July 16, 1956 (22nd Parliament, 3rd Session)

PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

That is exactly what it is saying. This government is saying: Here are fields of taxation only open to the provinces and yet we are taking it on ourselves to say how much of the taxes collected will be collected by the federal government unless there is to be double taxation. It is an utter absurdity to suggest that the provinces of this country would make 100 per cent collection of the amounts now collected in income taxes and corporation taxes. It is an utter absurdity. The very fact that an absurdity of that kind is put forward indicates the weakness and the fallacy of the present position of the federal government when it takes it upon itself to say: Here is how far we say we
should go. We say we have a prior moral claim up to 90 per cent of all the taxes collected in the income tax and corporation tax field. That is what they are saying. Who gave them that right in a field of taxation that is

the only field open to the provincial governments with all these heavy obligations with regard to hospitalization, highway construction and all the other things that they must do to carry out their obligations to the people?
It should be realized, Mr. Chairman, what happens when these various things are done. Where does all this money come from? Mainly from enterprises which are organized with the assistance of the provincial and municipal governments. Where do the corporation taxes come from? They come from corporations which, the moment they locate, must have light, water, sewerage, educational facilities nearby and roads and highways to them. These things all must be provided by the provinces, in the case of mining, forest and other operations of that kind. These things must be provided by the municipalities in many cases. These are the things that must be provided in order to make it possible for the revenue to be earned by these great corporations. Where do personal incomes come from? The larger incomes come from people who are engaged mainly in activities which also find their support from the provincial and municipal governments. If there is any question of a prior moral claim in relation to these taxes, the prior moral claim rests with the provincial governments and in turn with the municipalities operating under them.
As each ratepayer in the municipalities looks at this tax bill now, let him recognize the fact that with the growth that is taking place or should take place in those less fortunate areas there would come, even under these proposals, rapidly increasing taxes that will in fact assume crushing proportions within the life of this agreement. It is for that reason that it has been said by those who speak on behalf of the provinces that the consequences of this agreement can be disastrous if it is carried forward on this basis.
The Minister of Finance has spoken about the fact that there are pressures to get into fields that are not ordinarily occupied by the federal government. In the light of what has been said by the provincial premiers and of what has been said by the Canadian mayors and reeves association, it is clear that within the life of this agreement there will be further demands made upon this government which should not be made at all if there were a proper adjustment of taxes.
Recognizing the fact that there is a steady swing of population from the rural areas to the urban areas, and recognizing these mounting demands to which I have referred and which are going to produce not merely a crisis in education but also a crisis in highway construction and in the construction of many other services that are needed, I submit

that before a bill of this kind goes forward we should have a real understanding between the provinces and this government, and that we should not be asked to put into rigid form something which, by some of the provinces, is described as a strait-jacket. The position of the municipal taxpayer, of the home owner whom we should encourage, may well be disastrous under these proposals if the predictions of those best able to interpret their needs are in fact borne out by events.
The time is long overdue for a real examination of this question and an allocation of taxes which will take the load off the home owner and the municipal taxpayer. From provincial governments of different political complexions comes the same statement, namely that the present proposals will not make it possible for them either to meet their needs or to assure adequate revenues to the municipalities. The Minister of Finance has made it clear that this is just another stopgap.
This is a time when we should have a real solution of this problem. The governments of the provinces and the governments of the municipalities as well agreed to centralization for war. Let us now make a declaration of decentralization for peace which will make it possible for the provincial governments and the municipalities to carry out their full role under our federal system, and in the light of our rapidly mounting burdens. A government that fails to seek a solution of this problem and puts this matter into rigid statutory form before there has been approval is a government that is unfit to govern. I urge this government, even at this state, to withhold this resolution and to seek a real conference with the provincial governments at which there would also be representatives of the municipalities which are very real entities at this time, and to seek a solution for the years of peace that will make it possible for Canada to grow in the way it should. None of these great developments take place in a vacuum. All these developments take place in areas where their primary concern must be the assistance given by the municipal or provincial governments. As we look with confidence to the future; as we recognize the unparalleled opportunities of Canada at this time; as we recognize the bright prospects before our own people, let us ask-yes, let us demand-that the government have a real conference, not just a meeting where the premiers will be told what they are going to be allowed to have, and that there be worked out a lasting solution- and not merely a stop-gap-under which our federal system will grow and prosper in all its strength.
At one o'clock the committee took recess.
67509-381J
16, 1956 5999
Federal-Provincial Financial Arrangements AFTER RECESS
The committee resumed at 2.30 p.m.

Topic:   TAXATION
Subtopic:   MEASURE TO PROVIDE FOR AGREEMENTS WITH PROVINCES
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