April 27, 1954 (22nd Parliament, 1st Session)

IND

Fernand Girard

Independent

Mr. Fernand Girard (Lapointe):

Mr. Speaker, a while ago, the hon. member for Macleod (Mr. Hansell) speaking of the Quebec income tax said that it was a family problem between Quebec and the federal government and that it did not concern the other provinces. However, he recognized that this was greatly unfair to the servicemen stationed in the various camps of the Department of National Defence in the province of Quebec.
Mr. Speaker, that attitude well shows how the government deals with this matter. It is considered unfair that a serviceman from another province should be compelled to pay
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The Budget-Mr. Girard that tax. Yet they do not seem to realize that it is just as unfair to compel 300,000 taxpayers in the province of Quebec to pay a double tax, although they do not benefit, like the citizens of the other provinces, from the subsidies paid under the fiscal agreements, because the province of Quebec refused to sign them. It was expected that in the budget debate Liberals would try to refute all the arguments advanced in favour of the deduction of the tax and of the prior right of the province regarding that tax. They all took up the gratuitous assertions made by the Minister of Finance (Mr. Abbott) himself. Mr. Abbott's speech was met by thunderous applause from the Liberal members from Quebec, even when he stated that the prior right of the provinces in the field of direct taxation had no legal or concrete basis.
Before stating-yet without attempting to prove it-that the province had no prior right, neither de jure nor de facto, maybe the minister neglected to read the whole of the British North America Act and more particularly sections 91 and 92 which deal with this question. It is true that section 91, subsection 3, states that the federal government shall have the right to raise money by any mode or system of taxation. However, the beginning of that section, and all the government members failed so far to deal with this point, provides that:
It shall be lawful for the Queen, by and with the advice and consent of the Senate and House of Commons, to make laws for the peace, order and good government of Canada, in relation to all matters not coming within the classes of subjects by this Act assigned exclusively to the legislatures of the provinces.
And then, in section 92, it is expressly stated that:
In each province the legislature may exclusively make laws in relation to matters coming with the classes of subjects next hereinafter enumerated:
Nobody has attempted to equate "exclusive" with "parallel", as the government supporters who have spoken on this matter have tried to do.
The hon. minister not being in a position to rewrite the British North America Act seizes upon a motive which ill conceals the evident contradictions of his statement. He holds that to admit this principle would put the treasury in an intolerable position. In other words, he says: I cannot hand over his own garden hose to my neighbour; I need it to water my own garden. So he immediately claims that, as a charitable necessity, the poorer provinces must be helped, forgetting too that the 15 per cent we are claiming is less than what would be offered in a fiscal agreement, and that the other provinces

are left with the lion's share, the amounts received by them under these agreements being in no way affected.
The hon. minister made another declaration, with a more serious implication, when he said that the province of Quebec did not exercise its right to direct taxation before 1940. Does that mean that only those prerogatives granted under the British North America Act which are regularly resorted to are applicable and that the provisions of the federative act which have not yet been applied lapse and become inoperative? And yet the arguments used by the Minister of Finance lead to such a conclusion.
The hon. minister claims moreover that should he grant the 15 per cent deductibility of the Quebec tax, it would be tantamount to recognizing in principle the province's right to grab 30, 60, and even 100 per cent of his direct taxes. In the first place the request concerning deductibility covers but 15 per cent and nobody as yet has asked for 30, 60 or 100 per cent. In the opinion of the hon. minister, to grant the deductibility of 15 per cent would provide recognition of the prior right the provinces have in the direct taxation field.
How is it that 5 per cent, which is provided by a federal statute, does not constitute such recognition? Can the hon. minister tell us at what percentage provincial priority begins; is it 6 or 6if per cent, or what is it? It is of course obvious that the government is trying to hedge and veil its centralizing policy. As a matter of fact, the delirious enthusiasm of the socialists, which was only equalled by that of the Liberals at the time of Mr. Abbott's statement, is perfect proof that the centralizing attitude of the government in fiscal matters is at the same time a victory for the socialists, who want an almighty central government.
For the Liberal members from Quebec, this policy had a disadvantage, for it was disagreeable to almost the entire voting public of that province, who had and still have a word to say about their own autonomy. The hon. minister had thought of everything. He had a ready solution, which gave to his colleagues from Quebec the opportunity for numerous speeches on non-pertinent matters. He, indeed, invited the prime minister of Quebec to a conference with the federal government. But his invitation was accompanied by a straight rejection of all deductions.
That was a door, but one that was padlocked by the refusal of any concession. Such a contradictory offer has nothing in common

with preceding statements according to which "no pressure, direct or otherwise, would be applied to obtain the signature of a province". The same minister declared last year that one of the advantages of the fiscal agreements was that their success did not depend on the unanimous approval of the provinces. Twelve months later, he says that if one province refuses to participate, the treasury will be placed in an intolerable position. Completely unmindful of any contradiction, he is ready to see the taxpayers of Quebec carry the burden of an additional $25 million in taxes, as a punishment for their refusal to sign. He even says that the federal treasury could not tolerate our exercising our freedom of choice.
Everybody is talking of a federal-provincial conference. I am not against any sincere wish to understand each other, and every possible means to achieve such an end must be taken. Has any thought been given to the real alternative which faces a province which has refused to be a party to a fiscal agreement? There is only one: exercise her own right to tax. The province had to choose between $115 million under a fiscal set-up or $15 million, which is roughly the equivalent of 5 per cent. Such is the freedom of choice which is offered!
Much more, the charitable duty of helping the poorer provinces has been invoked, even though to do so a province would have to accept double taxation, although in fact, the said province never requested 100 per cent of its direct taxes, but only 15 per cent, which is less than was offered under the fiscal agreements.
Not one hon. member has taken upon himself to refute the arguments advanced in this house by several hon. members about the prior rights of the province to direct taxation. All have adopted the rather easy way of resorting to gratuitous assertions and advocating a federal-provincial conference, while stating that they would adopt an uncompromising attitude.
The Minister of Northern Affairs and National Resources (Mr. Lesage) summed up all those arguments, which he repeated after the Minister of Finance, by using a charming comparison, quoting as an example a child who refuses to obey his father's order to stop pulling the cat's tail. The child replies that it is the cat that is pulling. Using the same comparison, I must say that it applies even better to the other side of the argument. The child is well entitled to pull the tail of a cat that drinks his plate of milk. I easily see the federal government in the role of the father
The Budget-Mr. Girard who scolds his child because he is pulling the cat's tail, without stopping to ask himself to whom the plate of milk belongs.
The passing-of-the-buck policy will not succeed in diverting attention from the real problem which consists in determining to whom the plate of milk belongs or whether the province has a prior right in the field of direct taxation. It is therefore useless to find in that attitude and in the dollar and cents consideration of a centralizing government reasons for decentralization and then pretend to have fulfilled the intentions of the fathers of confederation, who cannot have set up a central state at the expense of the autonomy of the provinces which united to make up that state.
When one reads the numerous speeches made before confederation, one is astonished to see that the fathers of confederation were unanimous in their desire to protect the autonomy of the provinces. Since our contemporaries do not seem to agree on the constitution or on its interpretation, I took the liberty of making a pilgrimage, as I say, among the fathers of confederation, a few years before the pact was signed, to see what they really had in mind. When they drafted the British North America Act, they evidently intended to grant to each legislative body the necessary prerogatives to ensure the preservation of the two races and of the two cultures that were facing each other under the union government, following the uprisings of 1837.
One has but to read the speeches of those who drafted our constitution to become firmly convinced that the British North America Act is the outcome of the unanimous and clearly-stated desire to safeguard the autonomy of the two races which faced each other in Upper and Lower Canada, and to guarantee the rights and the prerogatives of the other provinces which might join confederation. May I be permitted for this purpose to quote some of the statements of the fathers of this confederation which it is our duty to preserve and respect. We will find in these statements the proof that confederation was a treaty between two races, a pact ratified in London, whereby each province agreed to join the other, not so as to disappear but in order to form a central government having jurisdiction over questions of general interest.
It never came to the mind of the fathers of confederation to form a centralizing government which would deprive the provinces of all their sources of revenue, limiting their role to that of a passive distributor of the

The Budget-Mr. Girard liberalities of a central government. If such had been their intentions, the provinces would never have put up with it.
Immediately following confederation, in a speech delivered on May 17, 1867, Sir George Etienne Cartier said, as reported on pages 523 and1 524 of the record of his speeches:
Confederation was a compromise and still retains that character to-day. There are many who went as far as to say that we did not quite know what to expect from Great Britain, that though a good constitution had been drafted at the Quebec conferences, the imperial authorities would change and alter It at will. You know what happened. We went to Britain and we were treated fairly, generously. All our representations were taken into account. These Canadians, said the British ministers, have come to see us with a ready made constitution, agreed upon after friendly agreement among themselves, the result of a mature discussion of their interests and needs. They are the best judges of what is good for them, let us not undo what they have done and let us approve their confederation.
And even before confederation, most of the great parliamentarians of the day were moved by the same spirit.
On February 6, 1865, the hon. the attorney general, Mr. Macdonald, in a speech which I quote from the debates preceding the adoption of the British North America Act, said:
The whole plan of confederation as worked out by the conference and submitted by the Canadian government for the perusal of the people and of the legislature is in the nature of a compromise. I do not hesitate to repeat it, there has been of necessity many mutual concessions.
Such a project may be considered as a treaty passed between the different provinces, and if any serious change is made thereto, every one of the colonies will feel itself absolved from the implied obligation to deal with it as a treaty and will be in a position to amend it ad libitum so as to suit its own views and interests; all our works will remain fruitless and we will have to start all over again and to work out a new treaty.
As evidenced by page 81 of the same volume, Sir Etienne Tache stated, on February 8, 1865:
I must declare that the scheme must be assented to or rejected as a whole because it is the result of deliberations not only of the Canadian government but of the other provinces as well.
And the Hon. Mr. Brown spoke along the same lines when he said:
Whether we ask for a parliamentary reform for Canada only or a union with the maritime provinces, the views of French-Canadians have to be ascertained as well as our own. This plan may be adopted, but no plan not assented to by both sections could be approved.
And the Hon. Sir Etienne Tache said on February 16, 1868-I am quoting from page 243:
Thus, honourable gentlemen, the proposal now before you is not so much the work of the Canadian government, but the collective effort of delegates from all provinces in the form of a treaty.

On the motion for second reading of the bill, in the House of Lords, as stated on page 27 of a book by the Rev. Father Ares S.J., entitled "Confederation: Law or Compact", even Lord Carnarvon said the following:
The Quebec resolutions are, with a few small amendments, the basis of a legislation that I now have the honour to introduce in parliament. These resolutions have been agreed to by all the British provinces of North America and the legislation based on these resolutions must be accepted as a treaty of union.
To those facts which establish that the treaty has really been a pact between the provinces can be added the opinions expressed on direct taxation even before confederation by the fathers of confederation. 1 shall quote the statement made on February 7, 1865, by the Hon. Mr. Galt, which can be found on page 68 of the report of the debates preceding the passing of the British North America Act:
The transfer to the general government of all of the main sources of revenue and-with a single exception, that being the field of direct taxation- of all the means which can be used to have the industry of the nation help meet the needs of government means-the fact will be evident to anyone-that part of the resources placed in such a way at the disposal of the general government will have to be used one way or the other to fill the gap which inevitably will be created between local revenue and local expenditures.
Mr. Speaker, that statement was made in 1865, even before the pact of confederation was signed. I have been unable to find any other statement which at that time could have been interpreted otherwise. It seemed evident that in the spirit of the fathers of confederation the right of direct taxation should be reserved solely for the provinces.
Mr. Paquette, who then represented Lower Canada, made a speech on March 8, 1865, reported at page 795 of the debates on the confederation of the British North American provinces. He was speaking precisely of direct taxes. After compiling various figures, he predicted a deficit of $485,078 for Lower Canada. He stated:
Mr. Speaker, how can we overcome that deficit unless we resort to direct taxation?
And he added:
The Minister of Finance states himself that the federal legislature will have the power of resorting to all taxation systems it may deem advisable to meet the expenses of its administration, while local legislatures will have to resort to direct taxation for the same purpose, if their revenues are not sufficient.
Mr. Speaker, surely one cannot find more frank statements. Well, those statements were made even before confederation, even before the present discussion was started, even before the government decided to nego-

tiate fiscal agreements, and we find that, in the minds of the fathers of confederation, the provinces had a prior right to direct taxation.
And yet, the Minister of Finance dares contend that the question of priority has no basis, neither de facto nor de jure. Section 91, in the light of section 92, either states a general rule, or constitutes a contradiction, which is inadmissible on the part of the fathers of confederation, particularly in view of the fact that the numerous debates on confederation dealt with the necessity of safeguarding the prerogatives of the provinces. Reading the speeches contained in that volume, one finds that, for all purposes, no speaker suggested that any of the provinces could keep its prior rights, its prerogatives. We cannot admit that they made a mistake, or intended that section 92 should be inconsistent with section 91.
We must therefore admit that section 92 sets forth exceptions to the general application of section 91; that it is a clarification of it. And section 92 does state that direct taxation is exclusively a provincial matter. The word exclusively is important. No mention has been made of it in the speeches of the government supporters since none of them could interpret it in a sense favourable to centralization.
After confederation political figures of every party continued to make statements to the same effect. Here is what I find in the debates of the House of Commons for February 18, 1925. The Right Hon. Ernest Lapointe is quoted as follows:
I may say that every time an important amendment was made it was first submitted to the provinces. I do not think there are many cases in which an amendment has been asked to the British North America Act without communicating with the provinces. If it was done it was only in cases where there could be no possible objection on the part of the provinces.
And the same gentleman also stated:
It is somewhat strange that one of the parties to the convention should study the methods of amending the pact without inviting the other parties interested to participate in the discussions.
Again the Right Hon. Mr. Lapointe stated, on February 18, 1925, once more according to Hansard, at page 300. The minister of justice mentions those words, after quoting the opinion of Mr. Churchill stating that the construction of "pact" given to the confederation by public men in Canada was also the one of the public men of the empire. Then he adds: "That was the interpretation
accepted by every interested person in
The Budget-Mr. Girard Canada, it is the opinion of the public men in the provinces."
Perhaps it will be alleged that precedents altered the constitution without consulting the provinces. I shall answer through Lord Sankey who stated in 1932, as found in Appeal Cases, 1932, pages 54 and 70:
Inasmuch as the act embodies a compromise under which the original provinces agreed to federate . . . the process of interpretation as the years go on ought not to be allowed to dim or to whittle down the provisions of the original contract upon which the federation was founded, nor is it legitimate that any judicial construction of the provisions of sections 91 and D2 should impose a new and different contract upon the federating bodies.
As may be seen, Mr. Speaker, there has been a continuity of views amongst all members of parliament of both parties which have held power since confederation; but all this has become part of the fiscal structure of confederation. Yet some have tried to consider the confederation act as a law, subject to modifications, which could be changed without consulting the provinces.
Well, I know, of course, that the partisans of centralization do not all support the principle of the central government's supreme authority, which enables it to amend the confederation act without the agreement of the provinces; but they approve of a federal law reducing to 5 per cent the rate of our direct income taxation in the provinces. They are blaming a province which did not ask Ottawa's permission to exercise its own right. They dare not deny a province the right to levy taxes, but they dictate a limit to this right. They admit provincial taxation, but as a supplementary one, that should raise no issues with the federal treasury.
Yet it was a distinguished Liberal, the Right Hon. Ernest Lapointe, who declared on February 1, 1937, as may be seen in the official report of the house-and I quote:
The dominion is the child of the provinces; it is not their father. The fact of saying that we have jurisdiction does not give it. The assumption of powers which we do not have does not give those powers to us.
Let those who have nothing but words of praise for the enticing offer of subsidies pretend now that provinces do not lose their autonomy! The other provinces are now asking the government to raise the subsidies they receive.
The hon. Minister of Finance, if he were premier of a province, would not accept such a situation. I base this opinion on nothing but his own statement to the house last year when he dealt with the question of fiscal
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The Budget-Mr. Girard agreements, as can be ascertained on page 2131 of Hansard for February 19, 1953. I quote:
This might never be possible. As a matter of fact, I am by no means sure if I were a provincial minister of finance that I would agree to such an arrangement. X am afraid I would find something repugnant in the idea that an outside body-a board, council or commission-would be investigating provincial affairs and determining the size of the fiscal needs for a particular period which amount in turn would be the measure of the federal grant.
Who can say that within 25 years we shall not have a socialistic government, a government that will decide the fate of provincial autonomy which is supposed to be guaranteed by a pact that can be broken by the more powerful? No Liberal member seems to have seen that; they have acted against the spirit and the letter of confederation and contrary to all the statements and policies of their own party. Instead they saw in Mr. Duplessis, who resorted to the Quebec provincial tax, an opponent whom they wished to corner, even at the cost of penalizing a province at the rate of $25 million per year, thus placing its citizens in an unfair situation and in a position of economic inferiority as far as the other provinces are concerned.
If the Liberal party is so sure that its policy is the right one, why does it fear so much a vote on the matter? Why does it try to transform it into a mere question of dollars and cents, thus shifting the true meaning of the issue? Why have they chosen to act in a way that is evidently contrary to the interest of their electors, preferring to submit to party discipline? Why did the socialists applaud with so much energy? Why did the Quebec press condemn them unanimously?
They have also tried to cast a smokescreen on the matter by speaking of national unity, Quebec isolationism, ultra-nationalist separatism and so forth and so forth.
I am asking you, Mr. Speaker, who is working against national unity? Is it those who urge compliance with the Canadian constitution or those who try to amend it to suit their centralizing policy? The province of Quebec has always found a safeguard to its autonomy within the very framework of confederation and she will never give in to the tantalizing appeal of fiscal agreements. It safeguards national unity within the framework of the act of confederation, which is the constitution of our country.
We shall not cease to labour the point, Mr. Speaker, until we obtain fair treatment for the province of Quebec, even though the only ones to rise to its defence may be the independent members, as well as those too few Conservative members and the hon. member for Quebec-Montmorency (Mr. LaCroix).

In concluding, Mr. Speaker, I would like to digress a moment to ask the Minister of Labour (Mr. Gregg) whether the government will soon grant supplementary unemployment insurance benefits.
There are in my constituency nearly 1,000 families who have not received any income since April 15. It is perhaps true that the present situation is merely temporary, but I nonetheless support the request of the labouring people and would ask the minister to keep on paying these benefits for a few weeks at least to families without any means of support.
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Topic:   THE BUDGET
Subtopic:   ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE
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