December 13, 1957

PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

We have given to this plea of the construction workers very careful study and have brought forward this amendment, not without misgivings in regard to the difficulties of administration which might present themselves. I would, however, ask the committee to bear in mind that there has been no opportunity for giving consideration to the position of other workers who may consider that their tax position should be regarded as equivalent to that of the construction worker in the view embodied in the present clause.

Any attempt to deal with other groups would necessarily require the most careful study before any action could responsibly be taken. I am asking the committee therefore to approve the clause in this form, to give us an opportunity to watch-as we will watch very carefully-the application of the clause; and the matter will, I can assure the committee, be the subject of continuing study. I hope for that reason the committee will see fit to give us the opportunity to go forward with this clause, meeting as it does a problem, not of our creation, but a problem created by the directive of a year and a half ago; and will also give us the opportunity of seeing how this works out in operation and in administration before we are asked to revise it or to extend it.

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LIB

Leon David Crestohl

Liberal

Mr. Crestohl:

I should like to direct a question to the minister. I wonder if he could tell us whether in a case where a worker whose talents and knowledge are essentially required and who is shifted about the country, say in the construction of aeroplanes, from his ordinary residence to the location where construction is going on, the term "construction worker" would also be applied

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to that classification. Would the words "construction worker" also apply to this classification, because in reality they are construction workers. If a worker on the D.E.W. line is called a construction worker, then I think certainly an aeroplane construction worker might also be called a construction worker. Would the provisions of the bill also apply to those engineers who are summoned away from home for the purpose of helping in the construction of aeroplanes?

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

Mr. Chairman, the hon. member is asking me for an advance interpretation of expressions used in this clause. I can only say to him that the interpretation will be a matter for the Department of National Revenue, and having regard to the purpose of the clause I am quite satisfied that the department will endeavour to place a fair and ample interpretation upon it.

As to what type of construction is contemplated here, the hon. member is seeking, I take it, to draw a distinction between someone who is engaged in constructing buildings which will become fixtures, part of the real estate, and someone who is engaged in constructing a chattel. I think I can say to him in this respect that a man who is engaged in the construction of a factory, a canal, a bridge or a road is obviously a construction worker. When it comes to the matter of fabricating an aeroplane or some chattel I should think that process would be more properly described as manufacturing than as constructing, for this purpose.

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LIB

Leon David Crestohl

Liberal

Mr. Crestohl:

May I point out that I have a particular reason for asking this question. These are men of special talent whose ability and scientific knowledge are required. As a result of their particular knowledge and talent they are often summoned from one place to another. Would the minister not think these people should be placed in a special category, and that they should be offered the relief which the bill intends to provide?

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

I am quite sure the hon. member is aware a man who is on, shall we call it, a travel status for his employer, a man who is travelling about on behalf of his employer, is not assessed for whatever the employer lays out as part of his travelling expenses or living allowance while engaged in his travels on behalf of his employer.

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CCF

Thomas Speakman Barnett

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

Mr. Barnett:

Mr. Chairman, I listened very carefully to the Minister of Finance when he spoke on clause 1 of the bill. I am sure the proposal which it contains in so far as construction workers are concerned will be welcomed. The minister made reference to a directive on which we had considerable

discussion in the house a year ago. As I understand it, the proposal for an amendment to the Income Tax Act which he is now bringing forward is in fact making legal something which, apparently, had been carried on as a practice in the industry over a number of years, a practice to which the Department of National Revenue has turned, more or less, a blind eye. I think that is obvious in the light of the directive we were discussing here last year under the name of bulletin No. 10.

Certainly I welcome the suggestion that discrimination against construction workers is to be eliminated. Nevertheless, from what the minister said in his opening statement it has become apparent that we will have to start all over again a wearing down process on the new Minister of Finance at a time when some of us felt we were beginning to penetrate the conscience of the former minister of finance to eliminate this kind of discrimination.

I must say that in listening to the Minister of Finance on the question of administrative problems I fail to follow his argument that because of administrative difficulties the broader provisions which some of us have been suggesting cannot be brought in at this time. Particular reference has been made to the situation of the loggers or bushworkers by a number of hon. members who have spoken earlier in this debate, and in pursuing the subject I should like to suggest that if the minister is thinking in terms of administrative problems he will really have a problem on his hands when he begins his attempt to determine whether or not certain workers are construction workers.

I would remind him that in some of the west coast logging camps where all the workers are organized in an industrial union there are probably a good many workers who are in construction classifications. The minister will find himself up against the peculiar difficulty of having to try to draw a fine dividing line between certain workers in these camps who can qualify as construction workers and certain others who, he will have the trouble of deciding, are not construction workers.

Earlier someone here was talking about a Pandora's box, and I think the minister, as a result of the approach he has made to this problem, has opened the way to a large number of administrative problems which he has not envisaged. The Minister of Finance has suggested that he has not had any representations on this matter of allowable deductions except on behalf of construction workers.

I quite agree with him that the Canadian Labour Congress has made a major point of

this question of construction workers, because it was a problem which had arisen as a result of this bulletin of the Department of National Revenue. But when he says he has not received any other representations at all, I do not know whether or not he is referring to the situation as far as the Department of Finance is concerned only since he took office. I do know, however, that I have in my hand a letter dated December 9 of this year addressed to him from what is known in British Columbia as the loggers' local of the international woodworkers of America.

Mr. Donald Fleming,

Minister of Finance,

Parliament Buildings,

Ottawa, Ontario.

Dear Sir:

This is a copy of a letter which is addressed to the minister, copies of which were sent to me and some other people. The body of the letter states in part:

Based on press releases, it is my understanding that you proposed amendments to the Income Tax Act, to provide that construction workers will be entitled to use expenditures of transportation and board costs away from home as deductible from taxable earnings. It is also my understanding that legislation for this provision will be introduced in the near future and become effective for application on earnings during 1957.

We welcome this proposed change, as we have endeavoured for quite some time to get this type of legislation. However, we regret that it does not cover loggers who have identical problems. We have, over a period of years, made presentations to the federal government for this type of legislation, and in order to obtain support on this problem, our submissions have included requests for all workers with this type of problem.

I think that makes it clear that as far as the loggers are concerned they recognize the justice of the claim of the construction workers.

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

What is the date of the letter my hon. friend read?

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CCF
PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

I have not seen the original letter yet.

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CCF

Thomas Speakman Barnett

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

Mr. Barnett:

I realize it is possible that this particular letter may not have come to the attention of the minister but I think he will have noted from the context as I read it that this particular local of the international woodworkers has made representations to the government, according to their statement, over a period of years. I might explain to the minister that this particular local which is known colloquially in British Columbia as the "loggers local" is the organization which represents the workers in the scattered logging camps along the coast of British Columbia from Vancouver to the Alaska border and because of the fact it is predominantly a loggers local it can be considered the spokesman

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of the loggers in the entire logging industry *of British Columbia and Alberta. This is not a new problem at all nor one which has not had prior consideration within the Department of Finance.

I am going to turn for a few minutes to the debate which took place in this house last April when we were discussing the Income Tax Act. Following an extended discussion on the subject dealt with in clause 1 of this bill, as found at page 3035 of Hansard of April 3 last, I referred to statements that had been made by the then minister of finance and I said:

For some of the things the minister said I am inclined to hope that this may be a case of things having to get worse before they can get better.

I was referring to the minister's refusal to deal with the problem of bulletin No. 10. I suppose one could say that things are perhaps a little better at this moment than they were then as far as the stated intention of the government is concerned. I then went on to say:

I made reference to this matter in my budget speech. I said I thought this bulletin which is under discussion was extending the discrimination that I have been attempting to draw to the attention of the minister at the budget stage for the last several sessions.

I welcome the statement which the minister has made in part, because up until this year the only thing I have been able to get in the way of an answer from the opposite side of the house has been a few inconclusive words from the minister's parliamentary assistant on this subject. The one point to which I want to make reference, seeing that the discussion has gone this far, is this.

I agree in part with what the minister has been saying, namely that this problem is not something which is unique to the construction industry. As far as I am concerned, it applies equally, and as seriously, for example to the logging industry. In my opinion from the study I have made of the matter over the past several sessions, this whole question can be resolved only by a suitable amendment to the Income Tax Act-

Well, we now have an amendment to the Income Tax Act but the question as to whether it is a suitable one is open to debate. I went on to say:

-one that will remove what to me is a discrimination that now exists against the expenses that are incurred by those on wages and salaries in the course of earning a living.

As I said, I was refeiring at that time to some of the remarks that were made by the then minister of finance. I think I should point out that Mr. Harris made remarks which certainly should have come to the attention of the present minister if he has been giving any consideration to this problem. It will be found on page 3025 of Hansard of April 3, 1957, that Mr. Harris had this to say:

There is no question but that the construction industry is unusual in this field, yet it is not wholly

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unique. There are other industries in which allowances for board and lodging are given.

Later, on the same page, he said:

We have been doing our best to find a rule which would tax every one with the same kind of income unless there was a real case to be made for an exception. I think all hon. members of the committee would agree with me on that score, namely that if there are exceptions-if I am being taxed for one thing that some hon. gentleman opposite is not being taxed for-there must be great justification for that exception to be made.

Later, on the same page, he went on to say:

We want to see that all other workers who are in about the same kind of situation will have their cases considered on their merits and we will be able to know where to draw the line with respect to the exemption, whether it should be drawn just at the construction workers or whether it should be extended beyond that.

On page 3028 he continued with remarks to the effect that he thought it was clear that he had no fixed idea on this matter but, however, he did want a consistent tax law.

Some of us were inclined at that time to say, "All right, let us have a little more patience about this question and be prepared to wait a little longer so that we can have a consistent tax law." I suggest that we have now waited for some months and while it is perfectly true that there has been a change of government and that we have a new Minister of Finance nevertheless I think it is apparent from those remarks made by the previous minister of finance that this is something which has not suddenly come under review within the Department of Finance and I can see no real reason why the present minister should not have been able to proceed to bring in a proposal that would have been equitable as far as all the working people of Canada are concerned.

It is interesting, of course, to discover that apparently our present Minister of Finance is able to put forward one point of view in one particular situation in one place and to put forward a rather different point of view when he is speaking to a different audience on some occasions. I have in my hand a copy of the Ottawa Citizen of December 10 and on page 3 there is a story which is headed, "Fleming Blasts U.S. Subsidiaries Lacking Canadian Shareholders". The story goes on at some length to describe the remarks made by the minister to the audience to which he was speaking on that occasion. However, farther down in the article it is reported that the Minister of Finance:

Slightly changing the topic he suggested a few simple thoughts-

Well, I have heard it suggested on occasion-

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PC

Charles Edward Rea

Progressive Conservative

The Acting Chairman (Mr. Rea):

Order. May I remind the hon. member that we are on Bill 232 and I hope his remarks are going to come within the subject matter of this bill. I have been waiting to hear just how they are related to it but at the moment the Chair does not see in what way they are related.

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CCF

Thomas Speakman Barnett

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

Mr. Barnett:

I assure you, Mr. Chairman, that I made reference to the headline of this article purely for the purpose of allowing the Minister of Finance to identify it. What I am about to refer to is directly related to the topic under discussion, as I see it. The paper reports with respect to the Minister of Finance:

Slightly changing the topic he suggested a few simple thoughts for ways in which tax laws should be devised, framed, interpreted and applied.

Then it lists under nine points the ways in which the Minister of Finance thought this would be done. Point No. 5, as reported in the paper, is this:

Taxes ought as a rule to be general in their application. The legislator should avoid discriminatory provisions.

When the Minister of Finance was making that statement he was, in effect, agreeing with some of the statements made in this chamber last year by his predecessor when we were discussing the point that we have under consideration in this clause of Bill No. 232.

Earlier in my remarks I made reference to the fact that, having looked into the matter for several sessions, I had come to the conclusion that the problem with which we are dealing can be dealt with only by a suitable amendment to section 5 of the Income Tax Act. Well, we have before us in the committee today a proposal for an addition to section 5 of the Income Tax Act but, Mr. Chairman, in my opinion this is not a suitable amendment to the Income Tax Act because it is discriminatory and restrictive in its application. While, as I said earlier, it may be something that is welcomed by the construction workers at this time, nevertheless I am quite sure that they would be quite happy to see it applied to all other workers who find themselves in similar situations. Therefore, I should like to move:

That clause 1 be amended by deleting therefrom the word "construction" where it appears in lines 6, 12 and 13 on page 1, and in line 4 on page 2.

The clause as amended would then read:

(2) Notwithstanding subsection (1), in computing the income of a taxpayer for a taxation year from an office or employment, where the taxpayer was, during the year, employed as a worker, there shall not be included

(a) the value of, or an allowance (not in excess of a reasonable amount) in respect of expenses incurred by him for, board and lodging, received by him.

(i) in respect of, in the course of or by virtue his employment as a worker at a site from which, by reason of distance from the place where he maintained a self-contained domestic establishment (hereinafter in this subsection referred to as his "ordinary place of residence") in which he resided and actually supported a spouse or a person dependent upon him for support and connected with him by blood relationship, marriage or adoption, he could not reasonably be expected to return daily to his ordinary place of residence, and

(ii) in respect of a period while he was required by his duties to be away, for a period of not less than 36 hours, from his ordinary place of residence; or

(b) the value of, or an allowance (not in excess of a reasonable amount) in respect of expenses incurred by him for, transportation between his ordinary place of residence and the site referred to in subparagraph (i) of paragraph (a), received by him

(i) in respect of, in the course of or by virtue of his employment described in subparagraph (i) of paragraph (a), and

(ii) in respect of a period described in subparagraph (ii) of paragraph (a), during which he received board and lodging, or a reasonable allowance in respect of expenses incurred by him for board and lodging from his employer.

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PC

Charles Edward Rea

Progressive Conservative

The Acting Chairman (Mr. Rea):

Order. On this amendment I want to point out that May, 16th edition, at page 554 says:

An amendment is out of order if it is irrelevant to the subject matter or beyond the scope of the bill.

The explanatory note of the bill reads: This new subsection provides that a person employed as a construction worker at a construction site from which he cannot reasonably be expected to return daily to his ordinary place of residence where he maintains a home in which he lives with his wife or other dependant shall not be required to include in income the value of free board and lodging furnished during the period of necessary absence or free transportation furnished to or from the construction site, or a reasonable allowance paid to him to cover expenses of such board and lodging or transportation.

Now, it is strictly for the construction workers, and after reading the citation from May, at page 554, the Chair must rule the amendment is out of order.

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CCF

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

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

Mr. Knowles (Winnipeg North Centre):

Mr. Chairman, have you taken into consideration citation 502 of Beauchesne's 3rd edition, which reads:

A private member may move that certain specified taxes be readjusted and that the scope of tax exemptions be enlarged.

I suggest, sir, for your consideration the question whether my hon. friend's amendment is not a request that the scope of the exemption proposed by the government be enlarged.

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PC

Charles Edward Rea

Progressive Conservative

The Acting Chairman (Mr. Rea):

I might also point out to the hon. member for Winnipeg North Centre citation 344 of Beauchesne's 3rd edition:

It is an imperative rule that every amendment must be relevant to the question on which the amendment is proposed.

Income Tax Act

This, in the opinion of the Chair, is enlarging the scope of the bill and therefore the Chair must rule the amendment out of order.

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LIB

Daniel (Dan) McIvor

Liberal

Mr. Mclvor:

Mr. Chairman, I have sense enough to know that I am not able to say anything that would make the minister change his bill now, but I think he will take into consideration every suggestion that has been made. Since he wants to get away in a few minutes to bid farewell to his family, I say pass the bill and get it out of sight.

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SC

Frank Claus Christian

Social Credit

Mr. Christian:

I will not take up much of the time of the committee, but I do wish to say this. Since the words "construction worker" have not been defined in the bill, that in itself will lead to a lot of confusion and dissatisfaction. I have two questions to ask the Minister of Finance. Why were not the words "construction worker" defined in this bill? Would a carpenter who goes from one logging camp to another to do carpentry work come within the definition of a construction worker?

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PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

Mr. Chairman, I think the answer to the second question is very clearly yes, he would be a construction worker under the conditions described by my hon. friend. As for asking for a statutory definition, I think we can leave the application of the words of this clause to the Department of National Revenue. It seems to me it is not a case for spelling out in detail lengthy definitions in this legislation. My hon. friend recalls that one of the purposes of the Income Tax Act when it was first introduced to replace the old income war tax act was to get away from the principle of a multiplicity of statutory definitions, many of which had given rise to a great deal of litigation in the courts.

(Translation):

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LIB

Georges Villeneuve

Liberal

Mr. Villeneuve (Roberval):

Mr. Chairman, the phraseology and the general pattern of section 1 of this bill to amend the Income Tax Act are somewhat of a surprise to me. Indeed when I read the proposed subsection 2 of section 5 of the act, describing the class of workers who are to be allowed board, lodging and transportation expenses after an absence of more than 36 hours, I cannot help pointing out to the hon. Minister of Finance (Mr. Fleming) that this is too restrictive a clause.

You see, construction workers employed at a construction site make up a limited class of workers, especially in the riding I represent; in point of fact, it is a class which includes very few individuals.

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In my opinion, the case of loggers and mine workers should have been particularly provided for.

About 50 per cent of workers in my riding have to go out and work in bush camps in the winter time. They often have to work 50, 75 and even 100 miles away from home, yet they are by no means provided for in section 1 of this bill.

Not far from my constituency there is at this time a very important project under way. The Aluminum Company of Canada is building a huge dam at des Passes falls employing for this purpose three to four thousand workers. About 90 per cent of these men have to live on the spot, travelling home only occasionally. I am sorry that they are not covered by this clause. I am certainly not surprised at the apparent generosity shown towards the end of that particular clause, which provides that the workers involved may be exempted for the year 1957. When I say I am not surprised, I mean that the number of workers thus exempt will be so small that the government can well afford to show itself very generous in this regard. It gives colour to the government's purpose, pretending to be granting a tax exemption whereas, in fact, all this is a mere show of words, a sham exemption wrapped up in involved phraseology.

I wish to go on record as protesting against that restrictive definition which discriminates against a large number of other categories of workers who would also have deserved to be tax exempt as regards food, board and transportation.

(Text):

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CCF

Douglas Mason Fisher

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

Mr. Fisher:

Mr. Chairman, I should like to ask the minister several questions, one having to do with interpretation has already been brought up. In logging and especially in the pulp and paper industry there is a great deal of construction work involved and you cannot say that it is of a temporary nature because the whole course of the operation is towards permanency. I can think of actual highways that have been built. Some of our companies have constructed 200 to 300 miles of highways. For example, Marathon Corporation usually plans to construct up to 17 miles of highway a year and a number of bridges. So far as water works are concerned, they construct sluices, flumes, skidways and things like that which are permanent. If the company were to set up its bookkeeping operations in a suitable way, would it be possible to allow men detailed to that kind of work to have, instead of paying board and room, some adjustment of their wages to cover expenses

in order that they may qualify under the construction clause of the act? That is my first question.

Second, the minister seemed to suggest that no studies have been made in relation to woods workers. I would remind him of an answer that was given to me and which can be found on page 938 of Hansard. I asked the following questions:

Have any officials of the government made any studies and/or reports on the application and the possible effects of the extension of the expense deductions given to transport employees under subsection 7, section 11 of the Income Tax Act, to workers in either the woods or construction industry or both?

The answer was "yes". I realize that this is a slightly different section but I would infer from this that studies have been made with regard to woods workers. I should like to know the meaning of the statement the minister made in relation to that answer.

The third question I should like to ask has to do with the point the minister brought up about representation and strength of representation. I am sure we can all agree that when there is what one might call strong lobbying it is bound to bring something to the attention of the government, but just because the loggers and the bush workers have not been strong or vocal enough in presenting their case, whereas the railway workers and the construction workers have, surely should not mean that the one should have an advantage over the other when the similarities in their situations are so obvious. I should like to ask the minister whether he feels that strength of representation is more important than just the straight fairness of the position.

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December 13, 1957