Mr. St. Laurent (Quebec East):
Mr. Chairman, I hope the rosy expectations of the Minister of Finance with respect to the effects of the increases proposed in this legislation will be justified because whether we sit on this or the other side of the house, we are all equally concerned with the economy of our country. I may say at once that it is the intention of the official opposition to support both the increase in the direct tax revenue sharing with all the provinces and the special grants to the Atlantic provinces.
I wish to make a few observations on the proposed increase of general application under the direct tax revenue sharing arrangements, but I will leave the subject of the Atlantic provinces grants to the hon. member for Bonavista-Twillingate and other members of the opposition.
Of course no one can deny that during the war and ever since the war it has been an unavoidable necessity for the government of Canada to derive a substantial portion of its revenues from taxes on personal incomes, corporate incomes and, to a lesser degree, in succession duties. It is, I think, also obvious, and has always been obvious to everyone, that the burden of provincial and municipal treasuries has been rising because of the rapid growth of our population which requires increased provincial and local services and because of the increased costs of maintaining and expanding those local services.
It will be remembered that at the close of the war under the wartime arrangements, when all the then nine provinces were included, the provincial revenues from the
direct tax fields were about $100 million. For the present fiscal year the provincial revenues from the same fields, including equalization payments, were estimated by Mr. Harris at approximately $630 million when the subject was before the house for consideration in 1956.
From the table which the Minister of Finance has now placed on record in Hansard I gather that the total standard taxes, equalization and stabilization payments for the present fiscal year without the increase would be $630,878,000. That is an increase of considerably more than six times what it was at the end of the war. The proposal made in 1956 was that there should be an increase of approximately $114 million in the payments for the present fiscal year, over and above what it would have been, calculated on the basis of the 1952 formula. That is considerably more than the total increases which are proposed in this resolution, a resolution we are prepared to support.
The purpose of the present government in its tax revenue sharing arrangements is the same as the purpose of the previous government. It has always been recognized that it was proper that there should be some portion of the revenues available from these direct tax sources available for provincial services, and more than once I had occasion to state what was the government's policy in this regard. One of those occasions took the form of a letter addressed to all of the provincial premiers on January 14, 1955, in which I expressed it in the following words:
The present government has no intention of abandoning the objective of the tax-rental agreement which is to make it financially possible for all provinces, whatever their tax base, to perform their constitutional functions themselves and to provide a reasonable Canadian level of provincial services without an abnormal burden of taxation. That is the foundation of the policy of the federal government.
In the arrangements we proposed in 1956 a genuine endeavour was made to go as far as the situation at that period allowed toward achieving that objective.
At the present time the government feels it is possible to go beyond what was done then. The amount of the increase proposed is less than what was approved by parliament in 1956 but it is, of course, in addition to what was then being provided. It is being done by modifying one of the percentage rates in the formula which is the basis of the 1956 legislation.
We considered that formula was a good formula; that it provided for bringing up for each province the theoretical yield from taxes in this field of direct taxation to the average that proved to be the yield for the
Dominion-Provincial Relations two provinces in which it was the largest. We note with satisfaction that the equalization principle is to be maintained, and is regarded as the proper basis for the arrangements to be made in regard to this tax revenue sharing proposal.
During this session we have not, of course, had a national budget, and we are not therefore in a position to see accurately just how this will fit into the whole budgetary situation of the country at this time. That is the responsibility of the government, and I assume that the government has been fully conscious of that responsibility and of the effect on the budget of this and all the other substantial increases in permanent charges which have been made.
Topic: DOMINION-PROVINCIAL RELATIONS MEASURE TO PROVIDE FINANCIAL ASSISTANCE TO ATLANTIC PROVINCES, ETC.