1917-08-02

SPECIAL COMMISSION ON RAILWAYS.

Sir ROBERT BORDEN (Prime Minister):: I beg to lay upon the Table a return to an Order of the House moved for by the right hon. leader of the Opposition (Sir Wilfrid Laurier) with regard to correspondence exchanged between the Board of Trade of the city of Quebec and the Prime Minister on 
the subject of the report of the Special Commission on Railways.



THE CANADIAN RAILWAY SITUATION.


Right Hon.   S@: In connection with the resolutions relating to the Canadian Northern Railway Company and the Grand Trunk Pacific Railway Company, of which I gave notice yesterday and which appear in the Votes and Proceedings, I beg to lay on the Table, for the information of the House, the following financial statements:
In the matter of the Canadian Northern Railway system:
Balance sheet, June 30, 1916.	-
Statement of securities issued and fixed charges, June 30, 1917.
Statement of liabilities, June 15, 1917.
Statement of equipment account.
List of securities for*loans.
Gross and net earnings, June 30, 1917.
Comparison of earnings, 1915, 1916 and 1917.
Statement re capital expenditure and betterments, year ending June 30, 1917.
Statement as to mileage.
In the matter of the Grand Trunk Pacific Railway system:
Statement showing -bonds and other-securities authorized, issued and outstanding, and the net proceeds therefrom; also-interest payable during the period from July 1, 1917, to June 30, 1918.
Statement showing details of estimated cash requirements for the period from July 1, 1917, to June 30, 1918; the estimated surplus from the operation of the system and the net amount of aid required for the coming year.
I beg to move that these documents be-printed, and that, for this purpose, Rule 74 be suspended in relation thereto.


Mr. PUGSLEY:: Does the minister intend to lay on the Table any correspondence-with the Canadian Northern Railway company which has led up to the proposal which he has submitted to the House?


Sir THOMAS WHITE:: There is no correspondence; the matter has been taken up-by personal interview. The documents which I have laid on the table of the House have been given me by the Secretary of the Canadian Northern railway and the Vicepresident of the Grand Trunk Pacific Railway company respectively.


Mr. GERMAN:: Does the minister know whether these statements differ in any material particular from the statements found in the report of the Royal Commission? In that report these matters are gone into very fully.


William Thomas White: These are statements presented by the company and certified by the auditors of the company. Whether they differ in detail, or the extent to which they differ in detail, I am not prepared at this moment to say. They are, however, official statements of the company which I lay before Parliament as such in order that they may be printed for the information of the members.


Sir WILFRID LAURIER:: Yesterday my hon. friend said that the Government had information that the p'edgees of certain stock of the company would adopt the suggestion involved in the resolutions. Is my hon. friend prepared to lay that information on the Table?


William Thomas White: There are no further written documents than those which I have laid on the Table. I stated to the House a moment ago that these negotiations have been carried on between officials of the two companies and members of the Government. I said yesterday that the owners and pledgees of the stock would, I was confident, be prepared to enter into the agreement referred to in the resolutions.


Wilfrid Laurier: All this was verbal?


William Thomas White: All our negotiations have been oral.


[Stage Direction]
Motion agreed to.


Right Hon.   S@: I should like to convey to the House the report of Surgeon-General J. T. Fotheringham with regard to a matter which has led to inquiry in the House, that is, the circulation in Canada of a hook called " The Tiddlers." Cablegrams have been despatdheu to Great Britain for further information. No replies have as yet been received, but in the meantime I thought it desirable that the report of Surgeon-General Fotheringham to the Minister of Militia and Defence should be presented to Parliament for the information of hon. members.
Sir Robert Borden read this report:.
Memorandum.
Department of Militia and Defence.
Ottawa, 30th July, 1917.
The Honourable the Minister,
Dept, of Militia and Defence.
Reference to Canada and Canadian troops in " The Fiddlers."
Sir,-I have the honour, in reply to your submission to me of pamphlet marginally noted and of certain attached communications, to submit the following for your consideration :
1.	The pamphlet is, apparently, meant to attract attention to alleged shortcomings on the part of the British Government in the matter of temperance legislation, and would appear to affect Canada only in so far as Canadian troops are held up therein as horrible examples of the result of certain alleged failures on the part of the British Government.
2.	Without being meant as an attack on Canadian authorities or Canadian troops its statements reflect very seriously upon the morals and military efficiency of Canadian troops. It is suggested, please, that if allowed to reach the Canadian public these statements should be accompanied by a full and definite refutation in the public interest.
Harm has already been done by similar irresponsible and exaggerated statements from other sources. Alarm and anxiety have been aroused in some quarters in Canada altogether out of proportion to what the facts of the case would warrant, and such ill results could not fail to follow upon the publication of the pamphlet in question unless it were accompanied by a statement of the truth, which is altogether different from the picture presented in the pamphlet in question.
3.	Statements occur in the pamphlet reflecting on the Canadian troops as to (a) alcoholism, (b) venereal disease. These are all grossly exaggerated and overdrawn. The general impression left upon a reader could not fail to be erroneous. The picture is entirely contrary to my own observation and experience during two years of daily contact with all ranks, for six months in England and for eighteen months on our western front.
A.-As Regards Drink:
It is a gross libel on the men and a great unkindness to their relatives at home to set forth isolated examples (which are not now called in question) without stating percentage and numbers of troops involved and showing the real prevalence of the conditions charged.
(a)	It is equally unfair to quote as representative of present conditions the state of affairs at the outset of the wai!* and particularly at Salisbury Plain,-if for no other reason than that the majority of the First Contingent were British born and left but few relatives in Canada.
(b)	Positive evidence to the contrary may be quoted as follows:
Major General John Hughes in reporting on the 28th June, 1917, to the Adjutant General, Ottawa, upon the subject of his visits and inspections made during the month of May last in England and France states as follows:
"I asked for the crime sheets of the last month in every camp and was pleased to find that for drunkenness there was less than one case per thousand men per week, and this was

not in any one camp alone but the average of all camps in England."
This statement applies for the month of April. 1917.
Major General S. B. Steele, C.B., M.V.O., general officer commanding troops. Shorn-clifte, on the 3rd May, 1917, reports as follows to the general officer commanding Canadian overseas military forces, London:
"With an average occupation strength of 20,000 troops, both Imperial and Canadian, the cases of drunkenness work out an average of three per thousand per week. This average has during the past year or more neither increased nor decreased, although at times there have been from 40,000 to 50,000 troops in the Shorncliffe area."
These figures, it will be noted, apply' to a period of more than a year.
Col. C. A. Smart, officer commanding Canadians, Shorncliffe, reports on the 1st May, 1917, for the Shorncliffe area as follows: "Average daily strength, including all hospitals, for the month of
April	 31,296
Average daily occupation strength
for the month	of	April	 19,748
Total number of cases of drunkenness
for the month	of	April	 74
Percentage of cases against total
strength	0023
Percentage of cases against occupation
strength	0038"
You will note from the above that the actual percentage of cases for one month is less than one-half of one per cent on the actual occupation strength, and I am sure that you will agree that this is a particularly gratifying state of affairs.
General Steele also informs me that Colonel Burns-Bogg, the town commandant, Folkestone, has expressed to him his admiration for the splendid behaviour of the Canadian troops in this area and he considers that it is not excelled in any other part of Great Britain.
(c)	It should be noted that cases of drunkenness, few as they are, are to be charged, not against the camp canteens but against licensed places outside -the camp lines and under civil control. These, of course, are placed out of bounds by the military authorities whenever they appear to be the occasion
'of disorder among the troops. The camp canteens supply only beer and being under strict military control with very severe limitation of the hours of sale are, in my judgment, a safeguard instead of a menace in areas where licensed houses not under military control exist to which the troops may go from camp. I may add that this is the practically unanimous opinion at the front.
(d)	The run# ration at the front.
Reference is made in the pamphlet to this
topic. It is true that with the best of control unfortunate incidents will occasionally occur due to pilfering from the battalion issue of rum before it reaches the men in the trenches. This is, from my experience at the front, a very rare occurrence. The restrictions surrounding the issue are such that ill effects are practically controlled, and, speaking as A.D.M.S. of a division at the front, it is my conviction that during the six months at least of bad weather it is necessary for the efficiency of the men that rum be available for special issue on occasions considered by com-

manding officers to justify it. These requests from commanding officers go to brigade headquarters and are by them submitted for approval or otherwise to the A.D.M.S. of the division, upon which approval the supply officer is authorized by divisional headquarters to make the issue. It is not issued to all ranks but to those bodies of men who are in special need. For instance a Divisional Ammunition Column or a supply train are not issued with rum on the same conditions as apply in the case of an infantry or particularly a pioneer battalion who have been all night at work in the rain and mud. In no case is the issue a matter of routine. It should also be stated that the regulations as they now exist are the result of two years' experience and are much more stringent as well as better observed than was the case in the earlier months of the war.
(e)	Figures from Britain showing the number of arrests for drunkenness, also number of troops concerned, have been cabled for.
(f)	It may be noted as additional general evidence of the good conduct of the Canadian troops in England that on May 29, 1917, Major General G. B. Hughes, General Officer Commanding 5th Division, wrote as follows to Major General Sir Richard Turner, V.C., K.C. M. G., D.S.O., General Officer Commanding Canadian Forces in Britain:
My dear General
I am anxious to inform you that this division held a sporting meeting in Godaiming on the 24th of May, at which there were present between eight and ten thousand men of the Division, as well as a large number of the people of Godaiming.
There was not a single case of drunkenness or disorder of any kind reported either bv the military police or the civil police of Godaiming, or any of the other villages on that occasion.
Yours faithfully.
(Sgd.) G. B. Hughes."
(g)	Insanity.
The pamphlet in question contains on page 45 the following statement:
"A doctor from a Canadian Hospital said a large percentage of their troops had had to be sent back to Canada rendered permanentlv insane through the action of alcohol. Facts in 'Daily' News, Oct. 31, 1916."
This statement gives one a fair idea of the credibility of the pamphlet as a whole. I can of my own knowledge give it an absolute denial. 'Only a small number of Canadian troops have been returned insane. The vast majority have recovered or will do so. and alcohol has played a part in only a small number of cases. The Military Hospitals Commission reports on July 31 as follows:- An analysis of fifty cases at the Ontario Military Hospital at Cobourg dated February 1, 1917, shows that in only two cases does alcohol appear as the apparently dominant factor although there are in all thirteen in which alcoholism figures as an important factor either in precipitating or modifying the condition, in addition to other more predominant abnormal, primary conditions. The total number of cases so far returned to Canada, as shown by the records of the M.H.C is only 222. It will be borne in mind that the total number of recruits enlisted is 406,209 to March 31, 1917.

The following comments are made hy the Medical Superintendent of the Military Hospitals Commission:-
"Eleven of these were heavy drinkers, but the condition was directly due to alcohol in only five of the eleven. In the other six of the eleven, the mental condition itself was probably responsible for drinking.
The total roll of returned Insane men is not yet complete, insanity, feeble mindedness and specific diseases of the nervous system taken together, but not including epilepsy make up about 2 per cent of all returned invalids. Re-lati/vely speaking!, ,of the 'returned soldiers suffering from nervous or mental disability there are very few cases traceable directly to alcoholism.
Faithfully yours,
(Sgd.) Alfred Thompson."
It may be assumed that less than 300 cases of insanity have been returned so far to Canada since the beginning of the war.

Venereal Disease.
(a) While it is true that no one cause contributes snore strongly Ito' Venereal disease than indulgence in drink, the statements made with regard to the prevalence of venereal disease in the Canadian troops which are used to bolster up the general charges made against the liquor trade in Great Britain are all characterized by the same gross overstatement and unfair use of figures. For instance, on page 47 a quotation is given from a speech given ly Col. Sir Ha mar Greenwood in Parliament on April 23, 1917, to the effect that in fourteen months 7,000 Canadians had undergone treatment for venereal disease from one of the three Canadian camps in Britain. This statement appears in another form on another page of the pamphlet as follows: "The Government has given us figures for the army at home last year and they are 43 per 1,000. There are 7,000 cases in one Canadian camp alone." It will be noticed that the length of time, fourteen months, in which the alleged number of cases occur, is omitted, and that no statement is made as to the number of thousands of Canadian troops which had passed through that camp in the course of fourteen months without venereal disease. It is regretted that accurate figures as to the incidence of venereal disease among Candians in Britain and France are not available in Canada, but, speaking generally, they are about the same for Canadian troops in England and France as in Canada. For instance in the month of January, 1917, the percentage due to venereal disease of the total sickness among the troops in Canada was 1.8 which is as high as in England.
(b) The situation in Canada may be stated
as follows:-
Total number of recruits C.E.F. to
March 31, 1917	 406,209
Total cases venereal disease admitted
in Canada in same period	 10,232
Percentage of venereal disease cases to
number of recruits	 [DOT]	2.5
That is in every 1,000 recruits enlisted 25 developed yenereal disease in pearly three years, or about 8 per annum.
From these figures it is fair to conclude as [DOT] follows:-
In civil life the 1,000 recruits may be said to represent a population of about 4,000 made up as follows :-
Unmarried men	 500
Married men	 500
Wives	 500
Children, 5 per family	 2,500
Total	 4 000
A civil population of 4,000, if incidence of venereal disease were the same as for the 1,000 men in the C.E.F. which is taken as the unit, would then have 8 cases of venereal disease in the year, or twenty-five in three years period. There is no doubt that the actual incidence in civil life, particularly in villages, towns or cities is far in excess of these figures, although no figures from civil sources are available, the disease not being registeiable under civil authority.
4.	It is submitted, please, that the above criticisms on the character of the pamphlet in question are fair and represent the 'general unreliability of the pamphlet as a whole. If I may be permitted to express an opinion based upon my personal knowledge of the situation among the Canadian troops in France and Britain as regards alcoholism and venereal disease it would be that the circulation of statements such as fill the pamphlet in question, among the people of Canada is most undesirable, and should be prevented by any measures open to the authorities, having regard to the interests both of the troops themselves and of the Canadian public.
I have the honour to be, sir,
Tour obedient servant,
(Sdg.) J. T. Fotheringham,
Surgeon-General, D.M.S. Invalids.
Reference is made in this report to certain information in respect of which inquiry has been made in Great Britain. In addition to that, other messages bearing on the subject have been despatched, to which no reply has yet been received. The replies will be expedited .as much as possible, and when they are received a further statement on the .subject will be made.



PAPERS PRESENTED.

[Stage Direction]
Copies of orders, in council referring to officers reverting to lower rank in order to proceed to the front.-Sir Edward Kemp.

[Stage Direction]
(Questions answered orally -are indicated by asterisks).

[Stage Direction]
* Mr. DELISLE:
1.	Is Mr. G. A. Dillon an employee of the Government?
2.	If so, since what date has he been employed?
3.	What salary does he receive and what are his duties?
4.	Did he pass a Civil Service Examination?
Mr. DOHERTY:: 1.	Yes.
2.	January 4, 1912.

3.	Salary, $3,200. His duties are to purchase supplies for all ,tihe Canadian penitentiaries. Major Dillon is also acting as supply officer for the internment operations and receives for his services as such, under an order in council, the pay attached to the rank of captain in the Canadian militia.
4.	As an officer of the Outside Service, he is not subject to examination by the Civil Service Com/mission.


THE BOAT WILFRID C.
Mr. COPP:: 1.	Has the boat Wilfrid C. been purchased by the Government?
2.	If so, from whom was said boat purchased, when was said purchase made, and what was paid?
3.	If said purchase has been made, what use is to be made of said boat by the Government?
4.	Has the Government purchased provisions for said boat?
5.	If so, from whom were said provisions purchased, and of what do they consist?


Mr. HAZEN:: Yes.
The Shepody Navigation Company, Limited, 21st July, 1917; $7,000.
Used in connection with the naval defence of Halifax harbour.
It will probably be necessary to purchase a small quantity of provisions for the use of the crew of this vessel on the voyage from Monoton to Halifax. As the vessel was only purchased a few days ago, sufficient tinfe has not elapsed for a report on the .subject to be received in the department. Any such transactions will be of email value, however, as the victualling will be done through the usual channels once the ship reaches Halifax.


MENTIONED IN DESPATCHES.
Mr. WALLACE:: 1.	How many officers have been "Mentioned in Despatches" who have not left Canada?
2.	What are the names of such officers?
3.	By whom were such officers recommended?
4.	Is the term, "Mentioned in Despatches", used exclusively for valour on the field of battle, or is it also used for those performing office work or other duties in Canada?


Sir EDWARD KEMP:: 1.	None.
2.	Answered by No. 1.
3.	Answered by No. 1.
4.	The term " Mentioned in Despatches " is reserved for service in the field,


J. P. JAFFRAY.
[Stage Direction]
' Mr. PROULX:
1.	What position is filled by one J. P. Jaffray, former editor of the Galt Reporter, in the Department of the Interior?

2.	Where is he stationed and what are his duties ?
3.	Is the Government aware as to whether or not this man is engaged in writing political articles as well as performing his other duties?
4.	If not, will the Government make an inquiry?
Mr. ROCHE:: 1.	'Canadian Government immigration agent.
2.	Philadelphia, P.a., U.S.A. Encouraging immigration to Canada of farmers, farm labourers /and female domestic servants and examining ocean pout arrivals at Philadelphia destined to Canada.
3.	No information on this point.
4.	Yes.


CANADIAN ARMY BOOTS.
[Stage Direction]
On the Orders of the Day:
William Manley German: I desire to call the attention of the Government to an extract from the London Times of June 24th, published' in the Winnipeg Evening Tribune of Friday last, as I think it is in the public interest for me to do so. The extract reads:
Remarkable allegations of the waste of public money were made at the Stratford Police Court yesterday, when a dealer named Samuel Schneiderman, of Broadway, Barking, was summoned for being in possession of thirteen pairs of Canadian military boots.
On June 5, Sergeant Mitchell of the Canadian military police, went to defendant's premises and saw a number of boots bearing the stamp of the Canadian military authorities, but not the condemnation stamp. The police were called in, and defendant said he bought them with others from a Mr. Jacobs, Sandy Row, London. Mr. Jacobs was seen. He said he had sold boots to defendant, and they were part of large quantities bought from Government auctioneers.
For the defence, Jacobs yesterday said he bought thousands of pairs of boots through Bacon's auctioneers to the Government. Those produced were part of consignments obtained in this way. He paid sometimes as little as 7d. a pair for boots, sometimes as much as 2s. Those produced he bought at Is. 4d.


The Chairman:: No wonder the expenditure of the country goes up.
The Bench dismissed the case, but stated that, in view of the evidence it was a matter that the authorities should go into.
Now the matter has been brought to their attention, will the Government have this glaring case of extravagance investigated?


Sir EDWARD KEMP:: A despatch somewhat similar to this was sent out to Canada and published in the Canadian press early in June. When I saw it, I cabled to the proper officials in London to ascertain the facts. The reply I received was that * these were worn-out boots that were of no use for military purposes.


William Manley German: They were not marked
as condemned boots?


Albert Edward Kemp: They were condemned boots. They had been discarded as not fit for the soldiers to wear any longer. The condemned mark may not have been on them.


WOMEN MUNITION WORKERS IN TORONTO.
[Stage Direction]
On the Orders of the Day:
Mfr. GEORGE W. KYTE (Richmond):
I desire to call the attention of the Minister of Labour to the following article which appeared in the Toronto Daily Star of July 27th:
"They are killing us off as fast as they are killing the men in the trenches", declared the spokeswoman of a deputation of women munition workers who came into The Star Office yerterday morning. "We are working six days a week from seven till seven and on Sundays from seven till four, and now they want us to work fourteen hours a day by coming back three nights a week to work two extra hours. We just hav.e half an hour for lunch and half an hour for supper."
There were seven of them and they had just been dismissed from a munition factory in which they had most of them been working for over a year, because they refused to work on the fourteen-hour shift. Two wore the six months' munition workers' badge, and one wore the munition workers' good service medal as well. Two had husbands at the front and one had lost a brother in the trenches, while three other brothers were on active service.
Skin Off Hands.
" Look at our hands" cried one black-eyed maiden, thrusting out hands blackened with oil and machinery and from which the skin had peeled in big patches. They were all saturated with oil, and told of removing oil-soaked garments at night to replace them in the morning because they had no time for laundry work.
"One of the -girls was too sick to come with us", they said, "She has been working five nights night work and is just dying on her feet. The oil has got into her system."
"We refused to work the fourteen hours yesterday, and when we went in this morning we were tbld we could go. We are going to see the Mayor about it."
The deputation then went up to the Mayor's office, but he was not in and they were referred to the Imperial Munitions Board. Sir Joseph Flavelle was in Ottawa, and Mrs. Fenton, Supervisor of Female Labour in munitions factories, was out of town. Mr. Mark Irish, to whom the deputation was then referred, had not time to-day to make public the result of the interview.
One Dropped Dead.
"There was one of us dropped dead on the street car the other day", said one of the deputation, "Though they put it down to heart trouble. And I know another who was so tired and dizzy that when she was going home from work she fell off the car and died later. And another the same way that walked right in front of a car and was so badly hurt that she is disfigured for life. I tell you we can't stand it."
I would like to ask the minister if his attention has been called to the conditions of women workers in munition factories in Toronto as described in this article, and if steps have been taken to .ameliorate these conditions.
Hon. T. W. CROTHERS (Minister of Labour):: I have no information as to
any such conditions as those read by my bon. friend. I may add I do not believe .they exist. It will have been noticed by ,hon. members that the statements are very general in character. If my hon. friend will get some particulars, and the names of employers in Toronto who are said to have treated their employees as set forth in what my hon. friend has read, I would vbe very glad to inquire into 'the matter.


Mr. KYTE:: Was the Minister of Labour aware before to-day of the publication of this article?


Thomas Wilson Crothers: No, I was not.


George William Kyte: Does the minister think it
is the duty to institute some Liquify without waiting for me to make a charge?


Mir. SPEAKER:: Order. The subject is
not now open for debate.



GOAL SUPPLY IN THE MIARITIME PROVINCES.

[Stage Direction]
On the Orders of the Day:
['I mean the men who\nhave actually gone to the front, not the honorary or titled men who are floating .around at home or in London, drawing pay iand doing nothing.']
William Pugsley: made; what steamers have been placed at the disposal of the authorities; and what are the rates of freight?


Sir GEORGE FOSTER:: As my hon. friend knows a Fuel Controller has been appointed and he has been at work on the coal problem for the last three weeks or more. He has been given Dominion-wide authority and scope, and has been making, and is continuing to make, all the proper inquiries with reference, first, to the possibility of obtaining the supply of coal that is necessary. I am speaking of anthracite coal at the moment, but his authority also extends to soft or bituminous coal. He is making inquiry as to the quantity which will probably be produced in Canada for home consumption, and, consequently, as to the quantity which will be required in order that normal and legitimate demands may be met. He has visited Washington, and other points in the United States, has been in communication with the responsible authorities there, and is assured, as I know, of co-operation in so far as they are concerned. He has appointed an agent in the United States to act under him, whose duty it is to report upon the supplies of coal, at what points those supplies aTe available, the prices at -which they can be obtained, and as to transportation facilities from the points of production to the Canadian border. At the present time this gentleman is visiting the important centres in Canada with the Food Controller, and having conferences with municipal authorities and coal suppliers. He is gathering all possible information with regard to the quantities required, and the methods of transport.
Other steps are being taken in Canada to provide for the transport of coal brought in from the United States, after it reaches the border, and to provide for its distribution in Canada. To that end the Fuel Controller is in conference with the chairman of the Board of Railway Commissioners, and with the different railway companies. I understand arrangements have been made looking toward the timely and efficient distribution of the coal after it reaches the border. So much with reference to the general situation.
The anthracite - situation in Halifax and St. John is, as my hon. friend has said, somewhat different, because it is practically impossible to bring coal in there by rail, and the ordinary way hitherto has been by boat. At the present time facilities for water carriage are very scarce, and very difficult to obtain. It is true that the disparity of

cost as regards St. John and Halifax is I think mainly due, not so much to different prices at the points of production, although in obtaining coal from independent companies in New York there is a difference in the prices paid as compared with prices at the point of production where the coal is taken up by the railway companies.
The matter of freight comes in there. Rates are very high. Schooners and small vessels which take lumber from St. John and which hold themselves open to bring back freight, have their own rates of charges and they are, I understand, very high. How to obtain the necessary transport is a difficult question. The fuel controller has appointed an aide in St. John and another in Halifax. The gentleman in St. John is Mr. Frink and he with committees, is working, upon the problem there. I am not aware that the Government have any steamers that can be placed at the disposal of parties.in St. John and Halifax for the carriage of this coal. I would be inclined to think that they have not. It is also difficult for the Government to obtain vessels for that purpose. In the main, the transport will have to be arranged, I think, by the parties interested in obtaining coal, aided as far as they possibly can be, by the fuel controller and such agents as he is working in co-operation with. I have not seen the fuel controller for the last two or three days, hut I have given my hon. friend such information as I obtained at my last interview with him.


William Pugsley: I thank my right hon. friend the Minister of Trade and Commerce for the information which he has given to the House hut there is just one point in regard to it that I would like to refer to.
I would like if he had conferred with the Minister of Marine and Fisheries (Mr. Hazen), who is not now in his place, because the statement has been made positively in the newspapers in St. John that the Government, through the Minister of Marine and Fisheries, has arranged for vessels. It has possibly not come to the attention of mv right hon. friend. It will be a great disappointment to the people of St. John to read the remarks of the Minister of Trade and Commerce. I hope that he will be able, after seeing 'the Minister of Marine and Fisheries, to give some more encouraging information as to the Government providing steamers for the transportation of coal.	.


George Green Foster: I will take the matter up with the Minister of Marine and

Fisheries and if there is any additional information I will give it to the House.
Mr. MURPiRY: The minister announced that the Fuel Controller had secured an assistant in the United States but he did not mention who he was?


George Green Foster: Mr. MoCue. He has been retained 'by the Fuel Controller on the recommendation of the committee in Washington-the head committee in the United States which has the question of the coal supply in its charge. He was looking for the very best available man he could get and this is the man who has been recommended to him and whom he has employed.



[Stage Direction]
House in committee to consider the following proposed resolution, Mr. W. H. Bennett in the Chair.
That it is expedient to provide that packages containing human food or other commodities should be marked with the name and address of the fillers, the weight, measure or quantity of their contents1, and the dates of packing ; but not including packages for export, articles weighed or measured at the time of sale in the presence of the purchaser, or fresh fruit and vegetables; that penalties should be provided for violations of these provisions, and that such provisions should come into force on the first day of January, 1918.-Sir George Foster.
William Pugsley: What is covered by the words "other commodities"?


George Green Foster: 
Mr. NESBITT:: The net weight of the contents or the gross weight?


George Green Foster: The gross weight,
I think.


Edward Walter Nesbitt: It should be the net
weight.


George Green Foster: I am not certain as to that. I will have to look at the Bill, but that will all come out in the discussion of the Bill.


William Pugsley: Would it include such articles as cement in bags or barrels?


George Green Foster: All packages
containing human food or other commodities.


William Pugsley: The difficulty I see about using the words "human food" first and then saying "other commodities" is that the definition which would be given to the words "other commodities" would be that they would mean commodities of a like character to "human food." If it is intended to embrace commodities such as cement, fertilizers and a thousand and one things, why not, instead of using the words "human food" say that all packages containing any commodities shall be marked with the name, etc.? When you use the words "human food" and then say "other commodities" these latter words would be difficult to interpret as being general in their application. A court would say that it was intended to be limited to commodities of a similar character to human food. These words are obviously words of limitation. Why put in any specific description first because the words "other commodities" will be interpreted as applying to commodities of a like character to those specified previously?


George Green Foster: The idea was especially to emphasise the importance of human food.


William Pugsley: The minister may remember the question that arose in Ottawa within the last few weeks when the city complained that the .weight of cement in bags was light. I do not see why this legislation should not apply to cement.


George Green Foster: It applies to all.


William Pugsley: But the minister, by using the words "human food," is rendering it very doubtful whether the section

would apply. Any lawyer would tell him that.


George Green Foster: I should think the words would carry that meaning.


Mr. GRAHAM:: In the case of farmers who supply small quantities of butter to private customers each week, will it be necessary to have the name of the maker and the weight of the package stamped on each package?


George Green Foster: Yes, if they dispose of it in the original container. It is impossible to pass any measure without causing some inconvenience to some people, but the lesser inconvenience must be submitted to in the general interest. The farmer must have his oiled paper in any case, and it will cost him very little to have the name and weight stamped on it when he purchases it.


Edward Walter Nesbitt: The phrase "articles weighed or measured at the time of sale " would probably cover that. In any case, it would not be a serious' matter to have the weight and the name stamped on? Why are exports excluded from the operation of the Bill?


George Green Foster: Any one who has talked with manufacturers knows that there are many articles purchased for foreign markets which the purchaser desires to have marked and put up in a way which will suit the market to which they are to be exported rather than the home market.


Edward Walter Nesbitt: I have never been able to see why people manufacturing for export should not manufacture on an honest basis, the same as any one else. I would impress on the minister that the weights should be net weights. Otherwise there will be deception as to packages.


George Green Foster: Net weights are called for.


Mr. THORNTON:: I see grave difficulties in the operation of a Bill of this kind. For instance, there are many articles which remain on the dealers' shelves in packages, such as evaporated fruit. The law provides that these shall contain only a certain amount of moisture. Evaporation takes place while they are oh the retailer's shelves, and it may be that at the time of sale, through this natural evaporation, there is not the same net weight as there was at the time the package was weighed.


Mr. NICKLE:: This matter of the weight of packages containing human food received

my attention when I was a member of the legislature of Ontario. My attention was directed more particularly to the weight of bread. At the time the matter was brought 'to the attention of the legislature, there was no regulation establishing a standard weight for a loaf of bread. The province finally passed a law determining the weight of a standard loaf. Prior to that, the bakers could add to or take from a loaf of bread as they desired, and they varied the weight according to the price of flour, generally to the disadvantage of the consumer. During the discussion it was very forcibly brought to the attention of the committee, and later of the House, that the weight of a loaf of bread varied radically within a period of 24 hours after it left the oven; and if my memory serves me, there is a provision in the Ontario statute that the weight must be that standard weight within a certain period after the bread is baked. I do not know whether such a provision could be made with regard to commodities such as evaporated apples, but I think the minister should consider that aspect of the case, because if the measure is taken to apply to bread there will be difficulties in enforcing the law. We are all agreed on the general principle of the measure. I do not suppose there is a member who would not agree that the purchaser should get whaf he thinks he is getting as the net weight of the commodity within the package.
I may say that I endeavoured, when the matter was before the Ontario Legislature, to get before the House legislation along the lines suggested by the minister, but I found myself stopped, as the question was raised as to whether or not jurisdiction w.as vested in the Ontario Legislature. At that time my .attention was directed to the fact that manufacturers of commodities that were put up in packages could keep a fixed price by varying the weight of the content in the package, and that the consumer bad practically no protection at all. With the exception of the difficulty to which I have referred, I am heartily in accord with the measure proposed, and I trust that in the preparation of the legislation some scheme may be devised that will obviate the difficulties to which I have directed attention.


Mr. MARCIL:: I must congratulate the Minister of Trade and Commerce upon this proposed legislation. He should not, however, limit its provisions merely to food.


George Green Foster: It is not so limited. It takes in every commodity.


Charles Marcil: I .have heard numerous complaints that purchasers, when they buy a package, do not know what amount it contains. This -applies to -many different varieties of -food, as well as to soaps -and things of that kind. Sometimes the packages are found to be half empty, and the purchaser -does not know whether the package was intended to be that w-ay or whether the quantity has been reduced because of -an increase in the price. Any action towards securing full v-alue for the consumer's money should be welcomed, because nothing i-s more unfair th-an to have to pay for w-hat you do not get. In Quebec we have had a -constant grievance with regard to potatoes. When you want to -buy a ninety-pound bag of potatoes at a reduced price you would sometimes fin-d the bag to contain only -eighty pounds-and so on. Any legislation that the .minister can enforce to remedy such grievances -as these will, I -am -sure, meet with the unanimous support of this House, especially at -a time like thi-s, when the problem of -the co-st of living is such a pressing one. I, for one, w-ill -support any step that the minister takes in that direction.


Mr. VERVILLE:: Will this apply to other things than food in packages-to vegetables, or things of that kind?


George Green Foster: It does not apply to fruit or vegetables.


Alphonse Verville: The people -are being
robbed, -more in the matter of vegetables and eggs than in regard to anything else that I know of. The grocer often sells his small eggs -at the regular price and charges five cents a dozen more fo-r the larger ones.


George Green Foster: That is in Montreal.
M)r. VERVILLE:	I think I can point
to similar -instances in my h-on. friend's city. Toronto is not behind in that respect. It i-s desirable that all these things should be s-old by the pound.	-


Charles Marcil: l-t is so an the United
States and France.
Mr. VERVILLE-: I agree with the member for Bonav-enture (Mr. Marci-1) that bags of potatoes containing eighty pounds are often sold for ninety-pound bags. As a matter of fact, a man selling potatoes will often say to the -purchaser: I cannot sell by the pound; I am selling by the bag. The consumer, then, has to buy by the bag, and -sometimes he finds that the weight is short.
Turnips .a,n-d many other articles of the kind -are sold- by the pound, to the satisfaction of the grocer or merchant. I call special attention to the matter of eggs, because if the minister will get a little information from some of his officers, he will find that the -people -are robbed more in regard to eggs than in regard to anything else.


William Pugsley: I am disposed to accept the principle involved in this resolution, to a reasonable extent. I think, however, that the Bill founded upon the resolution will lead to all kinds of trouble. I do not think that -simply because in some instances grocers axe dishonest, we should resort to extreme legislation. My experience is not so unfortunate -as that of some hon. gentlemen who have spoken. Every retailer that I -have had to deal with has been honest.


George Green Foster: Was somebody
else buying for you?


William Pugsley: I buy a great deal by
telephone, and I have not had any reason to complain. I am surprised that hon. gentlemen have been treated as they -suggest. My suggestion is that they change their grocer; they might get over the difficulty by dealing with somebody else. In the city from which I come there has been, so far as I know, every disposition to deal fairly with the buying public. Under this Bill, the grocer or merchant with whom you are dealing 'by telephone has to put his name and the quantity upon every package of goods that he sends out. If you order by telephone ten yards of cotton, for instance, it is put in a package and the merchant has to mark upon the package the number of yards of cotton, contained therein. The same applies to any .article of dress; he must put the number of yards on the package. It is provided that the merchant must designate the weight, measure or quantity of any article which is included in a package which is ordered either by letter or by telephone. Surely the minister does not want to impose such a bother upon the retail dry goods dealer ot the retail grocer. If I -choose to go to the store myself and make the purchase or have someone go on- my behalf, compliance with these provisions will not be necessary, but if I order by telephone the merchant with whom I deal must comply with the law in every particular. If it is desirable that such a provision should apply to potatoes, butter, bread, meat, those commodities should be specifically named. But do not make this provision so broad that it will apply to



every small article one may order !by telephone, because that would put the retail dealer to a large amount of trouble which it is not at all necesary to impose upon him.


George Green Foster: My hon. friend
has furnished a good, example of raising trouble without toeing exact about the terms of the resolution. It would be intolerable if every time one sent toy telephone for a yard of cotton or for an ounce of allspice, the goods had to be done up in a package and labelled and marked. This applies to goods that are sold in containers, in the original or unopened packages..


William Pugsley: It is not limited to that.


George Green Foster: The resolution
is the basis upon which the Bill is founded. The Bill does not go to the extent that my hon. friend has suggested.


William Pugsley: Did the minister not
say to the member for South Renfrew (Mr. Graham) that the provisions of this proposed measure would apply to1 a pound of butter which had been ordered from a grocer toy telephone? The minister said that it would not be very much bother to have the name and quantity stamped upon such a package.
He now suggests that this provision is to be limited to the original package or container. A resolution is supposed to inform the committee of what the Bill is founded upon it will contain, and as this matter refers to Trade and Commerce, the Bill must be founded on the resolution. Therefore when we look at the resolution, we have a right to assume that it is what the Bill is going to be, and certainly the resolution is broad enough to cover the cases I have suggested. I am glad the minister realizes that it would be intolerable to have legislation of the character I have described. If he intends in the Bill to limit the extent of the resolution, and admits that he has made a mistake in the language he has used in the resolution, the matter of course, assumes an entirely different aspect.


George Green Foster: I do not think there is any mistake in the matter. A Bill cannot go beyond the resolution upon which it is founded, but I do not think the converse is true, that a Bill must go to the full extent of the resolution. You have to have a broad enough foundation on which to build your house, but it does not follow that you must build to the utmost capacity of the ground that you buy for your house.
IMr. Pugsley.]


Mr. WEBSTER:: This resolution will have a tendency to affect butter, cheese, and meat being placed in cold storage. Suppose butter that shows a percentage of 18 per cent water is branded to-day when it leaves the factory, as weighing fifty-six pounds per package, after it has been in cold storage for thirty days, it will shrink from one to one and one-half pounds per package, according to the temperature to which it is exposed. When that butter comes out of cold storage, it still has the fifty-six pound brand upon the package. How are you going to arrive at the proper weight? Dressed hogs shrink upwards of three pounds in a low temperature, so what object would there be in having a hog branded with its weight when it went into cold storage? Take the cheese industry. I think it is a proper provision that each month's make of each factory should have the brand of that month on the cheese, and not on the box. It is an easy matter tc remove the brand from the package, but it is a hard matter to remove it from the cheese. If that cheese is placed in cold 'Storage and remains there for thirty or sixty days, it will shrink according to the temperature to which it is exposed. If the package is branded with the original weight of the cheese, the buyer will be misled; he will not receive what the package states it contains. Therefore, the paqkage would have to be weighed the second time. In case of articles subjected to shrinkage, there would be no advantage whatever in having the weight branded on the package.


George Perry Graham: If that cheese were sold with the weight


John Webster: Box weight.


George Perry Graham: -box weight stamped
on it when it was put into, cold storage, a man selling it at that weight would be liable to a heavy penalty.
Mr. .WEBSTER:	The package when it
came out of cold storage would not contain the weight branded on it.


George Perry Graham: The seller would be perfectly innocent as the package contained the weight branded on it when it went into cold storage, but if it did not contain that weight when he sold it, he would be liable to a heavy penalty. The dairy trade of Canada is one of our most important industries, and while we must protect the public in every way, we must not unduly hamper the producers. The provision that this legislation will not apply to packages for

[DOT]4069
export is a wise one, notwithstanding what my hon. friend from North Oxford (Mr. Nesbitt) says, because the minister has explained that there are very many difficulties in the way of branding for export, in which trade you have to meet the consumer in the way in which he, wants to be met rather than the way in which you might want to meet him. A number of boxes of cheese might be originally intended for export, but one of them might be taken out, and if the package -was not branded, the law would be violated. The minister should have some provision by which the innocent producer will not be liable to a penalty.


Mr. CURRIE:: 
George Perry Graham: This resolution would not affect that.


John Allister Currie: It will affect that. There should be a provision that the package
253*
containing food or other commodities should have the contents marked on it and have attached to it the name and address of the fillers, the weight, measure or quantity, and so forth. When a butcher sells a piece of meat, he should be compelled to make out a bill and wrap it up in the package, and that bill should contain the exact weight of the meat. The same is true in the case of cheese. The matter will then be a question between the actual consumer and the seller. The question is not so much one of the weight of butter or cheese that goes into cold storage. Every one knows that the. ultimate consumer is supposed to get the weight of cheese he pays for. There is a certain shrinkage allowed on cheese put into cold storage. Legislation of this kind is required to put a stop to the rascally practice that has grown up throughout this country of selling by price. Suppose a housewife goes into a store and asks for some oatmeal. The clerk says: Here is a 25-cent package. She buys it. The package is done up nicely, but as a matter' of fact, the housewife gets only about 15 cents' worth of oatmeal. Canned goods and packages done up and parcelled should have on them not only the English weights and measures, but at the same time the metric weights and measures. After having had experience with the metric system, I feel satisfied that, as our coinage is on a decimal system, if the people got into the habit of using the metric weights and measures, along with our dollars and cents, they would continue using them. Under the present system, it is difficult for a woman of ordinary intelligence to calculate rapidly what she is getting.
As it is now, it takes the ordinary man or woman quite a little time to calculate how much twelve and a half ounces of butter, for instance, at 38 cents a pound would . cost. This difficulty will be largely avoided if we adopt the metric system, which is in force in every country of the world except the United States, Canada and Great Britain. Objections against the system are futile. The system has been forced into use in almost every country in the world, and this country is consequently at a great disadvantage in selling canned fruit and things of that kind, because the weight is not printed according to the metric system. I think if this resolution were amended to compel the seller to mention the weight as well as the price on the label, it would save a great deal of trouble and be of great advantage. All the grocers in this country are not as honest as those with whom my

hon. friend from St. John deals. But a grocer or 'anybody else who knows him would know it "would be useless to try and cheat him.


Charles Marcil: When buying maple syrup in Montreal I could never find out the quantity contained in the different-sized tins. Some tins would be sold for $1.25, and others for $1.50 or $1.75. One can would contain the imperial gallon, and another the oldtime gallon, and you could never tell just what you were getting. This legislation is on the line of what we have already done in the case of maple sugar and maple syrup, where it is imperative on the producer to sell the exact quantity he advertises. It was an old trick of these manufacturers to put the word "strawberry" or the name of some other fruit in large letters on the label, followed by the word "j:am" in such small characters that it was almost impossible to see it except on a close examination, and the buyer would consequently be getting strawberry jam when he thought he was buying strawberry preserves. The manufacturers could put up any compound under the word "jam," and the people were often deceived in this way. I quite agree with the hon. member for St. John and the minister that we cannot expect a grocer to put a label on every ounce or pound of goods he sells, but the tin or closed package on the shelf should bear the name of the maker, the date of manufacture, and the quantity, so that the people would not be deceived in what they were buying.


George Green Foster: This Bill is not intended to cure everything, and besides, the resolution is not the Bill; this is only a partial Bill. I think we might pass the resolution, as I am satisfied the House is in favour of the principle involved. When we get down to particulars, the Bill will of course be open to amendments, and possibly to enlargements.
Resolution reported, Tead the first and Second time, and concurred in.
Sir George Foster thereupon moved for leave to introduce Bill No. 120, founded on the resolution.


[Stage Direction]
Motion agreed to, and Bill read the first time.

William Thomas White: moved the second reading of Bill

No. 117, to authorize the levying of a War Tax upon certain incomes.


George Perry Graham: The presentation of this Bill for second reading fo-day comes as somewhat of a surprise to us on this side of the House, as last night the Minister of Militia told us that the business for to-day would be the Bills on the Order Paper, and after that, the naval estimates. According to the usual interpretation, that would [DOT] mean more or less unimportant Bills. I think, however, the House is unanimously in favour of the principle of this Bill, and I do not 'think there will be any objection to giving it a second reading and going into committee. After making certain progress the minister might allow the Bill to stay in committee until we have had an opportunity of digesting the information he will place .before us. I do not suppose that he wishes to .press the Bill through committee to-day.


William Thomas White: I am glad to
adopt the suggestion of my hon. friend. We can give the Bill a second reading and discuss it in committee clause by clause in a general way, making as much progress as we can. It imay be that we can use the rest of the day in going over the measure. It was not my expectation that the Bill would be reported to-day.


[Stage Direction]
Motion agreed to, Bill read the second time, and the House went into committee .thereon, Mr. Rainville in the .Chair.
On section 1-short title:
Mr.  A. K. M A CLEAN@: Is there any necessity for retaining the word " w.ar " in the title?


William Thomas White: When considering the short title of this Bill, I had in mind the suggestion my hon. friend. made in connection with the Business Profits Tax. He will recall that he suggested that the word " war " should be inserted before the word " tax," and I adopted the suggestion.


Edward Walter Nesbitt: The minister said the
otheT day that he expected this taxation would be more permanent than the business . profits tax. '


Mr.  A. K. M A CLEAN@: The reason I
raised the point was that in my opinion this income tax will remain in force much longer than the war will continue. The short title rather implies that the taxation is for a limited period, but there is this to be said in favour of it It is an intimation

that the tax will be subject to revision after the war.
On section 2, subsection (a)-Board:


Mr. LEMIEUX:: Where will you get the referees? Will they be permanent officials?


William Thomas White: We will take that up, il think, when we come to section 12. You will observe section 12 provides that the Governor in Council may appoint a board or .boards of referees, and may prescribe the territory or district within which they shall exercise jurisdiction. It would be open to the Government to appoint such boards as may be necessary. I think it would be a mistake to .appoint permanent boards, because it might happen that there would be no work for a .board to do.


Rodolphe Lemieux: Might I suggest that for such delicate functions as will be fulfilled by those referees it should be understood, and, in fact, enacted, that the boards would be non-partisan.


William Thomas White: Of course, my hon. friend knows I would not appoint a partisan board.


Rodolphe Lemieux: Perhaps I would trust my hon. friend, but there are some others I would not trust. I hope the Minister of Finance will take my suggestion seriously, because I am in earnest. This is a tax which will affect every one in the country, of every political persuasion, therefore, we have the right to exact from the Government that this board of referees, which will have to delve into private affairs, should be a non-partisan 'board. I isay this without any idea of finding fault with the past or present appointments of the minister.


William Thomas White: In connection
with the business profits tax, I may say that I never inquired and do not know as to the politics of the officers administering that Act. I am satisfied there are both 'Conservatives and Liberals employed. On the whole, it is a good staff. I have not heard any complaint whatever as to political partisanship playing any part in the appointments.
Mr. MARjCIL : Would this board be composed of judges, or ordinary business men, or Government officials?


William Thomas White: It might be a county judge. It might be composed of lawyers of standing, or business men. The aim would be to get men of good practical judgment, and of such standing as to command confidence.


Charles Marcil: They might be called upon frequently to interpret 'the .meaning of " income." For years past the Ontario boards have been called upon to define what " income " is.


[Stage Direction]
Subsection agreed to.
On section 2, subsection (d)-Person:
Mr.  A. K. M A CLEAN@: Should not "partnership" be included there?


William Thomas White: We dj not assess a partnership as such. We assess the individual partners, therefore I think it is unnecessary to insert the word ' partnership" in this subsection.


Wilfrid Laurier: This, of course, also includes a wife who has an income in her own name?


William Thomas White: Yes. "Person" means any individual.


George Perry Graham: Including women?


William Thomas White: Including women.


Rodolphe Lemieux: The husband is liable, and the wife is also liable?


William Thomas White: Yes.


Mr.  A. K. M A CLEAN@: A case might arise where the tax would be imposed twice. For instance, take the case of a marriage settlement paid under the terms of the settlement out of the income of a husband. The husband might he taxed for it, and it might be of such an amount when received by the wife that she would be liable to taxation also for the same thing.


William Thomas White: No.


Mr.  A. K. M A CLEAN@: If a man pays $10,000 a year under a marriage settlement to a trustee, that would be part of his income, and he would pay tax on it. When it is paid by the trustee to the wife, she would be in receipt of an income of $10,000 a year, and she would be liable to taxation. It might be argued that the tax would be imposed twice.


William Thomas White: It would certainly not be so held, because while the husband might have an income, this amount paid under the marriage settlement would be among his liabilities. I think it would be held that the husband would be liable to taxation on his net income, that is to say his income less the amount he was obliged to pay to his wife.


Mr.  A. K. M A CLEAN@: In any event, the investment would be in the name of the trustee?


William Thomas White: If the husband set aside securities in trust, clearly he would divest himself of those securities, and the interest would be interest derived by the trustee, not by the husband.


Rodolphe Lemieux: It is often arranged in marriage settlements that the amount to be paid shall be considered as alimony. In such a case would the alimony be assessable?


William Thomas White: If the wife had an income under a marriage settlement in excess of the exemption provided for by this Act, whether it is called alimony or not, it is the intention that she should be assessed.


William Manley German: The clause says:
"Person" m^ans any individual or person and any syndicate, trust, association, or other body, and any body corporate, and the heirs, executors, administrators, curators, and assigns or other legal representatives of such person, according to the law of that part of Canada to which the context extends.
What does "individual" mean? Section 2 says:
"Person" means any individual or person and any syndicate etc.
But what does individual mean? Under the law an individual is to be taxed, but a person is not to be taxed. Section 4 recites that an individual is to be taxed and then you interpret "person" as meaning any person or syndicate. Why do you so interpret the word "person?"


William Thomas White: I think the point of my hon. friend is well taken, and when we come to section 4 we will change the term "individual" to "person." That will make the intention clear. I think it would be so considered, but in order to make it uniform, and especially as we have used the word "person" in the interpretation clause, it would be better to change the word "individual" in section 4 to "person."


William Manley German: The interpretation clause says that:
"Person" means any individual or person and any syndicate, trust, association or other body and any body corporate.
It is clear that an incorporated company is to be taxed and that "person" means an incorporated company?


William Thomas White: Yes.
tMr. GERMAN: An incorporated company is to be assessed and then the persons deriving incomes from that incorporated company are also to be assessed. There wou'd be

certain to be a double assessment, one of the incorporated company and one of the individuals who derive their incomes from the incorporated company.


William Thomas White: My hon. friend
will observe when we get a little farther on with the Bill that while the company is assessed on its income its shareholders are also assessed upon their incomes, but there is an allowance made to the shareholder of the normal tax when the normal tax has been paid by the company upon the dividend which he receives. We have adopted there the principle followed in the United States legislation. Speaking for myself ana from a long experience in connection with taxation, and especially the taxation of incomes, I have always thought it was a mistake to assume that there is double taxation when a company is assessed and when its shareholders are also assessed. My hon. friend knows that a corporation in law is different from any or all of its shareholders. It is a legal entity carrying on business in competition with individuals and partnerships Therefore, it has never appealed to me very strongly that a corporation should not be assessed and that its shareholders should not be likewise assessed. But while I believe that the time will come when, in dealing with legislation of this kind, a corporation will be assessed in respect to its income and its individual shareholders will be asessed in respect to their incomes, 'we have not probably progressed to the point yet where we could give that doctrine the effect which I think it should have. But we defer to the generally prevalent view in connection with income taxation of this kind to the extent that, while we assess a corporation upon its income to the extent of the normal tax, when we come to assess the shareholders in respect to their incomes, including the dividends which they receive from the corporation so assessed, we make an allowance equal to the normal tax which the corporation has paid upon the dividends derived by the shareholders


Wilfrid Laurier: Let us undet
stand exactly the position we are in wr ' respect to this matter. The object of the Act, as explained by the Minister of Finance is to tax corporations. There are hundreds and thousands of corporations.


William Thomas White: Undoubtedly.


Wilfrid Laurier: Take, for ex ample, a tramway company in any city; it is to be taxed so much upon its income and

so much will be deducted from the amount which it has to pay to its shareholders. The tax will be paid by the company upon its income and therefore it will take away so much from what it has to give to its shareholders. If I understand the principle of the Bill a corporation is a "person" and must be taxed?


William Thomas White: That is right.


Wilfrid Laurier: Then we will come to the effect upon the shareholders later on?


William Thomas White: Later on.


George Perry Graham: Might I give another
case that may, and probably will, arise? It will make a difference in the amount of the tax whether the combined income of a man and his wife be taxed or whether the income of each be separately taxed. The combined incomes may be subject to the super tax. Separately neither of the two incomes may be liable to the super tax. Where there is a legal or proper division of incomes, as there are in many families, each should be taxed separately. That principle is right, I think.


William Thomas White: Yes, I think so.


George Perry Graham: I would ask the minister to consider a suggestion to discourage the separation of incomes which are now one in order to evade the payment of the tax. A husband might have an income of $8,000, and tne income might be separated so that the husband and wife would each have an " income of $4,000. If taxed separately they would not be subject to the super tax, while the income of the husband alone would be subject to the super tax. Legitimate incomes, where the husband 'and wife have their incomes separately, ought to be taxed separately and not combined, but to prevent any attempt to evade taxation which might possibly be made, I would suggest to the minister that he have something in his mind as a preventive of what anight otherwise occur.


William Thomas White: The only way that occurs to me to meet that situation would be to allow only one exemption, namely, $3,000, in respect of the joint incomes of husband and wife living together. It seems to me that that would meet the case. I hesitate to do that because they are both liable to assessment, and under the Bill they are both entitled to the exemption. My own view is that, just as men will not divest themselves of their property to escape the succession duty tax, it is not probable that men would on a large scale divest themselves of securities to provide a separate income for their wives in order to avoid this taxation. They might do so, but I think it extremely improbable. I shall be glad to consider the matter further, and if, in the opinion of the committee or a substantial proportion thereof, it would appear desirable that we should allow only one exemption in respect to the joint incomes of husband and wife living together, I shall be glad to amend the Bill.


Wilfrid Laurier: You give an exemption to everybody who has an income?


William Thomas White: That is what we have done.


Wilfrid Laurier: I agree with that.


Mr. MIDDLEBRO:: A concrete instance was brought to my attention on the way down to Ottawa last week. I met a gentleman on the train, a married man, who said that he had an income but not up to the mark of $3,000. His wife also had an income not up to $3,000. Neither would be liable to the income tax, but he said that he was quite willing that the two incomes should be combined and that they should pay the income tax.
As I understand, the object in giving the exemption of $3,000 is to enable a man to maintain a wife and family, and for no other purpose. If that purpose is served by an income of $3,000, I do not see why the two should have an income of $6,000 without being taxed.


Mr. C. A. WILSON:: I do not agree with that proposition, nor do I see its equity *and justice. If my law partner and I each make $5,000 should our income be combined to make a sum of $10,000 to come undeT the supertax?


William Sora Middlebro: You have two households.


Charles Avila Wilson: A good wife is earning a certain 'amount of money by keeping house for her husband, and the husband is working at his occupation, whatever it may be. Why should we add the earnings of the wife to those of the husband to tax a lump sum? In the province of Quebec, under our civil code, sometimes the husband must support the whole household and sometimes the wife, according to the marriage settlement.


William Sora Middlebro: My hon. friend has missed the whole object of the Act, which

is to give ia man sufficient to live on; in the case of the individual, ithat is pnit -at $2,000 *a year, and, in the case of a man who maintains a household, at $3,000 a year.


Charles Avila Wilson: The husband may have an income of $3,000 and the wife an income of $3,000. They may ,be separate as to property by the marriage contract. There .are three, four, or five children, each having an income of $1,000; or let ns say lit is a real French-Oanadian family and they have a round baker's dozen. Would my hon. friend suggest that the incomes of the husband, wife and children should be taken as one sum for the purposes of taxation?


William Sora Middlebro: Lf, on account of the larger families in Quebec, $3,000 is not enough to support a household, let us change the amount; but if we start on the basis of $3,000 being sufficient to maintain a household, there is no good reason why one household should have $6,000 income exempted.


Rodolphe Lemieux: The two incomes 'are so clearly separate entities, according to our regime of separation, under the civil law, that if the property which produces the income has come to the husband or to the wife from the father or mother, if the one who inherits that property dies without issue, that property does not go -to the surviving consort, but reverts to the father, mother, brothers, or sisters, according to our law of succession. So they 'are absolutely different things.
Reverting to the body corporate, my hon. friend said that an incorporated company would be taxed ais to its revenue and that the shareholders would also he taxed as to their dividends. My hon. friend says it is not fair that the same party should be taxed on both sides, because the company is the shareholder, and the shareholder, in the aggregate, is the company. How will you proceed to adjust that? Supposing a company has 5,000 shareholders and pays on its income, and the shareholders pay on their income; my hon. friend says he will keep in mind what has been paid by the company. How will it be decided how much the shareholder will have to pay?


William Thomas White: As that subject is specifically dealt with in section 4, possibly my hon. friend will wait until we reach that section before discussing it.
In the meantime, I might say to my hon. friend that a corporation is liable on its income only to the normal tax, and that 
the shareholders who will have to make returns of their income to the department will, when they are making such returns, be permitted to deduct the normal tax in respect of dividends derived from companies subject to this taxation. As to that portion of their income subject to the supertax, they will pay, because the corporation is liable only to the extent of the normal tax.


Wilfrid Laurier: That is very
satisfactory so far. But I would suggest that the clause which provides whether the tax shall apply to corporations or not shall also be allowed to stand, so that the two matters may be considered together.


William Thomas White: I am quite willing to let it stand. I imay point out, however that we are now dealing with the interpretation section.


Wilfrid Laurier: I would suggest that subsection (d) of section 2 stand.


William Thomas White: Very well.


George Perry Graham: I had no idea of interfering where there was a legitimate separation of property between husband and wife. I think that each should be treated as a separate individual when each has a separate income.


William Thomas White: As in the Act?
'Mt. GRAHAM:	As in the Act. But I
was suggesting the advisability of preventing the separation of incomes hereafter in order to escape taxation. The minister referred to the Succession Duties Act and that is just what I had in mind. In Ontario, not a few men in business have formed joint stock companies and distributed their property in order to get rid of succession duties. I had such cases in mind when I suggested that account-' should not be separated for the purpose of escaping the supertax. Where there is a pri per separation of accounts between husband and wife, each income should be treated feparately. I cannot see how anything else could he done, bearing !n mind the different conditions that may exist ss to the income of each.


Mr NICKLE:: From my point of view, I see eye to eye with the member for Nortn Gray (Mr. Middlebro). If I understand the exemption in this Act of $3,000 to married men, it is on the principle of the recognition of the home as an entity. If that is so, it seems to me that the total exemption in regard to the home should be not more than $3,000, and I am not now discussing

the wisdom of the amount at the present moment. If the husband and wife are going to be entitled to an exemption of $3,000 each-I speak purely from the point of view of my own province-any lawyer with the least skill could so handle vested funds as. to a very great extent, deprive this Act of its usefulness. The Finance Minister instanced as a parallel the Succession Duties Act, 'but I do not think that the comparison is on all fours. To avoid the Succession Duties Act in Ontario, a man has to deprive himself of the corpus of the fund. But to avoid this Act, if the Act is to continue as drawn, all a man would have to do is draw an assignment effective for the term of one year in relation to any stock, mortgage, or security and have the interest on that fund made payable to his wife.


Charles Avila Wilson: That would amount to fiaud.


William Folger Nickle: No, it would not be fraud at all. The Act is drawn so that each married person shall be entitled to an exemption of $3,000. All a man with an income of $5,700 would have to do would be to transfer by assignment $2,800 of his income to his wife. That family would then be exempt entirely as to income


Mr. McCRANEY:: If that course were
pursued, the money which was transferred to the wife would be held in trust by her for the husband. I do not see that it becomes any less the income of the husband simply because, without consideration, it is handed over to the wife in that way.


William Folger Nickle: If it were transferred to
the wife and vested in her as a trust, I quite agree. But if the assignment were made as a gift to her as separate estate, free .from any control on the part of the husband, under our Ontario law, which my hon. friend knows as well as I do, it would be vested in her as separate estate, the property of the wife. The law in Ontario makes a wife absolutely independent of her husband as to her separate estate, and the assignment of income to the wife would surely make that her sole property and certainly render it free from income tax.


George Ewan McCraney: I do not think the
question of separate estate comes in at all. Suppose a portion of the husband's income were given to me instead of to the wife; I would hold it in trust for the person who made the assignment. It would still be the income of the person making such assignment without consideration.


Wilfrid Laurier: The principle of this Bill is that any person who has an income is liable to taxation. Any person liable to the income tax has a right to exemption. A person having an income of $10,000 is liable to the tax' subject to a certain exemption. It is illogical to say that any person who is liable to the tax is not liable also to the right of exemption.


William Sora Middlebro: In the case of income received by both husband and wife, the wife is given $3,000 exemption because she is a member of and maintains the household. The husband is given also an exemption of $3,000, because he maintains the same household. The effect of this legislation would be to allow $6,000 for the maintenance of one household in some cases and $3,000 for the maintenance of one household in other cases. That seems to be very unfair.


Wilfrid Laurier: Apparently
the first principle is that every person is liable to taxation according to the extent of his income. If he is a married man and his income does not exceed $3,000, he is not liable to taxation. If it exceeds that amount, then he becomes liable.


William Sora Middlebro: Every person is liable to taxation because he has an income. If a man is married, we increase the exemption from $2,000 to $3,000, because he is married and has a household to keep up. The affect of this legislation is to make the wife practically as much liable as the husband, because she is given $3,000 to keep up the same household as the husband.


William Thomas White: May I suggest
that we reserve this discussion until we come to the exemption clauses? In the meantime, we can all consider the question and deal with it as we may deem proper.


Mr. KNOWLES:: As I am somewhat
doubtful whether I shall be here when, we reach those clauses, I would like to say a word in regard to the question of double exemption. The principle of this provision is that certain people with separate incomes are entitled to separate exemptions. That is a highly technical question. While we must not presume fraud on the part of our citizens, at the same time, in regard to the collection of money and taxes, we must anticipate that there will be certain possible debtors who may by fraud or quasi fraud endeavour to evade payment, and I am afraid there will be numerous cases in which the husband and wife will connive to

evade this tax. For instance, take a merchant who owns his store. He does not care whether that store is in his own name or in his wife's name. He can readily transfer it to his wife and pay her large sums, say for rent, just to make her the recipient of a separate income. There are many other ways in which people who desire to evade this tax can do so, and we need not shut our eyes to the fact that there are many who will endeavour to evade this tax. The principle of this Bill apparently being that the people who are able to pay should be compelled to pay, the incomes of husband and wife, whether the wife's income is the Tesult of a marriage settlement or. of inheritance or anything else, should 'be considered as one for the purposes of taxation.


Charles Avila Wilson: Is any minimum age . fixed for the word " person?"


William Thomas White: It will embrace minors a6 well as others, if they have the income.


William Pugsley: Would the minister give one or two explanations in regard to exemptions? Paragraph (a) gives the following exemptions:
The value of property acquired by gift, bequest, devise, or descent.
Does that mean that it is to pay no income?


William Thomas White: It means this.
Supposing my hon. friend should this year inherit a piece of property worth glOO.OUO. His income would not be increased by that amount. It does not mean that any revenue derived from that property would not be part of my hon. friend's income, but the property acquired by him would not be treated as income.


William Pugsley: Will the exemption as to contributions to the Patriotic Fund apply to provinces -where there is a direct taxation for that fund, and where they have done away with the voluntary system? That is the case in New Brunswick.


John Douglas Hazen: Would not that work out
in this way? When my hon. friend and I are making up our statements of income liable to assessment under this Act,- would we not have a right to deduct from our income the amount we paid in civic taxation? In our civic taxation is included the sum of money necessary .for the purpose of carrying on the work of the Patriotic Fund in our province.
[Mr. Knowles.}	*


William Pugsley: The words used are
"must be subscribed."


John Douglas Hazen: You are right; the word
"subscribed" would be hardly broad enough to cover that.


William Thomas White: We can amend
that. I think it is perfectly clear that if a taxpayer is entitled to deduct from the gross amount of his income the amount wh,ioh ihe subscribes directly and pays to the Patriotic Fund, and is liable for taxation upon the balance only, it would be proper if he pays by way of taxation to that fund, that is to say, contributes indirectly, to allow him similarly to deduct the amount so paid' from the amount of his total income so that he would be assessable only upon the balance.
Mr. HaZEN: I would suggest the use of the word "pay" instead of "subscribe."


William Thomas White: I think that would meet the case. I want to make it perfectly clear that by this legislation it is not provided that a man may deduct from the amount of his taxation the amount he contributes to the Patriotic and Canadian Bed Cross Funds. The wording of subsection (e) of section 3 is:
Amounts subscribed and paid by the taxpayer during the year to the Patriotic and Canadian Red Cross Fund and other patriotic and war funds approved by the minister.
That is a deduction form the total amount of a person's income. If a man's income is $10,000 a year and he subscribes and pays $1,000 to the 'Canadian Patriotic Fund, then he would be entitled to deduct that and say that his income for the purpose of taxation is $9,000, but he is not entitled to say: My tax under this measure is $400 or $500, and because I have paid $400 or $500 to the Patriotic Fund, I am not entitled to pay anything more.


Rodolphe Lemieux: Does not the word
"suspected" in subclause (f) smack a little of terrorism? It says:
(f) "Taxpayer" means any person paying, liable to pay, or suspected by the minister to be liable to pay, any tax imposed by this Act.
I object to the word "suspected." Why not say "deemed"?


William Thomas White: The word also
grated upon my delicate susceptibilities as to the use of language, but it is a word that is used in the Business Profits War Tax Act, and there does not seem to be any other word that would precisely take its place.


Edward Walter Nesbitt: "Presumed"?


William Thomas White: I thought of the word "deemed" or something like "thought by the minister to be liable."


William Pugsley: "Supposed"?


William Thomas White: I think that is the best word of all. "Deemed" is a very strong word, as in reality it means "doomed."


Wilfrid Laurier: I think
"liable" would be quite sufficient. If the minister said that a man was liable, the question would then come up whether he was or not.


William Thomas White: I will consider the suggestions, and we shall probably change the wording.
Section stands.
On section 3-Income:


Mr. COCKSHUTT:: How is one's income to be computed? I venture to say that there are very few people in this country who know exactly what their income is. They may be desirous of having the proper amount entered, but there are so many factors that have to be taken into consideration in connection with the origin and net result of a man's income. Suppose, for instance, a man has $75,000 invested in real estate, and that $50,000 of that amount is invested in a paying enterprise which allows him to take care of his municipal taxes, fire insurance, depreciation, and the general upkeep of his property.. The other $25,000 may be bringing in nothing, but the taxes have still to be paid and the necessary repairs made. Is any allowance made for what may be called "depreciation of capital" in a real estate investment? Everybody knows that when property is vacant it rapidly deteriorates. Vacant property is avery rapid income destroyer.
I have had a good deal of experience in that line, and I know that a man's income can be eaten into very rapidly by unproductive property. I venture to say that anybody who owns very much real estate has some unproductive property that is not only not bringing him in any income, but is actually eating into the income he receives from other sources. I have a good deal of that kind myself at the present time, as I have no doubt a good many men in this House have. Has the minister taken that into consideration, and is any allowance to be made for this depreciation of capital? In other words, if a man has a
certain amount of income from one source, and some other investment in property has depreciated in value and eaten into his income, is that taken into account in calculating the amount of income that will be liable to taxation? I do not know whether . I have made myself clear, but I have heard that the minister is a man of property himself-


William Thomas White: I used to be before I came to Ottawa.


William Foster Cockshutt: If so, he has probably some property that is decreasing his income instead of adding to it.


George Perry Graham: That is not the kind of fellow he is.


William Foster Cockshutt: I am not, of course, wishing to escape paying what I should legitimately pay, but if the minister should ask me what my income was in any one year, though I keep books and endeavour to make an entry of everything, I should have the very greatest difficulty in telling him what my income was, and that being so, how will a man who keeps no books and makes no entries ascertain his income? Take, for instance, the farmer; he probably keeps his wiife and family out of the products of his farm. He does not begin to estimate his expenditure until he goes outside of his family expenses, which are provided for by the farm. I only instance this as one case, because it occurs in many other callings. A merchant often helps himself to the goods in his own store, not counting this as really part of his income. Those' are .a few of the difficulties which present themselves in estimating an income. I would also like the iminister to tell me whether any regard is "to be paid to the depreciation which may occur in 'a man's property. For instance, he might be worth $100,000 this year, and when he makes his return's at the end of the year he may find his property is only worth $90,000. He has lost $10,000 on his investment. Will he be allowed to deduct that $10,000 from his $15,000 income, or will he bo assessed on the whole $15,000, and be obliged to look after the depreciation himself?


William Thomas White: Many difficult
questions 'arise in connection with income taxation. I think it would be a very dangerous admission to make that the estimate made by a taxpayer that his property has depreciated to the extent of, say, $5,000 or $10,000 would be sufficient to justify that $5,000 or $10,000 being deducted from his

income. It would be proper for the man who has productive properties to take into account the rentals received, and to pay the taxation and the repairs actually made in connection with those properties. The balance anight fairly he considered his net income. My hon. friend raises the question as to whether there should be an allowance for depreciation. I do not think it possible to get an income taxation down to a mathematical nicety such as is suggested where the amount of annual depreciation would be allowed, because it would be almost impossible to estimate such depreciation, and as against that there would have to be set off the possible appreciation of that property, because, real estate does appreciate. In the administration of an income tax yon must get down to a sound, but rough-and-ready basis-a basis of good sense. How mudh did the man derive from his real estate investments? How much did he actually pay out for taxes and repairs? The balance is his income. I do not believe he should be allowed to deduct the depreciation of his property, because the fact that it might have appreciated in value has also to be taken into consideration. I do not think we can get it down to a basis where you can set off the depreciation the tax-payer thinks he might fairly be entitled to deduct in respect to property, even property which may be vacant.
(Mir. NESBITT: Might I suggest that the depreciation would show in the returns?


William Thomas White: Yes. The depreciation would appear in the returns, and I think the onus would be very strongly on the taxpayer to show beyond peradventure that such depreciation had taken place. I do not like to admit the principle that depreciation should be allowed. Take another case-which might come within the instances my hon. friend has brought, to the attention of the House-a man has an income of, say, $10,000; he is carrying a piece of unproductive real estate in the West, upon which he has to pay taxes. I do not think he should be allowed to deduct the taxes he pays in respect of that property. His income is the return he derives from his profession or calling. If he is carrying a piece of real estate for purposes of speculation, he should carry it himself. I dTaw the distinction between that case and the case of a man.who is deriving income from properties which are productive. His income is the rentals he receives from such properties, but he is entitled to take into

account what he pays in the way of taxes, and repairs actually made.


Mr.  A. K. M A CLEAN@: I thoroughly agree with the minister. I do not see how you can introduce any such principle into the Bill that would meet the case mentioned *by my hon. friend (Mr. Coekshutt). A private individual might as well urge that ihis physical strength is depreciating from year to year, and that his earning capacity is growing less, and therefore he should have some allowance made for physical depreciation.


George Perry Graham: I would not admit that.
Mr. A. K. M1ACLEAN:	Take the case
the minister has just cited. Say a man is resident in Toronto, .and is in receipt of an income of $25,000 a year, and say he has unproductive property in the West which requires a disbursement on his part of $5,000 a year for taxes. In estimating his income, surely that $5,000 would not be taken into account?


William Thomas White: I do not follow my hon. friend.


Mr.  A. K. M A CLEAN@: I understood the minister to say that the fact a man was paying an annual tax bill of $5,000 upon unproductive property in the West would not be taken into consideration in calculating his income?


William Thomas White: My view is he should not be allowed to deduct it.


Mr.  A. K. M A CLEAN@: Why not?


Edward Walter Nesbitt: I think he should be allowed to deduct it.


William Thomas White: My view is he should not be allowed to deduct it because his income is $25,000 and he is speculating in the West-	\


William Pugsley: Suppose this unproductive property was in Toronto, instead of in the West?


William Thomas White: The reason I mentioned the West was because my hon. friend referred to it.


Mr.  A. K. M A CLEAN@: Suppose a professional man has an income of $25,000 a year, and he owns an unproductive property in the city of Ottawa, the taxation on which is $5,000; surely, he would only he liable upon an income of $20,000.


William Thomas White: If part of his income was from productive property, then he should be allowed to deduct taxes and

repairs. My hon. friend put forward the ease of a man holding unproductive property in the West, upon which he was paying taxes. These are very difficult questions to deal with, but I do not think he should be exempt from this income tax to the extent of what he pays for taxes on unproductive property held for speculation. Let me cite a case in regard to which I have had a good deal of experience. Take the income taxation of the city of Ottawa, or the city of Toronto-the assessor goes to a bank, say, and asks for the names of the officials of the bank and their salaries, and he assesses from $5,000 down, if the salaries are .such. Those in receipt of the incomes, may use them in different ways. Some may spend their incomes foolishly, others may invest in property, others may be carrying investments at a loss, others may pay taxes upon their homes, but the assessment is upon the amount of income received as salary.


Mr.  A. K. M A CLEAN@: Net income.


William Thomas White: The income received as salary. That is the way all assessments are made in this province. A man is not asked what he does with his income, he is not asked whether he invests part of it in mining stocks, or whether he pays taxes upon property with which he is speculating, or whether he pays margins upon stocks. He is simply assessed upon his income. Every man in the city of Ottawa is liable to assessment on the amount of income he receives. If he is a minister he pays income tax upon his $7,000 or whatever it may be; if he is an official he pays also. Once you introduce the principle that a man in receipt of a salary of $25,000 can deduct the taxation which he is paying upon property which may .be appreciating very much faster than the amount of the annual taxation, you are introducing a very dangerous principle into taxation. I do not believe that that principle is included in any taxation in this Dominion. The point is: How much does a man make? If he is a lawyer, how much does he make after paying out all expenses in connection with his profession?


Charles Avila Wilson: All his office expenses?


William Thomas White: All his office expenses. Then I would say that after deducting the outgo from what he has received the ibalance is the income of that individual and he should be assessed upon it.


William Pugsley: Supposing his entire
busines was the owning and managing of real estate?


William Thomas White: My hon. friend
has raised a point which is absolutely different from that which we are now considering. We are considering now the case of .an individual who. derives his income from his profession or calling and who has to pay taxes upon some property which he has been carrying for the purpose of speculation or not-it does not make any difference.


William Pugsley: Take myself, for example. The only property I own practically is real estate. I might have three or four houses which were bringing me a very good income and I might have other places which were vacant and on which I had to pay insurance, water rates and taxes. Would not the net income from all these different properties combined be that on which I would have to pay the tax?


William Thomas White: I would say
"yee," that my hon. friend would take all the incomes from these productive properties, and that he would pay the taxes on this other unproductive property deducting with respect to it, and the balance would be his income.


William Pugsley: Suppose I had property in Ontario or in the West?


William Thomas White: Unproductive? Mr. PUGSLEY:	Unproductive.


William Thomas White: I would say that if my hon. friend was carrying some unproductive property with the idea of making money on its appreciation he should not be allowed to deduct it.


William Pugsley: Suppose a man were
carrying it because he could not sell it and had to pay the taxes?


William Thomas White: In a taxation
measure of this kind, while that and every other principle should be discussed you will never be able to determine with mathematical exactness-the courts usually have to determine that-as to what should be allowed. It would be very dangerous to lay down the principle that if a man has an income of $25,000 and he is carrying unproductive property throughout this country, not being a man who is making his income from the holding and administration of real estate, he should be allowed to deduct the charges on this property from his income.

If you adopt that view, you are introducing a very dangerous principle and one which should not be allowed.


Rodolphe Lemieux: My hon. friend is making a distinction between say a professional man who goes into an occasional real estate deal and a man whose calling is real estate. ,


William Thomas White: A landlord who has a number of houses.


Rodolphe Lemieux: If a man who buys real estate and has to pay a large part of his income in municipal and other taxes, the amount which he so pays would be deducted from his income. That is what I gather from the remark of my hon. friend. But a professional man, say a lawyer, who has bought some real estate, even if the real estate is not a revenue producer, has to pay the taxes and he cannot deduct that from his income?


William Thomas White: I would say not.


Rodolphe Lemieux: If my hon. friend takes that view some individuals will be robbing themselves.


William Thomas White: I do not at all agree with my hon. friend. If a man is carrying unproductive property and is paying taxes upon it I do not know why he should assume that he is losing money by doing so. I think we must assume the contrary, namely, that the annual increment on the property is equal to the taxation which he is paying out. I think it would be a very unsound principle to lay down that a man should deduct from the income which he makes from his trade, profession, or calling, the amount which he may pay out in taxes upon property in which he is speculating.


William Foster Cockshutt: I do not wish to embarrass the minister in any way in coming to a conclusion. I can quite see that if the Minister's statement was followed out to its logical conclusion and finality a man might be paying on an income when he really did not have an income at all but rather an outgo. There are such men.
The minister must know, as I certainly know, that there are men who are known as property pbor. Such a one may not be a speculator. Investment in real estate is considered to be a legitimate enterprise. If it is not I am sorry I am in the business. But, I have been the owner of real estate for many years believing that it was a sound investment and I have been in that 
way trying to build up the community ol which I am a part. The minister in reply to the hon. member (Mr. A. K. Maclean) said that if a man had an income of $25,000 and $5,000 of it was going to carry a dead horse in the West, or anywhere else,-not necessarily in the West because we have lots of them in the.East-this $5,000 should not be deducted. Well, reverse it. Suppose a man has an income of $5,000 and he has $25,000 to pay out, where is he going to be? He will be paying on the $5,000 but he will be $20,000 worse off than he was at the beginning. I know many men who would be very glad of the opportunity of unloading their real estate but who are carrying it and who are what is known as property poor. They have property that is unproductive and they are trying to meej; the losses on that property out of the revenue derived from property that is productive. That has been the case in many towns and cities in Ontario. It is impossible for anybody in the renting business to build a house at the present high prices of labour and raw material and make a return of six per cent on his investment unless he is a remarkably capable man. It is the exception rather than the rule that a man has a six per cent return on his investment in real estate, I think the minister should take this into his serious consideration because there are many men who went into real estate not as a speculation but as a legitimate investment. All our trust companies are in real estate as a legitimate field of investment. If the principle which the minister has enunciated is carried out to its logical conclusion a man's income will go into one pocket and go out of the other twice as fast, until his capital is entirely consumed. A man with an income of $5,000 or $10,000 may have an outgo of $15,000 or $20,000. The minister should make an allowance for certain conditions, before the final balance is struck he should distinguish between productive real estate, and vacant and unproductive property.
In other words, the net results of his property operations for that year should be the amount he derived from his real estate.
I cannot see it in any other way, and I am not saying this with a view to depreciating the amount that the minister should get, but simply to arrive at a basis whereby we may calculate what is just and fair and right to a man who has made his investment, believing it to be straightforward and honest.


William Thomas White: If we admit the principle that we must take into consider-

ation depreciation in real property and securities, and in addition to that the taxation that a man may pay out upon unproductive property which he holds, we shall go a long way to defeat the purpose of this Bill.


William Foster Cockshutt: I would not take the depreciation without also taking the appreciation; I would take the two together.


William Thomas White: My hon. friend says he would not take the depreciation without taking the appreciation. We all know how difficult it is to determine the value of a piece of property at any time, and how arbitrators differ. How is the department to determine what the annual .appreciation has been in a piece of property upon which a man has paid out taxes? I think there is a clear distinction between the case of a landlord with a row of houses from which he derives his income, his principal business being the administration of his property in those houses, his income being the revenue he derives from them, and his outgoings the taxation and repairs upon those properties for which he has paid during the year, and his income, for the purposes of this Act, being the difference between the two; and the case of a man who, in his calling, derives a net income of $25,000, and who uses that $25,000 either in speculation or in legitimate investment. For the purposes of this taxation measure, we ought to ascertain a man's income in his calling, and having determined that, assess him on that amount under this Act. Take my own case: I own some property in Canada which is non-productive, and upon which I pay, say, $1,200 or $1,500 in taxes. I say that I should be assessed on my income derived as a minister and any other income I may have, and that I should not be allowed to deduct the amount I paid in taxes on that unproductive property.


William Pugsley: Suppose that, instead of being an individual, it was a real estate company?


William Thomas White: That is different.


William Pugsley: It owns land with buildings on it in one block, and in the next block land which is not bringing in any income. If it is a company the minister will allow its revenues to be put on one side and its total taxation on the other. Why should the individual be treated more harshly than the company?


William Thomas White: The corporation is in that business. It could not legitimately own the property unless it was in that business. A real estate agent should be assessed on any income he derives in respect of his business. A man owning property, deriving income from that property, should be assessed on his income in respect of that business. But the banker, who has an income of $25,000 from the bank, should, in my opinion, be assessed upon the $25,000, no matter what he does with the money.


Sir HERBERT AMES:: Say that there is a 'block of houses that are rented regularly. If that is owned by a joint stock company you take the total rentals from the houseis and deduct the total expenditure in connection with the properties, and, we will say, you have $1,000 to the good. You are taxed as a company only on the $1,000. But supposing that I, an individual, wishing to live on investments, erect a block of buildings .and that the gross income is $5,000, and that the gross outgo is $4,000, so that the net value to me is $1,000, shall I be taxed on the $5,000?


William Thomas White: You will be taxed on the $1,000 because you are deriving part of your income from these properties.


William Pugsley: If all in one row, but suppose there .are two separate blocks in the same town.


William Thomas White: The same principle would apply. The danger in allowing deduction's for taxation upon non-productive property is that it is impossible to ascertain how much that property has appreciated in the year, .and the man -may be speculating with it.


William Pugsley: That would apply to the row of houses too.


William Thomas White: Yes, and it would be open to the court to say how much it had .appreciated or depreciated, buit for the .purpose of practically administering an Act such as this-, you could mot hold an inquiry as to how much each piece of property had depreciated. I should say that the onus would be on the taxpayer to show affirmatively and beyond doubt 'that there had been a loss in connection with that property.


Rodolphe Lemieux: Every man who has been dealing in real estate oif late can tell my hon. friend that there has been a loss. Today I know individuals who .are paying two, three, 'and four thousand dollars in Montreal for municipal taxes, .and if they can-

not deduct that from their income for the purposes of this Act you ruin them.


William Thomas White: In the municipal taxation is there an exemption?


Rodolphe Lemieux: 
Rodolphe Lemieux: In view of the discussion which -took place before six o'clock, I think that the minister ought to explain what he understands by net income.


William Thomas White: 1 have a very
clear view as to what would be included in income as defined by this Bill. I have always found, 'and I think the courts have found, that it is better to take a word in its plain, coimmonsen.se meaning. If a man is employed as an official, let us say, in a hank, and receives a salary of $5,000, his net income for the purposes of this Act will be $5,000, because he earns that sum from his occupation. The question has been raised: supposing that 'man, in addition to having a .salary of $5,000, derives $1,000 imbre by way of rental from some houses which he owns. Let us assume that he has to pay out in connection with this house $300 for taxes, repairs, and other outgo. He derives from that particular investment $700 net; therefore, if he has no other investments outside from which he derives income, his net income for the purposes of this Act is $5,700, made up of $5,000, which he earns from the bank, and $700, the net income from the productive property which he owns. Let us take the further case which was undeT consideration before six o'clock. Assume that an official drawing a salary of $5,000 owns some unproductive property-let us say, some vacant land, and that he pays, in order to retain that land, $1,500 or $2,000. My own opinion is that his income, notwithstanding the fact that he pays out that amount in respect of the unproductive property which he holds, is $5,000, the income which he derives from his calling. To show my hon. friend the fairness of the view which I put forward, let us compare the two eases. Two men, let us say, are employed by the Bank of Montreal,

and each draws a salary of $10,000. One of these men has no outside property at all; he spends the entire $10,000 upon himself .and this family. Clearly he is assessable for $10,000, which is his income. The other man spends only $1,500 or $2,000 upon himself and his family-he may have a smaller family-and with the balance of the money speculates in stocks or pays taxes upon property which he holds and which gives him no return.t Would anybody seriously argue that the first man should be taxed upon $10,000, and that the other man should not be taxed at all, or should be taxed only upon $2,000 or $3,000? Get it down to a eommonsense basis. What is the man's income from his trade, profession or calling? If he is an official, what is the amount of his income?-if he is a lawyer, how much does he make out of his office after paying the necessary outgoings? We are not concerned with what he does with the money after he gets it; we are concerned with the amount of his net income. If he spends it on his family; if he wastes it; if he speculates in stocks with it, or if he buys lands for investment and pays taxes upon them, -we have nothing to do with that. But if he has some landed property outside from which, after paying the necessary outgoings in respect to that property, he derives additional income, we add to the salary which he gets in his official position the net amount which he receives from that investment, and the two together will make his assessable income,


Rodolphe Lemieux: In the case of a married man, $3,000 of the income is exempt; therefore the man with the $10,000 income is assessed for only $7,000.


William Thomas White: I was not referring to the exemptions in my illustration.


Rodolphe Lemieux: Suppose a man has a net income of $5,000 and, on account of unproductive property which he holds, he is obliged, by the law, to pay municipal taxes to the extent of $2,000. Of his income $3,000 is exempt. Do you assess him upon $5,000, or upon $3,000. In any case, lie has to pay the municipal taxes. Will he have to borrow in order to pay the federal taxation?


William Thomas White: This measure does not and cannot provide how a man will find the money to pay his income tax. In the case mentioned, the income of the party is $5,000. If he is married, he is entitled to $3,000 exemption; therefore, he

will be taxed upon $2,000 and will be liable to pay $80. As to how he will/ get that money, I am not in a position to say, but he will be liable for it under this Act. I do not see how it could be otherwise, unless we reduce the Act to a nullity.


Charles Avila Wilson: Suppose a lawyer collects in fees $5,000 in a year, and the expenses of running his office are $3,000, his net revenue for purposes of taxation will be $2,000?


William Thomas White: Yes.


Wilfrid Laurier: In section 3 it is provided:
Income .	.	. shall include the interest,
dividends or profits directly or indirectly received from money at interest upon any security or without security, or from stocks, or from any other investment.
That is quite intelligible, hut I want an explanation upon what follows:
And, whether such gains or profits are divided or distributed or not.


William Thomas White: My right hon.
friend has touched upon a very important .provision of this measure, and he asks a very proper question. We have been desirous of assessing, not only the amount which a man may choose to. take out from his business, but also his share of the profits which are actually earned by the partnership during the year. A partnership might earn $100,000, and if it was assessed as a partnerships, the assessment would be upon $100,000 .less the exemptions. But the partners might say:	There is an income tax
and we will not take $50,000 apiece-if that was the share to which they were each entitled;-we will take only $5,000 .apiece, and will pay income tax only upon that $5,000. That would not be 'fair. My right hon. friend would have to pay upon his income because it is definite and ascertainable; but if a partner were entitled to one-half of the partnership profits, and if he took only part of his profits out of the business and that were counted as his income, he would escape taxation on part of what he had really earned in the partnership. IMy right hon. friend does not agree with me in that? I think he is wrong if he does not agree with me in that. .If we are going to assess an individual who is in business upon his profits in that business, then we should assess a partnership, or a joint stock company upon its profits in its business. But we assess the partners individually upon their incomes, -and therefore it is necessary to assess them not only upon the profits 259
that are actually distributed, hut upon the profits to which they are entitled. There is one point in this connection to which my right hon. friend has drawn attention. Following the words which he has quoted, we have these words:
The share of any gains or profits made hy any syndicate, trust, association, corporation or other body, or any partnership, to which a taxpayer would he entitled if such profits or gain were divided or distributed.
I am not clear at present as to whether these words should be allowed to remain in the Bill or not. The intention was that we should assess shareholders in respect not only of the dividends which they actually receive, but also of their share in the earnings of the company though not actually distributed amongst them. The idea was to prevent the company from paying a small dividend and piling up large reserves which it could at any time distribute to its shareholders. But there is in the Bill a provision further on. Subsection 4 of the same section provides that:
For the purpose of the supertax only, the income of a taxpayer shall include the share to which he would be entitled of the undivided or undisturbed gains and profits made by any syndicate, trust, association, corporation or other body, or any partnership, if such gains and profits were divided or distributed, unless the minister is of opinion that the accumulation of such undivided and undistributed gains and profits is not made for the purpose of evading the tax, and is not in excess of what is reasonably required for the purposes of the business.
There are some privately-owned companies which might defeat the purpose of this Act hy paying a small dividend and accumulating profits instead of distributing them amongst their shareholders. This subsection is to prevent such an evasion of the tax. As I say, I am not at the moment clear whether in subsection 1 of section 3 the words "the share of any gains or profits made by any syndicate, trust, association, corporation or other body, or any partnership, to which a taxpayer would he entitled if such profits or gain were divided or distributed," should be left in the Bill. I shall give the matter further consideration and shall express my opinion to the House later on. If I deoide they should come out, I shall move an amendment. I can see a possible hardship in that shareholders who are not seeking to evade any liability under this measure and who receive, let us say, a dividend of 10 per cent, would find themselves, under the express terms of this measure, assessable for, say 12 or 15 per



cent because the company earned at that rate.	.


Wilfrid Laurier: I present my views to my hon. friend as I understand this Bill. The principle of the measure is that every entity should be taxed-a corporation, a partnership; and then besides that, the partners or the shareholders .who receive their share of the profits. Every business ascertains its-profits for the year. Then it considers its liabilities, the contingent possibilities in the way of losses or the need for improvements. After having provided for these things, it distributes to its shareholders or to its partners the excess profits. My hon. friend taxes first the profits of the company, and then he taxes what is left in the entity, that is to say, in the partnership or association. Then he taxes also what comes to the shareholders or the partners. I raise no objection. But the measure may work a very severe hardship to a corporation. Suppose a corporation has earned $100,000 of profits during the year and distributed $50,000 to its shareholders and retains $50,000 to provide for contingent liabilities, or necessities, or losses. The minister takes the power to assess the corporation in respect of what may be its intention in so acting. Every association, whether it be a partnership or a corporation, works for individuals. If it keeps its profits in its coffers, it is to that extent acting to the detriment of the partners or shareholders, but for the benefit of the partnership, and in that way for the ultimate benefit of the partners or shareholders. Therefore, if it keeps that amount back in good faith for the interest of the company, I think that should be taken into consideration. If on the other hand this action is taken to evade taxation and to cheat the revenue, that is a different matter. It seems that in this measure no distinction is made between an honest intention and a fraudulent intention. We presume that the intention on the part of the taxpayer would be to have the Bill honestly enforced. This should he taken into consideration.


William Thomas White: I think no diffi-lulty is likely to arise in the case presented by my right hon. friend. Take such a case as he mentions-that of a company earning profits of $100,000.
It is proper for that company to deduct from its gross revenue enough to make allowance for bad and doubtful debts and for any contingent liabilities-I am not speaking of some liability of a fanciful nature that might be expected in the remote future.

When these items are deducted from the gross revenue the result is the net profits. Having done that-'and it is open to a company to do that, and companies do it, because it is sound from an accounting standpoint-if the company has still a net income of $100,000, even although it distributes only $50,000 to its shareholders, it should pay the normal tax of 4 per cent upon the whole $100,000. That is its net income, just as my hon. friend's net income is the amount which he derives as an individual.
My right hon. friend, I think, is a little mistaken, possibly, as to how we assess partnerships. We do not assess a partnership as an entity; the assessment is not against the partnership, but .against the individual partners. We assess a joint stock company upon its net earnings, according to the proper definition of that term, making them pay the normal rate of 4 per cent. In the case of the shareholders of that company, who pay upon income-pantly made up from the dividends received from the company, under a provision which we shall reach later on in the Act, an allowance is made to the extent of the dividends which were taxable which they have received from the company. The provision to which I specially 'draw .attention is to- prevent privately-owned companies-companies with a few shareholders, family concerns-from paying out small dividends and accumulating an immense reserve which could be distributed at a later date.


George Perry Graham: A close corporation.


William Thomas White: Yes. In the United States it was found that there was a great evasion of the tax, and some of our provisions have been modelled on their measures in the drafting of which they have had a good many years' experience.


Herbert Brown Ames: Let me cite a case in connection with undistributed profits which would work a very real hardship. The figures I shall give are not exact, but it is a case of which I have personal knowledge. We are going to tax the revenues of 1917. Now I know of a firm that ran behind $100,000 in the year 1915. In the year 1916 it came out about even, and in the year 1917 it made $100,000. They always carried forward from year to year a certain amount of profit and loss out of which the dividends are paid. Now in the third year, although $100,000 had been made, in view of the fact that nothing had been made in the previous year, and $100,000 lost the year before, no dividends were paid. The three years were

taken as one, and the business has practically stood still. I think the firm did a wise thing in paying no dividends. If you are going to tax this undistributed $100,000 which they made in the third year, you are going to do an injury, because you are asking them to pay on profits that were never made.


William Thomas White: That would be a case in which the discretion of the minister could be exercised, as provided in the subsection. It is only where the intent is to defeat the Act that these undistributed profits will be subject to the supertax.


Edward Walter Nesbitt: There is a style of company that I am sure the minister thoroughly understands, and which I think he had in his mind when speaking a few moments ago. The section says:
The share of any gains or profits made by any syndicate, trust, association, corporation or other body, or any partnership, to which a taxpayer would be entitled if such profits or gain were divided.
That means the individual shareholder. Now there are many companies in Canada at the present time that are working largely on borrowed capital, and if they are borrowing money from the bank, the bank will not allow them to distribute their profits in the form of dividends, because those profits are needed in the business. You are taxing them four per cent. Now, it is not the fault of the shareholders that these profits were not distributed

they, of course, would like very much to have them distributed-but as a matter of fact it might ruin the business if the profits were distributed. I would like the minister to take that into serious consideration, because he knows that a great many joint stock companies are in that identical position, and he knows further that since the war started, on account of the enormous advance in the cost of raw material, the money they have been able to borrow from the bank does not go nearly so far as it did before the war. Consequently, the firms require more money and the banks will not allow the profits to be distributed in the way of dividends. To punish the shareholder as he would be punished here is, in my judgment, rather harsh treatment.


William Thomas White: 
William Thomas White: Subsection (f) of section 5 says that among the incomes that shall not be liable to taxation are:
(f) The incomes of mutual corporations not having a capital represented by shares, no part of the income of which inures to the profit of any member thereof.
Would that cover the case my hon. friend has in mind?


Mr.  A. K. M A CLEAN@: I wished to say a word or two about undistributed profits. There must be some provision in the Bill for taxing undistributed profits in some way or other.


William Thomas White: There is.


Mr.  A. K. M A CLEAN@: I was going to give the minister the benefit of a suggestion contained in a proposed amendment to the United States Income Tax Act. I have merely a summary of it here, but probably the minister has seen it, By this amendment it is proposed to:
impose a tax in addition to the income tax, of 15 per cent upon the amount remaining undistributed 60 days after the end of each calendar or fiscal year of the total net income received during the year, including dividends The tax, however, does not apply to:
(1)	That portion of the undistributed profits used for the establishment or maintenance of reserves required by law, or
(2)	That portion of the undistributed profits of railroads used, with the approval of the Interstate Commerce Commission, or if not subject to the jurisdiction of the Commission with the approval of the state or local authorities having jurisdiction over such expenditure, for extensions, renewals, or betterments, or '
(3)	An amount of undistributed 'profits equal to 20 per cent of such net income of corporations directly engaged in the production or distribution of commodities or in banking, so long as it is employed in the business.

This might afford some suggestion by which we could provide for a direct statutory provision in taxing undistributed profits.


William Thomas White: By subsection 4
provision is made for the application of a supertax to undistributed gains or profits provided that the minister is of the opinion that the accumulation of such, undivided and undistributed gains and profits is made for the purpose of evading the tax. In what my learned friend has read there is an attempt to make it statutory, which is a pretty difficult thing to do. Here it is left as a matter of discretion. My own view is there is not likely to toe an attempt at abuse, except in the case of a close corporation, and in such a case I think wise discretion would have to toe exercised to see that the corporation paid the proper share of taxation.


Mr.  A. K. M A CLEAN@: You want to take sufficient power to have that discretion?


William Thomas White: It is there.


Mr.  A. K. M A CLEAN@: Is it wide enough? Sir THOMAS WHITE: Oh, yes.


Rodolphe Lemieux: If the minister will permit me, I would like to repeat a question I put this afternoon, in connection with, first, a corporate body, and, second, a shareholder. My hon. friend said there will be an adjustment after a while, and that what the corporate body paid to the exchequer would be deducted from what the shareholder will have to pay. How are you going to adjust it? Supposing a company has five thousand, six thousand, or perhaps ten thousand shareholders, each receiving more or less dividends, and therefore paying more or less to the exchequer, how are you going to adjust it as between the individual shareholder, the company, and the exchequer? There are companies which at the beginning of the war ceased paying any dividends. Those dividends are cumulative. Suppose this year or next year they make enough profits to pay the cumulative dividends to each shareholder, as representing the unpaid dividends since the beginning of the war, will you assess the whole of the cumulative dividends, which are really the earnings of the years before this Bill comes into force, or will you deduct what should appertain to the years when no dividends were paid?


William Thomas White: In regard to my hon. friend's first question, if he will look 
at subsection 2 of section 4, he will see that corporations and joint stock companies, no matter how created or organized, shall pay the normal tax upon income exceeding $3,000. That is quite clear. Every corporation will be assessed by the department in respect of its net income at the normal rate of four per cent.	[DOT]
Clause (f) of subsection (1) of section 3 provides that for the purpose of the normal tax, the income embraced in a personal return shall toe credited with the amount received as dividends upon the stock or from the net earnings of any company or other person which is taxable upon its income under this Act. Having assessed all the companies, when we get a return from a shareholder, he will toe entitled to credit of the amount paid by the corporation upon dividends he received which are embraced in this return.


Rodolphe Lemieux: Will he do that himself, or will the department do it?


William Thomas White: He will make a return showing how his income is made up. Say, part of his income was derived from shares in a company which has paid the normal tax upon its income. In that case he would toe credited with the amount which was so paid. The department would scrutinize his return, and in preparing his assessment would make the necessary allowance. Subsection 4 of section 7 provides that all corporations, associations, and syndicates shall make a return of all dividends and bonuses paid to shareholders and members. That would help the department in making the necessary adjustments,


Rodolphe Lemieux: Would it not be better to have the companies deduct the tax of the individual shareholders?


William Thomas White: No, they pay
their own in full, then we make the allowance in the case of the individual shareholders. It is different from what it is in England.


Edward Walter Nesbitt: It is just the opposite.


William Thomas White: Yes. Answering my hon. friend's second question; if he asks the question from a strictly legal point of view, I should say that a shareholder receiving accumulated dividends would be liable to taxation on those dividends as part of his income.


Rodolphe Lemieux: Then, it is retroactive?


William Thomas White: If they were
cumulative for a period of two or three years, my view would be that in the ad-

ministration of the Act it would be lair to make the assessment of the dividends for one year, that is if it was a preferred dividend. I shall consider the matter, because I do not like to have anything left to the discretion of the minister. I think, legally speaking, if a shareholder, gets cumulative dividends for three or four years in one payment in a y-ear, it is part of his income for the year. But, my hon. friend suggests there may be a certain injustice in that, and there may ibe something in his suggestion. I will consider it.


George Perry Graham: A difficulty might be
that in all matters of assessment the assessment of one year is taken, in a measure, as the basis for the next year. No matter what the return may be the officer in charge will simply look it over and see that a man received, say, $800 in dividends last year from a certain company, and this year he only acknowledges $150.
There are, as the hon. gentleman has said, companies that have paid no dividends for several years, hut within the last year they have been- catching up on the arrears of dividends/ There will be some injustice in charging what was really, or what should have been, their income for two or three years back as the income for this year. The minister said he would take it into consideration. I think it is worth thinking over.


William Thomas White: I doubt if you could deal with that expressly by statute.


Rodolphe Lemieux: When you speak of dividends you should speak of coupons which represent a fixed amount. A certain big hotel company issued coupon bonds, but a few months after the war broke out that company ceased to honour its coupons. It is expected that in a year or two the company will 'be in a position to pay the coupons. In that case I do not see any reason why you should not make an allowance for the coupons which were due, but unpaid, before this Bill came into operation.


William Thomas White: I am afraid we could not do that. In the back years they did not receive their interest in a particular year, but they do receive their interest after that and they will have to pay on that.


Edward Walter Nesbitt: lloes the minister propose allowing a corporation, to deduct bond interest before assessing the profits at the end of the year?


William Thomas White: Without doubt, interest upon bonds is a fixed charge and net
profits are only ascertained after deducting interest upon underlying charges, all interest payments, operating expenses and overhead-in other words, the net profits, according to a properly drawn balance sheet.


Edward Walter Nesbitt: I realize that it is impossible to be perfectly fair to everybody, but a corporation having no bonds and having stock will be in a very much worse position than a corporation that just carries bonds.


William Thomas White: I saw that argument advanced in one of the newspapers, but I submit it is not sound. The corporation that has a share capital pays upon its net earnings and its shareholders, upon receiving their dividends, are credited with the tax that is paid by the corporation. Take the case of a company which has a large bonded indebtedness. The holders of those bonds, not the company, are assessable under this Income Tax Bill for the incomes which they receive. The holder of the bonds pays upon the earnings of the company which are used to pay its bonded interest.


Edward Walter Nesbitt: My hon. friend is quite right as to the individual shareholder or bondholder, but he is not right as to the corporation, as the corporation with stock is paying the four per cent on the whole profit whereas the corporation with bonds outstanding has that four per cent deducted.


William Thomas White: I understand that the corporation in the one case would pry a considerable sum, let us say, and in the other case it would not. But if you take that corporation with only a nominal share capital and distributing all its net profits to its bondholders, its bondholders are the virtual proprietors of the company. I do not mean to say that they are legally the proprietors hut they are virtually the proprietors of the company because they hold its bonds and they get, by way of interest, all of its earnings or practically all of its earnings. Now take the case of the company that has no bonded indebtedness but has a large share capital and pays out dividends to its shareholders. The shareholders there are virtually the proprietors of the company, not legally, but virtually the proprietors of the company as the bondholders in the former case are virtually the proprietors of that company. That is to say, they take all of its earnings. The net result is about the same because the bondholders are assessable as individuals in respect to the bond interest which they derive. It is true that the other company

is assessed upon its net earnings, but the shareholders in their assessment are allowed to credit the amount which the company paid in respect of the dividends which form part of their income. Therefore the bondholders in the one case and the shareholders in the other are virtually the proprietors of the two companies and they are both taxed and are taxed upon about the same basis.


Wilfrid Laurier: Did I understand my hon. friend correctly to say that the Bill does not apply to partnerships?


William Thomas White: I am not quite [DOT]sure as to the sense in which my right hon. friend puts the question.


Wilfrid Laurier: Do you tax a
partnership?


William Thomas White: We do not tax a partnership as such. Let us say that A and B are partners carrying on a business. We do not make an assessment against A and B for income which they jointly derive, but we make ,an assessment against A as to his interest in the income which he derived and his share of the undistributed profits, and against B similarly; and in that way we assess the partners.


Wilfrid Laurier: I would call
my hon. friend's attention to paragraph (d) of section 2:
"Person" means any individual or person and any syndicate, trust, association, etc.
The use of the word " association " would seem to include a partnership.


William Thomas White: If my right hon. friend will look at page 4-


Wilfrid Laurier: Yes, I -understand thait. I asked my hon. friend if partnerships are taxed, -and he says that partnerships are not taxed but that partners are taxed. Then, I call his attention to paragraph (a) of section 2. I would imagine that a partnership would be included in an " association."


William Thomas White: I should differ
from my hon. friend. The word " association " in its -broad meaning might be taken to embrace partnership but I think an association is different from a partnership. Even if the word " association " should embrace partnership, if -my right hon. friend will look at page 4, section 4, subsection 3, he will see that it say-s:
Any persons carrying on business in partnership shall be liable for the income tax only in their individual capacity.

That w'ould exclude partnerships.


Rodolphe Lemieux: I would like to call
my -hon. friend's attention to paragraph (b) of subsection 1 o-f section 3:
The proceeds of life insurance policies paid upon the death of the person insured, or payments made or credited to the insured on life insurance endowment or annuity contracts upon the maturity of the term mentioned in the contract or upon the surrender of the contract.
I am informed that there is an Ontario statute which provides that the proceeds of an insurance policy made in favour of a man's wife is not liable to any taxation. Will that be -liable to taxation under -this?


William Thomas White: My hon. friend is
referring to paragraph (b) of subsection 1 of section 3. That is one of the exemptions.


Rodolphe Lemieux: I did not observe that. I notice among the exemptions:
Such reasonable allowance as may be allowed -by the minister for depreciation, or for any expenditure of a capital nature for renewals, or for the development of a business.
That I understand.
And the minister, when determining the income from mining and from oil and gas wells, shall make an allowance for the exhaustion of the mines and wells.
There are other businesses in which something akin to exhaustion may take place. Take real estate. A man may buy three or four acres and derive income from their sale, -but as the sales take place that source of income becomes exhausted; part of the income is a return of capital.


William Thomas White: Undoubtedly there is a return of capital in such a -case, and even if no provision existed in the statute, we should properly make an allowance in respect to the exhaustion of mines and oil wells. In a real estate transaction such as my hon. friend mentioned, a certain amount of the return would be regarded as return of capital and a certain amount as profit. We would deal only with the profit.


William Pugsley: From the minister's
statement to my hon. friend for Rouville (Mr. Lemieux) it might be inferred that the proceeds of an insurance policy paid to a widow would be exempt. Did he not mean that it would not come in as part of the income for that year, but that later it would be subject to taxation as part of her capital? It becomes capital or principal upon the income from which this statute operates.


William Thomas White: True, later.
Mr. LEM1EUX: Again referring to the Ontario statute, would my hon. friend (Mr. Middlebro) say if it entirely exempts from taxation the life insurance collected by a widow?


William Sora Middlebro: I think my hon. friend is confounding its exemption from seizure for the debts of the husband with exemption from taxation.


Mr. LOGGIE:: Referring to subsection 4 of section 3, and dealing with the supertax only, it is not uncommon to find companies in business for many years but never declaring 'any dividend. They may make some profit, but they n'ever have money to pay dividends. They are borrowers from the hank and all-the profits that are available go to pay indebtedness, yet the books may show substantial profits. Or these profits may be locked up in investment that are not liquid, and cannot easily be converted into money.
Subsection 4 of section 3 provides that surplus profit, undivided, may be assessable for the supertax if the minister says so. I would point out that when the profits of one year are distributed and left in the business, then the following year the net results of the business, having the benefit of the money so left in it, will be greater than if these profits had been distributed. The increased profits are, of course, subject to the normal tax each year. That is something that the minister ought to take into consideration. I wish to draw the attention of the minister to another matter in connection with the net income of private individuals. A man who conducts, say, a dry-goods business is known as a business man. A private individual earning a salary and receiving, besides his salary, rents from houses that he owns, so that his net income is $3,000 or $4,000, would be considered, I assume, as a business man, and his transactions would be treated in the same manner as those of any business firm?


William Thomas White: Yes.


William Pugsley: Before this section is
carried, the suggestion of the member for Brantford (Mr. Cockshutt)) ought to be considered. The minister has said that he will treat a man's income from his business, position or profession independently of his income from any property, for instance, that he may own.


William Thomas White: Not quite that.


William Pugsley: It comes pretty near that. The minister has said that if a man receives a salary from his occupation of $10,000, has real estate from which he receives an income and has certain other real estate which is a burden to him and upon which he is obliged to pay various amounts by way of taxes and repairs, these amounts that he pays put will not be taken into consideration when the amount upon which he is to be assessed is being determined. In a ease of that kind the man will be obliged to pay taxes upon the' total income which he receives from one particular source. It ought to be made clear that that is not the intention of the law. Take the case of a company which, while not engaged, in buying or selling, is engaged in the ownership and management of real estate. It owns a dozen different pieces of property; . from some of that property it receives a good income, but in respect of other portions of it there is a loss. The company makes up its statement for the year, including in its statement all. the property which it owns. It places on the revenue side its total receipts and on the debit side its total disbursements in respect to the entire property, and the balance is the income of that company for the year. Why should it be different in the case of the individual? If the law is to be administered differently in respect to the individual, the individual must convert his real estate holdings into the holdings of a joint stock company. It is a very easy thing to do that; but why should it be necessary? If a man wishes to hold his property, why should he be compelled to put it into a company in order to get the benefit of the exemptions which, it is admitted, exist in respect to a company? In the case of a man who owns a number of pieces of property which bring in an income and also other pieces of property the carrying of which inflicts a loss upon him, the income upon which taxation should be levied should ibe his net income from his entire holdings. I cannot for the life of me see why the minister should adopt any other course. In accordance with all the principles of fair play, he ought to amend the Bill so as to make it clear that the net income upon which taxation will be levied is the net income which a man gets in the fair and reasonable carrying on of his business and the fair and reasonable administration and management of the property that he owns.


William Thomas White: I am sorry that the member for St. John (Mr. Pugsley)

was not in the Chamber a little after eight o'clock -when I dealt with this matter at some length, and, I think, to the satisfaction of the committee. I am surprised that a gentleman of my hon. friend's fine legal mind cannot see the clear distinction which exists between the case of a man who has an income of $5,000 and a further income of $1,000 from productive property outside, and the case of a man who has an income of $5,000 which he spends in paying taxes upon investments outside, or in stock speculations or otherwise.
The illustration which I use is this: Take the case of two officials of the Bank of Montreal and let us assume that they are each getting a salary of $10,000. One of them spends the money upon himiself and his family. The cither man owns $100,000 worth of unproductive real estate upon which he has to pay taxes. Does my hon. friend mean to suggest that we should tax the one man to the full extent of the $10,000 and that the other man should go scot-free because he happens to pay away $7,000, let us say, in taxes upon unproductive property which he holds? The people of this country would not stand for that for a moment. The true principle of the Bill and of every income-tax measure is to consider what is a man's income from, his trade, profession, or calling? If he is an official of a bank and draws $10,000 a year as such official, that, in the plain, ordinary sense of the term is his income, no matter what he does with iit. If, in addition to that, he has five houses, which bring him in $2,000 a year gross, and he has to pay out of that $500 for taxes and other outgoings, he has a net income from those houses of $1,500, and his income in the plain, every-day, ordinary sense of term " income," is the $10,000, plus the $1,500 net which he receives from his investment. It would be absolutely impossible to administer a business tax if, having ascertained the net income derived by a man from his trade, profession, or calling, the department had to follow him through all his investments. My hon. friend's proposition goes as far as this. Supposing a man has an income of $10,000 from his official position as a hank manager, and let us say he engages in unfortunate speculation and loses it all; my hon. friend says that that man is not liable for income tax. I say that he is liable for income tax. The question is-what is the man's income from his trade, profession, or calling? It is $10,000. Then we need not care what he does wift/h it, whether he [3ir Thomas White.]
spends it luxuriously, whether he loses it in stock speculation, or whether he uses it to pay taxes on $100,000 worth of property which he owns. My hon. friend, who is a good lawyer, knows that any court would uphold the contention put forward by me to-night, that the correct interpretation of the word " income " is a man's income from his trade, profession, or calling, no matter what be does with that income after he gets it.


William Pugsley: My hon. friend would
be perfectly right if the income tax provided for by this Bill was limited to a man's income from his trade, profession or calling, but the measure is not so limited.


William Thomas White: We were speaking about that aspect of it.
iMr. PUGSLEY:	My hon. friend cannot
pick out one clause of the Bill-
Sir THOMiAS WHITE: Of course he can.


William Pugsley: -and deal with that
alone, and have this legislation construed as if this was the only clause in the section. The section provides that the term-" income " shall mean:
The annual profit or gain or gratuity, whether ascertained as being fees or emoluments, or as wages, salary, or other fixed amount, or unascertained as being fees or emoluments, or as being profits from a trade or commercial or financial or other business or calling, directly or indirectly received by a person from any office or employment, or from any profession or calling, or from any trade, manufacture or business, as the case may be.
It would be all right if it stopped there; but it does not atop there; it goes on to say:
And shall include the interest, dividends or profits, directly or indirectly received from money at Interest upon any security or without security, or from stocks, or from any other investment.


William Thomas White: Quite so-from
any other investment.


William Pugsley: Which means and includes an investment in real estate.


William Thomas White: True.


William Pugsley: Therefore if you are to determine what a man's net income is, you have a right to take not only what he receives annually from his business, but what he receives from the investments which he has bona fide made with his money, and, if he is unfortunate enough to incur a loss from some of those investments, surely all that should be taken into consideration, and the man's net income should be taxed.

If my hon. friend were limiting his Bill to income from a man's trade, profession or calling, that would be a different thing; but he taxes his whole income, no matter from what source it is derived, whether from his profession, trade or business, or from the investments which he has made. -The minister not only seeks-as he says he is going to have this Bill administered-to collect taxes from the full income which a man receives from his business, trade or employment, but he further says that, in construing this Bill, he will insist that if a man receives from his investment in certain real estate an income, he will be assessed upon that income even although in respect to some other investments in the same class of property he is sustaining a loss and compelled to bear a burden. That is pushing the matter to the very verge of the grossest possible injustice. I cannot understand why the minister should refuse to have the matter made plain. All I suggest is that the law shall be a reasonable one; that the man shall be obliged to pay a tax upon his net income. I do not mean to say that if he chooses to risk his money in wild speculation, any loss he might incur in that way should be deducted. All I mean is that where a man is engaged in real estate-


William Thomas White: Engaged in real estate?


William Pugsley: Not engaged in buying and selling real estate, but owning real estate, investing his money in real estate- if from some of his property he gets a good income, and with other portions of that property he is unfortunate and it brings in no income and he has to bear a large burden in respect to the taxes, all I ask is that his whole income from his different properties shall be considered, and it shall be upon the net income that he shall bear the burden imposed by this Bill. To have the law different is going to bring ruin to many people in this country who are unable to bear such a heavy tax, especially under the circumstances which prevail at this time. In the city of Montreal there are friends of mine with whose circumstances I am familiar, who have put their money into real estate. From some of their property they are receiving a good income. Other portions of their property in regard to which they exercised the same judgment or thought they were doing so, into which they bona fide put their money, are non-productive, and they are bearing heavy burdens, paying out heavy taxes. All I say is that the incomings and outgoings in respect to those different properties should be considered together, and upon the net income the taxation should fall.


William Thomas White: I do not mean to say that, if a man had a row of houses from which he received rents, and if there were some vacancies in those houses during the year, he would not be allowed to deduct, from the total income which he received from the row of houses, the taxes which he would pay in respect of the vacant houses as well as of those not vacant.


William Pugsley: Suppose there are two rows of houses in different parts of the city, or suppose the rows are in different towns. Why should there be any difference?


William Thomas White: There is no difference if there are two rows of houses. Let us take two rows of houses and say that a man derives from those $5,000 a year and that some of them during the year are vacant and others are occupied, but that they are two rows of houses from which he has been in the habit of deriving an income. Nobody would contend that he should not be allowed to deduct the taxes from the income which he would receive in respect of those two rows of houses. Let us go back to my1 former example. Two men have each a salary of $10,000. One man has a family to keep and spends the entire $10,000 upon himself and his family in their maintenance and education. The ' other man has a considerable quantity of real estate, and he has to pay out $4,000 or $5,000 of his income on taxes. We must not assume that that money is lost. He is paying it out to protect his own property; and the first man that I have mentioned would have every reason to complain if we assessed him upon the full $10,000 and explained to him as a reason why we did not assess his neighbour who drew precisely the same salary as he did, that he held a good deal of real estate and took a considerable amount (of that income to pay taxes upon that real estate. I think the first man would have a real grievance. He would say:	His inco me is the same as mine;
I spent mine in keeping my family, and educating my children, and he spent his in paying taxes upon some unproductive real estate which may give him an excellent return in years to come. I do not believe we should go back of the man's income.


Rodolphe Lemieux: But, supposing the
second man had investments in rows of houses.
40!>2


William Thomas White: He would have an income from them.


Rodolphe Lemieux: Sup-posing he receives
no income from them? Some of them maybe vacant. You will deduct that from his annual income, I suppo.se?


William Thomas White: You mean deduct it from the $10,000?


Rodolphe Lemieux: The minister makes a
difference between the man who has an investment in real estate and the man who has an investment in houses. What is the difference?


William Thomas White: There is no difference, in principle. What I have stated is entirely consistent. -If a iman has an income of $10,000, and diminishes that income by losses he makes on real estate, or by amounts paid for taxes, or otherwise, what is the difference between that and the man who has an income, of $10,000 and loses $5,000 in a stock speculation? He might say, " I have lost $5,000 in stocks, therefore I want you to assess me at 85,000, instead of $10,000." We should say, " No, your income, was $10,000; you speculated in stocks, which is not the ordinary course of your business at all, and you lost this money; that does not affect your income, which is $10,000." If you laid down the principle that you would allow a man. to 'deduct losses made in business in which he is not engaged, such as stock speculation, or real estate speculation, you might just as well never pass the Act, because it would be evaded in numberless ways. The true principle of the .matter is, what is a man's income? Every one knows what you mean. If you ask a man on the street " What is so-and-so's income?" nobody will misunderstand you. You will be told it is the amount he gets from his employer, if he is employed. If, on the other hand, his income is derived from stocks, bonds or securities, everybody understands it is wbait he receives in the way of interest and dividends upon those .securities. It is a coimmonsen.se matter. My hon. friend quoted section 3, to show that not only was individual income included-that is to say the individual income of a man from his trade, profession or calling-but also his income from investments. We all know what that means. It means his income from investments after he pays any necessary outgoings in connection with those investments, whether it is house property or not, tplus the income he receives in "his trade, .profession or calling. If is net for us to inquire what he does with his income after he gets it. We [Mr. Lcmieux.j
are not interested in knowing whether he loses it in a stock speculation, or spends it foolishly. If you have to follow what a man does with his income, .and allow it to be urged that he lost it in a stock speculation, or in a real estate speculation, ot spent it foolishly, you might just as well never pass the Act.


William Foster Cockshutt: I must say I think
the minister is rather confusing .a fixed income or a salary with the proposition I brought out, .and which I .think has been well re-stated by the hon. member for St. John (Mir. Pugsley). I made no .mention whatever of a .salary. If a man is getting $10,000 income from his calling, not in the way of salary, but from his .investments in real estate-


William Thomas White: Is he a real estate dealer?


William Foster Cockshutt: No, be is not a real estate dealer.


William Thomas White: Is that his principal business?


William Foster Cockshutt: It is his principal
source of support. He has received it perhaps after struggling for years and investing his money, or he may have had it bequeathed .to him.


William Pugsley: Or, he might have his real estate managed by a real estate agent. It may not be his business at all..


William Foster Cockshutt: I have a piece of .property which has been in the family for three generations. It has come down to me as an inheritance and I would hesitate to part with it. I am not what you would call a real estate dealer, but I have my investments largely in real estate, and as a business man I have made my returns for years to the city of Brantford as to my income. I should be very sorry indeed to think I was deceiving them, but I have taken a course which I am bound to say is the course I would take if the Finance Minister asked me to tell him what my income was-I would do my best to tell him my net income, deducting all expenditures in the way of taxes, repairs, insurance and everything of that kind, which every man who owns property knows he has to make.


William Thomas White: There is no objection to that.


William Foster Cockshutt: But, according to the minister, there is an objection to it. He instances the case of a man who loses part

of his salary in speculating and real estate. When I make my returns to the Brantford assessors, I deduct the repairs, taxes, insurance, and everything. On the other side, I put the rent received, and the difference is my income. I think that is the fair way of doing it, and it was with a view to getting the matter settled and enabling a man to make a proper return to the department that I raised the question. I am, in a small way, a trustee for some real estate, and I know this method of making returns has been found equitable and satisfactory by the courts. If it is proper for a trustee, it ought to be proper for an individual. There is another point I wish to mention. If the Finance Minister tells a man he has an income of $25,000, and the man himself says "My income is only $15,000" it is up to the Minister of Finance to show him where the $25,000 is. If a man only has an income of $15,000, and it is sought to assess him on an income of $25,000, I think he has a very reasonable grievance against the Government. I am not saying this with a view to paring down at all, because I am quite satisfied and willing to pay anything I may be called upon to pay under this Act; but, as a man who has to make a report, I do not want to be subject to a $10,000 fine for making a false report. It appears to me the minister would be acting wisely if he were to consider the proposition made by the hon. member for St. John. I think it was a fair statement, and covers the point in perhaps a better way than I did this afternoon. I was not dealing at all with the matter of salary or with anything but an income from real estate, which income is the difference between the revenue and the outgo or expenditure. It seems to me that is equitable and right. I cannot see it in any other way.


Siir THOMAS WHITE:: We are talking about entirely different things. Before six o'clock my hon. friend raised the question as to depreciation of real estate. After eight o'clock we were discussing the question raised by my hon. friend from Rouville ('Mr. Lemieux), whether a man with a salary of $10,000 should be allowed to deduct from it the taxes which he might pay in Tespec't of some unproductive property which he held. If a man's income is derived from real estate his calling, so to speak, is that of a landowner, although, of course, he is not a professional man in that sense. He has to take his unproductive houses and estimate .the net return, as my
hon. friend has suggested. The proposition I am laying down is that a man with an official salary of $10,000 should not deduct from it the $1,000 or $2,000 that he may have to pay in taxes on unproductive property. I am in the position where I shall have to pay in this respect just like other people. I bake to pay taxes on unproductive property, and I certainly do not intend to deduct the taxes from my income. I think that is how the boards will construe the Act. That is the way they have construed the income tax legislation of the United States.


George Perry Graham: There are two. kinds of property. One is real estate. Suppose a man is not interested in real estate, productive or unproductive, but in some other kind of property-securities, for instance. Suppose the bon. member for Brantford (Mr. Cockshutt) had two securities, one of which paid him a regular dividend. All at once the dividend stops. Would he be entitled to deduct from his income the interest he had to pay on the money in that non-productive security?


William Foster Cockshutt: I do not 'think that is a parallel case.


George Perry Graham: Nearly; it is a different kind, of property that is all.


William Foster Cockshutt: If, instead of it being a dividend producer, the dividend ceased and a call was made upon him to pay in more capital-that is the point which I raised. Instead of bringing in income, he is called upon to make good an outgo. The company says: " You have subscribed for so much stock, and to save it you must now subscribe for so much more." If the company said that, that would be a parallel case. The ceasing of the dividend is not sufficient. Taxes, insurance, repairs, all have to go on. If I have a caretaker, he has to be there, 'and snow shovelling .and watering the street have .all got to be done as though the property was occupied.


George Perry Graham: I will go as far as my hon. friend has suggested. Suppose that a call was made, do you think he would be entitled to deduct the amount of that call from his income? I say no. Go just as far as you like. That is capital expenditure; it is not income. Suppose I invest $10,000 in stock and half of it becomes unproductive. A call is made, and I have to pay in that call. I have made an invest-' ment that I thought was going to pay, but it did not. My hon. friend has invested

$10,000 in real estate that he thought was going to pay, but it did not. We are, therefore, both in the same position, the only difference being that one is real estate and the other securities. Should we allow oub loss in either ease to he deducted from our income for the purposes of this taxation?


William Foster Cockshutt: That is not a parallel case as I understand it.


George Perry Graham: I carried it as far as my hon. friend wanted me to.


William Foster Cockshutt: The hon. member
carried it to an illogical conclusion. If the call was made because the company had encountered a loss, as frequently occurs, I say that he did not increase his capital by reason of the call having been made. He has really made a loss. He is being called upon to make up a call. Take a fire insurance company, for instance They have been paying dividends every year as my hon. friend knows. Suddenly they have a disastrous year and the dividends cease. The fires have been so great that instead of having a dividend on his stock, all the premiums have been exhausted and the company has lost a portion of its capital. In order to keep the security good, a call is made to put it where it was. If the hon. gentleman figured out that that was income, I think he would soon find that he was living on air, and that the income was a myth. There is no income about that. It is a loan that has to be made. Surely if an income exists, the man that has it ought to know. If he is trying to evade the law, fine him. But if he says, "My income is $15,000, as I can show you by the net results in the bank at the end of the year." I would take that as prima facie evidence that that was his income.
Mr. MoCREA: Suppose that a man has two properties that he is carrying on his books at a certain value. One of them he sells for possibly twice what he is carrying it at. Would that be considered as income for that year? The other property he sells at a loss. How would the minister treat that? If one is counted as profit, the other should be counted as lose. As I understand the minister, capital will have nothing to do with profits. If a man has a property and sells it at a profit of 20 or 50 or even a hundred per cent, that will not be taxed. If he sells his property at a loss, do I understand that he will not be allowed to deduct that amount?


William Thomas White: I think I agree with my hon. friend. It would not be fair

to count as income in any given year the profit which one might make on the saie of real estate which a man had held for a number of years, for that would not be annual gain, and I do not think it would be possible to apportion a certain amount of it in respect of the year in question. The same argument would apply to the other property. A great number of the questions that have been raised here are of theoretical importance, but not likely to become a practical issue in the administration of the Act. In connection with the Business Profits War tax we had many cases where properties were sold at a profit after being held for a number of years. But in the working out of the Act it was recognized that that was not gain for that particular year, and no difficulty was experienced.


Mr. McCREA:: That is as I understood it.


Alphonse Verville: Suppose I am paying
$1,000 interest (an a property mortgage? Would I be allowed to deduct that amount from my income? If I am taxed on that $1,000, and the man who receives it counts it as part of his income and is also taxed on it, that would be double taxation?


William Thomas White: In the case my
hon. friend suggests, where he is paying $1,000 interest upon a mortgage upon some property which he holds, he would be entitled to deduct from the revenue which he t derived from that property the interest which he paid on the mortgage. On the other hand, the mortgagee would derive from my hon. friend the thousand dollars which would be a part of his income. If the income be $3,000 more, he will be liable, under the provisions of this Bill, less $3,000 exemption.


Alphonse Verville: I brought that up
because there are quite a lot of workmen having small properties and very heavy mortgages upon them. They were afraid they would be taxed for the amount of the mortgages, but according to the explanation they will not be.


Rodolphe Lemieux: Take the case of a man who buys some stock and makes only a partial payment and the stock is hypothecated with the bank. Let us -say that I buy 500 shares of Ottawa Electric, and that I pay for 100 shares, the bank carrying the stock, how should I be assessed in that case?


William Thomas White: That case came under my observation many times years ago when I was connected with assessment

work. This Bill will work out in this way: My hon. friend, we will say, is entitled to $1,000 on those shares, out of which he has to pay $600 to the bank for carrying them. The balance of $400 would be the net earnings which my hon. friend would derive from^ the investment.


Francis N. McCrea: The minister's explanation with reference to the question I asked does not seem to be satisfactory, and I do not think the Bill makes it quite clear.


William Thomas White: I think the words "net gain or profit" covers that.


Francis N. McCrea: A person holding a property might sell it for $15,000 or $2,000 more than he was carrying it at, and that might be interpreted as profit. I think the Bill uoes not explain that, and I think the minister should make it clear, so that there will be no question about it.


William Pugsley: Is the word "net" in the Bill?


William Thomas White: Section 3, subsection 1, says that:
For the purposes of this Act "income" means the annual profit or gain.


Wilfrid Laurier: Perhaps my hon. friend will insert the word "net" there?


William Thomas White: I do not like to insert the word "net," because I do not know whether it has been interpreted. I know that in the province of Ontario there are decisions that income for the purposes , of taxation means net income.


Rodolphe Lemieux: Why not put it in?


William Thomas White: I will consider it, ibut II do not like to insert a word without having counsel look up the cases to see that it is apt. Lawyers will appreciate that. Income, to me, means net income in the case which my hon. friend has mentioned.
iMr. LEMIEUX:	There is a distinction
between net and gross income or net and gross gain, which is well understood. It is not gross gain or income but net income or gain, and I do not see why it cannot be so worded. I would like to ask another question. I was asked: this evening toy a gentleman if a subscription made this year to the Patriotic Fund or to the Red Cross Fund would toe deducted in accordance with the explanation given toy my hon. friend.


William Thomas White: Yes, this Bill
applies to incomes for the calendar year. Therefore, any contribution made during this calendar year may be deducted from the income.


Herbert Brown Ames: While we are on this subject, I would like to say I am rather sorry that my hon. friend the Finance Minister is not willing, for the year 1917, to consider any amount that has been subscribed and actually paid to the Patriotic Fund, or the Red Cross Fund, as having been contributed towards the support of the war and therefore having toeen paid as a tax'. As I understand, he is only willing to go so far as to provide that whatever contribution has been made to the Patriotic Fund shall be exempted from the amount to toe assessed for income tax. If a man has an income of $10,000 and he gives $1,000 to the Patriotic Fund, instead of having $3,000 exemption he has a $4,000 exemption, and it only means that he has a $40 concession made to him. That is all he gets really for his patriotic effort in giving $1,000, or one-tenth of his income, to the Patriotic Fund. I would like to have seen the whole $1,000 credited for the year 1917 as having been paid into the war fund. I wish the minister would take that into consideration for the year 1917 only, inasmuch as his income tax covers that year and inasmuch as during that year very many large contributions will be paid. For the year 1918 he can adopt the other method if he so desires.
There is another feature of this measure that I would like to speak of. The minister spoke about exempting from the operation of this Bill moneys that were contributed by taxation to patriotic funds. I just want to point out that, while it may be reasonably easy to exempt from taxation moneys that are voluntarily subscribed and paid, because these are usually given in round figures and easily obtainable, it is going to be a very difficult matter indeed to give credit to tax-payers for the amounts that they are paying into the Patriotic Fund through taxation. In New Brunswick, $500,000 is being raised for the Patriotic Fund entirely by levying a tax. It works out to about one mill on the dollar. A man with a $10,000 property will pay $10 to the Patriotic Fund in that way. Supposing that man has an income of $6,000, $3,000 of which is exempted, his tax, at four per cent on $3,000 will be $120. Are you going to say to him: We-will not tax you on that $3,000, but we will tax you on $2,990 because you have given $10 through taxation to the Patriotic Fund; therefore, your tax will amount to $119.60? That is a deduction of 40 cents. I do not think it would be worth while to do all the figuring that would be necessary for

such a very small reduction. In the case of a man with $1,000 property there will be a four-cent reduction instead of a forty-cent one. Every city, town and county in New Brunswick is raising money by taxation; practically every city, town and county in Nova Scotia is making a contribution by taxation ; Quebec province is contributing $1,000,000 raised by taxation ; Montreal, Sherbrooke and other places are making contributions raised by taxation; practically every county council in Ontario is raising money by taxation, at the rate of one, two, or three mills on the dollar; Toronto, Peterborough, St. Thomas, London and many other cities and towns are raising sums by taxation; and throughout Canada three-eighths of the money that is being raised is being raised by taxation. If you are going to figure that all down to the tiniest sums in the case of individual contributors, you are going to have such an amount of book-keeping that it will hardly be worth while.
So I would not ask any recognition of moneys paid into the Patriotic Fund on a man's regular tax bill. But where a man voluntarily contributes .a generous amount I',should like to see that reckoned as money contributed directly to the war, and to see the Whole amount deducted from what he would pay as income tax. Even if that is not done in 1917, certainly in 1918 he should not be taxed for income on the amount he generously subscribed to the Patriotic, the Red Cross and other funds.
Mr. A. K, MACLEAN: I have had many representations .that patriotic contributions would suffer very much if the contributors were not given credit for their contributions upon the tax .and not upon the assessment.
I shall read a passage from .a letter which I received to-day from a gentleman in Toronto, once a minister of the Crown:
In my way of thinking-, the only way to prevent such funds as the Patriotic suffering from heavy reduction is to let contributors, under the supervision of the department, deduct from the income tax the amounts they give to these funds.
In other words, he suggests that, instead of considering these contributions in calculating the assessment, they ought to be applied in reduction of the tax after it is fixed. If the tax results in a substantial diminaitioni in the contributions to the fund we shall create a burden which the state must take up, and it may be a very sound conclusion to reach that the deduction be made upon, the tax .and not upon the assessment.


William Thomas White: I have endeavoured to bear in -mind that if the tax is too heavy it may seriously affect contributions to the Patriotic -and Red Cross Funds, *which have been so generously supported by the people of Canada. But if we allow contributors to these funds to deduct their contributions from the amount of taxation to which they (are liable under this measure, will that not be tantamount to our paying their subscriptions? There might be cases in which .subscribers have subscribed, and will subscribe, more than the amount of their taxes, but it would seexri to one that if we took their subscriptions as cash in payment of the taxes under this .measure, the Government would simply be paying their contribution, and assuming the burden of the fund to that extent. My hope was and is that this income tax, while undoubtedly heavy, is not unduly heavy, having regard to war conditions, and that the well-to-do .people of this country who have done so well with the Patriotic and Red Cross Funds will still continue their subscriptions. I have believed it desirable not only that the Patriotic Funds and Red Cross should be sustained, but that these contributions should be continued in the interests of the donors themselves, because when a man gives to the Patriotic Fund or any other worthy object, he really benefits himself as well as the object to which he is contributing. In connection with the Patriotic Fund these contributions have made for patriotic spirit which has meant a great deal in connection with the prosecution of this war.
I assure the committee that it is from no lack or desire to be generous, in .so far as the Government can be generous in this matter, that we have drafted the Bill so as to allow the contributions from the income rather than from the amount of taxes payable in respect of the income. I think it best to leave the Bill in its present form. We have been asked to make exceptions to the extent that ia man contributes to religious and other philanthropic purposes.
I did consider all these matters very earnestly when we were fixing the rate-s, particularly of the supertax. I was exceedingly anxious that the taxation should not be so severe as to dampen the patriotic enthusiasm of the people of Canada which has resulted in such splendid contributions to the Patriotic and Red Cross Funds.


Mr. SCHAFFNER:: I understood the member for Montreal, St. Antoine (Sir Herbert Ames) to -say that moneys voluntarily paid into patriotic funds would be deducted from

the amount assessable for income tax, but that amounts paid into suoh funds by way of municipal or provincial taxation would not be so deducted. If that is the ease, it is most unfair. In Manitoba we have a very large tax, ^specially for the Patriotic Fund, amounting to about $8 upon each quarter-section of land. If the amount that a man pays into the Patriotic Fund in the ordinary course is deducted from his income assessable under this Act, surely the amounts collected from him by the municipality for the Patriotic Fund should be similarly deducted.


William Pugsley: I think that paragraph (e) should be changed by striking out the words "subscribed and," so that it would read "amounts paid by the taxpayer during the year to the Patriotic and Canadian Red Cross Funds." I desire to press the view that people who contribute to these patriotic funds under a system of taxation authorized by the provincial legislatures should receive the same treatment as those who pay in a province where there is not such legislation. In New Brunswick the amount raised is, I think, about $500,000, which is a very generous contribution. Some gentlemen in the city of St. John have asked that their taxes for the Patriotic Fund should be very largely. increased beyond what they would be liable for under the law. Their request has been complied with, and the amounts which they pay are very generous. They will feel that they are discriminated against if consideration is given to those who contributed voluntarily, while no consideration is given to the people of those provinces which have passed a law providing that all people shall pay according to their means. The member for Montreal, St. Antoine, says that it would involve a good deal of bookkeeping to take into consideration the taxes paid under provincial legislation, because in many cases the amounts are comparatively small. Well, it would lead to no more bookkeeping than the making of a record of all those who contributed voluntarily, because the voluntary contributions are not all large. In New Brunswick the amount of the tax for the Patriotic Fund is endorsed upon every tax Bill; it appears separately in the assessor's books and in the books of the collector in each municipality. If .any taxpayer desired to have exemption in respect to such payments to patriotic funds, he could make out his statement just as the man who contributes voluntarily makes out his statement in order to secure exemption.


Herbert Brown Ames: How would you divide up the million dollars that is given by Quebec in such a way that each taxpayer would have a fair share?


William Pugsley: That, of course, is an
indirect contribution.


Herbert Brown Ames: Not at all; it is raised by taxation.


William Pugsley: That is a contribution
by the municipality. I suppose bonds were issued for the purpose of making the contribution.


Herbert Brown Ames: They did that in many cases in New Brunswick.


William Pugsley: In New Brunswick
there is a direct tax upon every owner of real estate in the province. As soon as the law was passed there, voluntary contributions largely ceased, because it was considered that the amount raised by taxation should take the place of voluntary contributions.
-Sir THOMAS WHITE: I should dislike very much there being any feeling that discrimination existed. Some citizens subscribe directly; others concur in legislation taxing themselves -and others for the purposes of the Patriotic Fund. Probably each taxpayer will indicate in his return the .amount for which .he has been taxed for patriotic funds. The view of my hon. friend would be met if we struck out the words " subscribed and " in paragraph (e). I would move that these words be struck out. It is hardly likely that we shall get the administration of the Act down to the mathematical nicety of a few dollars. However, we will do the best we can with it; this am.end.ment is to avoid the appearance of discrimination.


William Pugsley: The striking out of
those words meets the case.


[Stage Direction]
Amendment agreed to.
Rodolphe Lemieux: What is the nature of the .special war tax imposed in Ontario? I understand that this tax was imposed for war purposes, to -assist the various funds which are incidental to the cause in Ontario.


William Folger Nickle: It was put into a separate fund, as I understand the matter, and administered from time to time for various objects in connection with the war-Red Cross, Sailors' Relief, purchasing machine guns, Patriotic Fund and several others.


Rodolphe Lemieux: I am very glad for the explanation given by my hon. friend. I

may expect, as a taxpayer in Ontario, that the Minister of Finance will deduct this war tax which I have paid, in addition to my other subscriptions to the Patriotic Fund. Subsection (e) says:
"Amounts subscribed and paid by the taxpayer during the year to the Patriotic and Canadian Red Cross Funds and other patriotic and war funds approved by the minister.
This war tax should come under this subsection.


William Thomas White: The amount is almost negligible in the case of an individual. For instance, one mill on $10,000 would be $10.


Rodolphe Lemieux: I am under the impression that in my Bill the tax amounted to something like $49.


William Thomas White: That is because my hon. friend is so wealthy.


Rodolphe Lemieux: No, I have an ordinary property here, and it is on that property I am taxed. The tax is not an insignificant one. At all events, it seems to me that under this subsection the taxpayer should be permitted to make a deduction in that respect.


William Thomas White: The amount is so very little in the case of an individual. One mill on $10,000 would be $10, so that if this war tax was permitted to be deducted from an income of $10,000, a man would be allowed to deduct, from the taxes paid under this Bill, forty cents, because the tax is only four per cent on the income.


William Sora Middlebro: I am rather of the opinion that the amount of exemption allowed in connection with contributions to the Canadian Patriotic Fund is not sufficient. On the 22nd of June, the Minister of Finance spoke in this House as follows:
The hon. member for St. Antoine (Sir Herbert Ames) said the other day that $40,000,000 had been raised or pledged in connection with those funds. Let us not overlook that; but unfortunately, in every community, there are one or two or three or more men who are rich and who are close and who have not contributed to those funds, and the people of this country feel that they should be made to contribute. If I can make them contribute, I will do so. I am not sure that it would not be well, in connection with an income tax, if we bring one down, to provide that a man should be exempted to the extent that he has contributed to the Patriotic and the Red Cross Funds, because, if you impose too Severe taxation, you 'will tend to stop

I do not say you will stop-the voluntary flow of funds for those great purposes, and it is not only the money that is valuable, but the good will.
From that I rather concluded that we were going to ibe allowed to deduct patriotic

contributions not from the income, but from the tax upon the income. That was the fair inference from what was said.


William Thomas White: Would not the
Government then be paying the contribution?


William Sora Middlebro: I would not go as
far as that, because I think that is too large a deduction, but that money that has been contributed to the Patriotic Fund is money that is necessary, and if we do not contribute to the Patriotic Fund, the Government will have to come to the rescue of that Fund. This Bill, however, does not sufficiently penalize the man who has not been contributing to the Patriotic Fund, because the man who has contributed is allowed a deduction o.f only four per cent on his contribution. That means that the man who has not contributed is penalized only to the extent of four per cent. The suggestion of the hon. member for St. Antoine (Sir Herbert Ames) is a good one, that is, that those who have actually been paying contributions before the Bill was introduced, should be allowed to deduct the amount of their contributions from the tax because if you do not do that, as the tax in respect of this Bill will be on the income for the year 1917-although paid in 1918- you will have this condition of affairs, that they will be paying a tax in respect of this year and they will also have been paying into the Patriotic Fund during the same time, and they are getting practically no relief in respect of that contribution because they are getting an exemption o1 only four per cent of their contribution.'


William Thomas White: I shall be very glad to take the matter into consideration, but if we enact in this measure that contributions to the Patriotic and Red Cross Funds shall be deducted from income taxation, then many would prefer to give to those funds to giving to the Government. The tax will then not come in to the Government, but will go to the two funds. We are desirous that the funds should be maintained, but I would like this measure to be such that the well-to-do citizens of the country would pay the Government the amount of tax levied by it, and, at the same time, continue or even increase their contributions to the Patriotic and Red Cross Funds. The effect of giving exemption from taxation to the amount of the contribution means that the Government pays the contribution. Therefore, if a contributor gave to the Patriotic or the Red Gross Fund only the amount that he would be

liable for taxation under this measure, he pays to those funds only what he is obliged to pay to the Government and the merit of his voluntary contribution is largely gone.


Herbert Brown Ames: The hon. member for North Grey (Mr. Middlebro) and I wish it clearly understood that it is only in regard to 1917 that we are pleading, the point being this, that we have had campaigns in practically every city throughout the Dominion of Canada, and we have secured a large number of subscriptions that are being paid in on a monthly basis. Practically all those subscriptions will be paid in by January, February, or, at the very latest, by March of next year. This income tax is retroactive in that it is on what a man's income was in 1917. All those men who are now giving generously to the Patriotic Fund are giving without any expectation of having an income tax placed upon them this year. They have a self-imposed income tax for the Patriotic Fund. In addition to that you are going to place upon them another income tax. All that we are pleading for is that the money which is subscribed and paid in 1917 by the comparatively small portion of our population who have an income of over $3,000, and who therefore come under this tax, may be regarded as having been paid to the Government. Three-eighths of all the money we get comes from taxation; probably as much more comes from small subscribers, and perhaps one-quarter of all we get comes from the large subscribers who have incomes of $3,000 and upwards, and who will therefore be hit by this tax.
Where <a man with tan income of $10,000 has deliberately settled down tand said: " I will give one-tenth of my income to the Patriotic Fund," when you task him to give three or four hundred dollars more by way of income tax in that same year you tare making his burden piretty heavy. Furthermore, it must be remembered that there are in every community ia certain number of extremely stingy men, who have not given a dollar to anything since the war began, wlho have dulled the edge of every campaign committee we have had, who have been the obstacle in every attempt we have made to raise money. Other people would say: "There is Jones, with <a big income; he has not given a red cent for w.ar purposes; if he won't give, why should we give?" We have met with that over and over again. We have frequently found
two or three men in a community with big incomes who had contributed absolutely nothing, tod I would like to have these men feel that they could not escape the 1917 tax by .being stingy. I think it would have a helpful influence throughout the community if Parliament showed that we appreciate the patriotism and generosity of the .men who have been subscribing so liberally. It would not take very much out of the minister's revenue this year. I do not say it should go beyond 1917, but it would be a recognition for 'that year of the generosity of these men. We .shall have to make our plans for 1918 having in view the fact that this income tax has been imposed. People will subscribe then with their eyes open. They will say: "I know that I have to .pay $500 income tax, .and I therefore cannot give you as much for the Patriotic Fund as I did last year; I will only give you $250 this year." But for the year 1917, on which these .people are pledged .and have sent in their cards, .making an engagement that cannot be broken, we want to feel that they are to some extent protected.


William Thomas White: I shall be very glad to take into consideration the observations which have been made. I think they are well worthy of Careful consideration.


William Stewart Loggie: The minister will not forget that the provincial taxation spoken of is spread over a number of years-, I think twenty years in the case of New Brunswick, and even, if you deduct the taxes paid it would not amount to much. When this taxation was levied there was no thought of this special taxation being imposed, and perhaps that is worth considering.


Francis N. McCrea: I think it is very desirable to exempt everybody if possible; but nobody knows the financial affairs of this country better than the Minister of Finance, and they are in such shape that he has had to resort to this measure of taxation. Later on, I believe he will have to resort to still more serious methods-. I think it would be a mistake to modify in any way ;the taxation he is now imposing, on patriotic or any other grounds. The trouble has been that in the past the minister and the Government have been lacking in the courage they should have had. They should have imposed taxes -before now so that the people of this country would be carrying a more substantial part of the burden to-day. If more severe methods of taxation had been resorted to it would be



a great deal easier for the Minister of Finance .to-day to raise funds in New York or elsewhere. I am not fond of taxation myself; I like my money as much as anybody, but I realize that we have to put our hands down in our pockets arL(j pay the fiddler. We are performing pretty fast music just now, and the money is needed.
I repeat that it would be a mistake to modify the taxation proposals because in my judgment the time is pretty near at hand when far more severe methods of taxation will have to be resorted to, and we might just as well face the music in the matter of money as in the matter of men. There is a great cry just now for the conscription of men, so let us consider means of paying these men.


William Sora Middlebro: I do not quite understand clause (e). This evening the hon. member for Brantford claimed that depreciation in value of his property should be deducted from his income. Subsection (c) seems to cover that point. It says that you may have exemption from income for:
Such reasonable allowance as may be allowed by the Minister for depreciation, or for any expenditure of a capital nature for renewals, or for the development of a business.
That seems to cover the point. I am opposed to the principle of allowing depreciation to be deducted from income.


William Thomas White: This refers to depreciation in connection with a business enterprise.


William Sora Middlebro: It does not say so; that is my objection.


William Thomas White: I think it does. The whole section relates, and is intended to relate, to a business.


William Pugsley: May I be permitted to call the minister's attention to the use of the word "net" in different parts of section 3-a fact which I think he ought to take into consideration in determining whether he will insert the word "net" before the word "profit" in line 2 of subsection 1. The minister said that he does not like the word "net," but he is using it in line 38 of page 2 in the phrase "the net earnings," and again on the next page in line 9, where he speaks of the "net profit or gain." Although the minister does not like the word "net" he has thought it reasonable to use it in those two cases, and he knows that it is a rule of construction that if in an Act a word is used referring to one subject and is omitted in reference to another subject, the court will draw certain inferences from that

omission on the principle of "inclusio unius est silentio alterius." The minister, I know, will agree with me that it is very important to take that into consideration in considering the whole section. The court might hold that in simply using the word "annual profit or gain" in one case and "net profit or gain" in another, Parliament intended where the word "net" had been left out, that the gain or profit would be the gross gain or profit. I throw that out for the consideration of the minister.


William Thomas White: I shall be glad to take it into consideration, but it seems to me that profit or gain means net profit.


William Pugsley: Then why use the word "net" in the two other cases?


William Thomas White: It is unwise to use two words where one will serve the purpose.


William Pugsley: Why use it then?


William Thomas White: Net earnings as applied to a company is a common and ordinary expression. It has a well defined and well understood meaning, and is used by accountants in making up their statements.


William Pugsley: Why do you use the
words "net profit?"


William Thomas White: I do not believe the word "net" adds anything to the word "profit." I would rather strike out the word "net" in section 2. "Profit" is profit. I do not think you gain anything by saying "net profit." "Net earnings" is, of course, different.


[Stage Direction]
Subsection agreed to.
On subsection 2, section 3-Holding Companies :
Wilfrid Laurier: What is the
meaning of this? Can my hon. friend give a concrete case?


William Thomas White: If a company
owns all the stock of another company, there is no reason why it should not take the product of that second company at any price that may be agreed upon irrespective of whether it is a fair market price or not, because the first-named company owns all the shares of the second. There might be an international case in which a company in the United States would own all the shares of a company in Canada. The Canadian company might be doing a highly profitable business if it was carrying on ite affairs in the usual course, but by rea-

son of a contract which it might havie with the United States company to sell its product at a very low rate, it might show no profits at all. I may eay this section is the same as the one in the Business Profits War Tax Act, inserted for the purpose of making such companies contribute reasonably under that measure of taxation.


[Stage Direction]
Subsection agreed to.
On subsection 3, of section 3-Non-residents :
Herbert Brown Ames: May I ask the
minister what will happen in a case like this. I know a gentleman in Montreal who is manager of a large business concern. He is an American citizen, and still holds, technically speaking, his residence in the United States. He is taxed on his income in the United States, but he draws his income as a salary in Canada. Will he be taxed a second time in Canada, and therefore have to pay two income taxes?


William Thomas White: I should say the Government which should give way would be the Government of the United States. This gentleman is domiciled in Canada and is drawing his salary in Canada. There is no reason why he should not pay the income tax. If he is subject to an income tax in the United States, that is a matter he should take up with the United States Government. I cannot see how we could distinguish his case from the case of any one else drawing a salary in Canada.


William Stewart Loggie: Does this subsection include a corporation?


William Thomas White: Yes.


William Stewart Loggie: Does a corporation doing busines in Canada, whose head office is in the United States, have to make up a statement of the revenue from its Canadian business?


William Thomas White: Yes.


[Stage Direction]
Subsection agreed to.
On section 5-Incomes not liable to tax-paragraph (j):
The military and naval pay of persons who have been on active service overseas during- the present war in any of the military or naval forces of His Majesty or of His Majesty's Allies.
George Perry Graham: I presume that, as a
matter of -fact, comparatively few incomes of men at the front will be taxable any way?


William Thomas White: Some. Their pay is exempt.
260i


George Perry Graham: I know that the pay they receive as members of the military forces is exempt but their entire incomes are not exempt. Has the Government considered the question of exempting the entire incomes, up to a certain amount, of men who are serving at the front?


Herbert Brown Ames: * They will be exempt to the extent of $3,000 besides bv this Bill.


George Perry Graham: I imagine they will be exempt up to $3,000. But suppose a man's income is $5,000, would it be unreasonable that, in consideration of the fact that he is serving at the front, he should be exempt to that extent? I have not thought of the matter very much. It was suggested to me to-day. I am not sure of the effect it would have on the finances but the minister might think it over and it might be worthy of consideration.


William Thomas White: I think it worthy of consideration. As a matter of fact there' is no exemption we could give that would' be more than these men deserve, hut wfieru we exempt the military and naval pay of those^who have been on active service overseas _we practically exempt them all from the income' tax levied because there is a $3,000 exemption besides.


George Perry Graham: That is for married
men.


William Thomas White: Yes, and $2,000 for single. My own view is that there will be no taxation for those who are at the front.


Herbert Brown Ames: What is the argument in favour of paragraph (h) ?:
The incomes of such insurance, mortgage and loan associations operated entirely for the benefit of farmers as are approved by the minister.
Supposing a co-operative, mortgage or loan association was conducted for the benefit of people who were not farmers? In the cities there are co-operative building societies.


William Thomas White: Paragraph (f)
exempts them:
The incomes of mutual corporations not having a capital represented by shares, no part of the income of which inures to the profit of any member thereof.
If a company is not operated for the gain of the shareholders it will be exempt.


Francis N. McCrea: It appears to ipe that men who are at the front should not only have their pay exempt but also any other in-

come they may have. A man who has given up his business, left his property and gone to the front to defend the country should not be taxed on any income whether it be his military pay or any other.


William Thomas White: I think the present provision meets the situation reasonably well. There may be some who have -gone overseas, or will have gone, who would mot want to be exempt altogether from the provisions of this income tax. I think they would be satisfied to he exempt to the .extent of their military and naval pay.


Francis N. McCrea: I mean the men who
have actually gone to the front, not the honorary or titled men who are floating .around at home or in London, drawing pay iand doing nothing.


[Stage Direction]
Section agreed to.
Progress reported.
On motion of Sir Thomas White, the House adjourned at 11 p.m.
Friday, August 3, 1917.