George Alexander DREW

DREW, The Hon. George Alexander, P.C., C.C., Q.C.

Parliamentary Career

December 20, 1948 - April 30, 1949
PC
  Carleton (Ontario)
  • Leader of the Official Opposition (October 2, 1948 - November 1, 1954)
June 27, 1949 - June 13, 1953
PC
  Carleton (Ontario)
  • Leader of the Official Opposition (October 2, 1948 - November 1, 1954)
August 10, 1953 - April 12, 1957
PC
  Carleton (Ontario)
  • Leader of the Official Opposition (October 2, 1948 - November 1, 1954)
  • Leader of the Official Opposition (February 1, 1955 - August 1, 1956)

Most Recent Speeches (Page 4 of 1429)


July 16, 1956

Mr. Drew:

This bill does not meet the situation because the minister knows perfectly well that at this time there is already double taxation in some of these fields. He knows that it has been made clear that under these arrangements it is certain that there will be further double taxation. My point is that these fields are fields in which the provinces have just as high a moral right and the governments of the provinces, within the realm of their own constitutional jurisdiction, have just as much right to be recognized in their ability to determine what is needed as has the federal government itself.

Topic:   TAXATION
Subtopic:   MEASURE TO PROVIDE FOR AGREEMENTS WITH PROVINCES
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July 16, 1956

Mr. Drew:

We are now at another point of adjustment resulting from the agreement made in 1941. All that we are now discussing goes back to what took place at that time under the terrible demands of war. At h time when that war was in its most critical stage, the provinces agreed without hesitation to vacate their traditional fields of direct taxation with a clear understanding, however, that this was only for the duration of the war, and that once the war was over their historic position would be restored without impairment. We must remind ourselves of that consideration which was in the minds of the provincial governments when they signed the agreements in 1941.

We have listened to the details which have been put before us. We have a table which interprets in figures many of those details in somewhat complex form. But it is not necessary, I submit, to go into those details now. 1 am sure there will be general approval of some of the principles accepted in what has already been done; I am sure there will be a general approval of the principle of equalization grants, whatever the actual formula may be, or whatever the adequacy of the grants may be. Something of that kind was recommended first in the Rowell-Sirois report. I say it was recommended in the Ontario proposals of 1946 to the conference, which was held that year, under the name qf national adjustment grants. I mention that only to indicate that there has been general agreement for some time that the equalization of revenues in this country is necessary to make it possible for the less wealthy provinces of the country to give to

the people of their provinces the local services that are the constitutional obligations of those governments, whether they be provincial or municipal governments.

The question before us is not whether the right method has been adopted, whether the formulae are the desirable methods to reach these conclusions; the question before us I submit, Mr. Chairman, is whether or not at this time there is evidence that these agreements will satisfactorily meet the demands which are actually now imposed upon the provincial governments and the municipal councils throughout Canada and particularly whether they will be adequate over the five-year period during which these agreements will operate. I think that is what we must ask ourselves.

We have statements from every part of Canada that the requirements will not be met. We have ahead of us not merely the crisis in education but we have before us various problems of the most urgent nature which are increasing in importance by leaps and bounds.

Topic:   TAXATION
Subtopic:   MEASURE TO PROVIDE FOR AGREEMENTS WITH PROVINCES
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July 16, 1956

Mr. Drew:

Where in the whole of Canada today is there a single municipality that can say definitely it has been able to meet the demands for modern needs of roads and highways? Where is there a municipality in Canada today which would confidently say that under the proposals now before us they see the solution ahead of meeting the enormously increased demands for improved highways and roads which come from the rapidly increased number of automobiles in this country? Where is there a municipality in Canada today which sees in these proposals an adequate solution of hospitalization problems? We must remember that personal health is primarily the responsibility of the provincial governments, and in assisting the municipalities that come under our constitution it must be remembered that no matter what grants have been made or are contemplated by this government in the field of hospitalization or in health the main burden for anything that is done rests upon the provincial governments and the municipalities and will continue to do so.

We have the unqualified statement from municipality after municipality across Canada as well as from the provincial governments that these proposals will not make it possible for them to meet their needs even at the present level, let alone the rapidly mounting levels of the years immediately before us. Where is there a municipality in Canada today which is not having some problem

with its supply of sewers and water supplies for any rapid housing development that may be taking place? Where is there a municipality in Canada that has been able to keep pace with the demands that we always regarded as normal in days gone by where houses went into new areas that had been opened up? It must be remembered that there will be an increased demand for the supply of water, sewers and electricity and all the other local facilities which are far closer and of more immediate need to the people than most of the things which come from this government and those needs can only be met by revenues which are not even contemplated in the proposals now before us.

The Minister of Finance (Mr. Harris) said that he is not even tempted to say that this is a solution. That is certainly an admission of the reality. The fact that he is not even tempted to say this is a solution is a recognition that in his mind this is only another makeshift. By now it should have been possible for us to find some solution for the situation which arose as a result of the wartime agreements of 1941. Ever since those first agreements came near their termination there has been a demand from all the provinces for a satisfactory solution of the difficulties that were inherent in those agreements once we returned to a period of peace. It was recognized from the very beginning that those agreements were only makeshift and now in the admission of the Minister of Finance that he is not even tempted to suggest that this is a solution we have the bald declaration of the government that in 1957 there is going to be another makeshift for something that should have been solved long ago through the joint consideration of these governments.

We are now asked to go ahead with an arrangement which the government admits is a makeshift. We are asked to say it is expedient to adopt another makeshift at this time. We are asked to say that even after these long years the government has not yet been able to sit down and thrash out this subject to a point where we can hope to have some satisfactory solution that will prepare us for the years of peace. The agreements of 1941 were for war; we want agreements now for the years of peace, agreements which will work, agreements which will make it possible to ease the tax burden of the local taxpayer on his home, his business and his rental in a way that will make us better able to meet the keen competition we now face throughout the world.

We have seen something of what the dangers of inflation really are in the statements that have been made in the United

16, 1956 5995

Federal-Provincial Financial Arrangements Kingdom just within the past few days. Let us not blind our eyes to the fact that one of the gravest dangers we face in Canada is inflation based upon an excessive burden of taxes at the various stages at which taxes are imposed. Certainly unnecessarily high taxes are inflationary and not deflationary. They do not keep down the inflation and instead they add to the pressures of inflation because if taxes are unnecessarily high, as they are in many municipalities today, they have inevitably increased the needs of every individual for the amount that will be received for the purpose of meeting those taxes and to a point this contributes to the inflationary spiral. There are many other factors, of course, and I am not suggesting for a moment tftat there are not, and all these must be considered. But certainly in this competitive world the effect of taxation on our competitive position is one which we must not ignore.

What has happened in this case is unhappily typical of what has happened on other occasions. It illustrates the unfitness of this government to govern. The Minister of Finance has told us that there were meetings from time to time starting on April 26 of last year and then finally coming to a meeting on March 9 of this year. That should never have been dignified with the name of "conference". All that amounted to was that this government called the provincial premiers together for one day so that they might be told what this government was prepared to do. That is not a conference in any meaning of the word "conference". It is certainly not the type of conference that accepts in fact or in principle the relation of the federal and provincial governments or the place of the provincial governments under that system. It was said by more than one provincial premier that this was no conference at all. It was said that they could just as well have stayed away and been told by a letter what this government was prepared to do.

Once again it was a case of "take it or leave it". I know the Minister of Finance shrugs his shoulders.

Topic:   TAXATION
Subtopic:   MEASURE TO PROVIDE FOR AGREEMENTS WITH PROVINCES
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July 16, 1956

Mr. Drew:

I am very glad to hear that announcement for the first time. If it is not denied, then there is support for the argument I am making that the present proposals are unsatisfactory. If the statement made by the Minister of Citizenship and Immigration is correct, then I submit it is perfectly clear that when we are told by certain provincial premiers that double taxation will be the result of this situation most certainly there should be a pause and there should be an opportunity to get together and to really analyse what will be done.

5998 HOUSE OF

Federal-Provincial Financial Arrangements

I know the arguments that can be made, Mr. Chairman, about corporation taxes. The simple fact remains that what is called the abatement in the corporation tax field is 9 per cent and not even the 10 per cent that was stated in principle as being the very starting point, the minimum that was to come within a year after the war. To the extent that that was only a minimum at a time when the needs were not comparable in any way with the needs of today, the federal government is in default in principle even in relation to what was promised that long ago. Certainly this statement would have been meaningless if it only suggested that the provinces could go ahead and levy taxes and create double taxation because they could have done that at any time. There was never any uncertainty about that. The very fact that they can supports my point that there was a clear understanding that the percentage then indicated was a percentage which was to avoid double taxation.

Topic:   TAXATION
Subtopic:   MEASURE TO PROVIDE FOR AGREEMENTS WITH PROVINCES
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July 16, 1956

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

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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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