October 28, 1971

NDP

David Orlikow

New Democratic Party

Mr. Orlikow:

Mr. Chairman, I want to pursue the argument which the parliamentary secretary used to try to explain why the government feels the $150 expense allowance for workers is sufficient. If I understood him correctly, he said that the economic situation is such that the miner can afford to move more than a quarter of a mile away from the mine shaft, that he can afford to move 10, 15 or 20 miles away from his place of work and that the state does not and should not subsidize his expenses in travelling to and from work. But the parliamentary secretary did not address himself to the question that we have been asking. Why does the government have two standards? Why does the government apply that particular standard to the workingman, the factory worker, the man working in a mine or a mill?

To the doctor who lives in Rockcliffe and has an office in downtown Ottawa, who uses his car to go from his home to his office and from his office downtown to the Civic Hospital to see his patients, the government does not say, "You want to live in Rockcliffe and if you have to see your patients at the hospital you will have to pay expenses you incur." On the contrary, the government says to him, "You can charge off a very substantial part of the cost of your car, not just the gas and oil but depreciation and everything else."

The government says to the lawyer who wants to live in Kanata, uses his car to come to his office on Sparks Street or on Metcalfe Street and then uses it to go to the court

October 28, 1971

Income Tax Act

house, "You can travel from your home in Kanata 20 miles to downtown Ottawa, from there to the court house and back to Kanata at night, and you can charge off 70 per cent of the expense of your car in the form of a deduction from your income tax." I suppose, Mr. Chairman, I am pretty stupid-

Topic:   GOVERNMENT ORDERS
Subtopic:   INCOME TAX ACT
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?

An hon. Member:

We won't disagree on that.

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Subtopic:   INCOME TAX ACT
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NDP

David Orlikow

New Democratic Party

Mr. Orlikow:

I would like the hon. member who sits there to stand up and speak sometimes, but I suppose the reason he is not the stupidest member of the House is that he has just enough brains not to get up and speak.

Before this item passes I would like the parliamentary secretary to explain to me, in language which I can understand so that I can show it to my constituents, why working people are not treated in the same way.

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Subtopic:   INCOME TAX ACT
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LIB

Patrick Morgan Mahoney (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Mahoney:

Mr. Chairman, the hon. member who has just spoken is under a rather grave misapprehension as to the law regarding travelling expenses for doctors travelling from Rockcliffe to their offices in downtown Ottawa. That expense is not allowed to doctors and there is ample case law to substantiate this.

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NDP
LIB

Patrick Morgan Mahoney (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Mahoney:

It is rather futile debating this point. If hon. members opposite wish to continue to perpetuate the fiction that somehow or other wage and salary earners are discriminated against in that they cannot deduct the cost of travelling to a mill or factory, while professional people are favoured in that they can deduct the cost of going from their homes to their offices, there is nothing I can do to stop them. But it simply is not true.

The hon. member for Kamouraska raised a rather specialized matter and I must apologize for not jumping up immediately to answer his question regarding Canadian taxpayers who are employed outside Canada. So far as travelling expenses are concerned, so far as the cost of commuting home for the weekends is concerned they are in exactly the same position as if they were employed in Canada. That is not an expense which the income tax department allows. However, for those particular people there is a provision in the bill which I would draw to the attention of the hon. member. It is section 8(9). This, for the first time, will permit these employees to credit against their tax in Canada, to deduct from their tax payable in Canada the taxes they have to pay to the state in the United States in which they are employed.

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Subtopic:   INCOME TAX ACT
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Some hon. Members:

Hear, hear!

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LIB

Patrick Morgan Mahoney (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Mahoney:

Heretofore they have been able to deduct the federal tax, but now they can deduct the state tax as well. I am sorry; it is a deduction from income but not a deduction from tax. This is something new and should be of benefit to the particular taxpayers about whom the hon. member for Kamouraska was concerned.

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Subtopic:   INCOME TAX ACT
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PC

Robert Jardine McCleave

Progressive Conservative

Mr. McCleave:

Mr. Chairman, we are sitting around here this evening waiting for some decisive results from the eastern part of Canada. Apparently at the moment the election has become rather a stalemate, but anyway it is a little better than it has been. I was going to ask the parliamentary secretary-

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Subtopic:   INCOME TAX ACT
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NDP

Stanley Howard Knowles (N.D.P. House Leader; Whip of the N.D.P.)

New Democratic Party

Mr. Knowles (Winnipeg North Centre):

On a point of order, Mr. Chairman, the hon. member should not leave us in the lurch; he should tell us what the figures are. You, Mr. Chairman, are restricted to the chair and I am sure you, too, would like to know the results from Newfoundland.

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LIB

Gérald Laniel (Deputy Chair of Committees of the Whole)

Liberal

The Deputy Chairman:

Order, please. I would advise the hon. member that the Chair would not rule out anything he might like to add.

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PC

Robert Jardine McCleave

Progressive Conservative

Mr. McCleave:

I am getting some conflicting figures, but I understand there is one seat difference between Mr. Smallwood's party and the challenging party, and that the Labrador party has also got one seat. I don't know what that means at all, but while we are waiting for it to be resolved may I raise this matter with the parliamentary secretary. This afternoon, in answer to a question that I raised yesterday, he simply said that it was government policy with regard to the Income Tax Act that strike pay would not be included as a taxable benefit. I think at least we should hear a statement of government policy on this so that some of us can decide whether to debate it further or not.

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LIB

Patrick Morgan Mahoney (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Mahoney:

The hon. member, as a member of the Standing Committee on Finance during the study of the white paper, will be aware that this issue was faced and the recommendation by the committee was that strike pay be included in taxable income at least when it came from sources funded by tax deductible contributions. The government considered that matter and made the decision that that would not be a desirable thing.

I am afraid that I am not in a position to give the background reasons for that decision, but the matter was distinctly faced up to and considered. As a matter of fact, I am sure we are all aware of the typographical error that crept into schedule A in the ways and means motion where the marginal note referred to this matter but the provision was not there. I am afraid I cannot give the reasons but I can simply say that the matter was faced up to and the decision was deliberately made.

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Subtopic:   INCOME TAX ACT
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PC

Robert Jardine McCleave

Progressive Conservative

Mr. McCleave:

I would like to make what is probably a very legitimate point for all members of the committee including those on the government side. We are frequently faced with the representations of organizations and associations from different parts of Canada some of which have fought a continuing battle on tax reform over the last ten years. It is a pretty legitimate matter for any one of us to say that at least we should have on the record of the House of Commons, before we dispose of this bill, the reasons why we take certain courses. This is why I posed the question to the parliamentary secretary. I know we dealt with it in the committee as we did many other things, but I think it is a matter of compressing within a short period of time the reasons why the government is or is not adopting certain suggestions.

I make no apology for raising the matter. I think that to let people know what we are trying to do here is a very important element in persuading them why tax reform should be carried out. I make no apology for that, sir.

October 28, 1971

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Subtopic:   INCOME TAX ACT
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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

Mr. Chairman, I should like some clarification on the point that the parliamentary secretary raised a minute or two ago. I agree that if the parliamentary secretary takes his car and drives to the office or goes home, he is covered by other allowances. I think it is safe to say that unless he has an interest in the oil business or has another job, he is not going to get any money for his automobile. However, I think he would be hard pressed to pass on that example to professional people.

It may be true, and I think it is, that the doctor would not say that he had three patients in the Civic Hospital and was driving there from Rockcliffe, but I am sure that everyone here knows that the doctor can claim a percentage of the capital cost of his car, that he can claim a certain percentage of the operating expenses and as long as he does not claim 100 per cent the income tax department will not be very strict. This applied in the horse and buggy days as well. I presume when I was born the doctor had to drive 11 or 12 miles with the horse and buggy, but there was an allowance for it.

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Subtopic:   INCOME TAX ACT
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An hon. Member:

You are not that old.

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NDP

William Arnold Peters

New Democratic Party

Mr. Peters:

I think the parliamentary secretary is not being fair to members of this House when he says he will not accept that there is a difference between the worker who takes his automobile to work, whether it be ten or 50 miles and where there is no other means of transportation, and the doctor who is driving his car in the course of his duties. In one case the worker can get no consideration for his car expenses against the income he earns, and in the other the doctor gets a percentage of the cost. I have operated on an expense account where I was supplied with a car. As long as I did not claim 100 per cent there was no difficulty. I owned two cars, so I said that I was using the company car for business and I allowed 5 per cent for casual driving. I used the other car for other purposes, so I was not entitled to that consideration.

I think the parliamentary secretary is being unfair to members who believe that the same type of concession should be given to the worker as is given to the professional man and self-employed citizens in respect of the operation of an automobile.

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Subtopic:   INCOME TAX ACT
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LIB

Patrick Morgan Mahoney (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Mahoney:

Mr. Chairman, since it is so close to ten o'clock I must apologize to the other hon. member who sought the floor. However, in view of the allegations which have been made I felt I should respond immediately rather than tomorrow. The fact is that the doctor in Rockcliffe does not have the right to claim the cost of motoring from home to the office against his income. The Department of National Revenue applies percentages of expenses and this varies with the experience of individuals. A doctor in a small rural community might very well be allowed over 75 per cent of the cost of his motor vehicle because it is regarded as a proper business expense.

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Subtopic:   INCOME TAX ACT
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An hon. Member:

What about the worker?

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LIB

Patrick Morgan Mahoney (Parliamentary Secretary to the Minister of Finance)

Liberal

Mr. Mahoney:

The doctor in the large community may be allowed as little as 50 per cent. I would not go so far as to say that each individual case is individually assessed, but certainly all are looked at in typical areas and if any professional man feels that he is using his vehicles for business purposes to an extent greater than the norm in

Proceedings on Adjournment Motion

the community, he could justify this to the Department of National Revenue.

What about the worker driving to work? He is not going to get his expenses for operating that motor vehicle to and from work and he is not going to get any allowance while it is sitting in the parking lot outside the factory, either. The doctor drives the car in the course of earning his income. That is the criteria; the car is operated while the man is earning income-it is part of his necessary operations in earning his taxable income. It is not necessary for anybody to park a car next to his office building all day long.

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Subtopic:   INCOME TAX ACT
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October 28, 1971