January 29, 1958

SC

Frank Claus Christian

Social Credit

Mr. Christian:

Thank you. That is what I anticipated. I would also like to ask the minister whether he could give us some idea when the bill will be introduced and circularized?

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming:

Mr. Chairman, the moment this resolution is passed the bill will be introduced, given first reading and will be available at once for distribution. As I indicated last night, we do not propose to go any farther with it than this at the present session. But, in the light of the suggestions, recommendations and advice we may receive from those who study the bill in the interval between the two sessions, we would propose to introduce the measure at the next session of parliament. It may be that it will not then be in the same form. It may be that we shall be making changes in the light of the recommendations we shall receive. But the measure that is drafted will be available the moment this resolution is passed.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
SC

Frank Claus Christian

Social Credit

Mr. Christian:

I should like to say further that we in the Social Credit group in this house agree that it is expedient that this measure be introduced to replace the present Dominion Succession Duty Act. I am particularly concerned about the provision in the estate tax measure to the effect that if a man is survived by a widow and dependent children, certain statutory exemptions will be given. As I understand it, under the old act there was a $20,000 exemption for the widow

and that if a widow survived and there were five children, each child would have an exemption under the old act of $5,000, making a total exemption for the widow and five children of $45,000. However, under this measure there is an exemption for the widow of $60,000 and $10,000 for each child, which makes the total amount of exemption of $110,000. Under the old act-and I took a look at it-I note that the definition of "child" includes a child of the deceased and also a child who has been lawfully adopted while under the age of 12 years by the deceased as his child, provided at the time of the death of the deceased the child was under 18 years of age, in the case of the deceased's own child or an adopted child.

Under the new act, as I understand it, the age will be raised for the child from 18 years to 21 years. When the definition of the word "child" is given I trust that it will also include an adopted child.

With regard to the matter of the bill itself, I should like to read from the Canada Trust bulletin for the month of January, 1958. The heading in the bulletin is "The New Estate Tax Act" and it explains the difference between succession duty and an estate tax in the following words:

It is not generally known that succession duties are levied against beneficiaries-not against estates. The rates of duties payable by the beneficiaries vary in relation to the size of the estate, the value of the individual benefits, and the degree in which the beneficiaries are related to the deceased. As a result, the assessing of succession duties can be a very involved process requiring large and highly trained departmental staffs.

In contrast, an estate tax is levied against estates, and although the rates of tax may vary with the size of the estate, the assessing of the tax is not complicated by such factors as the value of individual benefits and the relationship of the beneficiaries to the deceased. An estate tax, therefore, possesses the merits of simplicity and economical administration.

I would therefore congratulate the minister. I believe that this particular measure, when it is introduced into the house and when it becomes law, will be a good one and will be a big improvement over the old succession duty act.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
CCF

Herbert Wilfred Herridge

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

Mr. Herridge:

I just want to say a few brief words on this resolution. First of all, I must say that I am glad that the minister who is introducing the bill is leaving it, as it were, on the order paper so that it will be given study by a good number of people who are interested in this type of legislation. I know that members of this group-and, I suppose, the same is true of all members of the house-have received representations from various organizations suggesting the necessity

for some amendment to the Dominion Succession Duty Act. This legislation, of course, will be somewhat on a different basis; it is called an estate tax.

Before proceeding further I want to express my complete support for the general point of view expressed by the hon. member for Vancouver-Kingsway. He was speaking for this group in that respect. It expresses one of our attitudes towards life on these important problems relating to taxation.

I want to emphasize that we in this group have not the philosophy of bringing everyone down to a certain level. We want to bring everybody up to a certain level. When it comes to the question of estate taxes, we want to make sure that the widow is well provided for; that there is provision for the satisfactory education of the children and so on. However, at the same time we believe it is time that we increased the rate of taxation on these very large incomes. The hon. member for Okanagan Boundary made reference to some extent to a portion of the remarks of the hon. member for Vancouver-Kingsway when he was referring to incomes in the millions-and I think he used the figure of $5 million-as taking away, as it were, the initiative from people and not recognizing their ability. I can tell the hon. gentleman this.

I know a few people in my large experience who have a million and up to ten million, and the reason they have it largely is not as a result of any exceptional ability as compared with the average man but rather as a result of the opportunity they have had to plunder their fellow man. That is why they have this money. I am not saying that there are not many cases of people with large fortunes who have shown exceptional ability and have used them, from their point of view, to the best advantage possible under this system. But if in the days ahead, in the opinion of members of this group, we are going to solve some of these economic questions that are facing us today, and if we are going to bring about a greater, shall I say, social equality in this country, a greater fairness between all people, we must give serious consideration to such legislation as this along the lines suggested by the hon. member for Vancouver-Kingsway.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
SC
CCF
SC

Frank Claus Christian

Social Credit

Mr. Christian:

Do you agree with the percentage figure mentioned by the hon. member for Vancouver-Kingsway, namely 85 per cent of the amount of an estate? Do you think that is fair? Do you not think that is plunder by government?

Dominion Succession Duty Act

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
CCF

Herbert Wilfred Herridge

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

Mr. Herridge:

That is a simple question to answer. Even with 85 per cent of $5 million, you have quite a good deal left, have you not? You have a bit more than the average at that. I certainly agree with it. The hon. member was speaking for this group when he gave that figure.

I am just going to say this in conclusion, Mr. Chairman. If we are to develop a sense of social responsibility and also social equality, if we are to do something to meet the economic problems that face us today with respect to unemployment, and are to provide the services that are required in this country from coast to coast, we must introduce a great many other changes in legislation. We must view succession duties, taxation and estate tax according to the principles enunciated by the hon. member for Vancouver-Kingsway when he spoke for this group on this important measure.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
SC

Ernest George Hansell

Social Credit

Mr. Hansell:

I want to have something to say on this resolution by reason of the fact that many of us, a year or so ago, received many letters and petitions asking for a revision of this act in the interests of the women of this country. I especially want to call to the attention of the minister the fact that a year ago, in the last session of the last parliament, I asked the then minister of finance, Mr. Harris, whether, on the basis of this flood of letters which all members of parliament were receiving, we could expect any revision of the succession duty act to be made before the session ended. He responded that the government had been working on a revision of the act but that it would have to be deferred to the next session of parliament. Of course, since that time there has been a change. An election has been held and a new government has come into office.

But I pursued the matter a little further. A number of weeks ago, I think in November, I asked the present Minister of Finance a similar question. I prefaced my question by calling his attention to the fact that we had all received many letters and resolutions, mostly from women and women's organizations, asking for revision of the act and making certain proposals. I also reminded him of the question I had asked his predecessor. The answer the present Minister of Finance gave me at the time was that the matter was under active consideration. I want hon. members to notice that I prefaced my question by calling attention to the fact that women's organizations throughout the country were asking for certain things.

I come now to the present resolution and I say that we are reasonably pleased that there are to be changes in the present succession duty act. The name of the act is to be

3994 HOUSE OF

Dominion Succession Duty Act changed and there will be slightly greater exemptions. Estates will not be taxed quite so heavily as before. At the same time, having regard to what is contained in the resolution, I am afraid that some of us will have to express serious disappointment. Our disappointment arises from the fact that the present resolution and the bill to follow, if we are to judge the bill on the basis of the resolution, do not come anywhere near giving the widows of this country what they have asked for in resolutions they have presented to members of the House of Commons. In addition, not so long ago there was a convention of women in Ottawa. I think they represented the Canadian Women's Institutes. They held their convention at the Chateau Laurier and if I am not mistaken a delegation of these women waited on the Prime Minister and the Minister of Finance.

They were encouraged at the time to believe that some attention would be paid to their request. Again I say that if all that is in the bill is simply a reduction of the taxes imposed on estates the legislation will fall far short of satisfying the women of the country. It will fall far short of what the women have been asking for. In my files I have a letter from Mrs. Kehr of Vulcan, Alberta. I have another one from Mrs. Finlayson of Ottawa who is chairman of the Canadian Committee on the Status of Women. I have another from Mrs. Kellar of Cayley, Alberta, another from Mrs. Gillanders of Blackie, Alberta, another from Mrs. Ray of Royalties, Alberta, another from Mrs. Beagle of High River, Alberta, who is the president or secretary, I believe, of the High River Women's Institute, another from Mrs. Maisey of Kirchaldy, Alberta. I think she was writing for the women's institute of that district. I have another from Mrs. Williams of Arrowwood, another from Mrs. Hill of Arrowwood, Alberta, another from the district director of the Farm Women's Union of Alberta, Mrs. House of Arrowwood. I believe I have other letters in another file regarding the same matter.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
CCF

Stanley Howard Knowles

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

Mr. Knowles (Winnipeg North Centre):

Is

this a request program?

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
SC

Ernest George Hansell

Social Credit

Mr. Hansell:

I do not care what sort of program you call it. What I am saying is that if I have received this many letters from my own constituency, then I miss my guess if other members cannot equal the number I have received. We have all received them. They come from all over Canada. As I said, these women met in convention in Ottawa. They waited on the government and they were given encouragement. Again I say that the resolution and the bill to follow fall short of giving the women what they ask for. Here is a typical resolution I received which requests that one half of a deceased husband's

estate be conceded for tax purposes as earned by his widow and therefore not subject to succession duties when passed to her upon his death. I think that is a reasonable request.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
?

An hon. Member:

Even with a $5 million estate?

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
SC

Ernest George Hansell

Social Credit

Mr. Hansell:

I know my hon. friend can poke that sort of question at me if he wishes. I am not saying that if you get into the $5 million class, there should not be some sort of graduated tax. I am not saying anything about that. But there are very few in the $5 million class.

I will give an example of what I mean. There is a widow in my constituency whose husband was ill for years. What did the wife do? She cared for her husband over those years and she managed the farm by employing a hired man. The husband and wife had a joint bank account. When the husband eventually died the joint account was frozen. That is reasonable for certain legal purposes, but then there was the further event that even though the wife thought she had a right to claim half of that joint account she was not allowed to do so when the estate was calculated. She could not claim a nickel of it except as it was calculated for inclusion in the estate. The result was that they might just as well not have had a joint account.

We find that particularly so with farm women. For the most part farm women work hard all their lives. They are one with the husband in the estate and therefore they should be half owners of the estate. I think we should acknowledge equality in the marriage partnership and recognize that work within the home and for the family is just as necessary and important as the husband's work is outside the family. The government has recognized that to some extent in other legislation.

The government of Canada has, I might say, increasingly imposed upon married women the burden of partnership with their husbands because the wife is required to pledge her credit when the husband desires to get a loan from the bank. In so far as the Veterans Land Act is concerned, the wife of a man who applies for a loan has to sign the documents and is jointly responsible. The same situation applies to the National Housing Act. The husband and wife are considered partners for the purpose of protecting these loans.

However, when it comes to considering what the husband leaves the wife, then evidently the government does not consider the wife as a partner. I suggest that this bill falls far short of what the women of this country expect. I think it is reasonable that

they should expect half of the estate up to a reasonable amount. I am not going to hold up the committee, but the minister has said that when the resolution is adopted the bill will be given first reading but will not be proceeded with beyond that stage. The minister said we would be given time to analyse it and come forth with suggestions.

I want to ask him if he is really sincere in asking the members of this house to come forth with their suggestions. If he is, then he is going to get some. If he is sincere in requesting that we come forward with our suggestions he should indicate his sincerity by saying that he will listen to them; that he will accept those suggestions and if they are reasonable, when the bill is presented at the next session of parliament, if he has anything to do with it, those suggestions will be incorporated in the bill. If he is sincere, that is exactly what he will do. If this bill is introduced and we can see it and analyse it, the women's organizations of this country can also see it, then I am quite certain that the minister will be flooded with suggestions as to how the women of this country who are left widows, perhaps without earning power, feel they should be regarded in so far as their husbands' estates are concerned.

I will not say any more than that. I want the minister to be sincere in this matter. I think he is sincere. I think he wants to do a good job for Canada. I have no doubt about that. He is a very fine gentleman. I am going to say this, however, that we in this corner of the house have, for many years, recognized that he is restricted in what he would like to do. He is restricted by reason of the fact he is a victim of the financial policies that have been embodied over the years in the legislation of this country. His hands are tied. If he is sincere about this matter and wants to do a real job for this country and particularly the unfortunate widows, he will look into all these matters, including the financial policy which is tying his hands, and he will tear himself loose from that type of policy. This will enable him to do all the things that he believes the people of this country desire he should do. Some of us expect to be back for the next parliament. I do not know whether or not the minister will be, but I suppose he expects to be. If we are all back here, we are going to remind him of what he said this afternoon. We are going to ask that suitable amendments be made to the bill.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
PC

Frank Charles McGee

Progressive Conservative

Mr. McGee:

May I take just a moment

before the time expires, to point out one aspect of this matter which appeals to me in particular. Recently we have heard a great deal about the decline in the purchasing power of the dollar. It seems to me that the 96698-253

Dominion Succession Duty Act main features of this proposed bill will have the effect of increasing the purchasing power of the insurance dollar, certainly as it applies in my particular case. I should like to pass along to the minister and the house the comments which I have received from my riding concerning this bill. The people in general are most enthusiastic about it and the manner in which it faces up realistically to present problems.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
CCF

Colin Cameron

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

Mr. Cameron:

May I call it six o'clock, Mr. Chairman?

At six o'clock the committee took recess.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink

AFTER RECESS The committee resumed at eight o'clock.


CCF

Colin Cameron

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

Mr. Cameron:

I do not propose to take much of the time of the committee now, but since we have been told that this bill is not going to be proceeded with during this session I feel there are some things which should be said in regard to this particular phase of our taxation structure.

I want first of all definitely to associate myself with the views expressed by my colleague the member for Vancouver-Kingsway who, I think, set forth the views not only of this group but of a growing number of people throughout the country. I think it is not too much to say that most intelligent people today in our western society tend to give at least lip service to the idea of an egalitarian society, and by that I do not mean any rigid level which puts everyone on precisely the same basis. I do suggest, however, that most people today do consider that the serious inequalities between incomes and the consequent standards of living and opportunities should be ironed out as rapidly as possible, and one of the major sources of continuing inequality in society, of course, is the inheritance of wealth.

I quite understand and agree with the view expressed by the member for Macleod when he spoke of the position of widows who are left with children to support and to educate. I am sure no sensible person and no person with any sense of justice would want to deprive a widow of the necessary estate in order that she might continue the work of rearing her family, although I should say that, as far as I recall, I have had only one letter on this matter. It may be that I have not as many potentially rich widows in my constituency as has my hon. friend from Macleod. However, I am quite prepared to agree that something should be done to take care of that situation. I believe that the

Dominion Succession Duty Act measure before us, as outlined by the minister, as recorded at page 2008 of Hansard for December 6, does indicate a point of view with which I, for one, and I think a great many people in Canada, would hesitate to agree. I have in mind the following words of the minister:

For the present I point out that in every tax bracket the tax payable under the new law will be less than under the present Succession Duty Act.

I strongly suspect that the vast majority of the people in Canada hold entirely opposite views to the views which must be held by anyone who would advance that as a desirable development. I think we have to take into consideration the development in our society of new standards of value.

I was quite struck with the comments of the hon. member for Okanagan Boundary when he suggested that there was a danger, even with the bill as presented or forecast by the minister today, of a loss of incentive in our society, and I am tempted to ask, incentive for what? Do we really want to hold ourselves down, in a society which we claim to be a civilized one, to the idea that the only incentive worth thinking about is that to acquire a fortune? I think that is a false standard to hold before our people, and I may say that any continuation of the means by which people can inherit a markedly superior standard of living from that of their neighbours is one that prevents the development of new standards in our society that I believe to be very essential at the present time, if we are to progress in the way which many of us want to progress.

I recall the remarks of a quite eminent financier in Canada on this particular question and I took very great comfort from what he said. He is a gentleman who held a very respected position in the banking fraternity, and, during the hearings of the banking and commerce committee four years ago, I had a private conversation with him. He made what I thought was a very significant and a very valuable comment. He told me that he enjoyed one of the largest salaries paid to anyone in Canada but he said, "You know, these days a lot of nonsense is talked about saving but I pay no attention to it. My wife and I spend every nickel we get. I see no reason at all, now that I have raised and educated my family and they are all standing on their own feet, why I should take steps to leave them money which they do not require." I believe that is a point we have to consider in relation to this matter, whether we are really serving the best interests of the people by permitting them to inherit vast

fortunes as they do under the present Succession Duty Act and, according to the minister, as they will be able to do to an even greater degree under the bill he proposes.

Most of us, I think, are acquainted with cases of the children of rich men who have suffered from the very fact that they are the children of rich men and who have found themselves outstripped by those who have been brought up in a more modest and realistic part of society. I would urge, therefore, that before the minister again brings this measure down before the house he should consider the new ideas which are abroad in our country and in most other countries of the western world and which cause us to look with slightly dubious eyes at those who devote all their energies to the accumulation of large fortunes. After all, large fortunes can only be accumulated by someone who has a single track mind, and a person with a single track mind is not only of no particular value to us at the present time but, if he is allowed to have economic power, as in these instances, he is a positive danger to us.

I would hope to see the legislation of this parliament designed in such a way as to iron out the economic inequalities in our society and thereby help in the development of a new and more valid scale of values with which to face the difficulties which lie ahead of us. I say this because I am afraid that we shall eventually have to face the challenge of people who have a slightly different scale of values, one perhaps for which we do not care very much, but certainly not the scale of values envisaged in this measure before us. I would like to see the minister give very serious thought to this matter before the next session of parliament. If he is still the Minister of Finance I would like him seriously to consider whether he is really serving the interests of the Canadian people by bringing in a measure of this sort, or merely serving the interests of a very small though powerful minority in our society, a small and powerful minority which I would think one could safely say would not comprise the most valuable members of our communities. The most valuable members of our communities, it would seem to me, would not be the rich men but the wise men, and it is noticeable that riches and wisdom are very seldom found in the same place because, as I have pointed out, to acquire wealth one needs a single track mind. A single track mind does not easily achieve wisdom.

Therefore, while we are not going to be given the opportunity to vote on this measure during this session, I did think it would be as well for some of us to put on record our views with regard to the inheritance of

wealth, namely that it is something that should be limited strictly to protecting the rights of widows for instance, who are left with families to rear and children who still must have their education and their start in life. Beyond that, however, society owes no debt whatever to any young man or any young woman. A young and healthy man or woman who has been trained and educated has then received from society all to which he or she is entitled.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

Over the dinner hour, Mr. Chairman, I consulted the library and found "The History of Canadian Wealth", volume 1, by Myers. I, too, was interested in the comments this afternoon of the hon. member for Okanagan Boundary when he said he felt we would really take away an important incentive from the youth of Canada if we were to act upon the suggestions of my colleague the hon. member for Vancouver-Kingsway when he suggested that the British proposal to acquire 85 per cent of an estate, say, of $5 million, would be a step which the Minister of Finance should consider.

The hon. member for Okanagan Boundary thought that 85 per cent was a very large amount to take, but my colleague from Kootenay West emphasized that it was not so much the amount of money taken that mattered, in a situation of that sort, but how much was left, and I think that a family which inherits an estate of $5 million should not complain too much about having $750,000 left. I suggest this amount will be enough to provide the hon. member for Okanagan Boundary with the indemnity he gets as member of parliament for 75 years, though he might not be able to live that long.

I think we should look at the legislation which is before us. It does provide that if an estate of $5 million is left the amount is taxed as an initial rate on the aggregate net value of 20 per cent and then an additional 34 per cent. That would be 46 per cent for the estate, so if a deceased person had a widow and nine children, which, it is true would be quite a large family, they would be left with $2,300,000 to be distributed-$230,000 for each of them-and it would seem to me we should not lose too much sympathy on the dependants of Canadians who inherit that sort of an estate.

As I look through the "History of Canadian Wealth" I find chapters on the Hudson's Bay Company, the landed proprietors, the railroad promoters and so on, and I find that many of these fortunes have been created by special legislation passed by parliament. In this modern world, there is no self-made person; there is no one who acquires an estate of $5 million as a result of hard work and savings.

96698-253J

Dominion Succession Duty Act I notice that some 80 years ago Sir John A. Macdonald made some remarks of which the present Minister of Finance might well take note. As reported in this "History of Canadian Wealth", a Mr. Donald A. Smith was accused in parliament of using his position as a member for the personal benefit of himself and his associates. Sir John A. Macdonald accused Smith of more warmly and strongly advocating a lease bill "which is in his own interest and which will put money in his pocket" than the minister who introduced it. Macdonald termed it a fraudulent measure. More opposition came from another house member, Mr. White, who said:

There seems to be a party in this house-a very prominent party-who cares more for the Hudson's Bay Company, the Montreal Bank and private matters than for the interests of the people of Manitoba ....

It is a mistake to think that any one person, as a result of skill and ingenuity, can create a great fortune today. I think we should remember that the wealth of this country, and of any country, is created as a result of the efforts of all the people in the country, and I think it is a mistake to assume that because one individual, as a result of special legislation, obtains control of a huge fortune his children and his grandchildren should escape the responsibility of having to make any useful contribution to society.

Just two years ago we passed through this house the famous pipe line legislation. There is no doubt that whoever is writing the history of Canada 50 years from now will be able to look back on that act of parliament and say that a Canadian parliament then made it possible for certain individuals in Canada to become rich at the expense of those who use the natural resources of this country.

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink
SC
CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

I am sure the hon. member who interrupted me, and particularly the member for Lethbridge-

Topic:   REVISION, CONSOLIDATION, ETC.
Permalink

January 29, 1958