place upon this subject matter today, if for no other reason than that I was very much intrigued by the spectacle of the hon. member for Winnipeg North Centre coming into this house in the rather unwonted capacity of special pleader for the wealthy of this country. I think I shall be able to show before I resume my seat that the effect of what he has urged would be to create a wholly disproportionate benefit for those who pay the large income taxes in Canada.

By way of introduction to that, perhaps I might point out in re-emphasis of the point which was so clearly made by the hon. member for Burin-Burgeo that, apart from some successful commercial enterprises which it has operated with great skill and at considerable profit, in most cases the government itself produces nothing. The money it spends for social services, for defence, or for other governmental purposes must be obtained from the people of the country in the form of taxes. In other words before the government can put a dollar back into the citizen's right-hand pocket in the form of services or tax dispensations of any kind it must take more than a dollar from the other pocket of the citizen, because there is a certain amount of overhead in collecting and spending money.

One of the tests of a good taxation system, indeed one of the tests of good government, is that this process of collecting taxes and spending them for the benefit of the citizenry should be done as efficiently as possible. In other words, it should be done with a minimum of red tape, a minimum of fuss, and a minimum of work, to the end that as large a

percentage as possible of the amount it takes from the people in taxes should be handed back to them in benefits of one kind or another. Therefore when we address ourselves to the question which is now before us, the first thing we have to consider, it seems to me, since this resolution would involve the giving up of some $50 million or $60 million in government revenue, is whether this particular way of giving back revenue is the best way in the interests of the people of Canada. As I will endeavour to prove in the course of my remarks, I think it is very far from being the best way in which such an amount could be put out to the Canadian people either in the form of new services or in the form of a reduction of taxation.

There is a very simple reason for this, a reason so simple that I cannot understand why a man as clever as the hon. member for Winnipeg North Centre, and as well informed as he is-

Hear, hear.

Mr. Garson:

I am glad to hear his colleague applaud those sentiments but, as I was about to say, I am rather unhappy that the hon. member for Winnipeg North Centre has not given him a better reason for applause.

Mr. Argue:

He is consistent, anyway.

Mr. Garson:

It is good to be consistent, either by being right, as we are on this side of the house, or by being consistent in being wrong, as his party is. The simple point which has eluded the hon. gentleman and his friends in the C.C.F. party is this. We have in Canada an income tax system which is highly progressive in the sense that it is imposed according to ability to pay, and that it is steeply graduated, having a low rate for the people in low income brackets and a high rate for people in high income brackets. When people start talking in percentage reductions with regard to that kind of tax it means they are handing back taxes to the people not in a progressive form but in a form which is the opposite of progressive. They are handing back very little to the man in the low income bracket and a great deal to the man in the high income bracket.

In all the elaborate research which the hon. gentleman has carried out in connection with this matter-and he has gone all through this study several times-this particular point, which happens to be the nub of the whole matter, has eluded him on every occasion and it still eludes him now.

Let us examine for a moment the income tax system in relation to which the hon. gentleman makes his proposal to benefit the people with whom he and his friends are

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so deeply concerned, the people in the low income tax brackets. Let us see first of all how they are taken care of under this present income tax system of ours. What exemption do they get for example, as compared with those of other countries? Well, here are the comparisons, all reduced to Canadian dollars. A single man in Canada gets an exemption of $1,000; his counterpart in Australia gets $224; and on income in excess of that he pays tax. In the United Kingdom he would pay tax on amounts above $385. In the great and rich country to the south of us he would pay on everything above $600. Thus, when the hon. gentleman talks about knocking off 3 per cent, why, we give in the income tax itself a difference of 40 per cent before we start to calculate income tax at all, in other words $1,000 in Canada compared with $600 in the United States. And it is in these circumstances that the hon. gentleman saws the air and lectures us about the unfairness of the Canadian tax system.

What about the married man? The exemption he gets in this country is $2,000. In the United States, which has the highest exemption figure of comparable countries, it is $1,200. In the United Kingdom it is $660, and in Australia, which has had the great benefit on various occasions of having a labour government with all its policies, the exemption is $447.

Thus even if, for the benefit of the low income groups for which the hon. gentleman is so solicitous, we were to put his proposal into effect tomorrow, we would be conferring a 3 per cent benefit on people who already enjoy a benefit of 40 per cent in comparison with the United States the most favoured country-while in comparison with any countries which have enjoyed the benefits of labour governments it is substantially more, something of the order, in the case of Australia, of 77 per cent as compared with 3 per cent for a single man. And in the light of this the hon. member asked us to take his statement seriously that we should be criticized because we have not given back this 3 per cent he talks about.

That is not the worst part of it, Mr. Speaker. The worst part of it is that if we gave this sum back in the particular form which the hon. gentleman recommends, we should be giving back a great deal more to the wealthy people than we should be giving to poor people.

Mr. Murphy (Lambion West):

May I ask

a question?

Mr. Garson:

No; but if the hon. member would reserve his question until the end of my remarks I would be very glad to answer it then.

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Let us consider now the case of the married man. I hope the hon. member for Winnipeg North Centre will check me if I am doing his idea any injustice. A married man with an income of $3,000 would get 3 percent of $3,000 that is, an exemption of $90 on account of his medical expenses. That would be deducted from the income upon which his tax would be charged; and inasmuch as he pays a 15 per cent income tax that would save him $13.50. In the same way a married man with no children and an income of $5,000 would save $28.50 in income tax, and a married man with an income of $10,000 would save $72. For a married man with an income of $30,000 the saving would amount to $432, and for the married man with an income of $50,000 a year the saving would be as much as $795 a year if he were sick enough to use it all up.

Mr. Knowles:

Is that not the point, Mr. Speaker? Will the minister not admit that when he puts up these straw men he must get them to stand up?

Mr. Garson:

These are not straw men. The hon. gentleman does not know the difference between a straw man and a fact, and that is a very great difference.

Mr. Knowles:

Will the minister permit a question?

Mr. Garson:

Surely.