May 28, 1984

LIB

Arthur Allister MacBain (Parliamentary Secretary to the Minister of Justice and Attorney General of Canada)

Liberal

Mr. A1 MacBain (Parliamentary Secretary to Minister of Justice and Attorney General of Canada):

Mr. Speaker, the effect of the motion by the Hon. Member for Fraser Valley West (Mr. Wenman) is that the Government should consider the advisability of repealing Section 31 of the Income Tax Act. Admittedly, this is a controversial section. There are two sides to the argument about whether there should be an amendment repealing Section 31 of the Act. This section, which is commonly referred to as the hobby farmer section, limits the expenditures which certain farmers can deduct in a year for income tax purposes.

The danger of simply advocating the removal of this section from the Act is that it may interfere with the integrity of the Act if it is removed. As well, it deals with tax expenditures that are sometimes known as loopholes. There is a difference of opinion even among farmers and certainly among others as

May 28, 1984

Income Tax Act

to whether or not the provision has reason to stand at least in a limited way.

Consideration has been given to section 31, but there are two arguments. The one put forward by my learned and hon. friend is one side of the argument only. The other side allows someone who is really not a farmer to reduce substantially his income, if the section were removed, and gives protection against an unnecessarily high tax expenditure from income from other sources being used.

I admit there is room for a discussion or refinement of the section, refinement being where there is strictly an opportunity taken by someone to overcome what would otherwise be taxable income by using expenditures of great dimension against other income. If that were allowed to be taken advantage of by everyone, what would be the end result? What is the policy angle involved? If it is a policy angle to attempt to let the taxpayer go from a mere employee at General Motors to buy a farm and to slide into farming using tax expenditures, for all intents and purposes really government grants, is that what our Government, whatever Government it may be, wants to do? If that is what you want to do, maybe we should say it, Mr. Speaker. If what we want to do is permit someone just to take advantage of the Tax Act, to get reductions in his actual tax payable by going into a non bona fide operation where there is little or no hope for income but lots of expectation of losses, and if losses were not curtailed, it would be a loophole or a tax expenditure which would have serious consequences on the integrity of the whole Act. I am not at all sure that the Hon. Member is correct if he were to say, or to suggest to us at least by implication, that all farmers would be happy by a mere deletion of Section 31.1 will go with the Hon. Member for Fraser Valley West (Mr. Wenman) a certain distance. I will go the distance that the matter which he has brought before the House this afternoon is timely. It is my understanding that the basic question is being considered by the Department. I can say there is no firm decision that there should be a step to remove the section completely and to remove any safeguards. The expenditure from what is in fact and in substance merely for a hobby farmer would be to remove any tax payable from his normal income, regardless of how much that income was and how much tax there would be thereon, but I am prepared to go part of the way to agree that Section 31 is controversial.

I think there is need for a refinement, perhaps for a small farmer who is merely working off the land to supplement his income until his farm becomes profitable or at least so it can sustain the operation. That might be quite in order. I am sure if one were to study the section and to study the implications with great care and go into the question with Departmental officials, one would find there have been improper advantages taken of the Section over the years. That is my understanding. In a genuine case where a person has in fact and in substance a genuine farming operation, which admittedly may be losing money, that individual may be forced temporarily to remove himself from being a full-time farmer and take some income

elsewhere. If he wants to use some of that income where it is limited to $5,000 in order to limit the tax payable on his secondary income, it may be perfectly all right, but to do what the Hon. Member for Fraser Valley West says, which is to let him go whole hog and remove all his income from taxability, may be to place on the shoulders of the other taxpayers an unfair tax burden.

I for one would be hesitant to do that. I am a farmer's son and, like many of us in the House who are second generation farmers, we are hesitant to do anything that would hurt the farmers. We are always anxious to do something helpful, but one must look at the fairness of what we are trying to do.

There are in society, and farmers are no exception although it seldom happens in the farming community, some people who take advantage of any section or any tax expenditure no matter how carefully the section is drawn to turn a legitimate tax expenditure or legitimate loophole to their advantage. Thank goodness there are a very limited number of such people in our society.

If we were to say this afternoon, that we should remove Section 31 altogether and not limit the expenditure from the so-called hobby farm as against regular income, I would have to be against the motion. I know there are legitimate cases. I accept the fact that the Hon. Member for Fraser Valley West is putting forward his motion on the basis of legitimate cases, but there is room for honest men to disagree on how the matter should be approached.

The way this motion approaches the problem leaves a lot to be desired. But if you approach it by amending Section 31 either by changing the amount of the $5,000 expenditure or by putting in certain safeguards and spelling them out, that might work. Probably one of the problems with Section 31 is the interpretation it has received by the department and its officials, including the feeling and the position of the Minister of Finance (Mr. Lalonde) which he put forward in his Budget of February 15, 1984. We must also consider the decisions made on tax cases concerning this matter. I think the Section is drawn in such a way that there is a serious difference of opinion about it and that has to be removed. That perhaps is true, but to say that is not to say we should support removal of the Section without due consideration as to its statutory history.

We must look at the ramifications. How has this section affected genuine farmers? By that I mean not the hobby farmer but the genuine farmer who is in a tight situation trying to make a farm produce taxable income and in doing so, trying to survive and at the same time fight very hard with another job off the land to make the total operation-the farming operation and what he does elsewhere-at least profitable.

I am prepared to discuss the basic question with the Hon. Member. However, I have reservations about removing Section 31 and letting the chips fall where they may. It is probably true to say that the problem is as much one of

May 28, 1984

interpretation of the statute as it is whether or not the statute was properly drawn and reflected what legislators intended when they passed it. We would have to go back and study the intention of the legislators and what has happened under the section. For example, how many cases have there been, have decisions been going one way or vice versa, what is the position of the tax Department, or how difficult is it for the Department to make this section work when dealing with farmers.

As I said before, we know as farmers' sons how difficult it is for them to make a go at any time. The last few years have been particularly difficult, and no doubt 1984 will also be. We tend to do what the Hon. member for Fraser Valley West has done. With the best of motives, we try to lean over backwards to help farmers. He is particularly dealing with small farmers.

I understand and agree with him in that respect, but how can we remove Section 31 and let the consequences fall where they may?

The motion of the Hon. Member would affect the integrity of the Act itself. It would not bring harmony to the farming community. Many farmers are not in favour of the use of farmlands for hobby purposes. They are not in favour of promoting hobby farming in that manner, especially full-time farmers who are profitable and have to pick up the slack. It is not a black and white situation like the Hon. Member would like us to believe. I do not think that will solve the problem and make farmers happy. Certainly small hobby farmers will be happy if we take away Section 31 and they are allowed to use as many expenses as they can dream up on their hobby farm operations against their secondary income. However, the farming community in general will not be happy. Certainly those who have an interest in the integrity of the Income Tax Act and trying to make it work will not be happy.

While the matter is worthy of debate, the simple solution of the Hon. Member for Fraser Valley West is inadequate.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
NDP

William Alexander (Bill) Blaikie (N.D.P. Caucus Chair)

New Democratic Party

Mr. Bill Blaikie (Winnipeg-Birds Hill):

Mr. Speaker, I would just like to make a few comments on the motion of the Hon. Member for Fraser Valley West (Mr. Wenman). I am interested in it because some people in my riding have expressed concern about the way in which the Income Tax operates in this particular respect. I mentioned this matter in the House before in a statement pursuant to Standing Order 21.1 called attention in particular to the unfairness of the way in which retroactivity was applied in some of these cases.

However, I rise to participate in the debate this afternoon more from my concern about what I think is a false impression on the part of the Hon. Member. He would like to give the impression that he is for policies to promote "the retention of productive and potentially productive small holdings in agricultural production" and that he regards it as something valuable. I regard it as something valuable, but I would like to deal with some of the ways in which the Hon. Member and the Party he represents advocate a set of policites which go in the opposite direction to valuing "the retention of productive and potentially productive small holdings".

Income Tax Act

What is the position of the Progressive Conservative Party with regard to the development and growth of agribusiness? What is its position in terms of the way in which more and more farms in western Canada are becoming larger, with small farms disappearing as a result of the ability of the larger ones to buy them out and as a result of the vertical integration in the agricultural sector? I have never heard any Conservatives, nor for that matter Liberals, speak against that kind of economic phenomenon which has every bit as much to do with the disappearance of small productive and potentially productive holdings.

I have never heard Conservatives object to the way in which many people from outside Canada have been able to buy up large tracts of land, driving up the price of land in Canada and making it impossible for small farmers to carry on or for people who want to become small farmers or start new farming operations. When we try to do something about that, the same people who now say they are for small farmers rise in the name of free enterprise and values in the marketplace to say that we cannot stop it because it is free enterprise. Their first priority is not productive and potentially productive small holdings. Their real priority is free enterprise. If small farms stand in the way of that, they can go the way of the dinosaur, as far as the Progressive Conservative Party is concerned. Let us not kind ourselves about that.

I have never heard the Hon. Member nor his Party ask for something to be done about land speculation or about the way in which potentially valuable land is raised in price and often used for the wrong reason because someone got hold of it first and did what they wanted to do. I have never heard Conservatives object to that, because above and beyond the value of land and the responsibility to use it well, they hold the value of free enterprise and the marketplace. Let us not be kidded about that this afternoon by the Hon. Member for Fraser Valley West.

The only people we can take seriously when it comes to land use are those who are willing to say that it is our responsibility to be good stewards of the land, a responsibility which goes beyond any attachment we may have to any particular economic system or economic values. That is what the Progressive Conservative Party is not prepared to do. It exalts the kinds of land use which at the moment are destroying the eco-system of this planet. That is the kind of development to which it looks forward for the future of Canada and our planet. That kind of private, uncontrolled, profit-motivated free enterprise development is using up the last remaining stands of the Amazon forest. The other day the Duke of Edinburgh, His Royal Highness Prince Philip, called attention to this particular problem. If we do not do something about the way in which our economic system is using up land-

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

John Leslie Evans (Parliamentary Secretary to the President of the Privy Council)

Liberal

Mr. Evans:

Order.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
PC

Robert Lloyd Wenman

Progressive Conservative

Mr. Wenman:

What does that have to do with the motion?

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
NDP

William Alexander (Bill) Blaikie (N.D.P. Caucus Chair)

New Democratic Party

Mr. Blaikie:

I think it is completely relevant because the Hon. Member prefaced his remarks by commenting upon land

May 28, 1984

Income Tax Act

use in particular. If we do not address these kinds of questions, we will never address the problem of land use as it should be addressed.

Members of the Progressive Conservative Party have risen and waxed self-righteous about land use. They do not really care about land use. They care about money use. To hear any Progressive Conservative get up and talk about land use and responsibility for the land is just so much hypocrisy. What they really care about is money. When the day comes that they are willing to put their concern about land above and beyond the concern for profit, then we will be able to take them seriously when it comes to land use.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
PC

Walter Leland Rutherford (Lee) Clark

Progressive Conservative

Mr. Lee Clark (Brandon-Souris):

Mr. Speaker, I must begin by expressing my disappointment at the extreme divergence from the topic which the Hon. Member who just spoke indulged in.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
NDP

William Alexander (Bill) Blaikie (N.D.P. Caucus Chair)

New Democratic Party

Mr. Blaikie:

It is not a divergence at all; it is to the point.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
PC

Walter Leland Rutherford (Lee) Clark

Progressive Conservative

Mr. Clark (Brandon-Souris):

Mr. Speaker, Section 31 and Brazil have nothing whatsoever in common. Section 31 is making it exceedingly difficult, impossible in many cases, for young farmers who are attempting to acquire small holdings and make them productive. I know some of those young farmers. If they succeed they will become very productive farmers in the future, but at the moment they cannot support themselves by their agricultural earnings alone. As a result, they are compelled to seek employment off the land. Very often both the farmer and his wife are compelled to seek employment off the land.

These young people are working exceedingly hard. It is not unusual for them to have a regular job which requires them to put in 40 hours and then have to work another 40 and 50 hours on the farm. I think specifically of a member of my own family who drives from Regina to his holding in eastern Saskatchewan. That young man is very anxious to become a full-time farmer, and he will as soon as economic conditions permit. In the meantime he faces a handicap which, not solely but in part, is due to the policies of this Government. He is faced first of all with a shortage of capital. He is also faced with high interest rates which have unfortunately been increasing. He is faced with a decline in the revenue he receives for his product.

As you know, Mr. Speaker, the price of grain has dropped some 6 per cent this year. This young man is receiving the same price for his produce as was received in 1971 and 1972, but his costs of production are now 250 per cent greater than they were. He is trying to make ends meet but, naturally, he is incurring losses. Unfortunately, Section 31 denies him the opportunity to apply all of those losses against his general income. The result is that Section 31 is making it even more difficult for him to become a full-time farmer.

The young man of whom I speak, and there are many others like him, is not and will never be in the class of a so-called hobby farmer. We on this side of the House do not carry any particular torch for hobby farmers. There are ample provisions

within the Income Tax Act, so I am informed, to govern so-called hobby farmers without reference to Section 31. Our concerns are for those young and struggling Canadians who seek to become self-supporting and productive farmers, those who will become the next generation. They are the unfortunate ones who are not in a position to inherit farm land and equipment from others. They are simply trying to do what our forefathers did two and three generations ago. It was easy at one time for a young man without capital, by virtue of his labour, to go out and become over a period of time a self-supporting farmer. But land value at it is today, and with the cost of operation being what it is today, it is impossible for a man to become a full-time farmer unless he has, first of all, an immense amount of capital available to him. Those who do not have those assets must, of necessity, take employment and try to farm at the same time.

Section 31 works to the detriment of such young people. If it is permitted to continue to function in the way it is now, we will make it virtually impossible for such young people to become full-time productive farmers. If we do that, the economy of Canada will be the loser. We who play the role of Government will also be the loser because we will lose the revenue these young people will eventually bring to us. I commend the Hon. Member for Fraser Valley West (Mr. Wenman) for bringing this issue to the attention of the House. As you know, Mr. Speaker, this Bill is being debated for a second time. We had ample opportunity the first time to discuss the merits of the legislation. That is why I very much support the Hon. Member and encourage Members opposite to permit the Bill to be brought to a vote.

We have an opportunity to indicate where we stand on this legislation. We have an opportunity to express our disapproval of Section 31 which is strangling young Canadians. This is a particularly onerous condition because of the high unemployment which exists across the land. The people of whom I speak already have a job. However, they do not wish to remain in that job, they wish to be farmers. If we permit them to vacate their salaried positions and become full-time farmers, we will free up another position for those 1.5 million unemployed Canadians. In doing this, are we not only helping farmers and the agricultural economy as a whole, but we are helping the unemployed of Canada. Therefore, I say to the Members opposite that they have an opportunity to take a bold step forward. They have had a chance to speak; if they will just permit this Bill to be brought to a vote, then we can do something to further the condition of the young farmer, an opportunity which I think we should take.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

Denis Éthier (Parliamentary Secretary to the Minister of the Environment)

Liberal

Mr. Denis Ethier (Parliamentary Secretary to Minister of the Environment):

Mr. Speaker, I find it very strange that the Hon. Member who just spoke talks of the fear we might talk out this Bill. What they have been doing up until five o'clock was trying to talk out the Bill we have before the House. I find it even more amusing to see how the Hon. Member for Fraser Valley West (Mr. Wenman) wanted to rush his Bill through without even giving us a chance to take part in the debate. I find it amusing because on so many occasions the same

May 28, 1984

Member, as well as other Members of his Party, have accused the Government of rushing legislation through when it is sometimes before the House for days, weeks and months. Today they want the Bill through without any debate. I find it very, very strange.

I am sure the Hon. Member for Fraser Valley West has very good intentions to present a Bill to find ways and means to pay less tax on income. This is quite typical of Members opposite. It is a wonder that they have not included in the motion all sections of the Income Tax Act which deal with collecting taxes. However, they cannot have it both ways. You cannot talk of reducing deficits and not collecting taxes and lowering the Government's revenues.

Individuals engaged in farming activity are placed in one of three categories under the Income Tax Act for the purposes of determining the extent to which farming losses may be deducted from other sources of income. Full-time farmers for whom farming may reasonably be expected to provide the bulk of income, or the centre of work routine, are unrestricted in their eligibility to deduct losses fully. At the other extreme is the person who engages in minimal farming or peripheral activity and who has no reasonable expectation of a profit. Any farming losses sustained by such individuals are not deductible. This is because the activity is a personal endeavour and is a hobby and not a business. This hobby criterion applies to all activities and not only to farming.

Individuals in the third category do not look to farming or to farming and some subordinate source of income for their livelihood, but carry on a farming business as a sideline. Such secondary farmers are restricted under Section 31 of the Income Tax Act which imposes a $5,000 annual limit on the deduction of farm losses against other income.

However, all farmers including those farmers who have a restricted farm loss, can carry losses back for three years and forward for ten years so that these losses can be deducted from farm income earned over this period. These more generous carry-over provisions were introduced in the April, 1983 Budget. Previously, farm losses could be carried back only one year and forward only five years. Hence, the restricted farm losses of such farmers are not lost if in fact the farming operation is profitable over this period.

The purpose of Section 31 is to set up a flexible boundary between the person who carries on farming activities for personal enjoyment and the genuine farmer. This boundary is essential to restrict access to the very generous incentive provisions available to farmers, particularly the ability to use cash accounting methods. Repealing Section 31 would make it administratively more difficult for Revenue Canada to distinguish between genuine farmers and those engaging in farming as a leisure activity.

Section 31 has been a controversial provision of the Act and has attracted a great deal of criticism. Arguments have been made that there is a feeling in the agricultural community that the restricted farm loss rules are discriminatory since they do

Income Tax Act

not exist for other forms of business. Most typically, it is argued that Section 31 limits access to farming since it restricts the extent to which losses sustained in the early stages may be written off against other income and hence impedes the transition from part-time to full-time farming. It is also commonly argued that Section 31 imposes a hardship on bona fide farmers who temporarily take off-farm work during periods of poor farming conditions and who occasionally find themselves restricted by the provision.

Because of the controversy surrounding Section 31, the ramifications of the existence of the provision have been subject to extensive analysis in the Department of Finance. Although the arguments put forth are of concern, extensive research indicates that it is by no means obvious that reapeal of the Section or an increase in the annual limit would remedy existing problems.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
PC

Robert Lloyd Wenman

Progressive Conservative

Mr. Wenman:

It would help.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

Denis Éthier (Parliamentary Secretary to the Minister of the Environment)

Liberal

Mr. Ethier:

It would not remedy the existing problems. In fact, such actions might create major problems within the legitimate farming sector. Data indicate that the vast majority of individuals restricted by the provision have very low gross farm sales, typically less than $5,000 annually, and high average off-farm income. Furthermore, a large percentage of those who would be affected by the provision habitually report farming losses year after year.

The U.S. experience, as well as available data for Canada, suggests that removal or extension of the limits would make farming even more attractive to individuals whose main interest in farming was primarily the speculative and tax write-off possibilities available. In fact, a large portion of the agricultural sector in the U.S. has argued vociferously for tightening up of liberal loss write-off provisions already in existence there.

It has been argued by many agricultural economists in the U.S. that the existing situation has forced up the price of agricultural land, thus making expansion and entry difficult and has reduced product prices. It is also argued that rates of return in farming have been lowered by the influx of speculative capital to the point where legitimate farmers find it difficult to make a living.

In summary, there is need for the restricted farm loss provision. Farmers receive generous incentives, most particularly the ability to use the cash accounting method for tax purposes. It is important to restrict these provisions to fulltime farmers and to prevent non-farmers from gaining unintended access to these incentives. Such access is undesirable as it adversely affects the economic conditions facing the genuine farmer.

The Government is very concerned to see that the restricted farm loss provision does not apply to genuine farmers. This provision is being reviewed to seek ways to prevent such genuine farmers from ever being affected by the restricted farm loss rules. At the same time, the Government is anxious to ensure that the generous tax incentives available to the agricultural community are properly targeted at those for whom they were intended.

May 28, 1984

Income Tax Act

I do not think that passage of this Bill is in the best interests of the taxpayers of the country. It is not in the best interests of the farming community of the country and I cannot support the Bill in its simple form.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
PC

Gerry St. Germain

Progressive Conservative

Mr. Gerry St. Germain (Mission-Port Moody):

Mr. Speaker, I rise today to speak on the motion of the Hon. Member for Fraser Valley West (Mr. Wenman) with great consideration and understanding. I know the problems that Section 31 of the Income Tax Act has created for a large segment of Canadians who made the extra effort by trying to establish businesses in the farming sector.

The motion proposes that we consider the advisability of repealing Section 31. Here again, the Hon. Member has clearly shown a responsible role by saying that we should consider its repeal. I think that this clearly points out that we on this side of the House are not trying to provide an avenue for those who are wealthy to escape paying taxes. We are merely trying to give those who want to enter into the farming community a chance.

In the area in which I live, which is part of the Fraser Valley in British Columbia, the price of land is very high. It is very demanding financially to enter into those kinds of enterprises. There is no other way to do so unless one is born with a silver spoon in one's mouth. Most of the people who want to enter into the farming community are born in poverty like most of the rest of us are.

On my own farm, there was a young man who was driving a chicken-catching truck who wanted to enter into the dairy business. He would never have been able to enter into that business had some form of reasonable taxation not taken effect. With Section 31 remaining a part of the Act, this man is really going to struggle.

The Hon. Member for Brandon-Souris (Mr. Clark) mentioned the matter of jobs. If one man is taken off the job and goes to a farm, a job opening is created. The lack of jobs is the biggest issue facing Canadians today. There are no jobs, whether it be for the young, the old, or anyone.

In the Budget speech, the Government promised to reconsider Section 31 of the Income Tax Act. What has the Government done? It has done absolutely nothing. Here it is saying that it is the protector of the minority-the small businessman and what have you. But, who does it worry about? It worries about the big businessman. The most unbelievable presentation that I have heard in the House was given by the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie). He did not even speak to the Bill. He did not consider the small guy. I do not know what he considered. He was speaking about the Amazon and Brazil.

This is an important issue. The context of entering into the farming community today has totally changed from what it was in prior years. Elderly people who must retire can no longer hand their farms over to their children. The children must purchase the farms so that the elderly can maintain a

reasonable standard of living. In most cases, those young Canadians must go out and perform work other than the work which they perform on their farms. It has been proven time after time that the only way to do it is to hold down a job and farm x number of hours each day as well.

I believe that the Government has a responsibility to Canadians, and to small entrepreneurs who are trying to break into the farming industry. Without seriously considering the Bill put forward by the Hon. Member for Fraser Valley West, we will achieve nothing.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

Paul Edmund McRae

Liberal

Mr. Paul E. McRae (Thunder Bay-Atikokan):

Mr. Speaker. I have no concern about speaking this Bill out. However, I would not feel that way if the motion called for changes which would make it possible for small farmers and part-time farmers to get a better break and make it possible for them to survive. However, that is not what the Bill proposes. The Bill proposes that Section 31 of the Income Tax Act be repealed. That leaves it wide open for anyone to purchase a farm or a piece of property in order to obtain a great tax write-off. They do not really have to be concerned about farming at all.

One thing that bothers me about this Bill is that it has been characteristic of the Tory Party in the debates in the last several months to always be worried about the person who is not paying taxes. They should be looked after nicely and we should treat them well! I can truthfully say that in the last three or four months, there has been a great deal of concern in my community by the people who are earning wages and whose taxes are being paid at source that they will be forced to pay more and more taxes if more and more ways are found in which other people do not have to pay taxes. Therefore, I think that the deletion of Section 31 is one way to create a situation in which some people could beat the game and other people would have to pay more.

Taxes are a zero sum game. If there are segments of our society which are not paying their fair share, then those whose income comes from wages and who pay their taxes at source will have to pay more. I think the people in my constituency of Thunder Bay-Atikokan and the community in between are getting a little annoyed about the idea that there is this great inequity in the taxation system. This Bill is one way to create that inequity.

What are we going to do? The Tories are talking about the terrible deficit and how they want to reduce that deficit. What do they do? They say: "Let us make it possible for anybody to buy a farm, do what he wants with it and write his losses off'. They do this without any compunction at all. They are not interested in farming. One of the consequences of this kind of measure-and there is evidence in the United States to suggest that this is true-is that it will increase the value of farmland, and it will put it in the hands of people who are only interested in using that land for a tax write-off. They are not interested in the kind of food production we need. This is the kind of thing which is happening.

I realize that there is a problem. However, Section 31 is there to solve that problem. If the Tories had submitted an

May 28, 1984

amendment or some suggestions as to how we might solve the problem of the person who has to work 35 hours to 40 hours a week to get his farm going and who wants to be a farmer, who needs help, and who really has some legitimate grievances, then I would suggest that an amendment be made to Section 31. They should deal with that particular problem-

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
PC

Robert Lloyd Wenman

Progressive Conservative

Mr. Wenman:

Mr. Speaker, I rise on a point of order. I think that it would be appropriate as a matter of order for you to inform the House, as you did by recognizing me as a speaker, thereby taking my rightful place from me on the floor of the House, that if in fact the Member of the Liberal Party continues to speak he will effectively kill this measure which will help the small farmer of Canada. Mr. Speaker, will you inform the Member that he will do that?

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

Jacques Guilbault (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Guilbault):

The Hon. Member for Thunder Bay-Atikokan (Mr. McRae).

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

Paul Edmund McRae

Liberal

Mr. McRae:

Mr. Speaker, I do not understand the last manoeuvre at all. I am trying to suggest that if there was an honest attempt on the part of the Opposition to seriously come to grips with the problem of the small farmer who is trying to get a start, who wants to spend the rest of his life on a farm, and who wants to pass it on to his son or daughter, that that kind of suggestion would receive support from this side. We are trying to do that very thing.

That is not what this particular motion proposes. It proposes to repeal Section 31 of the Income Tax Act. Repeal, as far as I am concerned, means to take it right out of the Act. That means that anyone could use the purchase of a farm as a loss against income. It means that someone else will have an opportunity to get away with beating the tax system and have an added tax expenditure. That particular person will not pay his fair share. My constituents who work at Great Lakes Paper or Canada Car, in the riding of Thunder Bay-Atikokan and across this land, will have to pay more.

There was a Budget a couple of years ago-which may have had some flaws-which the Opposition Party ran into the ground. The whole point of that Budget was to bring more equity into the tax system to ensure that every Canadian would pay a fair share, and there would not be people with incomes of $200,000 or $300,000 a year paying no tax at all.

If the Party opposite comes into power-and I hope that they do not-in the next six months, we will have changes. That is what it has been about for the last six months: tearing the tax Department down. We will have changes which will mean that all kinds of Canadians will not be paying taxes. The working man, the guy who earns a wage, is the guy who will have to pay more.

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink
LIB

Jacques Guilbault (Assistant Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Guilbault):

Order, please. The hour provided for the consideration of Private Members' Business has now expired.

Adjournment Debate

Topic:   PRIVATE MEMBERS' BUSINESS-MOTIONS
Subtopic:   INCOME TAX ACT
Sub-subtopic:   EXEMPTION FOR SMALL FARM HOLDINGS
Permalink

PROCEEDINGS ON ADJOURNMENT MOTION


A motion to adjourn the House under Standing Order 45 deemed to have been moved.


METRIC CONVERSION-ENFORCEMENT OF REGULATIONS- MINISTER'S STATEMENT. (B) SALARIES OF METRIC COMMISSION EXECUTIVES

May 28, 1984