1924-05-26

ROYAL ASSENT

Mr. SPEAKER:: I have the honour to inform the House that I have received the following letter:
Ottawa, May 26, 1924.
Sir,-I have the honour to inform you that the Hon. Mr. Justice Idington, acting as Deputy of the Governor. General, will proceed to the Senate Chamber on Tuesday the 27th instant at 8.30 p.m. for the purpose of giving the royal assent to certain bills.
I have the honour to be, Sir,
Your obedient servant,
A. F. Sladen,
Governor General's Secretary.



LAUSANNE CONFERENCE

Right Hon. W. L. MACKENZIE KING (Prime Minister):: I beg to lay on the
Table copies of telegrams between the British and Canadian governments with respect to the Lausanne Conference and the Lausanne Treaty. I move:
That 1,500 copies in the English language and 750 in the French language of the telegrams exchanged between the British and the Canadian governments in connection with the Lausanne Conference and Treaty, laid on the Table of the House this day, be printed forthwith, and that rule 74 in relation thereto be suspended.
The House may recollect I mentioned last week that I would anticipate the passing of this motion, and for the convenience of members arrange to have copies of the correspondence printed. They are now printed and will be available in the office of the distribution Clerk for any members who may wish to have them.


Right Hon. ARTHUR MEIGHEN (Leader of the Opposition):: Will the Prime Minister say if the correspondence as tabled is complete, and if not, which government or governments takes responsibility for the omissions?


William Lyon Mackenzie King: The Canadian government has asked that all the correspondence be brought down. The British government has taken exception to a part of the correspondence being brought down,
Dominion Elections Act

and what I am now placing on the Table is the correspondence agreed to between the British government and our own government.


[Stage Direction]
Motion agreed to.


William Lyon Mackenzie King: (Prime Minister):	With the consent of the
House I wish to move:
That when this House adjourns on Wednesday, the 28th instant, it stand adjourned until Friday, the 30th instant.


Mr. BAXTER:: I would like to ask my
right hon. friend if Tuesday next will not also be observed as a holiday.


William Lyon Mackenzie King: I have another motion I was going to propose, to the effect that when the House adjourns on Monday, June 2nd, it stand adjourned until 8 p.m. on Tuesday, June 3rd. The government has felt that, as a function is to be held at Government House in honour of His Majesty the King, which function members of the House would probably wish to attend, we should not sit on Tuesday afternoon. I understand it is customary for the British House of Commons to sit on the King's birthday, and as we are anxious to bring to a conclusion the work of the session, we thought it would meet the wishes of members of the House were we to sit on Tuesday evening, keeping, however, the afternoon free.


[Stage Direction]
Motion agreed to.

William Lyon Mackenzie King: With the consent of the
House I move:
That when this House adjourns on Monday, June 2nd, it stand adjourned until Tuesday, June 3rd, at 8 p.m.


[Stage Direction]
Motion agreed to.

Mr. HAROLD PUTNAM (Colchester):: Mr. Speaker, I have four short petitions from membere and adherents of the Presbyterian churches which I shall name in a moment. They are all worded praying that the petitioners be not included in any legislation as incorporators or members of the United Church of Canada, and that they be not transferred by legislation from the Presbyterian Church in Canada. They are as follows, all in the county of Colchester:	135 members
and 80 adherents of Sharon Presbyterian Church, Tatamagouche; 15 members and 13 adherents of the Onslow and Belmont Con-
[Mr. Mackenzie King.[
gregation; 19 members and 8 adherents of the First Presbyterian Church, Truro, N.S.; 34 members and 26 adherents of the Falls Section, Earltown Congregation.



DOMINION ELECTIONS ACT AMENDMENT

[Stage Direction]
Hon. ERNEST LAPOINTE (Minister of Justice) moved for leave to introduce Bill No. 128, to amend the Dominion Elections Act.
He said: The only purpose of this bill is to amend the Dominion Elections Act so as to introduce the transferable vote. It will apply in single-member constituencies when there are more than two candidates offering for election, besides this provision, there are amendments to other sections of the act to make them harmonize with the application of the new principle.
Arthur Meighen: In the Speech from the
Throne this measure was termed the "alternative" vote instead of the "transferable" as now used. Which is right?


Mr. LAPOINTE:: They are the same thing.
Motion agreed to and bill read the first time.



DUMPING CLAUSE

[Stage Direction]
On the Orders of the Day:
Mr. ROBERT FORKE (Brandon):: Is it
the intention of the government to introduce an amendment to the dumping clause before the Tariff Act is finally disposed of?


Hon. J. A. ROBB (Acting Minister of Finance):: There is nothing before me on
the subject. I shall bring the question of my hon. friend to the attention of the Minister of Customs. I may say, however, we believe that certain regulations now before the House will meet all the objections that have been raised by my hon. friend.



CIVIL SERVICE SALARY REVISION

[Stage Direction]
On the Orders of the Day:
Mr. W. G. McQUARRIE (New Westminster) :: When will the report of the Auditor
General on the salary revision of the postal employees be presented to the House, and also the report on the revision of the salaries of other civil servants? I desire to ask also: Is it owing to the threatened strike of the postal employees that their department is receiving primary consideration?


William Lyon Mackenzie King: To the last part of my
hon. friend's question the answer is "Certainly not." With respect to the report to

Civil Service-Salaries
which he refers I would say that the Civil Service Commission and also the Board of Audit have been preparing reports for the consideration of the government with respect to the revision of the salaries of the postal employees. Until the government has had an opportunity to consider these reports it will not be possible to say when they will be laid on the Table. They have not yet- at least the report of the Board of Audit has not-been presented to the government.


Arthur Meighen: The Civil Service Commission reported to the government some time ago.


William Lyon Mackenzie King: The Civil Service Commission has reported but the report of the Board of Audit has not yet come in. When it has been received it is possible the government may ask the Civil Service Commission to take cognizance of its recommendations before dealing finally with the salaries of the post office employees.


Arthur Meighen: Is the Board of Audit
a sort of appeal board for the Civil Service Commission?


William Lyon Mackenzie King: No, not in
any sense a board of appeal. I think my right hon. friend (Mr. Meighen) will recall that the government announced at the time an explanation was made of the manner in which we intended to deal with the revision of the civil service salaries, that the Civil Service Commission would be expected to carry on its work in co-operation with the deputy ministers and also with the Board of Audit. I understand that a conference with the deputy ministers was held. The Board of Audit is now reviewing the situation and when its report is completed if thought advisable it will be referred to the Civil Service Commission before a final decision is reached.	[DOT]


William Garland McQuarrie: May I ask the Prime
Minister if the Civil Service Commission has reported on any department other than the Postal department?


William Lyon Mackenzie King: Not that I
am aware of, but I could not say positively.


William Garland McQuarrie: There is just one
other question I wanted to ask the Prime Minister. What has held up the revision of the salaries of the other departments?


William Lyon Mackenzie King: I think only
the size of the work being undertaken. I understand the Civil Service Commission is going ahead with the revision of salaries pertaining to employees of the other departments.



PRIVATE BILLS


[Stage Direction]
Bill No. 123, for the relief of Nora Pearce.- Mr. Boys.
Bill No. 124, for the relief of Albert Francis Ray.-Mr. Garland (Carleton).
Bill No. 125, for the relief of Irene Mildred Jeffrey.-Mr. Boys.
Bill No. 126, for the relief of Florence Mitchel.-Mr. Martell.

[Stage Direction]
(Questions answered orally are indicated by an asterisk).

Hon. Mr. MARCIL (Bonaventure):: 1.	How much was paid in 1923 to the Quebec Oriental and the Atlantic, Quebec and Western Railways, respectively, for the carrying of the mails and under what arrangement?
2.	Was any amount so earned paid to the Receiver General and what was that amount and under what arrangement ?


Hon. Mr. STEWART (for Postmaster General) :: 1.	Quebec Oriental railway, $21,490; Atlantic, Quebec and Western railway, $20,063.40. Under provisions of Order in Council P.C. 1896 of the 13th September, 1922, fixing rate of payment to railways for conveyance of mails and the regulations governing payment for such service.
2.	Yes, Quebec Oriental railway, $6,017.20; Atlantic, Quebec and Western railway, $20,063.40. Under the provisions of section 8 of the subsidy acts, granting subsidy for the construction of that section of these railways between Black Cape and Gaspe, which required the railway to render service to the government up to three per cent per annum of the subsidy paid.


BRITISH PREFERENCE
Mr. CHURCH:: 1.	Have any representations been made to His Majesty's government of Great Britain regarding the British preference?
2.	Is it the intention of the government to make such representations ?
3.	What communications, if any, have been received by the government on the question?


William Lyon Mackenzie King: I
might answer these questions orally, as follows:
(1)	At a meeting of the Economic Conference in Geneva, at the request of the British government, representations were made to the British government with respect to the British preference, and I tabled at an early stage this

Questions

session a copy of the representations that were then made. I think the representations also appear in Hansard.
(2)	This question will be answered by the answer to No. 1 which I have just given.
(3)	There have been numerous communications from industrial and other interests in Canada which come to the different departments.


FORT SMITH DISTRICT AGENT
Mr. SHAW:: 1.	Is Mr. C. S. MacDonald, Dominion Land Surveyor, an employee in the department of the Interior?
2.	Was Mr. MacDonald appointed to the position of District Agent of the Northwest territories, at Fort Smith, N.W.T.?
3.	If so, is Mr. MacDonald fulfilling the duties of that office? If not, why not?
4.	(a) What person, if any, is acting as District Agent at Fort Smith, N.W.T.? (b) What salary does he receive and (c) from what fund is he being paid?


Hon. Mr. STEWART:: 1.	Yes.
2.	He was notified by the Civil Service Commission to report on receipt of instructions from the department.
3.	No. Has not got necessary administrative experience.
4.	(a) J. A. McDougal; (b) Salary, $2,700, living allowance, $1,500; (c) Northwest Territories Administration vote.


MR. G. F. KNIGHT
Mr. DELISLE:: 1.	Has one G. F. Knight been removed from the situation of superintendent of St. Malo shops, Quebec city, and if so, at what date?
2.	Is the same G. F. Knight still employed by the Canadian National Railways, and if so, where, and in what capacity ?
3.	What salary was the said G. F. Knight receiving when superintending the St. Malo shops, and what salary is he receiving now?


Hon. Mr. GRAHAM:: 1.	Yes, transferred, March 31, 1924, to
Moncton, as efficiency engineer.
2.	Answered by No. 1.
3.	The railway management do not consider it in the interests of the railway to publish this information.


CANADIAN NATIONAL RAILWAYS-EMPLOYEES' UNIFORMS
Mr. DOUCET:: 1 What tailoring firm or individual was given the order for uniforms for the uniformed employees of the Canadian National Railways?
2.	At what price was the order given?
3.	What quantity is ordered per year (a) of suits; (b) of overcoats; (c) of caps?


Hon. Mr. GRAHAM:: These questions are very indefinite. As to the first-name of IMr. Mackenzie King.]
firm or individual supplying uniforms it is to be remembered that the line extends over 22,600 miles. As to the second question, it is likely that there would be different prices. And the third question is as to quantities.
I call attention to the fact that I gave similar information to this on another matter last year. It is going to cost the Canadian National Railway Company considerable money. The Canadian National Railways got a very good price on some of their rolling stock and other companies were charged a higher price. As soon as I tabled the information the other companies, of course protested, with the result that the Canadian National Railways have been instructed that they cannot buy any more goods at that price, and that they will have to pay the high prices. Hon. members will see that difficulties sometimes arise if these prices are given to competitors, with a loss to the railway, if not to the country.


Sir HENRY DRAYTON:: I concur to a
certain extent with what the minister says. The position we have always taken has been that any information in connection with current business which would hurt the carrying on of the concern ought not to be given, and that only information which has regard to the ordinary management in connection with past years should be given. The situation is different so far as capital is concerned.


WELLAND CANAL POWER CONTRACTS
Mr. CHURCH:: 1.	"What are the terms of the contracts or agreements or leases between the Cataract Power Company or the Dominion Power and Transmission Company and the government in respect of the use of water from the Welland canal for power purposes?
2.	How much water is allowed to be diverted from the Welland canal under the terms of the leases or agreements ?
3.	What is the installed capacity of the Decew Falls plant?
4.	How much water in cubic second feet is required to operate this plant to full capacity?
5.	How much water is being used to carry the load there now?
6.	Do the terms of the lease or leases provide for an unlimited use of w'ater to operate at maximum capacity?
7.	What are the annual rentals payable to the department for the uses of these waters?
8.	Have these rentals been paid in full to date?
9.	If not, how much is the company in default on rentals?
10.	Is the rental called for in any way related to the maximum use of the water?


Hon. Mr. GRAHAM:: 1.	The date of the leases is December 31, 1902. Provision is made for three terms of twenty-one years each with rental to be ad-

Questions
justed at each renewal date. The flow lease is 1,000 cubic feet per second from the Welland canal at Allanburg. The annual rental for the term ending December 31, 1923, was $30,000, plus $60 per cubic foot per second of flow in excess of 1,000 cubic feet per second. The lessee agrees to supply all necessary power for the lighting and operating of the Welland canal at rates satisfactory to the lessor.
2.	See answer to question No. 1.
3.	Approximately 45,000 horse power.
4.	Approximately 1,750 cubic feet per second.
5.	The average daily consumption is approximately 1,250 cubic feet per second.
6.	No.
7.	See answer to No. 1.
8 and 9. The fixed rental for the term ending December 31 last, is paid in full. The rentals for any excess flow are subject to legal determination. The renewal of the lease for the second term has not yet been completed.
10. No, for years in which the maximum use does not exceed 1,000 cubic feet per second:	Yes, for each year in which the maximum use exceeds 1,000 cubic feet per second.


ONTARIO HYDRO-ELECTRIC
Mr. CHURCH:: 1.	Are rentals collected from the Hydro-Electric Power Commission of Ontario in respect of waters of the Trent canal used for power purposes ?
2.	What rentals are payable by the Hydro-Electric Power Commission in respect of waters of the Trent canal used for power purposes?
3.	Have these rentals been paid in full?
4.	What amount of rental was due from the Dominion Power and Transmission Co. (Cataract Power Co.) for the last fiscal year, and what does this rental amount to in comparison with the maximum horse power developed ?
5.	What amount of rental was due from the HydroElectric Power Commission for their various power developments on the Trent canal at the close of the last fiscal year, and what does this rental amount to in comparison with the maximum horse power developed?


Hon. Mr. GRAHAM:: 1.	Yes.
2.	$74,080, plus additional rental up to a maximum of $8,117 for the use of extra installation.
3.	Yes.
4.	$30,000, plus an amount for the use of flow in excess of 1,000 cubic feet per second, which amount is subject to legal determination.
5.	$55,802. There is no relation between this amount of arrears and the maximum horse power developed. The total annual rental for the term ending October 31, 1923, was equivalent to $1.79 per horse power of turbine installation.
159i


RURAL MAIL ROUTES
Mr. FINDLAY:: 1.	How many Rural Mail routes has the government opened since coming into office?
2.	Where are these new routes situated?
3.	At what dates were they opened?
4.	In how many towns or cities has free mail delivery been given or extended?
5.	What towns or cities have been so favoured?


Hon. Mr. STEWART (for the Postmaster General):: 1,	2 and 3. Port Credit Rural Route No. 2 (Ontario), 16th January, 1922.
Hanna Rural Route No. 2 (Alberta), 1st April, 1922.
Bentley Rural Route No. 2 (Alberta), 6th May. 1922.
Ivillam Rural Route No. 2 (Alberta), 1st February, 1923.
Port Haney Rural Route No. 1 (British Columbia), 1st September, 1923.
West Devon Rural Route No. 1 (Prince Edward Is.), 1st January, 1924.
Chateauguay Rural Route No. 2 (Quebec), 1st January, 1922.
The above were authorized before the present government took office although established on the dates mentioned.
Ivillam Rural Route No. 1 (Alberta), 4th July, 1922.
Clarkleigh Rural Route No. 1 (Manitoba), 3rd April, 1923.
Hayfield Rural Route No. 1 (Manitoba), 1st September, 1922.
Hayfield Rural Route No. 2 (Manitoba), 1st September, 1922.
North Edmonton Rural Route No. 2 (Alberta), 1st October, 1923.
Westlock Rural Route No. 2 (Alberta), 1st January, 1924.
The above are services which were temporarily suspended owing to inability to secure reasonable tenders.
Picardville Rural Route No. 1 (Alberta), 1st February, 1923.
Victoria Road Rural Route No. 1 (Ontario), 1st April, 1923.
Gunn Rural Route No. 1 (Alberta), 1st October, 1923.
Dunstable Rural Route No. 1 (Alberta), 14th March, 1924.
Hall's Harbour Rural Route No. 1 (Nova Scotia), 1st August, 1923.
Centreville Rural Route No. 2 (Nova Scotia), 1st October, 1923.
Shelburne Rural Route No. 2 (Nova Scotia), 1st November, 1923.
Stanley Rural Route No. 7 (New Brunswick), 17th July, 1922.
West Bathurst Rural Route No. 3 (New Brunswick), 1st May, 1923.
Questions

Hampton Rural Route No. 2 (New Brunswick), 1st June, 1923.
Hartland Rural Route No. 5 (New Brunswick), 1st August, 1923.
Tobique River Rural Route No. 1 (New Brunswick), 1st October, 1923.
Coldstream Rural Route No. 3 (New Brunswick), 1st November, 1923.
Coldstream Rural Route No. 4 (New Brunswick), 1st January, 1924.
Shannon Rural Route No. 3 (New Brunswick), 1st January, 1924.
College Bridge Rural Route No. 1 (New Brunswick), 8th February, 1924.
St. Jean Port Joli Rural Route No. 2 (Quebec), 14th February, 1924.
St. Isidore Junction Rural Route No. 1 (Quebec), 16th October, 1922.
St. Clothilde de Chateauguay Rural Route No. 1 (Quebec), 15th December, 1922.
Abbotsford Rural Route No. 2 (Quebec), 9th March, 1924.
Ange Gardien de Rouville Rural Route No. 2 (Quebec), 9th March, 1924.
Vinton Rural Route No. 1 (Quebec), 19th March, 1923.
Keene Rural Route No. 3 (Ontario), 15th October, 1923.
The above are rearrangements of services which were already in existence when the present government took office.
St. Fortunat Rural Route No. 1 (Quebec), established 11th February, 1924.
4.	Inauguration of letter carrier delivery, name of town, number of additional carriers employed, and date inaugurated: Waterloo, 5, July 3, 1922. North Bay, 7, October 7, 1922.
5.	Extension of letter carrier delivery, name of town, number of additional carriers employed, and date of extension: Hamilton,
I, December 16, 1922.	Windsor-Sandwich West, 2, Sandwich and Ford, 5, April 1, 1923. Niagara Falls, 2, June 30, 1922; 2, February 2, 1924. Oshawa. 1, December, 24, 1923. Fredericton, 1, March, 8, 1922. St. John, 1, June 30, 1922. Ottawa, 6, November 19, 1923. Peter-boro, 1, November 19, 1923. Winnipeg, 2, December 16, 1922 ; 3, February 24, 1923; nil, July 17, 1923. Saskatoon, nil, June, 5, 1922; nil, to 10 houses only, October 17, 1923; nil, to 6 houses only, January 2, 1924; nil, to 53 houses, February 14, 1924; nil, to 7 houses only, May 13, 1924. New Westminster, 1 November 10. 1922. Edmonton, nil, to 3 houses only, December 8, 1922, Edmonton, nil, to 6 houses, June 1, 1923. Nanaimo, nil, March 15, 1922. Vancouver, nil, September
II,	1922. Vancouver, nil, to 2 houses, September 25, 1923. Calgary, nil, to 14 houses, November 14, 1922.	Toronto-Keelesdale
District, nil, June 1,	1923; Rivercourt

District, 1, January 15, 1924; Warren Crescent, 1, O. C. March 8, 1922; section of Lambton, Flats and to both sides of Dundas street to Humber river, November 18, 1922. Section of Spadina Heights bounded by Coulson avenue, Bathurst street, Burton road to Spandina road and Kilberry avenue, 1, O. C. March 8, 1922, November 22, 1922. Certain residents of Don Cliffe drive easterly from 3261 Yonge street, nil, March 13, 1923.


CANADIAN NATIONAL RAILWAYS-MILEAGE OPERATED
Henry Lumley Drayton: What was the railway mileage operated by the Canadian National Railways (a) in the Atlantic; (b) Central; and (c) Western regions in the year 1923?


George Perry Graham: Atlantic Region	 2,760.08
Central Region	 7,830.91
Grand Trunk Western Lines..	991.69
Western Region	 10,268.21
System steam operated mileage December 31st, 1923	 21,850.89


BANK NOTE CIRCULATION TAX
Mr. GARLAND (Bow River):: 1.	Is there a tax on bank note circulation in the Dominion?
2.	If so, what is the amount and in what manner i9 it applied?
3.	When did it come into force?
4.	How much revenue has been received in each year from this source?
5.	What is the cost of collection?


Hon. Mr. ROBB:: 1.	Yes.
2.	One fourth of one per cent quarterly calculated on the basis prescribed by section 3 of the Special War Revenue Act, 1915.
3.	1st January, 1915.
4.
1915- 16	$ 1,300,446.80
1916-	17	
1,114,023.301917-	18	
1,115,757.651918-	19	
1,099,764.441919-	20	
1,170,223.451920-	21	1,257,533.701921-	22	
1,293,697.431922-	23	
1.244,437.141923-	24	
1,236,957.575.	The expenses of collection are inconsiderable, as the tax does not involve the employment of any special staff.


HON. WILLIAM PUGSLEY
Mr. HANSON:: 1. How long has the Honourable William Pugsley occupied the position of Investigator of war claims?

Questions
2. How much has he drawn of public moneys during the period he has been so employed?
3 How much of this has been salary and how much expenses ?
4.	How many claims have been heard, and how many decisions given ?
5.	What has actually been done as a result of the decisions given ?


Hon. Mr. COPP:: 1.	Appointed 13th March, 1923.
2.	$15,020.72.
3.	Salary $10,209.68; expenses $4,811.04.
4.	528 claims have been heard aggregating $31,295,619.99 but no decisions have been given.,
5.	Answered by the latter part of No. 4. UNOPPOSED MOTIONS FOR PAPERS


KOOTENAY FLATS
Mr. HUMPHREY:: For a copy of all letters, telegrams, memoranda, orders in council, and other documents in the possession or under the control of the government of Canada or any department thereof, of date subsequent to April 12, 1922, relating to the proposed reclamation of the area in the province of British Columbia and the state of Idaho known as the Kootenay Flats.


CANADIAN NATIONAL RAILWAYS-COAL
Mr. CARROLL:: For a copy of all letters, telegrams, receipts, vouchers, tenders, awards and other documents having reference to or bearing on an item of $7,360,091.85, Canadian National Railways, Toronto, Coal, as appears in Auditor General's Report Volume III, year ending March 31, 1923, at page W-184, including the names of the persons, firms and corporations from whom the Canadian National Railways purchased said coal and the prices paid therefor and any contracts in writing relating to said coal.


George Perry Graham: I ask the hon.
member to allow this motion and the following motion which appears in his name relating to the same matter, to stand. Perhaps I can get the information, but I will let him know in a day or two.


Hewitt Bostock: Stands.


LEAGUE OF NATIONS-LABOUR STOKERS AND TRIMMERS-AGE
William Lyon Mackenzie King: On behalf of the
Minister of Labour (Mr. Murdock), I beg to move that the House go into Committee of the Whole on Tuesday next to consider the following proposed resolution which stands in his name:
Resolved, That it is expedient to bring in a measure to confirm a certain Draft Convention fixing the minimum age for the admission of young persons to employment as trimmers or stokers, adopted at Geneva on the 11th day of November, 1921, by a General Conference of the International Labour Organization
of the League of Nations; to provide that any persons under the age of 18 years shall not be employed or work as trimmers or stokers on vessels engaged in maritime navigation excluding ships of war, vessels mainly propelled by other means than steam, and school ships, or training ships.
' Motion agreed to.


CHILDREN AND YOUNG PERSONS EMPLOYED AT SEA
[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister)	(for the Minister of
Labour) moved that the House go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to bring in a measure to confirm a certain Draft Convention concerning the Compulsory Medical Examination of Children and Young Persons Employed at Sea, adopted at Geneva on the 11th day of November, 1921, by a General Conference of the International Labour Organization of the League of Nations; to provide that the employment of any child or young person under 18 years of age on any vessel engaged in maritime navigation, other than vessels on which only members of the same family are employed, shall be conditional on the production of a medical certificate attesting fitness for such work and that the continued employment at sea of children and young persons shall be conditional on the repetition of medical examination at intervals of not more than one year.
Motion agreed to.

[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) (for the Minister of Labour) moved that the House go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to bring in a measure to confirm a certain Draft Convention concerning Unemployment Indemnity in Case of Loss or Foundering of the Ship, adopted at Genoa on the 9th day of July, 1920, by General Conference of the International Labour Organization of the League of Nations; and to provide that in the case of loss or foundering of any vessel the service of a seaman shall terminate before the date contemplated in the agreement, he shall be paid unemployment indemnity for the days during which he remains in fact unemployed for a period not exceeding two months.
Motion agreed to.


[Stage Direction]
The House in committee of Ways and Means, Mr. Gordon in the chair.
1. Resolved, That it is expedient to introduce a measure to amend the Special War Revenue Act, 1915, and amending acts, by providing that the rate of the consumption or sales tax imposed by section nineteen BBB of the said act shall be reduced from six per cent to five per cent.
James Alexander Robb: The hon. member for West York
(Sir Henry Drayton) on Friday evening made

Ways and Means-Sales Tax
some constructive suggestions regarding the administration of the sales tax. He pointed out that in a return tabled at a previous session, it had been stated that 3,170 firms were in arrears. I have had the officers of the department go carefully through the records, and I am now in a position to say to my hon. friend that a large number, probably 50 per cent, were in arrears under 'the 1920 act, and a large proportion of the balance of those cases arose under the 1922 act, which, for administrative purposes, was the same as the 1921 act. When we consider the amount of revenue collected, namely, over $100,000,000 in 1923-24, the outstanding items are not unduly large and no trouble in their ultimate adjustment is anticipated.
The proposed resolutions now before the committee provide that all wholesalers may be granted a license on an equal footing. The resolutions do away with the exemption from license of manufacturers of goods under $10,000 per annum. This is designed to protect further the revenue and also to protect large manufacturers against unfair competition by smaller manufacturers, which competition in some cases in the aggregate, is considerable.
The hon. member also referred to subsection 9 respecting the refund on goods imported free of duty. The purpose of this subsection is to protect a manufacturer who imports raw materials in respect of which, on the sale by the manufacturer, the freight paid would be included in the value on which sales tax had been paid. The discrimination *would be in the case of an importer of a like finished product the freight on which would not be included in the value for sales purposes.
The hon. member also stated that wholesalers are divided into two categories- licensed and unlicensed. The new resolutions provide that all wholesalers may now be licensed. The object of this change is to simplify the administration by reducing the numerous cases of refunds to which my hon. friend very correctly referred as involving private and public expense.
The purpose of paragraph B of section 12 to which the hon. member also referred, is to facilitate the securing of refunds. Under the proposed resolutions any wholesaler may take out a license, and to this extent paragraph B will be applicable. Deductions of sales tax on goods on hand on January 1, 1924, will be all disposed of by June 30, 1924. These refund claims have already been largely *disposed of.
[Mr. Kobb.l
My hon. friend referred to subsection 13 which provided that the minister may determine the value for the tax in circumstances where it is difficult to determine the value otherwise. This section deals with a very restricted class of cases, and it is modelled upon section 46 of the Customs Act which has been in existence since 1888.


Henry Lumley Drayton: I have not been quite able to follow my hon. friends remarks; it is rather hard to follow anything in connection with this matter; but I was able to follow one thing and- that is that he says-I hope he will correct me if I am wrong-that perhaps fifty per cent of all these arrearages are in connection with the legislation of 1921.


James Alexander Robb: That is the memorandum
from the department.


Henry Lumley Drayton: What kind of
enforcement of law does the minister conceive that to be? It is more inconceivable now than it ever was. As regards the admission of the goverment that they have left uncollected sales taxes, to the extent that is now admitted, ever since 1921, the excuse is worse than the original suggestion. What possible excuse is there for this? Are there favoured traders? This is a tax that under its idea ought to be collected' promptly. I admit that in connection with every one of these changes in taxation we have delays. There has to be erected for it machinery which it takes a considerable time to get properly working. I forget now whether it was in May or in June 1921 the act to which my hon. friend refers came into operation; and I freely admit that of necessity the department would require some time before it could get the new legislation working effectively. But it is a long time now since the close of 1921. What possible excuse can the minister put forward for the statement which the department is now giving us?


James Alexander Robb: I hope my hon. friend has not gathered the impression that the statement was intended as a reflection on an act passed during his administration. That was very far from my thoughts. I quite agree that a new act always involves changes and delays, but I am advised by the department that in large part these delays are due to the fact that litigation is pending in the courts: appeals are made to the courts and we have to await the ruling.


Henry Lumley Drayton: That is quite
right in some cases. There was a delay, for instance, in connection with an action brought by the retail merchants wit-h Darticul*>- rafor-

Ways and Means-Sales Tax
en.ce to the tailors. That is the only case I have in mind at the moment, however, and it was decided months, if not indeed years, ago; I think the decision was given in 1922,- my hon. friend's adviser is here and he can tell us whether that is correct or not. I am strongly of the view that there are no legal questions outstanding which at all turn on the legislation of 1921, -when we got rid of the question of the wholesaler on the one hand and the retailer on the other. I think my hon. friend is wrong.


James Alexander Robb: I cannot give my hon. friend
the details, but the information given to us by the department was to the effect that the delay was due to the courts. I take no serious issue with the statement of my hon. friend that as far as possible the sales tax should be collected pretty sharply, for that is the only way in -which any business can be run. But when we consider the total amount of taxes collected and the small amount that is outstanding, I think my hon. friend will admit that the department is doing fairly well.


Henry Lumley Drayton: But we do not know what the amount outstanding is.


James Alexander Robb: I have not the figures, I am
sony.


Henry Lumley Drayton: The minister
ought to give us that information so that we might see whether the amount outstanding is reasonable or not.


James Alexander Robb: I will get it.


Mr. MacLEAN (Prince):: There is another side to the question. I have received a number of letters from firms who claim that they are charged the sales tax over and over again under the regulations that came into effect last January, when they were allowed to show the sales tax on their invoices. Previous to that, they say, they had absorbed the sales tax in the price, and then they were allowed to show it on the invoice. The merchants complain now that instead of paying 6 per cent they pay in some cases 8 and 10 per cent and even as high as 14 per cent. I do not know whether or not this complaint is well founded, but I have received a number of communications to this effect. Another complaint that has reached me, in regard to which I have received many letters, is that the wholesale houses have intimated to the retailers their refusal to deduct from their prices the percentage of the reduction in the sales tax. It seems to me that if there is a penalty for failure on the part of manufacturers to collect the sales tax, the government should be equally strict in seeing to it that in regard to any reductions
that have been made in the tax, and any exemptions from the sales tax that have been provided, the benefit should go to the retail merchants and the public in general. I am not going to weary the House by reading the letters that I have received unless I am asked to do so; but I want to repeat that it is the duty of the government to make sure that any reductions brought about in the sales tax are put into effect. We have had the statement from an hon. gentleman in this House that steel had been reduced in price, as well as other articles that enter into the manufacture of goods affected by the sales tax. If that is so the price to the consumer should be proportionately less. The letters that I have received from various firms go to show that notwithstanding the fact that the tax on many articles has been reduced or abolished there has been no corresponding reduction in price. This is a matter well worth the attention of the government.


James Alexander Robb: With reference to the remission of the sales tax, I think my hon. friend will see that this is a question that must be settled between the dealer and his customers;
I have only to state the fact for him to understand how impossible it is for the government to undertake to settle with all the wholesalers from the Atlantic to the Pacific. If the wholesaler or the manufacturer does not deal fairly with the retailers I fancy they will take care of him. As to the complaint that certain dealers are not reducing their prices in keeping with the reductions in the sales tax, that is a matter which will be adjusted by competition. And competition, I think, is being provided.


Henry Lumley Drayton: I want to point out to the minister that the answer that was given by the Minister of Customs (Mr. Bureau) deals with the question of litigation. In the month of May the Minister of Customs answered:
It is not possible to state the amount of sales tax due by provinces, as at 1st February, 1924,
That was three months after the time the taxes ought to have been paid, because the Acting Minister of Finance (Mr. Robb) admits that these taxes ought to be collected concurrently with business. It is impossible even to tell what the balance is. For the minister's information I may say that I am quoting from Hansard of May 7, at page 1906. At that time the Customs department could not tell us what was owing to them. My hon. friend stated a little while ago that the amount was negligible, but I would point out that he does not know. If the answer given by the Minister of Customs is right, no one

Ways and Means-Sales Tax
knows anything about the matter except that the taxes are not being collected; that is all we know. My hon. friend ought to bring down to the House a statement showing what taxes are uncollected and what balance is due. As to the number of firms which the department knew to be in arrears, I would point out that the answer given by the department obviously is incomplete, because they cannot say what firms are in arrears when they do not know what taxes are owing as far back as February 1924. To regard this answer as complete can only mislead the House. But in that incomplete answer, which gives the grand total of firms in arrears as 3,170, the list is subdivided showing the number of those who are in arrears three months and under, and those in arears over three months. Those in arrears for three months and under total 704. I do not know as at what date that would be, because we are not given that information. Then firms in arrears for over three months number 2,466. The answer proceeds:
Of the 2,466 firms and individuals in arrears of sales tax for a period of over three months, 431 are retail bakers and confectioners who have refused to pay sales tax pending the decision of the Supreme Court in the case of Rex vs. Versailles Sweets; -
So 431 firms are in arrears as the result of pending litigation. I should like to be corrected if I am wrong, but I think the baker question arose on the legislation of two years ago. Mr. Russell is here and he can say if I am wrong.


James Alexander Robb: He does not know.


Henry Lumley Drayton: In the absence of any information I am going to assume that my recollection is correct. The answer continues:
-442 are cases of firms and individuals in liquidation; 363 firms and individuals are paying arrears by instalments and prosecutions have been entered in 463 cases.
In the balance of the cases the department is corresponding with the firms and individuals concerned with a view to making satisfactory arrangements for payment of arrears before legal action is taken.
These latter cases require nursing as drastic action would probably result in financial failures.
Does not my hon. friend think the committee should be informed what taxes are in arrears and how long they have been in arrears? Surely, by this time the department knows what taxes are owing of the end of last month. Perhaps my hon. friend will give the committee information as to how long arrears are allowed to stand before any check is attempted, and when the accounts are sent in.


James Alexander Robb: I am not sure that I am
able to give my hon. friend the exact information he requires. I point out to him,

however, that under the special War Revenue Act of 1915 there is this proviso which safeguards the government:
Notwithstanding the provisions of the Bank Act and the Bankruptcy Act, or any other statute or law, the liability to the Crown of any person, firm or corporation, for payment of the excise taxes specified in the Special War Revenue Act, 1915, and amendments thereto, shall constitute a first charge on the assets of such person, firm or corporation, and shall rank for payment in priority to all other claims of whatsoever kind heretofore or hereafter arising save and except only the judicial costs, fees and lawful expenses of an assignee or other public officer charged with the administration or distribution of such assets.
So the government are fairly well protected. I think my hon. friend will admit that it is difficult to give the exact information, because some of these cases may be pending in court; some of the firms may be bankrupt and it has not been determined whether there is sufficient to pay even the government claims. For that reason the detailed information which my hon. friend requested, and quite reasonably, 4 p.m. has not been brought down. Obviously the officers could not bring down information of which they are not certain. But to show that they are doing fairly well I may point out that under the sales tax of 1923-24 the collection was more than $100,000,000, an increase of $10,000,000 over 1922-23, and an increase of $39,000,000 over 1921-22. It seems to me that that is sufficient evidence that they are not neglecting the business of the country but are collecting these taxes fairly well.


Henry Lumley Drayton: I would think, Mr. 'Chairman, that those figures absolutely prove the situation which these returns indicate. Surely you would expect with the doubling up of the tax a doubling up of the previous receipts. We started in with a sales tax of one and one, and then one and a half and one and a half. My hon. friend goes back to the one and a half and one and a half, totalling three, and compares that with a net of six per cent, and thinks it a matter for congratulation because the collection is $39,000,000 more. On that basis it should be much more. But further than that, the machinery for collecting the tax ought to be so much better, and I would expect to find a multiple instead of a mere increase. Just look at what happened in connection with the sales tax, collections went up rapidly just as soon as the machinery was perfected and in running order. If my hon. friend cannot bring down the information, I do not know where we can get it unless we move for a special committee to find out just how this tax is working and what the trouble is in

Ways and Means-Sales Tax
collecting it. It is information which ought to be available, for it touches every business in the country.


James Alexander Robb: I have been looking at the return brought down on May 7, and considerable care seems to have been taken in its preparation. I imagine the department brought down all the information then available. May I point out to my hon. friend that while it is true the tax was increased fifty per cent, the revenue was increased sixty per cent?


Henry Lumley Drayton: One hundred
per cent; it is double-from three to six per cent.


James Alexander Robb: No.


Henry Lumley Drayton: Certainly.
Surely my hon. friend knows the history of this legislation. The first tax was one and one, the second was one and a half and one and a half the third was an addition by the right hon. Minister of Finance (Mr. Fielding) making an increase of fifty per cent, and then it was made six per cent. Now six per cent is not an increase of fifty per cent on three per cent, but an increase of one hundred per cent.


James Alexander Robb: The increase of fifty per cent, as a matter of fact, only applied in one instance. There was no. pyramiding of the tax as under the previous act.


Henry Lumley Drayton: In the debate
of last year it was shown that there was a pyramiding of the tax. Surely my hon. friend can tell us down to what date we can find out the truth about the collection of these taxes. This government run their business in such a way that they do not know what is owing to them in connection with current taxation as far back as February last. My hon. friend can at least say down to what date they have followed this business and know where it stands. Do they know as far back as the end of last year what was owing, and will they condescend to give us that information?


James Alexander Robb: On May 7 the Minister of
Customs tabled replies to questions which my hon. friend himself has just read to the committee. Those replies were based on the records of the department. My hon. friend must be reasonable. He knows very well, it takes some time for the minister to get returns from all the different outposts in different parts of Canada. I shall direct my hon. friend's inquiry to the department, and if there is available information more complete and up-to-date, I promise him he shall have it.


Henry Lumley Drayton: But there must be some date on which the information is complete, and I merely ask my hon. friend what date that is. Here is the answer that was given:
It is not possible to state the amount of sales tax due by provinces, as at 1st February, 1924, as audits have not been completed to that date.
To what date have we completed the audit? At what time does the department know how the business stands? Surely that is a very plain and simple question. Will my hon. friend undertake at least to give the House that information?


James Alexander Robb: I will undertake to direct the inquiry of my hon. friend to the minister in charge and to the department, and will endeavour to have the information to-morrow.


Henry Lumley Drayton: Had this not
better stand till the minister in charge is here? He might be able to tell us at once.


James Alexander Robb: I think we had better try and make some progress.


Henry Lumley Drayton: Does my hon.
friend know whether there has ever been an audit yet.? Here we have evidence that it cannot be told how we stand on 1st February, 1924. Has the department ever been in a position to know how we stand? Surely my hon. friend can tell us that.


James Alexander Robb: I would like to say this for the department. As Acting Minister of Finance it was but natural for me-and, I imagine, for my friend when he was Minister of Finance- to take a great interest in the administration of the Customs department, which is the big collecting department of the country's revenues. I am advised that there is no department of the public service that has a better check-up system than the Customs department, and if anyone has any doubt about it, let him try and smuggle an automobile or anything else into Cajnada and see how quickly he will be rounded up.


Henry Lumley Drayton: We are now
getting into automobiles, instead of customs taxes, but I think that is probably the nearest argument my hon. friend can make with the information he has.


Mr. CALDWELL:: What machinery has the government for seeing that everybody pays sales tax who should pay it? I would also like to refer to a remark made by the hon. member for West York on Friday last, a remark with which I thoroughly agree. There does not seem to be any very sound principle on which this sales tax is based. I interjected

Ways and Means-Sales Tax

on Friday last that I did not think there ever was any sound basis for a sales tax. I have always objected to it, and the discussion today has only confirmed my conviction that this tax is not based on any sound principle. It would be impossible for the government to see that everybody pays this tax who should pay it, without maintaining costly and cumbersome machinery. It is evidently quite hard for them to make an audit and find how much sales tax is outstanding. The sales tax is based on consumption, certainly. Now I think we wdl all agree that in order to prosper we must facilitate business in every way possible, but the sales tax, to my mind, is a clog on the wheels of industry. It is a fine on every one who attempts to do business in the commodities that bear the tax. The sound principle is to tax a man on what he is worth, and not on what he consumes. I would even be willing to do away with the exemptions in regard to income tax, and tax even small incomes a slight amount, with very sharp gradations in the tax as the incomes become greater. I think that is the only sound way in which to raise taxation. Take a poor labourer with ten children-and it is usually the poor man who has a large family; I do not know just what the reason is, but that is usually the fact-he is paying an equal amount on the goods he consumes as the millionaire, which I think every one will admit is not a sound principle. Then, take different classes and different occupations. Some occupations are buying far more goods bearing a sales tax than others. Take the farmer, for instance. Previous to this budget-he had to pay sales tax on a large amount of the equipment necessary in his business. Compare him with a city lawyer, whose only equipment is his books.


James Alexander Robb: Upon what equipment does
the farmer pay sales tax now?


Thomas Wakem Caldwell: Not under the present
budget, but under the previous budget he had to pay a sales tax on his machinery and practically all his raw material, except fertilizer.


Henry Lumley Drayton: Not on his
raw material.


Thomas Wakem Caldwell: Yes, I would like my hon. friend to name one raw material on which the farmer did not pay sales tax previous to this budget. He paid sales tax on fertilizer up until last year or the year before. I urged the Minister of Finance of that day to put fertilizer on the free list. He did not do it, but he removed the sales 
tax, because, I think, he Realized it meant an immense tax on the man who was using fertilizer. Contrast the sales tax paid by the farmer previous to this budget with what the city lawyer paid,-and by the way, I do not think there is much comparison between their incomes. The farmer who has only been making a debt in the last four years was paying a sales tax on everything he bought. I would like to go further and refer to the soldier settler, who has had a very hard struggle to stay on the land, and a great many of whom have already left. They had to pay sales tax on all their equipment. Therefore, I do not think the sales tax was ever based on a sound business principle. I would like to know from the minister what machinery the government has for seeing that everybody who should pay the sales tax does pay it.


James Alexander Robb: They have inspectors going
about from place to place all the time, and it is because we are satisfied1 that some people have been evading the tax that we are introducing this legislation to provide for a more complete survey. I would like to ask my hon. friend a question; he has asked me one: What system of taxation better than this would he suggest to get $100,000,000 of revenue?


Thomas Wakem Caldwell: I can tell my hon.
friend very readily; I thought I had answered that when I was on my feet; I suggest income taxation. Do away with the exemption on an income of even $2,000, if you like. You will naturally have to tax a small income a very slight amount, but then the tax could rise with very sharp gradations. I think that is the only sound principle upon which to tax, because it is taxing a man on what he is worth. Take a man working in a mill for three dollars a day, and having ten children. He has to pay a sales tax of six per cent on all the boots and shoes he buys for his children,-I am not speaking of this budget. How many of his children will have boots and shoes to wear to school? I admit that this budget has made a great difference. Still, the sales tax is not based on a sound principle, and I am speaking of the principle of the thing, not the degree or extent of the tax. With a sales tax of six per cent on boots and shoes, a man working in a mill at three dollars a day and raising a family-


James Alexander Robb: I object to my hon. friend
referring to a sales tax of six per cent on boots and shoes. There is no such tax in existence to-day.

Ways and Means-Sales Tax


Thomas Wakem Caldwell: I admit that; the tax
is only 2i per cent to-day. But it is not the extent of the tax I am speaking of; it . is the principle of the tax I object to.


John Babington Macaulay Baxter: I am not in the happy
position of my hon. friend from West York and the minister. They both have been discussing how much money is raised under this law. I am at a loss, at the end of a three hour period that I spent trying to find out what the law was, to know what the law is.
I have not found out yet, and I think it is going to take me a little longer. What I am going to say just now has no political bearing on the question. I am going to put in a plea for some convenience in legislation of this character. I am going to ask the minister, when the bill comes down, to give us a consolidation of the entire War Revenue Act. The statutes, I understand, are being revised, or are about to be revised. Now seeing that every merchant, and almost every lawyer, needs to consult this legislation it would be a matter of great accommodation if the statutes for this year were to show the act as it is without our having to refer to amendments here and there. This is a proceeding which takes up an enormous amount of time and patience, and when you have gone through it all, you are not quite sure that you are right. I would really urge the minister to give that point consideration, and to have whatever is enacted in the way of a special war revenue act embodied in the statutes of this session so that those needing to consult this special act will not have to refer to anything else.
Now, I would ask the minister if he would be kind enough to answer just one question. I had understood that the proposed reductions were estimated at $24,000,000. May I ask how much of that sum is attributable, or is supposed to be attributable, to the changes enacted in these resolutions?


James Alexander Robb: The sum attributable to the
reduction from 6 per cent to 5 per cent is $16,000,000.


John Babington Macaulay Baxter: What about the other reductions?


James Alexander Robb: If my hon. friend applies to
the Department of Customs he will find that they have for office purposes a consolidation of all the acts that have been in force from and after January 1, 1924.


Robert Forke: What is the title of that
act?


James Alexander Robb: Special War Revenue Act in
force on and after January 1, 1924. All the information needed is in this pamphlet.


John Babington Macaulay Baxter: I have no doubt somebody has prepared something of the kind but it is really not official. It is probably correct, but I have seen mistakes in compilations of that kind before. If my hon. friend accepts my suggestion and the government incorporates a consolidation of the War Revenue Act in the statutes of the present session it will be of the very greatest convenience to business and legal men. A great many practising lawyer's and also a great many merchants, were not aware that the consolidated acts could be obtained from the Customs, and I did not know it myself until a few minutes ago. Now, I want to return to what the minister said as to the effect of these reductions. Do I understand that it means a reduction of $16,000,000?


James Alexander Robb: We estimate that the change
from 6 per cent to 5 per cent involves a reduction in revenue of $16,000,000, but there are additional reductions that were made on boots and shoes, and other things that will bring the total up to $24,000,000. In addition to that, since the budget was brought down the government have made some reductions in the sales tax which will approximate $845,587.


Mr. CLARK:: Have you made any increases since the budget was brought down?


James Alexander Robb: No.


John Babington Macaulay Baxter: I do not know if I have
got the minister correctly or not, and I want to be clear on the point. I understood the minister to say that there was a reduction of $16,000,000 as the result of the change of one per cent?


James Alexander Robb: Yes.


John Babington Macaulay Baxter: And that the rest of the
items that are spread on the second resolution would mean $8,000,000 more. That is to say, $8,000,000 is attributable to what I might call the exemptions in the resolutions that are proposed?


James Alexander Robb: Yes.


John Babington Macaulay Baxter: So I get the idea that
$24,000,000 is the total reduction to be expected both from the changes in the customs tariff and in the sales tax? If that is an error I should like to have it corrected. I want to get a statement some time as to how much reduction will result in customs duties and how much reduction in the sales tax, and I want to get the amounts separately.

Ways and Means-Sales Tax


James Alexander Robb: 
Henry Lumley Drayton: Seven hundred
and fifty thousands.


John Babington Macaulay Baxter: I understood that that
information came from the department in some way. I do not know who gave the information, but I heard my leader make the statement and I also heard it challenged by hon. gentlemen opposite. It is not a matter of importance to me who makes the statement, but I want to get at the facts if there is anybody who can give them to me. Will the minister say that is practically a correct estimate?
If it is it surprises me. If it is not a correct estimate will the minister give me the very best estimate he can?


James Alexander Robb: That is the estimate that was made in the department.


John Babington Macaulay Baxter: But do you think it is
right?


James Alexander Robb: 
John Babington Macaulay Baxter: Does the minister candidly think it is right?


James Alexander Robb: Since that date we have made further customs reductions amounting to $473,000.


John Babington Macaulay Baxter: Added to what?


James Alexander Robb: Made on the basis of importation.


John Babington Macaulay Baxter: 
James Alexander Robb: Yes.


John Babington Macaulay Baxter: 
James Alexander Robb: 
John Babington Macaulay Baxter: Then the total reductions
from all sources will approximate $26,000,000, is that correct?


James Alexander Robb: 
John Babington Macaulay Baxter: That is near enough.


Mr. STEVENS:: Could the minister give
any idea of the amount of sales tax collections resulting from the increase and changes last year? The reason I ask the question is this:
It will be recalled that the sales tax increases of last year did not apply in some cases [Mr. Baxter.!
until the middle of the year; did not apply in some cases until 1st January. If the minister could give an indication of the increase resulting from the changes of last year that information would be acceptable.


James Alexander Robb: As my friend has correctly
stated this act only came into force on January 1, in a general way. Now, there has been a decrease in the sales tax. We expected that for the first six months. With the readjustment of business we anticipate the collections will increase and that we will get a revenue equal to the previous year, less the $24,000,000 concession we are making.


Henry Herbert Stevens: I understood from inquiries I had made that the result of last year's amendments would be a general increase of revenue. Could the minister give us some idea of the effect of the application of the two -that is, the old form of sales tax and the new 6 per cent brought in last year?


James Alexander Robb: The estimate in the department is that the general revenue for the year will not be any more than under the old act. There has been, as we expected, a decrease in the first few months' operation of the act. We expect that by the end of the year it will balance, and that we will get a revenue equal tc that of the previous year.


Henry Herbert Stevens: Do I understand that few the fiscal year 1924-25-that is the current year ending next March-the returns from the sales tax, having in mind these reductions and everything, will be equal to that of the last fiscal year?


James Alexander Robb: It may 'be a little less, because we will only have about ten months' operation.


Henry Lumley Drayton: The minister
told us he had a calculation showing $16,000,000 saved to the taxpayers and lost to the government by reducing the tax from 6 to 5 per cent. I ask for the details. What basis has the minister taken for that calculation?


James Alexander Robb: I take off one-sixth of the
total tax.


Henry Lumley Drayton: If we take it in that way, what method is adopted for arriving at the other amounts which the department arrived at?


James Alexander Robb: Calculating on the basis of
the importations and the production of the country.


Henry Lumley Drayton: I suppose this
has been reduced to writing. It would save time if the minister would just table the memorandum, instead of answering questions on each item.

Ways and Means-Sales Tax


James Alexander Robb: I do not think I have that. I had a memorandum in front of me when I was presenting the budget. I may have it at six o'clock.


Thomas Wakem Caldwell: Has the minister made a calculation of 316,000,000 due to the reduction from 6 to 5 per cent, compared with last year's revenue? The minister admits it only ' came into effect on 1st January; so that our
5	per cent sales tax the coming year will be a half per cent higher than it was for the previous year up to the 1st of January. This
6	per cent did not come into effect on very many articles until 1st January, and on some articles it came into effect on 1st August last. Is the minister making his calculation just as if the sales tax had been 6 per cent for the whole of the previous year?


James Alexander Robb: Yes, I made that calculation.


Thomas Wakem Caldwell: Then does the minister think there will be a reduction of $16,000,000? Because the tax was lower a part of the year-less than 5 per cent. Does the minister not think I am right in that calculation?


James Alexander Robb: I would not admit that .


Thomas Wakem Caldwell: I understand the suggestion of the hon. member for St. John (Mr. Baxter) only referred to the consolidation of the sales tax.


James Alexander Robb: Of all the acts.


Thomas Wakem Caldwell: The Customs Act?


James Alexander Robb: No, the Special War Revenue Act.


Thomas Wakem Caldwell: I would like to support that statement and supplement it by a further suggestion that the Customs Act should be consolidated up to date. We have the old Customs Act of 1907. I think that very few years since have passed in which it has not been amended in some form or other. I have had some experience in entering goods for customs duty. I remember on one occasion spending a whole afternoon with the customs official, when both he and I were in a hurry, trying to figure it out, starting from 1907, and taking the amendments which have been made since, we were trying to figure out what the duties were on some particular articles we were importing for building purposes. It is almost impossible for a customs official to tell you what the duty is on any given article. I suggest the minister should take into his serious consideration the matter of compiling a customs act to which an official could refer and tell you exactly the duty on any given article. It is not an impossibility,
because it is figured out in that way in the Canadian Almanac. I referred this official to the Canadian Almanac, and asked if he had one, and he said he had not. It is not the duty of the official to do the figuring and I suggest the government prepare a document for the officials which would give this information, because we have an admission from a lawyer that he could not find out what the act meant. I think the minister will admit that it is pretty difficult for a layman to tell us anything about it, and most of the customs officials are laymen.


James Alexander Robb: I shall direct the attention of the Minister of Customs (Mr. Bureau) to these matters.


John Babington Macaulay Baxter: I submit there should not [DOT] be, in the consolidation of the act, the numerous references, such as we find in some of the resolutions we are discussing. The numerical references to the Customs Act might be placed in the consolidated act, but the matters which the references stand for should be printed at length. It is very confusing to have to turn from the War Revenue Act, on the question of taxation, and refer to items 219a, 352a, and so forth. It is easily possible to enumerate these specific things, and it wmuld be much better drafting, and would add incalculably to the convenience of the people who have to deal with it. The matter is so complicated-and perhaps necessarily so-that everything that we can do which would tend to simplify it, I think, should be done.


James Alexander Robb: I will admit at once that there is room for improvement in that respect.


Henry Herbert Stevens: Would the minister not
bring in a schedule covering the items? My colleague and myself have been looking up some of these items, and it is somewhat difficult. I understand that some of the items, such as 445a, may not be the same items, as in the statute that we have in the Library, for instance; and there is no indication whether this is the new reference or the old reference. Consequently it becomes very confusing. If we had the schedule attached, showing exactly what 445 and 445a referred to, then we could figure it out.


James Alexander Robb: I have the details here, and if my hon. friend wants to know about any particular item, I will tell him.


Henry Herbert Stevens: When we come to the next item I want to discuss it.


[Stage Direction]
Resolution agreed to.
2. Resolved, That it is expedient to introduce a measure to amend subsection one of section nineteen
[Stage Direction]
Ways and Means-Sales Tax
BBB of The Special War Revenue Act, 1915, by providing that in computing the value of imported matches and of imported playing cards, the amount of the excise taxes imposed by part three, section sixteen A of the said act, and part four, section nineteen BB of the said act, shall be included in the value of such goods for the purposes of this act.
Henry Lumley Drayton: Are these both amendments to resolution of 10th April?


James Alexander Robb: No, 30th April.


Henry Herbert Stevens: We have not got that.


James Alexander Robb: It must be in the Votes and Proceedings of 30th April. The significance of this is that it has been ruled that the excise taxes on 16A and 19BB matches and playing cards, are taken into consideration for >
the purpose of the sales tax only for domestic consumption. The resolution is to put imports on the same basis as domestic articles.


Henry Lumley Drayton: Both are now being put upon the same basis, as I understand the minister.


James Alexander Robb: Yes, both domestic and import.


Henry Herbert Stevens: May I make a suggestion? As nearly as I can judge from reading Hansard and the two documents we have before us "Ways and Means resolutions, proposed amendments to resolutions of 10th April, 1924, this is really a complete substitution for resolution No. 2 in the original resolution introduced at the time of the budget. Would it not be well for the minister to move that the first resolution be dropped or discharged and that the committee proceed to consider the resolution to which I have just referred. Let us, at least, all be looking at the same documents at once, so that we may know what we are doing.


James Alexander Robb: I think the resolutions are right as they are.


The CHAIRMAN (Mr. Marcil, Bona venture) :: This resolution of 30th April follows immediately resolution No. 1 in the resolutions of 10th April.


Henry Herbert Stevens: Will the Chairman then please read the motion as he intends to put it?


Mr. Marcil  Bonaven-ture@Deputy Speaker and Chair(man)? of Committees of the Whole: (Reading):
2. Resolved, That it is expedient to introduce a measure to amend subsection one of section nineteen BBB of The Special War Revenue Act, 1915, by providing that in computing the value of imported matches and of imported playing cards, the amount of the Excise Taxes imposed by part three, section sixteen A of the said act, and part four, section nineteen BB of the said act, shall be included in the value of such goods for the purposes of this act.


John Babington Macaulay Baxter: Just to show the difficulty that is caused by drafting, I assume-and I am probably quite correct in the assumption- that the only excise taxes that are imposed on these things are imposed by the reference given, that is, part 3, section 16A and part 4, section 19BB of the act. But in this resolution, it says:
The amount of the excise taxes imposed by the said act.
It may be that there are two or three more kinds of excise taxes. It is this bit of enumeration that causes the most abominable confusion in all these customs and excise pamphlets.


James Alexander Robb: This has been submitted and passed upon by the law officers as it is. I think it is quite in order.


[Stage Direction]
Resolution agreed to.
3. Resolved, that it is expedient to introduce a measure to amend The Special War Revenue Act, 1915, and amending acts, by providing that the following goods shall be exempt from the consumption or sales tax imposed by section nineteen BBB of the said act, that is to say:- books enumerated in Customs Tariff items 173 and 175; printed text-books authorized by the Department of Education of any province in Canada; and materials used exclusively in the manufacture or production thereof; goods enumerated in Customs Tariff items 45, 46, 64, 209b, 219a, dry preparations used for the same purposes as goods enumerated in item 219a, 281, 281a, 352a, 410, 410a, 445, 445a, 445b, 446, 446b, 447b, 448, 449, 450, 453b, 453c, 453d, 456a, 460, 460a, 460b, 460c, 460d, 461, 461a, 466, 466a, 469 including goods enumerated in this item of a class or kind made in Canada, 506a, 544, 591, 591a, 663b, 666, 667, 696; tubing enumerated in Customs Tariff item 1017; insulin; extract of rennet; poultry feed; ice cream; rice, cleaned; macaroni and vermicelli; meats, salted or smoked; carbolic or heavy oil, to be used only in creosoting logs and round unmanufactured timber; cream separators and parts thereof; cars and other similar appliances for use exclusively at a mine or a quarry for mining or quarrying; articles and materials to be used exclusively in the manufacture of goods enumerated in Customs Tariff items 219a, dry preparations used for the same purposes as goods enumerated in item 219a, 281, 281a, 410, 410a, 445, 445a, 445b, 446, 446b, 447b, 448, 449, 450, 453b, 453c, 456a, 460, 460a, 460b, 460c, 460d, 461, 461a, 466, 466a, 469 including goods enumerated in this item of a class or kind made in Canada, 506a, 544, 591, 591a, 663, 663a, 663b, 666, 667, 696; tubing enumerated in Customs Tariff item 1017; articles and materials to be used exclusively in the manufacture of cars and other similar appliances for use exclusively at a mine or a quarry for mining or quarrying; articles and materials to be used exclusively in the manufacture of cream separators and parts thereof; materials, not to include plant equipment, consumed in process of manufacture or production, which enter directly into the cost of goods subject to the consumption or sales tax, manufactured or produced by a licensed manufacturer or producer; materials, not to include plant equipment, consumed in process or manufacture or production, which enter directly into the cost of goods enumerated in Customs Tariff items 281, 218a, 410, 410a, 445, 445a, 445b, 446, 446b, 447b, 448 449, 450, 453b, 453c, 456a, 460, 460a, 460b, 460c, 460d, 461, 461a, 466, 466a, 469 including goods enumerated in this item of a class or kind made in Canada, 506a. 544. 591,

Ways and Means-Sales Tax
591a, 663, 663a, 663b, 666, 667, 696; tubing enumerated in Customs Tariff item 1017; and by providing that on the following goods there shall be imposed, levied and collected only fifty per cent of the said consumption or sales tax, that is to say:-boots and shoes, including rubber footwear; biscuits of all kinds; goods enumerated in Customs Tariff items, 86, 105 and 106; creosoted railroad ties.
Charles Marcil: This resolution becomes No. 3, and under "further amendments to Ways and Means resolutions" the words:
And materials used exclusively in the manufacture or production thereof,
are added after the words "province in Canada," and customs tariff item 453d is added after customs tariff item 453c.


Henry Lumley Drayton: Will the minister explain what all that means?


James Alexander Robb: The particulars of the goods, included in the list of goods which are exempt from the consumption or sales tax, are as follows:
Tariff Items
173. Books for the deaf, dumb and blind.
175. Text books for colleges and scientific books.
45-46. Cereal foods and milk foods.
64. Sago and tapioca.
209b. Nicotine sulphate,
219a. Spraying preparations.
281-281a. Fire brick.
352a. Church bells.
410-410a. Chain.
445.	Mowers, binders and repairs.
445a-445b. Articles that enter into the manufacture of agricultural implements.
446.	Cultivators, harrows, etc.
446b. Ploughs.
447b. Thresher machines.
448.	Other agricultural implements.
449.	Axes, scythes, forks, etc.
450.	Shovels and spades.
453b. Sawing mill machinery and logging machinery.
453c. Mining machinery.
453d. Steel dies, etc.
456a. Ingot moulds for the production of steel.
460.	Mining machinery.
460a. Mining machinery.
460b. Coke-making machinery.
460c. Blast furnace machinery.
460d. Blast furnace machinery.
461.	Mining apparatus.
461a. Mining apparatus.
466. Apparatus for hospitals.
466a. Apparatus for hospitals.
469. Well-drilling machinery.
506a. Crutches.
544. Binder twine and materials.
591. Farm and logging wagons.
591a. Freight wagons.
663b. Materials for fertilizers.
666.	Explosives.
667.	Explosives.
696. Philosophical and scientific apparatus, etc., for any college, school, etc.
1017. Tubing, lapwelded, of iron or steel, not less than four inches in diameter when used in casing water, oil and natural gas wells.
Articles and materials that enter into the manufacture and materials consumed in process of manufacture are exempted from the sales tax on most of the items specified.
Reduced by 50 per cent
86. Canned vegetables.
105.	Canned fruits.
106.	Jellies, jams and preserves.
Boots and shoes, including rubber footwear.
Biscuits of all kinds.
445a and 663b are included as goods enumerated
etc., and in the item of materials consumed in process.
Articles added to the excepted list of April 10, 1924
64. Tapioca.
281-281a. Fire brick.
256a. Ingot moulds for use in the production of steel.	.	.
460c. Articles of metal when for use exclusively m smelting of iron ore.
460d. Machinery and apparatus of a class or kind not made in Canada for use exclusively in handling iron ore at an iron or steel plant.
1017. Tubing, lapwelded, of iron or steel not less than four inches in diameter when used in casing water, oil and natural gas wells.
Dry preparations used for the same purposes as liquid spraying preparations.
Reduced by 50 per cent
Creosoted railroad ties.


Henry Lumley Drayton: The items in this list are tied up with the other articles we have already had?


James Alexander Robb: Yes.


Henry Lumley Drayton: Will the minister give us the estimated loss in regard to each of these items?


James Alexander Robb: I have not that information here. I may say however that in the case of fire brick the reduction is $100,000; on ingot moulds $13,500; on blast furnace materials $30,000; on agricultural implements on hand on April 10, 1924, $224,000.


Henry Lumley Drayton: Are those
refunds?


James Alexander Robb: Only in the case of agricultural .implements; "the others are reductions in sales tax. On materials for binder twine, in addition to what has been already given, the reduction is $5,000.


Mr. HAMMELL:: Mention having been made of ploughs, I want to read to the committee an interesting announcement, more especially for the benefit of the hon. member for Brantford (Mr. Raymond). This statement appears in The Farmer's Advocate of May 15, 1924:
Price Reductions on Cockshutt Implements
Following the changes in the recent budget, we have revised our prices and reduced them to the full extent of the saving which will be effected by these changes.
Ways and Means-Sales Tax

The entire removal of the sales tax from farm implements is a very welcome and substantial relief from taxation, and the reduced cost of implements will be of direct benefit to our many customers.
We believe that Canadian farmers fully recognize and take a just pride in the merit of Canadian-made farm implements, and that, where a high standard of quality is maintained in the manufacture of these implements, they will be given preference.
Canadian farmers have set the world's standard in quality and production in farm products. Cockshutt implements have set a high standard and have taken a leading place in competition with the world's best production in agricultural implements.
Cockshutt Plough Company, Limited,
Brantford, Ontario.


Mr. NEILL:: I have a small amendment
which I desire to move, but before doing so I want to direct the attention of the minister to the enormous saving it would have been of trouble to hon. gentlemen if the information which he has just given us had been printed in his Ways and Means resolutions. For instance, he read just now section 219a and intimated in brackets so to speak, to what articles of goods it referred, and so on. It took me an hour the other day to trace all these different items out of the tariff and write their contents down in the margin of my paper, which now looks as though it had been walked over by a drunken chicken. Two hundred members had to do the same thing, or else come to this House and remain in ignorance of what was being discussed. Some of us have not got the tariff, and some of us who have got the tariff have not an up-to-date copy. The simple addition of a few words in each case would enormously have facilitated the passing of this resolution.
The amendment I want to move is only a small one. It is to insert before the word "poultry" on the tenth line the words: "Calf, cattle, hog or." The effect will be to add these to the exemption from the sales tax and the line will then read: "Calf, cattle, hog or poultry feed." At present only poultry feed is proposed to be exempted. The change I propose would simply make the exemption consistent with the policy of the government in regard to the exemption of poultry feed. I might explain that prior to the introduction of this budget both poultry and hog, cattle or calf meal were in this position. The exemption of this class of goods under the sales tax was as follows:
Bran, shorts, middlings, alfalfa meal; oil cake, oil cake meal; grains mixed or crushed for cattle or poultry feed; hay; molasses; salt-
And some other things. It will be observed that only "grains mixed' or crushed for cattle or poultry feed" are exempt. If anything is added to make the feed more 
palatable or useful, such as beef scraps or clam shells, or even linseed meal, which is not taxable in itself, yet the addition of that something different from "grains mixed or crushed" render the whole business taxable, although the addition might be a very trivial amount, perhaps only two per cent, and something that was not in itself taxable. The result was that this encouraged the usual methods of evasion, and large poultry people tried to mix their own feeds, which was not always satisfactory, and the smaller poultry people were at a great disadvantage because they had not the facilities for proper mixing. This occasioned a great deal of discontent in the trade. It is certain that some of the big companies handling poultry feed paid no attention to the regulations and tried to evade the law, in many cases successfully, whereas the honest dealers paid the tax. The ease with which it could be evaded must have made it difficult for the officials of the Finance department to collect the tax. The government appear to have been advised of these troubles, and in the resolutions they have struck the sales tax off poultry feed entirely, so that even if it contains something other than "grains mixed or crushed" it will not be liable for sales tax.
All my amendment does is to extend the exemption to calf, cattle and' hog mixtures. I am no advocate of any patent stock feeds, and the farming members will endorse my statement that the average patent stock feed is often not a very economical proposition. But calf meal is in a class entirely by itself. It must contain other ingredients than grains mixed or crushed, and it is a very essential feed nowadays in the dairy industry. Practically that industry could not be carried on to its full extent without this feed, and there is no reason why calf meal should have to pay this tax when poultry and other feeds do not.
Again, take the case of hog feed; where tankage is available it is added to bran, shorts and barley meal; but if so, then the	whole	mixture has to pay	thesales tax.	This,	I submit,	is against common sense. The	tax also applies if	molasses is	added,	although	molasses is	not
taxed in itself. The same thing happens with oil cake meal, and even if common or garden salt is added the whole mixture will have to pay the sales tax. The government,
I submit very properly, changed the regulation as regards poultry feed, thus preventing endless disputes, and without sustaining any great loss of revenue. I think the situation is parallel as regards calf, cattle or hog feed and poultry feed; it is illogical to change

Ways and Means-Sales Tax
the regulation in one case and not in the other. I submit it is only logical to put both of these branches of agriculture on the same footing as would be done by the adoption of this simple amendment.


James Alexander Robb: I accept my hon. friend's
amendment. I imagine that when this legislation was put through originally the basis for leaving out some of these items was this. As is well known, some manufacturers of poultry and cattle feeds gave their products a fancy name and taxed the
5 p.m. public $4 or $5 extra and on that account certain reservations were made. But for administrative purposes I agree with my hon. friend that there is room for clearing up this apparent discrimination.


[Stage Direction]
Amendment agreed to.
John Arthur Clark: I note that in the resolutions tabled on April 10 in the twelfth line of paragraph 2 these words appear:
Carbolic or heavy oil, to be used only in creosoting timber.
Then in the amendment tabled on the 30th in paragraph 2 these words were changed to:
Carbolic or heavy oil, to be used only in creosoting logs and round unmanufactured timber.
Those items were to be free from the sales tax. Then at the end of the paragraph under the 2^ per cent clause the words are added, [DOT]'creosoted railway ties." What was the reason ror the change? As far as I can see it, carbolic or heavy oil to be used only in creosoting timber would cover every form of creosoting. Why are railway ties to be subject to the sales tax if creosoted, while other creosoted timber is to be free?


James Alexander Robb: This correction was made to
meet a condition in eastern Canada where there were some long contracts extending over a period of ten years, and the contractor claimed he would be discriminated against unless we made this concession. The creosoted timber as originally put in remains. I know what my hon. friend has in mind, the case on the coast. The creosote is free as applied to logs on the coast.


John Arthur Clark: I understand that, but this is what I want to point out: A very large percentage of the output of the coast firm is devoted to creosoting railway ties, as well as the timber. Now under the original resolution tabled on the 10th of April, all timber, whether railway ties, piling, or otherwise, would be free of the sales tax if creosoted; in other words, railway ties under the original resolution, were free from the sales tax.


James Alexander Robb: No. I am told that in the department administering it they had some doubt as to that.


John Arthur Clark: They have removed the
doubt all right by making it taxable. What I want to point out to the minister is this: Railway ties under the Customs Tariff Act come under the very category as the items named in his original resolution. I would like him to refer to tariff item 500, and then check that with his original resolution. Item 500 says:
Logs and round unmanufactured timber .... and railway ties.	#
Item 503 says:
Planks . . . .and other timber, not further manufactured than sawn or split, whether creosoted, vulcanized, or treated by any other preserving process, or not.
I submit that the original resolution as drawn would cover everything that was creosoted if it was timber. Therefore, the effect of the original resolution, I submit, was to remove the sales tax from railway ties, and in any case I am certain the minister had in his mind the removal of the sales tax from railway ties as well as from piling and other types of creosoted timber, I have pointed out to the minister and to his expert before on numerous occasions, and I would like to point out to both of them again, the frightful situation that has existed in this particular industry. There is nearly $400,000 of capital invested in it. All these articles come in from the United States free of customs duty. Now 50 per cent of the value of the finished prooduct consists of the raw creosote.


James Alexander Robb: That is made free.


John Arthur Clark: No, the creosoted railway
ties are not made free, nor square timber. I submit they should all be made free of sales tax, because they come in from the United States free of customs duty, and 50 per cent of the value of the products consists of the raw creosote. Now if the raw creosote going into railway ties is still to be assessed 2i per cent sales tax-I am not quite clear as to just what the minister now suggests-but if all creosoted railway ties are to be subjected to 2J per cent sales tax, that will be even worse; it will increase the discrimination still more.


James Alexander Robb: It was 5 per cent before.


John Arthur Clark: Last year the sales tax was
assessed at 6 per cent on the raw creosote only, not on the finished piling. Now, had the sales tax been assessed at 6 per cent on the finished article, that would have been the very same thing as giving a bounty of 6

Ways and Means-Sales Tax


Henry Herbert Stevens: Let me add a word to
what my hon. friend (Mr. Clark) has just said. If the minister will give me his attention while I read the customs tariff, he will find that item 503 reads:
Planks, boards, clapboards, laths, plain pickets and other timber or lumber of wood, not further manufactured than sawn, or split, whether creosoted, vulcanized, or treated by any other preserving process, or not.


James Alexander Robb: Free of customs duty.


Henry Herbert Stevens: Yes. Now the American manufacturer of creosoted timber, all classes of timber and planking, can ship his product

in free of duty. We have asked as a compensating feature for the Canadian manufacturer, in the absence of the duty, that he should have his heavy oil, his carbolic or creosoting oil that enters into the manufacture of these articles, exempt from the sales tax. That is our request. Now, here is what the minister gives us. He gives us:
Carbolic or heavy oil to be used only in creosoting logs and round unmanufactured timber.
That is really limiting it to piling, or, I suppose, poles. I say the wording means that logs, or really piling comes in free or rather the creosote to be used for treating them comes in free. But creosote used for bridge timbers, ties, or anything else than round unmanufactured logs, will have to pay the sales tax, whereas the American manufactured articles under this item which I have just read enter free. Now, our argument has been all along-first, that this timber is really manufactured when it goes through the process of creosoting, because the creosoting is half the value of the timber. We claim that is a process of manufacturing, and that it ought to come in under a tariff item, and that there should be some protection in that regard, but such is not granted under the law. We claim as a result of this the American producer of creosoted timber has an advantage over the Canadian manufacturer of creosoted timber to the extent of the sales tax on the creosote or oil that goes into that timber, and that equals about half the price of the product. In other words it amounts to half the sales tax-this case 3 per cent, with the exception of ties and that would be H per cent with the exception of piling which would be free. Does the minister catch the argument? It is a little involved, perhaps, but it is rather a vital matter.


James Alexander Robb: Now the items which are free under the act are logs and round unmanufactured timber.


Henry Herbert Stevens: That is free by his-


James Alexander Robb: That is free of the sales tax-


Henry Herbert Stevens: Now.


James Alexander Robb: -and consequently we make the creosote free. Those are the only items that are free of the sales tax. If the goods come in from the United States they have to pay the sales tax.


Henry Herbert Stevens: That is exactly where there is a difference between us, and I think the minister is in error. If the minister will follow me again I will read this item in the customs schedule:

252i
Ways and Means-Sales Tax
503-Planks .	.	. .and other timber or lumber of
wood not further manufactured than sawn or split, whether creosoted, vulcanized, or treated by any other preserving process, or not.


James Alexander Robb: Free of the customs tax not of the sales tax.


Henry Herbert Stevens: That does not carry the sales tax.


James Alexander Robb: Yes, this is the sales tax
we are considering. My hon. friend is quoting from the Customs Act.


Henry Herbert Stevens: My understanding is that
the item does not carry the sales tax.


James Alexander Robb: My hon. friend is in error. The items free of the sales tax are logs and round unmanufactured timber.


Henry Lumley Drayton: I see on what basis my hon. friend is proceeding but he has not quite got the basis. He is proceeding in this way because, as he thinks, the only things that are free of the sales tax are logs and unmanufactured timber.


James Alexander Robb: Yes.


Henry Lumley Drayton: Now I am
reading from the Sales Tax Act. These things are free:	Logs, and round unmanufactured
timber, fence posts, railway ties-


James Alexander Robb: Go on reading.


Henry Lumley Drayton: Pulpwood, tanbark, and other articles the product of the forest, produced and sold by the individual settler or farmer.


James Alexander Robb: That is it.


Henry Lumley Drayton: They are in
exactly the same category.


James Alexander Robb: No, no. They must be produced and sold by the farmer.


Henry Lumley Drayton: I am reading
from the act of 1921.


James Alexander Robb: I know. But if my hon. friend will notice there is a semicolon in there. My hon. friend has a different interpretation from that which is placed by the Customs department.


Henry Lumley Drayton: I have no doubt the Chairman would tell my hon. friend that in the construction of statutes punctuation marks cannot be considered. The language has to be considered, and there seems to be absolutely no distinction between round and unmanufactured timber and fence posts.


James Alexander Robb: I am told by the customs that is the ruling they give in the department. I am just as anxious as my hon. friend not to discriminate against Canadian industry and if later on the point is established we will cure the difficulty. But I should not like to act without being sure of the ground I was on.


Henry Lumley Drayton: I point out to my hon. friend there is no distinction in principle whatever. I do not know what the department holds but there the fact is.


Henry Herbert Stevens: Let me come again to my point. The resolution as originally introduced was satisfactory. That is "'carbolic or heavy oil to be used in creosoting timber."


James Alexander Robb: But it was not satisfactory to the customs. That is why the change was made. Under the act as originally introduced the case was ably presented by my hon. friend. I might be frank with him and say it was done to please him but I would not like him to think-


Henry Herbert Stevens: We appreciate it and the reason we are bringing the matter to the minister's attention, my colleague and I- and we are not criticising the minister-is to point out what the change really effects. I know the question is a complicated one and what we want to do is to try and get it settled correctly. When the minister introduced his first resolution it was perfectly satisfactory but the second resolution disturbs our minds very considerably.


James Alexander Robb: I do not think my hon. friend needs to be disturbed. I am told by the customs it meets the case of my hon. friend. However I say to him now that if it does not we will make a correction; we have the power to do so.


John Arthur Clark: I want to understand this clearly because I allowed the matter to go through last year and it worked a frightful hardship and meant tens of thousands of dollars of loss. I understood the first resolution to mean that creosote or carbolic or heavy oil which might be used in treating timber would be free of the sales tax. That has been altered and apparently only carbolic or heavy oil that goes into the creosoting of logs and round manufactured timber will be free of the sales tax. In other words if we use the carbolic oil in the production of anything else, such as railway ties, we will continue to pay 24 per cent on every gallon of creosote. My understanding is that if the creosote is to be purchased for anything
Ways and Means-Sales Tax

except creosoting logs and round manufactured timber it will have to pay the sales tax. That means that if a firm purchase this oil for any other purpose than creosoting logs and round unmanufactured timber, they will have to pay the tax. For instance, if they purchase the creosote for the purpose of creosoting railway ties, they must pay 2| per cent. Is that not correct?


James Alexander Robb: Under the general act the creosote is exempt when used for anything that is going into an article that is liable to pay the tax.


John Arthur Clark: Under the present amendment before the House, railway ties become subject to the tax for the first time.


James Alexander Robb: They were liable to a tax of 6 per cent last year. It is now being reduced to 2| per cent.


John Arthur Clark: That is the way it has been administered. There is no dispute about the 6 per cent. But the 6 per cent was never meant by the Finance Minister to apply, even under last year's amendment, to ereo-soted logs and round unmanufactured timber.


James Alexander Robb: I am not committing myself in regard to last year.


John Arthur Clark: If my hon. friend will ask his expert I think he will find that that was the assurance given by the Minister of Finance.


James Alexander Robb: Anything going into any
material that is taxable is exempt.


John Arthur Clark: That is where the difficulty apparently arose last year. These finished articles were not taxed, but it was assumed by the Minister of Finance and his experts that they were taxed. I am quite sure the intention of the Finance Minister last year- and I had his assurance and also the assurance of his expert in regard to it-that it was never intended that 6 per cent should apply, to the creosoted log and the round, unmanufactured timber. I would like to get that point clear if I can.


James Alexander Robb: We are now endeavouring to correct any difference of opinion that existed last year, and we think we have corrected it.


John Arthur Clark: It was not a difference of opinion; it was simply a difference of interpretation in the department over which the minister presides and the interpretation placed upon it by the Customs department. Is that correct?


James Alexander Robb: I think that is right.


John Arthur Clark: If it were simply a difference of opinion, as I suggest, I think it is only fair and reasonable that the minister should undertake to give a rebate of the sales tax in such cases.


James Alexander Robb: I thought the hon. member was leading up to that.


John Arthur Clark: I think the minister is
fair-minded enough to consider it only fair that I should lead up to that, and press upon the minister that he should consider the question of a rebate, because if it were never intended-and I pledge my word that it was never intended by the Minister of Finance (Mr. Fielding)-that creosoting oil should be assessed 6 per cent, surely it is only fair and reasonable that a rebate should be given for the oil that has been purchased during the period that the 6 per cent tax was in effect, and the minister has power to grant the rebate. It has already been done in regard to some other articles this session. I think my hon. friend will agree that it is only reasonable and fair that, if the tax were never intended to apply, any tax that has been paid should be rebated, because otherwise, if my hon. friend does not grant this request, he becomes a party to giving a preference to the American manufacturers to the extent I have indicated. Undoubtedly this particular firm has lost a tremendous amount of business during the last year owing to the fact that the Americans have been shipping into our country their creosoted timber really under a bounty placed upon their goods by our own people. I am quite convinced that it was a bona fide mistake. All I ask is that the mistake be rectified and the rebate be given.


James Alexander Robb: The hon. member who sits
directly in front of my hon. friend (Sir Henry Drayton) knows that the minister who administers the Finance department never admits anything if he can avoid it; but I will promise my hon. friend that I will give consideration to the plea he has presented this afternoon, and when I have time I will look into the whole matter fully.


Henry Lumley Drayton: The minister
should look into the matter from this angle. Apparently we all agree that the Minister of Finance last year wanted to do what my hon. friend from Burrard (Mr. Clark) desires to have done this year; that he thought he was leaving the Canadian creosotor of ties in a position where he could do business and that so far as the Minister of Finance was concerned he carried out that intention, but that a different interpretation was placed upon the act, not by the gentleman who drew it, not

Ways and Means-Sales Tax
by the gentleman who knew what he wanted to bring about, but by the officers of the Customs department who had nothing whatever to do with its framing or its introduction into this House. I think we are agreed upon that. Then let us go a little bit further. If the minister agrees that that was the situation, a wrong was committed. The intention of the House and the intention of the Finance Minister (Mr. Fielding), the active voice in the House in putting through that legislation, was never implemented. Furthermore there was practically an agreement and consent between all the parties but this agreement has been nullified. Members on this side of the House understood that the Finance Minister (Mr. Fielding) was doing what he said he was doing, and the Finance Minister understood that also. There is a mistake all round, and money has been paid under a mistake. Under such circumstances, in an ordinary court of law this money could be recovered, but conditions in courts of law do not apply here, of course. Surely the ordinary considerations which influence courts ought with far greater force apply to the government. In other words, in view of what is admitted here now, what possible moral defence would the government have if they hung on to this money and did not give the rebate? The minister appeals to me as former Minister of Finance. I would always strive, I always did strive when I had the honour of occupying the place that he now occupies, to do at least the honest thing, at least not to hold on to money that the country was not entitled to, to apply the provisions of the Audit Act in cases where refunds manifestly should be made, and I am sure that the minister will now tell the committee that the provisions of the act will be applied in this case and the refund made.


James Alexander Robb: I shall have the matter very carefully looked into, and if it is established that there is a fair claim, it will be given fair consideration. I do not think the hon. member should ask me to go further than that. [DOT]


Henry Lumley Drayton: There is no
question of going into it. My hon. friend admitted it himself


James Alexander Robb: My hon friend has made a
case this afternoon, so far as his interest is concerned, but I shall have to look into the other side. There are always two sides to look into.


John Arthur Clark: I want the minister to have every opportunity to see the other side, but I can assure him that there is only one
side. If he will ask his expert who sits in front of him, he will be assured that his expert himself did not know that this article was being taxed until I drew his attention to it not three months ago. There is no question about the facts. While I want the minister to have every opportunity to see both sides of the case, at the same time I should like this item left over so that it can be further discussed, if necessary.


James Alexander Robb: I shall have it looked into very carefully. I am quite sincere in this as we do not want to do any injustice to anybody.


Henry Herbert Stevens: Will the minister be able to inform us when the bill comes down?


James Alexander Robb: I wonder if my hon. friend realizes the amount of work there is continually before the officers of the department while all this is going through parliament. We have not time to dig into arrears.


Thomas Wakem Caldwell: Do I understand from the minister that due to the fact that creosoting railway ties bear a sales tax, there will be no sales tax on the carbolic or heavy oil that is used in creosoting railway ties?


James Alexander Robb: No, but there is a tax on
creosoted railway ties.


Thomas Wakem Caldwell: Is there a sales tax on ties that are not creosoted?


James Alexander Robb: Not if they are sold directly by a farmer.


Thomas Wakem Caldwell: But by a lumberman? The minister has evidently made a concession to meet a need in British Columbia.


James Alexander Robb: More than British Columbia is involved. Something in the Maritime provinces is also involved.


Thomas Wakem Caldwell: In the last two years and especially within the last year a great industry has been developed in the Maritime provinces in the manufacture of hardwood railway ties that are creosoted. Firms there have spent an enormous amount of money in establishing creosoting plants and equipment for sawing hardwood in mills that formerly sawed soft wood. One lumberman cut 6,000,000 feet of railway ties this year and he is creosoting them. I would like the minister to consider remitting the sales tax on the creosoted ties as well. I do not think the 2-J per cent will bring him any great amount of revenue, but it will mean a big
Ways and Means-Sales Tax

thing to those firms that are installing machinery and developing an industry only in its infancy in New Brunswick. Prior to the last two years hardwood was not, to my knowledge, manufactured into railway ties owing to the fact that such ties, when not creosoted, did not last very long, and this creosoting is practically a new thing. Our cedar, which we used for ties previously, is becoming depleted, and it is not as firm a wood as hardwood. Creosoting is becoming popular for railway ties, and I think if we consider the government's purchases of railway ties, it would be good business for the government to remit this tax on creosoted ties. When the Canadian Northern was built in New Brunswick, cedar ties were not available; spruce and tamarac were used, and I understand there w'ill be a replacement of ties in New Brunswick to a large extent. I should like the hon. member for Resti-gouche and Madawaska (Mr. Michaud) to urge the minister to consider this matter.


Mr. MICHAUD:: On account of the heavy engines used now on the Canadian National Railways, cedar ties are too soft, and after a short time the rail cuts the railway tie, especially the cedar one, putting the tie out of use altogether. In order to meet the situation, we have begun using creosoted hardwood ties. Within a very short time I am informed that a large business with a big plant is about to be developed at St. Leonard in my constituency. They have spent thousands and thousands of dollars in this new industry, and I hope the minister will take into consideration the prospects of this company which is establishing such a large industry at St. Leonard, and that he will take off all duties and sales tax on creosote oil, if at all possible. We are awaiting new development at the present time throughout Canada, and any action on the part of the government which will be of assistance in that connection will be greatly appreciated by the people at large. Those who are making ties in my constituency are especially farmers or settlers who are opening up new land. They prefer hardwood land to soft wood land because they claim that the soil is richer, and they have to dispose of that hardwood in some way. They have been selling the hardwood, at least the heavy stuff, for manufacturing, and I am sorry to say that hardwood, especially the large timber, is going across the boundary line, and free of duty too. We want to keep that industry at home if possible. We want to encourage
*Mr. Caldwell.]
in Canada the manufacture of ties as well as the manufacture of hardwood lumber in every line of industry.


Henry Herbert Stevens: I think the minister is
under a misapprehension. Do railway ties creosoted in the United States and imported into Canada bear a sales tax?


James Alexander Robb: Yes, 2J per cent.


Henry Herbert Stevens: That is under the present law?


James Alexander Robb: Yes.


Henry Herbert Stevens: They did not before?


James Alexander Robb: Yes, 6 per cent.


Henry Herbert Stevens: In item 503, these items
are mentioned: Planks, timber or lumber of wood, not further manufactured than sawn or split, creosoted. Would that bear a sales tax?


James Alexander Robb: Yes.


Henry Herbert Stevens: How much?


James Alexander Robb: Under the tax as it is now?


Henry Herbert Stevens: Yes.


James Alexander Robb: Five per cent. There is a
sales tax against all timber, planks, boards, laths, shingles, excepting logs and round unmanufactured timber.


John Arthur Clark: Last year was there a sales
tax assessed against logs and round unmanufactured timber creosoted coming from the United States?


James Alexander Robb: No.


John Arthur Clark: Was there a sales tax on
logs and round and unmanufactured timber creosoted in Canada?


James Alexander Robb: No.


John Arthur Clark: 
James Alexander Robb: Yes.


John Arthur Clark: Of 6 per cent?


James Alexander Robb: Yes.


John Arthur Clark: Was there a sales tax
assessed against the creosote which went into the American logs, round and unmanufactured timber, and which subsequently came to Canada?


James Alexander Robb: There would be a sales tax
on the value entering Canada.

Ways and Means-Sales Tax


John Arthur Clark: No; that is where the minister is wrong.


James Alexander Robb: No; I am not.


John Arthur Clark: Assuming then that 50 per
cent of the value of the finished Canadian product consists of raw creosote, last year's law meant in effect that the American producers of logs and round unmanufactured timber creosoted and shipped into Canada were given a Canadian bounty of at least 3 per cent over our Canadian producer. Is that correct?


James Alexander Robb: I should say that was a fair
interpretation of the law, yes

since January 1.


John Arthur Clark: In view of that, and in view
of the fact that the Acting Minister of Finance and, I have no hesitation in saying, the expert who sits beside him, emphatically hold the view that it was not the intention that this 6 per cent should apply adversely to these articles, is it not fair that the sales tax which has actually been paid as a result of a ruling of the Customs department, made under a misapprehension, should be refunded under the provisions of the Audit Act? That is what I want to have made straight.


James Alexander Robb: My hon. friend has made a
fair case of discrimination against a Canadian industry and that is why we are correcting the legislation. But there are many matters in the tariff of a similar nature in relation to which we tax raw material more than we do the finished product. I repeat, however, that my hon. friend has made what I think to be a fair case for consideration.


John Arthur Clark: I do not want to press the
matter unduly but I want to make sure that we understand each other. Are there any other industries in Canada which the minister can name that are in a similar position to this one? Can the minister mention one other industry in the United States which has in effect a bounty of 3 p'er cent over Canadian manufacturers as a result of the sales tax?


James Alexander Robb: None has been brought to my
attention, although I have been made aware of cases in the customs tariff in which there was discrimination.


John Arthur Clark: Have there been any articles on which rebates have been allowed under the provisions of the Audit Act since the budget came down?


The CHAIRMAN:: I do not know that
the question is in order on this item- It seems to me that the hon. member is getting away from the matter under consideration.


John Arthur Clark: I am looking for precedents;
I want to understand the workings of the Audit Act.


George Newcombe Gordon: This is not a question that bears on the Audit Act.


John Arthur Clark: It is, absolutely. I think,
Mr. Chairman, you misunderstand my position. I am urging the minister to invoke the provisions of the Audit Act for the purpose of remitting the sales tax in certain cases.


George Newcombe Gordon: In reference to last
year's legislation, which is not under discussion to-day.	.
. Mr. CLARK:	I submit, Mr. Chairman,
that that legislation is indirectly before the committee; it is being amended. We must therefore discuss the provisions of last year's law if we are to make any comparison. I want to know whether in any similar case the government has this year invoked the ^provisions of the Audit Act for the remission of taxes paid. I want to find out whether the government has that power and whether that power has been exercised in cases similar to that now in question.


Henry Lumley Drayton: What does the
minister say?


James Alexander Robb: I have not the minutes of
the Treasury Board before me and I submit that the last question is a most unreasonable one.


John Arthur Clark: I do not want the minister to misunderstand my position. I have seen statements either in the press or in some of the documents we have before us daily to the effect that remissions have been granted under the Audit Act in certain cases. All I want to know is whether that power does exist and whether it is customary to exercise it. I do not press for any specific instances; but my interpretation of the Audit Act leads me to the belief that the government has that power. Does the minister consider that he has the power, and if he has, is it exercised? Am I correct in the belief that it has been exercised this year?


James Alexander Robb: My hon. friend asked me
a fair question a while ago and I gave him a fair answer; I do not think I should be asked to discuss the question further.


Henry Lumley Drayton: I am going to
give the minister credit for wanting to do the fair thing, and I do not think I do violence to reason in taking that view. Sometimes however the best intentions are thwarted and we encounter just such troubles

Ways and Means-Sales Tax
as, for example, the Minister of Finance (Mr. Fielding) evidently overlooked in connection with the wording of this very legislation, which was defeated by the construction put upon it last year. My hon. friend is correcting it this year in part; he is not correcting it in whole. If he corrected it in whole this very bill would provide for the return of payments collected in violence of the Minister of Finance's understanding and declarations on this subject. All that my hon. friend wants to know is whether the minister thinks there should be an amendment in the legislation to enable him to put these people back in the position in which they would have been had they not been injured by mistake. My own view is^ that the minister can meet the situation without the amendment; but my own view would not bind the minister or give him authority. The hon. member simply wants to know whether t'he minister is of the opinion that he is in a position to deal with this matter under the law as it now stands should he desire to take action. Personally, I do not think there is any necessity for the amendment.


James Alexander Robb: My hon. friend has had
a longer experience in the department than I have, and he is a good lawyer. I should think he has given a fair interpretation of the act.


Henry Lumley Drayton: I would rather have a declaration from the treasury benches.


Robert Forke: I move that the resolution
be amended by inserting after the figures "446b" in the eighth line, section 2, the figures "446c" and "447." The effect of that would be to exempt from the sales tax windmills and complete parts thereof, not including shafting and portable engines with boilers, in combination, horse-powers and traction engines for farm purposes, n.o.p., and complete parts thereof.


James Alexander Robb: I accept the spirit of the
amendment. I am not sure that the wording is correct.


Mr. KYTE:: Does the amendment include gasoline engines used by fishermen in motor boats?	*


George Newcombe Gordon: The amendment is
that after 446b in the eighth line of section 2 there be added the figures and letter 446c and 447.


John Babington Macaulay Baxter: Mr. Chairman, I am
probably in error, but just to show the difficulty of getting at this thing, I may say

that I started a while ago to look up some of these items. I have gone through the complete customs tariff and all the pamphlets given me in connection with it, but after three attempts I have failed to find item 506a. Item 506 refers to some kinds of wood. It is just possible that it is a typographical error.	.


James Alexander Robb: That is a new item, crutches.


John Babington Macaulay Baxter: An amendment made last year?


James Alexander Robb: No, made this year.


John Babington Macaulay Baxter: That accounts for it. It is all the more reason why we should have these things in extenso. I notice at the end of this resolution tariff items 86, 105 and 106. Item 86 is:
Tomatoes and other vegetables, including corn and baked beans, in cans or other airtight packages
Item 105 is:
Fruits in airtight cans, or other airtight packages.
And item 106 covers:
Jellies, jams, preserves and condensed minced meats.
Two of these items are tinned and the third would be in glasses or tins. There is another article of food which is very important in the country from which I come. The canning industry is developing in the province of New Brunswick, and in the city of St. John an important industry is growing up in the tinning of fish larger than sardines.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


John Babington Macaulay Baxter: What I was saying before recess was that fruits and vegetables in tins, generally speaking, are exempt from the sales tax. Representations have been made to me by Mr. Lewis Connors who has been the cause of considerable development in the fishing industry in New Brunswick, and who lately has acquired some properties on the west side of St. John harbour, where the actual canning of fish is being carried on. Generally speaking, sardines and some of the larger fish prove quite popular. That is an industry that is beneficial. It deals directly with the food of the people, just as much the food of the people as canned vegetables. I am not at all criticising the abolition of the sales tax on canned vegetables, but I fail to see any distinction between the canned vegetables and the canned fish. I am told also that the same question arises in British Columbia, where as we all know, salmon is canned in very large

Ways and Means-Sales Tar
quantities. I presume that there is some principle running through these changes, and I have gathered it to be in the direction of taking, so far as possible, the impost off the food of the people. Imported sardines may probably be classed among luxuries, but I think that the ordinary canned fish of this Dominion is not at all a luxury, and the further you get from the sea coast, the more it becomes an absolute necessity, if fish, which is a very valuable part of every man's diet, is to be had in decent condition. There are some parts where it is impossible to get fresh fish and fresh meat, and where canned fish is an excellent substitute for the ordinary diet.
I presume that this is not a matter of intention; I presume it is merely an oversight, and I trust that it is sufficient just to call the attention of the hon. minister to it to have the schedule amended so as to relieve, I would say, tinned or canned fish of all kinds from the impost.


Henry Herbert Stevens: I am quite anxious to
supplement what my hon. friend (Mr. Baxter) has said, and I would suggest to the minister that the figure 123, being tariff item 123, be inserted on the third line of page two of the ways and means resolutions, after the figure 106. Item 123 of Schedule A of the Tariff Act reads:
Salmon and all other fish prepared or preserved, including oysters-
And so on. That would include the canned fish to which reference has been made, and would cover canned salmon about which considerable has been said and correspondence had with the minister. That amendment, which I would ask the minister to accept, is very much along the line of the amendment suggested by the hon. member for Brandon on another score. It is simply enlarging slightly the exemptions, and is quite in harmony with the items set forth.


James Alexander Robb: Representations have been
made to us from many sources asking for exemptions from the sales tax. Hon. gentlemen will admit that we must draw the line somewhere. The government must have the necessary revenue to carry on. It is quite true that we have added to the list of exemptions this year canned vegetables and certain canned fruits and jellies, but hon. members will observe that canned meats are not exempted, and, there is no good reason why canned fish should be placed in a different category from canned meats. I think it is a pretty fair tax on the boys who go out at night and buy lobsters and sardines; they should pay something towards the administration of the affairs of this country, and for
administration purposes, you cannot make exceptions of canned salmon and other fish. For these teasons I am unable to accept the amendment which has been urged by my hon. friends, much as I would like to meet their wishes. I think we will have to stop where we are this year.


John Babington Macaulay Baxter: Of course, the minister
settles the matter and we must accept his decision, but I would ask him why the sales tax is taken off these other things, jellies and fruits, as well as vegetables. I would ask him to state to the committee some principle which causes him to pick out one class of articles rather than another. I had supposed it was all on the basis of food, but apparently it is not. I would not have thought that fruits and jellies were as essential a part of the food of the ordinary Canadian citizen as fish. I may be wrong, but I would ask the minister to explain, so that we can undertsand just where we are.


Mr. EVANS:: For once I find myself-


John Babington Macaulay Baxter: I wonder if I will have an answer from the minister.


John Evans: For once I find myself in full accord with my friends to my right. I think it is quite right to follow the principle of relieving the very necessaries of life from taxation as far as possible. I fully agree with them there.


Henry Herbert Stevens: I am very fortunate. I see the hon. member for Skeena (Mr. Stork) taking his seat. I wonder if he were to present this request to the minister, would it not receive better consideration?


James Alexander Robb: He has done so already.


Henry Herbert Stevens: We are just presenting
to the minister-my colleague and I, supported by one or two others,-the request that canned salmon, item 123 in the tariff, should be added to the exempted, or at least to the reduced list. Canned salmon is included in the item of "canned fish". The item reads:
Salmon and other fish, prepared or preserved, ineluding oysters.	.
Now, up to the present my appeal and that of my colleague to the minister has not met with any response. I see the hon. member for Skeena (Mr. Stork) in his seat and as the minister has already responded twice very courteously and very kindly this afternoon to the suggestions of the hon. member for Brandon (Mr. Forke) and the hon. member for Comox-Alberni (Mr. Neill) -after, I noticed, a little conference-and if
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the hon. member for Skeena would support this appeal, which so far has been ineffective, it may be that the odium of granting anything to the Conservative party may be removed and the minister may grant the request to one of his own supporters. I do not care to whom he grants it, I think it is a fair request and it ought to be accepted. Canned fish, and particularly canned salmon, is a distinct item of food. It is a food in a far more important sense than the items we have here now, although I am not for a moment objecting to them. The minister has put items 105, 106 and 86 on the list. These relate to tomatoes and other vegetables. Then there is fruit in air-tight tins or other air-tight packages, and jelly, jams, preserves and condensed mince meats. Surely on the basis of making food cheaper for the public the addition of canned fish is a most reasonable request, and I am going to ask my hon. friend from Skeena to give me his support in this because I know very well that it meets with his approval and is a very important factor in the industries in his own riding.


Mr. STORK:: I should have liked the hon. member for Vancouver Centre to have given me some notification of his intention so that I would have had an opportunity of discussing this matter. But as I have not had any chance to look into it I do not know just what is involved in the proposition. We propose closing a very expensive and extravagant central fisheries office at Vancouver and there may be necessity to meet expenditure by increasing the taxation on other commodities. However, I will be very glad indeed to discuss the reduction of the tax on canned salmon at some time soon.


Henry Herbert Stevens: My. hon. friend cannot
escape the issue by his promise to discuss the matter at. some future time. We are discussing the item right now. This is the time and the place for us to determine the issue. I am sorry that I have not got the support of the hon. member for Skeena but I shall proceed without it. Let me bring the matter again to the attention of the minister. Indeed I am going to move an amendment because I feel that I am warranted in doing so. The hon. gentlemen this afternoon moved amendments which immediately received the acceptance of the minister, and feeling confident in the precedent so established I will now move:
That the figures 123 be added after the figures 106 on the third line of page 2 of the resolution.
Let me support that by again stating that this item simply adds one of the commonest articles of food in the Dominion to the free 
list. I hope the minister will reconsider his decision of a moment ago and accept this amendment.


George Newcombe Gordon: It has been moved by Mr. Stevens:
That the figures 123 be added after the figures 106 on the third line of the special war revenue resolution.
Is it the pleasure of the committee that the amendment carry?


James Alexander Robb: I must repeat that I cannot accept the amendment. It seems to me that lobsters, sardines, and canned oysters are fair subjects for taxation.


Robert Forke: If the minister will add canned salmon and cut out the others I should like it, because salmon is such a common article of diet on the prairies. The other articles I regard as mere luxuries.


John Babington Macaulay Baxter: Some time ago I asked the minister a question but perhaps he did not hear me. I was scarcely able to make myself heard because a member of the ministry was over here and there was a very audible conversation going on.


Ernest Lapointe: To whom is my
hon. friend referring?


John Babington Macaulay Baxter: Not to the Minister of
Justice (Mr. Lapointe). I asked the minister to lay down a line of demarcation so that we may know why some things are relieved from the tax .and others are not. There must be some principle running through this matter or else some motive of expediency governs. Whether it is the one or the other let us know?


Alexandre Joseph Doucet: Before the minister announces his decision I wish to endorse everything said by the hon. member for St. John and Albert (Mr. Baxter) and the hon. member for Vancouver Centre (Mr. Stevens). The fish canning industry is just in the infant stage on our stretch of the Atlantic coast. Not only is that industry putting up salmon in cans, but it is also canning lobsters, oysters, quahaugs, sardines and kippered herring. I submit all these are articles of food which should be considered on a par with canned vegetables, canned fruits, jams, jellies and condensed mincemeats. It will be observed that biscuits of all kinds are reduced to 2i per cent duty. I know hon. members will agree with me that biscuits do not to any extent appear on the tables of the poor, or for that matter on the table of the average family. Many lines of biscuits are virtually luxuries. Ice cream is placed on the free list but even that is not altogether as im-

Ways and Means-Sales Tax
portant to the poor man's table as canned salmon, canned kippered herring, and other varieties of fish when they cannot be obtained in their fresh state. Some few years ago the industry of shipping fresh fish from the Maritime provinces was in a thriving condition. To-day the market has somewhat declined, and during the season when the demand for fresh fish is small, different varieties can be canned and sold for food. I submit, Sir, that in keeping with the other modifications made today with respect to canned vegetables, fruits, jams and jellies, that canned fish should also be rated for duty at 2J per cent.


William F. Carroll: I suppose most of the committee realize that the policy of reducing the sales tax ought to be more or less gradual. We cannot	remove	the	sales tax	in	itsentirety at one stroke, and I agree with those who regard canned lobsters and canned oysters as luxuries. Only a very few people in this country can afford to buy such commodities, and as a matter of fact five-sixths of the lobsters canned in this country find a market either in the United States or Great Britain. That is an information I obtained from the Department of Trade and Commerce a few days ago.	Sardines	are	practically	in	thesame position. They are used to a greater extent in this country than lobsters or oysters. The oyster business in this country is not very important, but the lobster business is. I for one, although coming from a county where there are very many lobsters canned, perhaps as	many as	in	any county	in	theMaritime provinces,	do	not agree	at	this
stage, with the debt of the country such as it is, that the lobsters or the oysters should be relieved of the sales tax. As far as canned salmon is concerned, the minister says it is a matter of administration to leave it as it is at the present time. I agree with the leader of the Progressive party (Mr. Forke) that if the minister could regulate the present proposals without any great difficulty, perhaps he should take the matter of canned salmon into consideration. It is not in the same class as lobsters or oysters or some of the other fish mentioned. I would suggest to the minister that perhaps canned salmon should be relieved of the sales tax. if it were possible. These canned salmon are widely used in the . homes of the poor of the country and are not in the same category as oysters or lobsters.


Mr. HUGHES:: Is it not a fact that there is no sales tax on canned lobsters exported?


James Alexander Robb: No sales tax on any fish
exported.


James Joseph Hughes: Certainly 95 per cent-I would say 99 per cent-of canned lobsters are exported, and what is the trouble? Where is the difficulty and injustice? There is a large percentage of canned salmon consumed in Ontario, I daresay; but I presume nothing at all compared with the quantity exported, upon which there is no sales tax. I was a little surprised to see my hon. friend from Kent (Mr. Doucet) so anxious to reduce the cost of food to the poor people and remove the taxation. That is a very commendable thing, but a few days ago he moved an amendment to the budget to increase the taxation on everything. That is not a logical position nor is it consistent, but I am glad to see my esteemed friend improving and recognizing the fact that the people are desirous of reducing the cost of everything, particularly the cost of food, the cost of the necessaries of life and the cost of implements of production. I am sure he now regrets that he moved the amendment, and that he will sin no more in that respect.


Alexandre Joseph Doucet: The amendment which was discussed a few days ago is not before the House this evening. If it were I might enlighten my hon. friend from Kings, P. E.I., (Mr. Hughes). If 95 per cent of our lobsters are being exported-and	it is
admitted that 95 per cent are being exported -we need not worry about the class of people in this country who use the other 5 per cent. We are not worrying on their behalf, but we contend that the poor class of our population who have to buy canned salmon and canned fish of other kinds, such as canned oysters, clams, quahaugs, sardines and kippered herrings, which are industries of some importance in this Dominion, should not be held down by the fact that the product is placed in a very unenviable position as far as the necessaries of life are concerned. They all make part and parcel of the dinner-table of the poor man. My hon. friend from Kings, P.E.I. has evidently forgotten that a few days ago he spoke on behalf of the poor people of the country, and possibly I learned a lesson from him. But I submit the poor classes of the Dominion are anxious to have the sales tax removed as much as possible from the necessaries of life. I contend that the cutting off of the sales tax on canned fish is a step in the right direction.


Mr. TOLMIE:: Coming from the Pacific
coast where the canned salmon industry is a very important one, I may say that this is becoming an article of food all over the
Ways and Means-Sales Tax

country, even miles away from the coast. It is one of our most important industries, and is a general article of food everywhere. I think the minister should seriously consider the removal of the tax on this food. Salmon canners, on the other hand have not had the good times that prevailed before the war, when the runs of salmon were very much larger than they are at the present time. They are working under difficulties that did not prevail before, both with regard to high wages and other matters and greater cost of production, and the removal of the sales tax would certainly be a great boon, not only to the salmon producers, but also to the salmon consumers throughout Canada. Therefore. I wish to endorse what the hon. member for Vancouver Centre (Mr. Stevens) and other hon. members who supported him have to say in this House.


James Alexander Robb: If it were only a question
of canned salmon, it might be very easy, but a question of administration enters into the amendment presented by my hon. friend, which includes canned salmon, canned lobsters and canned sardines, and I submit again that is a fair source of taxation. We made considerable reductions in the sales tax this year. If we accepted the amendment now, there would be no good reason why we should not immediately have another resolution introduced that we should exempt canned meats, and that would involve under the classification canned soups, of which there is a million and a half imported into this country. I appeal to the common sense of hon. members that the government must have a revenue somewhere, and that this is a fair source of revenue. We have made considerable reductions in the cost of living this year. Surely there will be another year coming, and I think the hon. member might very well withdraw his resolution. I think there is another amendment before the House before we take up this one, moved by the hon. member for Brandon (Mr. Forke).


George Newcombe Gordon: That was accepted.


James Alexander Robb: Yes, it was accepted, but I am not sure of the wording of it. I think we had better make sure of the wording. I am not raising any point in regard to it. If the Chairman will make the correction in the wording of it, it will be satisfactory.


George Newcombe Gordon: It seems to me substantially the same.


James Alexander Robb: Then it will be all right.


George Newcombe Gordon: The amendment, as
amended, reads as follows:
That the figures 446c. 447 be inserted after figures 446b in the ninth line, figures 446c, 447 be inserted after figures 446b in the twenty-first line and figures 446c and 447 after figures 446b in the thirty-fifth line.


[Stage Direction]
Amendment agreed to.
George Newcombe Gordon: Then an amendment
has been moved by the hon. member for Vancouver Centre (Mr. Stevens).


John Arthur Clark: I desire to say a few words in support of this amendment, particularly with regard to salmon canned in the province of British Columbia. No industry in this country has been more depressed than the salmon canning industry, and I do not think there is any industry more deserving of consideration at this moment. The government has seen fit to reduce and, in fact, to eliminate the sales tax as regards many items. It has seen fit to reduce the sales tax, I think, to 2j per cent on all canned goods with the exception of canned meats. There is a great distinction between canned meat and canned salmon. In British Columbia canned salmon is a very important item, and it is an important item in the diet of the people of Canada generally, much more so than canned meat. In the case of meat, the producer of beef, for instance, has his herds; he can control the herds; he always knows what he has. But the case of fish is quite different; each year the salmon canner goes out and catches all the fish he can, and his catch is a matter of speculation. Then he must can them. In view of the fact that this industry is in a state of depression and needs encouragement and assistance, and in view of the fact that the government has seen fit to give encouragement to the canning of fruits and vegetables, it is only consistent that the same consideration should be extended to the salmon canning industry.


Mr. McBRIDE:: I look on the matter in a somewhat different light. A man builds a cannery; he catches fish and he cans them. He does not have to feed or care for them before he catches them. A man raising cattle has to feed and look after the cattle for three or four years before he can sell them or can them. I am not finding fault with the salmon canners. That industry is of great importance to British Columbia. But if we are going to take this tax off one thing after another, where are the finances of the country going to come from? I think the people ought to appreciate what the government has done in regard to lowering taxes. It has lowered the sales tax. I was rather surprised this afternoon to hear that so many people had not paid

Ways and Means-Sales Tax
their sales taxes for two or three years. I am interested in a business and I know we have to pay our sales tax the fifteenth of the following month. If we do not do so, we hear from the department. If there is going to be a reduction in the sales tax as regards foods, it certainly ought to be in connection with canned meats and other things along that line.


Alan Webster Neill: I understand the amendment refers to taking the tax off canned salmon, canned lobster, canned oysters and canned sardines. I agree somewhat with the view of the Acting Minister of Finance (Mr. Robb) that lobsters and oysters are more or less luxuries. People who indulge in oyster or lobster suppers at midnight can afford to pay the sales tax. The situation as regards canned salmon is different. It is the poor man's diet. I would suggest that a compromise might be arranged, and if anyone will support me, I beg to move as an amendment to the amendment:
Provided that the reduction shall apply only to canned salmon.
So that the sales tax will be taken off salmon, but left upon oysters, lobsters and sardines.


Thomas Wakem Caldwell: I shall be pleased to
second the motion. I fully agree that as 95 per cent of the lobsters are exported, the matter is not very important whether the sales tax is taken off or not. Oysters, I will submit, are more or less of a luxury. One of the reasons why I did not speak before was because I was before the minister some time ago with a delegation endeavouring to persuade him to take the sales tax off sardines.


Henry Herbert Stevens: The amendment to the
amendment does not include sardines.


Thomas Wakem Caldwell: I should like to ask
the mover of the amendment to the amendment if it includes salmon and sardines.


Alan Webster Neill: I am confining the reduction
in the sales tax only to salmon.


Thomas Wakem Caldwell: I understood it included sardines. We have in New Brunswick on the coast of Charlotte county sardine fisheries that produce over one million dollars worth of sardines each year. On account of the fact that this sales tax applies in Canada and it does not apply in the United States, most of these fish are shipped to the United States and canned there. I think we have to-day only one sardine canning factory in New Brunswick, because the others have been put out of business by the Americans.


James Alexander Robb: Has not for years the sardine business of that part of New Brunswick been carried on in the United States? That is where the factories are. My hon. friend knows that.


Thomas Wakem Caldwell: A great deal of it.
We had a few sardine factories there which closed down. The one that is still running would not be running had not some outside capital been brought in and the company been reorganized. The minister showed us the difficulty he was in; that this would mean taking the sales tax off canned meat and salmon. In view of the fact that the amendment to the amendment includes only canned salmon, I will not support or second it, because I feel it would be discriminating against an industry belonging to the Maritime provinces entirely. There is already too strong a feeling in the Maritime provinces that they have been discriminated against in legislation and other ways. I cannot support the amendment to the amendment if it does not include sardines.


John Evans: This is a question that we
should treat quite seriously. Canned salmon is in a class by itself as regards the food of the lower classes. This article of food went up over 100 per cent in pre-war days and it has not come down yet. Usually we used to buy the very best under twenty cents a can; now it is up to forty cents and, in some cases, over forty cents. I certainly shall support the amendment to the amendment.
Amendment to the amendment (Mr. Neill) negatived1: Yeas, 43; Nays, 52.
Amendment (Mr. Stevens) negatived: Yeas, 27; Nays, 65.


Henry Herbert Stevens: I have another amendment to propose.


James Alexander Robb: Before the hon. member offers his amendment I have one which I wish to submit myself, just to show that we are not altogether hard-hearted in our attitude towards the fishermen. I move:
That the words " gasoline engines to be used in boats bona fide owned by individual fishermen for their own personal use in the fisheries " be inserted after the figures "1017" in the thirteenth line;
That the words " gasoline engines to be used in boats bona fide owned by individual fishermen for their own personal use in the fisheries " be inserted after the figures "1017" in the twenty-fifth line;
And that the words " gasoline engines to be used in boats bona fide owned by individual fishermen for their own personal use in the fisheries " be inserted after the figures " 1017 " in the thirty-ninth line.
Ways and Means-Sales Tax


John Babington Macaulay Baxter: The purpose the minister
has in view is probably all right, but why- does he discriminate against the practice, which is so common on our coast, of a number of men being interested together in a boat? This amendment applies to the individual fisherman. If one man has a gasoline engine in his boat he gets the benefit of this provision, but if his brother is in partnership with him, or if there are three or four men interested in a boat, they must pay the tax. I am utterly at a loss to conceive how any one could suggest to the minister the insertion of the word "individual" in the amendment. I can understand that the minister would not want to have a sort of corporate body owning trawlers and boats getting clear; but why a small combination of fishermen should not have an equal right with the individual fisherman I fail to see.


James Alexander Robb: I am told that the wording of the amendment I have submitted is identical with the language used in similar items in the act as first passed in 1915, and there has never been any question of it. I do not think the objection is wrell founded.


William F. Carroll: In the case of a fishing company who provide their fishermen with boats, would the present amendment as it is worded cover gasoline engines in use in such vessels?


James Alexander Robb: The words in the act of 1915 are:
Boats bona fide purchased by individual fishermen for their own personal use in the fisheries.
Those words have been in the act for eight years and no one has made any complaint in reference to them.


Arthur Meighen: When will the amendment *which the minister offers come into effect at the border?


James Alexander Robb: It will take effect as from
April 11.


Arthur Meighen: That is to say, there
will be refunds as from that date.


James Alexander Robb: Wherever there have been
purchases.


Arthur Meighen: I wonder where the
government will end with this practice of nailing and patching, hacking and chipping, and tinkering, fitting and refitting, and generally fooling with the budget. All one knows now when the budget comes down is that what the Minister of Finance presents certainly is not the budget; that is all that one can be sure of. One may have some con-	I
ception of what the budget may look like when it is finally patched and painted, but there is nothing certain beyond that. The thing is getting ridiculous. The government is floundering around like a wounded whale, and one never knows what may be its next move. It has always been the practice to bring down a definite budget, in regard to which the public knows where the government stands. There may be an instance or two where slight amendments are necessary; but this whittling away at the budget day after day and night after night is becoming absurd. The government promises under section 286 of the Customs Act to apply the tongs for months to come, and by order in council to patch up the budget wherever it may be found necessary to do so. That is the sort of thing we are having to-day, and the country is on the raw all the time. Section 286 was never intended for the purposes for which the minister, by his pronouncements, proposes to use it. Surely after the experience of all these days, and after all this carpentering and tinsmithing at the budget, attacking it line by line, and repairing it here and there, we shall get to the end of it and the government will know where it stands. Who is advising the government in the matter, and why do they not get proper advice before they bring the budget down?


Mr. CAHILL:: The oppositon is advising
them.


Arthur Meighen: The opposition to my
left are opposed to the government in geography but that is all; and they seem to be controlling affairs. But let us have finality somewhere. As I said a moment ago, all one knows when the budget comes down is that we have not got the budget.


George Perry Graham: Did my hon. friend himself not vote for an amendment just now?


Arthur Meighen: But it should have been in before. What I am protesting against is not the merit or the demerit of this or the other amendment; I am protesting against the practice of tinkering with the budget in this fashion. We should have it right at first. We should have the government's mind, if it has any mind on the budget-


Frank S. Cahill: Does my hon. friend-


Arthur Meighen: I do not say my hon.
friend's mind at all; that would not assist us. We should not have to be dragging it out of the government day after day and night after night, with the country hanging on the various moods and temperaments of the administration.

Ways and Means-Sales Tax


James Alexander Robb: Mr. Chairman, I am glad to have the assurance now that I may expect the support of my right hon. friend if any other demands are made upon us for exemptions from the sales tax.


Arthur Meighen: The minister has not got any assurance from me.


James Alexander Robb: I should like to stop somewhere.


Arthur Meighen: We are at liberty to put our views forward. We did not bring down the budget; il we did it would be our budget.


James Alexander Robb: May I remind my right hon. friend in that connection, that he was in the House and a member of the government when this act was introduced in 1915 by Sir Thomas White, and amendment after amendment was brought forward by him.


Arthur Meighen: The amendments were
very, very slight. They are coming in now every five or ten minutes.


George William Kyte: I wonder if there is any
significance in the fact that the right hon. leader of the opposition supported every amendment-at all events he did not oppose any-until this amendment is put forward to relieve the fishermen of the Maritime provinces from the burden of taxation.


Arthur Meighen: The hon. gentleman is precisely wrong. I never supported any amendment until we got to this amendment, which I supported.


George William Kyte: My right hon. friend did not make any objection until this present amendment was moved.


Arthur Meighen: I supported the fishermen.


George William Kyte: He asks why the government are making all these changes. Mr. Chairman, I desire to point out that the government have taken full lesponsibility for the changes, contrary to what happened some years ago, when the Minister of Finance of the government and the party which my right hon. friend supports brought in tariff changes day after day. Sir Thomas White did not wish to take responsibility for them himself, but blamed them upon the printers as typographical errors, and by the time the budget got through the House of- Commons it was shingled, shangled and shungled beyond recognition.


Arthur Meighen: The hon. gentleman bases his rather obtuse speech on an entirely false presumption. I have not opposed any amendment at all, nor have I supported any. I have not been able to be in the House very
much, although I have been kept advised of the various changes of attitude of the government. The only amendment I supported was the one supposed to be for the benefit of our fishermen. So the hon. gentleman's attempt to raise sectional prejudices is very far fetched. When his mind is running along sectional prejudices, just let him recollect his own record, and as well contrast it with my own, when the question of the Crowsnest pass changes came on. As to some amendments made because of errors of the Printing bureau, those can be understood. Those were not changes of mind of the government. The government brought in its legislation and stuck to it. That is what I am now pleading for. I am not arguing on the merits or the demerits of any amendments whether from this side or the other.


Alan Webster Neill: Mr. Chairman, I am glad to find from the remarks of the hon. member for Cape Breton South (Mr. Kyte) that the amendment proposed by the Minister of Finance to take the sales tax off fishermen's engines has some support in this House. I thought it was to receive nothing but condemnation, but I find there are fishermen on the east coast of the continent as well as on the west coast.


An hon. MEMBER:: And no Chinamen.


Alan Webster Neill: I am glad to associate myself with those gentlemen, for I hope to get their support on another subject. I find Chinamen are being introduced in Nova Scotia also, and later on we will have another common ground on which to meet. But at the present moment I should like to express on behalf of the fishermen of British Columbia-and I think I may do so without infringing upon the rights of the hon. member for Skeena (Mr. Stork)-at least those I represent, how thoroughly they will appreciate the action of the government in what to them will be a great advantage.


Mr. ROSS (Kingston):: Does this amendment have reference to any fisherman who takes out a license; to a man on the Great Lakes, for instance?


James Alexander Robb: It would be a matter for interpretation by the customs. I would say it would cover a person whose occupation is that of fishing-a fisherman.


[Stage Direction]
Amendment agreed to.
Henry Herbert Stevens: Now, Mr. Chairman, I
want to give to the hon. member for Skeena (Mr. Stork), the hon. member for Cariboo (Mr. McBride), the hon. member for Fraser Valley (Mr. Munro), and the hon. member
Ways and Means-Sales Tax

for West Kootenay (Mr. Humphrey) a chance to redeem themselves. They opposed my last resolution because I took the wording of the tariff item which included canned sardines, canned lobsters and canned oysters. Now I propose another amendment. It will be noted that on the fifteenth line of the resolution before the committee the words " meats, salted or smoked" occur. I think if we added there the words, " canned salmon and canned small herring " it would meet the views of hon. gentlemen who found themselves a little in conflict with me a moment ago. Therefore I am going to move, Mr. Chairman:
That the words, " canned salmon and canned small herring " *be added after the word " smoked " in line fifteen of the said resolution.
The effect will be to include in the exemption list canned salmon and canned herring. On the Pacific coast-and this, I presume, applies also to the Atlantic coast- we can a very, very large quantity of the smaller herring and pilchard. These and some grades of canned salmon are essentially above any other class of fish the food of the poor, and particularly the food of those in our province who live in the 9 p.m. logging and mining camps and the interior towns and citie3 where fresh meats are not easily obtainable. A similar argument on behalf of this food will, I think, apply to northern Ontario, portions of Quebec, and the eastern provinces. If you are to include jams and jellies and canned fruits and vegetables, and such like, I see positively no reason why you should exclude a food that is essentially above any other kind of food the food of the poor; and so, Mr. Chairman I move this amendment.


James Alexander Robb: Mr. Chairman, we have already voted on the issue of canned salmon, and I am not sure that the amendment of my hon. friend is in order.


George Newcombe Gordon: The amendment is in order.


James Alexander Robb: But quite apart from the point of order, I must point out that the resolution is impossible; it cannot be administered by the department.


Henry Herbert Stevens: I should certainly like
the minister to enlighten us on his objection. How can it be more difficult to administer the Special War Revenue Tax Act in regard to leaving canned salmon or canned pilchards off than it is in exempting canned fruits and canned jellies? What is the difference in administration? Does it take a more skilful inspector 
to discover whether the fish contained in a can are salmon or pilchards than to detect whether the contents of another can are jelly or jam? There surely is nothing in such an objection. I do not wish to appear impertinent to the minister, but frankly I cannot see any possible excuse for the objection from the administrative standpoint.
Let me add this. This is a very simple item. Let us take canned salmon, for instance, first. On the Pacific coast, which I think is really the chief location of the industry, the canneries can salmon and very little else. They export a certain amount. The government have to take cognizance of the export and exempt that from the tax. Now we are simply asking them to exempt it all. A large portion of the pack is exempt already- I suppose 75 per cent. The department must keep track of that 75 per cent and distinguish between it and the other 25 per cent sold in this country. We are proposing to relieve the department of that function; they do not have to take cognizance of any if it is all exempt.
Let us come now to the pilchards. At the present time we ship a large quantity, I suppose from 50 to 75 per cent of our pack, to Australia, Japan, South America, and other trans-Pacific points; some goes to the Old Country and the West Indies. All of that is exempt. The department must carefully distinguish between what is exported and what is sold at home, and I am asking that the minister shall be relieved of that function. There is no added administration there; indeed, there is a simplification of administration, unless I am wholly ignorant of what administration means and what its functions are.


James Alexander Robb: My hon. friend, living on the
coast, is I am sure better posted on fish than I am. Will he tell me the difference between small herring and sardines?


Henry Herbert Stevens: Yes, I will tell him the
difference. I will venture to say, so far as the Pacific coast is concerned, and that is all I undertake to speak for, that there are no real sardines on the Pacific coast. I am told the same is true of the Atlantic coast, although I am not speaking for the Atlantic coast; but I do know that these smaller herring are put up into cans as sardines and sold as sardines very often. Any of the fishery officers are quite qualified to determine the character of the fish, and I am sure they will advise the minister to that effect. My hon. friend smiles, I do not know just why.


Mr. DUFF:: I was not smiling; I am very serious.

Ways and Means-Sales Tax


Henry Herbert Stevens: I was referring to the
minister. Perhaps he is smiling at the thought of being advised by those sitting behind him.
I know the hon. member for Lunenburg will agree with me. He knows the fishing business thoroughly; I do not presume to pit my knowledge of fisheries against his. Let me continue. These small herrings are canned in different grades, and they are, above all, the food of the poor. That is the point I wish the minister to take. For the minister to say for one moment that it is more difficult to administer the exemption from the sales tax in the case of canned herring or canned salmon than in the case of canned fruits of various kinds-well, it is beyond me. 'I frankly cannot see the difficulty the minister imagines. I ask him to be good enough to dismiss that at least from his mind, and let us decide this on its merits. Is it an unfair thing to ask that the sales tax should be removed from this, the food of the poor, when you are removing it from jams, jellies, fruits, vegetables and other articles of that character.
Amendment negatived: Yeas, 37; Nays, 57.


Henry Lumley Drayton: Mr. Chairman, I desire to move the amendment which I have already placed in your hands. In connection with this amendment I have a carefully prepared speech supporting it. I am referring to lumber, and the speech reads:
Take the tax on lumber and on material that goes into the construction of a house or barn. I am told by a responsible contractor that on a $5,000 house, which is not an extravagant average price, the materials going into that house represent $3,500. The minister proposes to put a tax of $105 against that house; there is no question about that. The minister puts a tax of $105 against the building of a house at a time when every one is calling for more houses in this country. The same is true with regard to the building of barns throughout the country. I am told by the same contractor that the average cost of the material going into a modern barn would be 80 per cent of a $2,000 building. The minister proposes to put a tax on that $1,600 worth of materials of $48. He is hampering production to that extent.
Mr. Chairman, those are the sentiments of an hon. member of this House. At that time he was the hon. member for Valleyfield; today he is the hon. Acting Minister of Finance. Those were his sentiments when we had a sales tax a fraction of the sales tax we have to-day, and I am perfectly convinced that all I have got to do is to point out the situation to the minister and he will very gladly accept the amendment. What does the amendment do, after all? Why, it does just exactly what the hon. member urged very strongly when the tax was, as I say, very much smaller than it is to-day. He was 161
wanting to help, then. I am going to ask him whether he would not be helping a great deal more in doing what he thought should be done in 1921, than in putting fancy foods on the free list, fancy biscuits, ice cream, and the like. Here is something that enters into the activities of everybody that is doing anything worth while in the country to-day. The farmer uses lumber everywhere. He cannot put up a little lean-to without paying something to my hon. friend. The city man is using lumber; the miner is using it. Why, this whole budget was to see that everything that was required by the farmer, the miner, the lumberman and' the fisherman, was to be free. Well, the fisherman has to have his shack too. Here is something that helps everybody, and everybody is hurt to the extent that it is taxed. Now I am going to ask my hon. friend to take his own opinion and accept this amendment.


George Perry Graham: Would my hon. friend
now convince his friends to stand by their opinion?


Arthur Meighen: I am sure my hon. friend would agree to moving it down to the point where it was when the hon. minister objected. Perhaps we can all agree on that, and I would like to get to a vote on it before all the hon. gentlemen to my left get out. If we could move to reduce it to the point where it was when it was strongly objected to by the present Acting Minister of Finance possibly we could agree on an amendment of that sort at once and save time.


Pius Michaud: Will the right hon.
leader of the opposition look behind him and see how many of his own supporters are out?


Arthur Meighen: If any have gone out
we will get them in very quickly.


George Newcombe Gordon: Sir Henry Drayton
moves:
That the sales tax rates on lumber, planks, etc., as defined by sections 503 and 504 of the Customs Act be reduced to the taxes levied thereon under the act of 1921.


James Joseph Hughes: I should like to ask the
ex-Minister of Finance how he could say the sales tax of a few years ago was only a fraction of what the sales tax is now? It was higher than the present sales tax. Let any person make it up. It was li per cent to the manufacturers; li per cent when it came to the wholesalers; and after it passed the wholesalers it was li per cent again. Why on the average it was at least 6 or 7 per cent.

Ways and Means-Sales Tax


Some hon. MEMBERS:: No.


James Joseph Hughes: Certainly it was. Surely
the ex-Minister of Finance knows that. And when he stands up in this committee and says that the former sales tax was only a fraction of what it is now he is making a statement that is not correct.


Arthur Meighen: Will the hon. member
permit me a minute. He is trying to argue that from the manner in which the sales tax was imposed before it was higher than it is to-day. The same-I was almost going to say insane-suggestion came from the Minister of the Interior in his budget speech. The sales tax as imposed before was li per cent at the point of manufacture and li per cent at the wholesalers' point. The government next year increased each one of these by 50 per cent. Is that correct?


James Joseph Hughes: Certainly.


Arthur Meighen: If it was high when
it was increased 50 per cent it was still higher under this government up to the 1st of January this year. Is that not so?


James Joseph Hughes: That is correct.


Arthur Meighen: The Minister of Finance last year came and stated that because of the needs of revenue the government had to have a higher sales tax, and described his own amendment of last year as a further imposition of sales tax, which it was.


James Joseph Hughes: That is not correct.


Arthur Meighen: That was higher than
it was a year ago-


James Joseph Hughes: No.


Arthur Meighen: -and a year ago it
was 50 per cent higher than it was under us.


James Joseph Hughes: No, it is lower now.


Arthur Meighen: Of course if one could
persuade the hon. member for Kings, P.E.I. (Mr. Hughes) of anything he would be pretty well convinced that he was wrong himself. I will lead the hon. member through the reasoning again-the details the ex-Minister of Finance will speak of. For the first two years of this government's existence and for the last year and a half of that two years the sales tax was 50 per cent higher at each point than under the previous government. So up till January 1, it certainly was 50 per cent higher than it had ever been under us at our highest. Then the Minister of Finance last year, in proposing a measure which took effect on January 1, stated that he was imposing a higher sales tax.


James Joseph Hughes: I did not agree with what he stated.


Arthur Meighen: Then he was fooling
himself?


James Joseph Hughes: Oh, no.


Arthur Meighen: The Minister of Finance thought the tax was higher but as a matter of fact it was lower.


James Joseph Hughes: The right hon. gentleman is making a mis-statement now.


Arthur Meighen: As to the statement m question all the hon. member needs to do is to look back; he will find the statement of the Minister of Finance and the reasons given for supportihg it. Now, as to why it is higher anybody can see at a glance. There were no two wholesalers' taxes before and if there were, there were not two impositions.


James Joseph Hughes: Yes, there were, there were three impositions.


Arthur Meighen: Not in the case of the wholesalers.


James Joseph Hughes: Yes, and four in some cases.


Arthur Meighen: There was only one. I will ask this government to tell me a single case where they made two impositions of the tax, under exactly the same system as we had and as they continued, in the case of the wholesalers. They cannot give one. All this talk about repeated increments of profits is absurd, because there will be more increments of profit under the present system inasmuch as all is imposed at the first stage leaving the whole thing subject to whatever increments of profit may follow. I think the whole country understands it and I think the House understands it. I am not objecting to the present stage on that ground. At the present time I am merely pointing out that it is higher, and I am pleading for the House to get together now and reduce it to the point where it did stand and at the figure stated by the hon. member himself, the figure to which he objected some two years ago. Let us get to that figure and let us agree upon it.


James Joseph Hughes: I am quite certain if a statement is obtained from the Customs department it will be found that the average sales tax previous to the increase of 50 per cent, was fully equal to 5 per cent and more- I am quite satisfied of that. The average was li and lj and it was pyramided several times in some cases.


Arthur Meighen: The collections were 120 millions last year and about 72 millions in 1921.

Ways and Means-Sales Tax


Henry Lumley Drayton: I am afraid I shall have to take up one or two minutes in view of the remarks of the hon. gentleman (Mr. Hughes): We commenced the sales tax with a tax of 1 and 1. That was increased in the year 1921 to li and 1L That was again increased in the next year under the Minister of Finance of this government (Mr. Fielding), to 2i and 2-J. Hon. gentlemen will observe first that there was an increase in my successor's first budget of 50 per cent on the rates as they then were. I suppose there is no room for question as to that, not even by my hon. friend (Mr. Hughes). Then again last year we had what was claimed to be a further increase in something which would enlarge the revenues, and everybody knows it was not an idle claim. It is the sort of thing that may be worked up for an occasion like this, but everybody knows it was not an idle claim. He was collecting then 6 per cent instead of 41-that is what he was doing. The hon. member says it cost more. Let us see.
I have heard him-yes, and I have heard gentlemen to my left-talk time and again about the iniquity of getting a tax back at the origin, that the nearer down you have it to the consumer the less it costs the consumer. Under the old tax about 50 per cent was near the origin, and the other 50 per cent was at the last movement but one. Why, in connection with the customs tax it has been said time and again-yes, and in the very budget debate this year-that the real taxation taken out of the people was infinitely greater under the system of collection. Well, we had a calculation made last year and we took that added tax, that 6 per cent tax as against the 4i per cent tax, and we applied the ordinary profits coming down from the manufacturer, the wholesaler and the retailer to the consumer and we ascertained that the public had to pay Ilf per cent in order that the government might get the 6 per cent my hon. successor was legislating for. There is no doubt whatever as to the effect of the law. It never was challenged, it was not even challenged in the debate.


James Joseph Hughes: What does my hon. friend say the average was under the 50 per cent increase ?


Henry Lumley Drayton: Under our 50
per cent increase-there rvas no secret about it-the traders came here and sought to have a change made. Their point was that this tuppenny-ha'penny tax of li and li was not enough to make them re-write their price lists and they were absorbing it; they had to take it into their overhead and they said it was not fair to business. I remember going 161i
down to New York the week after my hon. friend's budget first came in with a large wholesaler, who stated that they were at last getting fairness. I said, "What did I do to you?" He said, "Look at your sales tax". He also said, "I never repriced anything in connection with the former sales tax, it was not worth while, but now when it is practically 5 per cent or 4J per cent, it is too much to pass on, and it cuts into our profits". That is what the difference was. That is the real fact and those are the real truths. There is no question about it. I do not want to delay this debate. My hon. friend says, "hear, hear." I am glad I can say something he can agree with. It is a pretty big job, and now when he says "hear, hear," I think I must be wrong. In order to shorten the debate, with ' the consent of the committee, I propose to withdraw that amendment and substitute one which will exactly put my hon. friend in the position he was in when attacking the tax in the year 1921, simply to reduce the sales tax on lumber to the taxes levied under the act of 1921; and in doing that I still believe that the taxes are very much hfgher than my hon. friend even thought the taxes should be, because he thought things should be free. The amendment would read: That the sales taxe rates on lumber, planks, etc., as defined by s. ctions 503 and 504 of the Customs Act be reduced to the taxes levied under the act of 1921.


James Joseph Hughes: The hon. ex-Minister of Finance has completely answered himself. He stated, according to the calculation made last year, that when the sales tax was increased 50 per cent, and no other change made in it, the average amount paid was 11 per cent. Now if, by increasing the rate 50 per cent the average collection was 11 per cent, then it must have been 7 per cent before, or in that neighbourhood; so that my hon. friend has completely vindicated my statement and completely answered himself.


Henry Lumley Drayton: I am sorry that I cannot get it across to my hon. friend.


James Joseph Hughes: You have got it across
all right.


Henry Lumley Drayton: I do not know
what is the matter with the hon. member. He is generally somewhat intelligent, but he is absolutely showing a total failure at the moment. He says I have proved his point. Well, what was his point? He says that the old rate was more than it is now. That i3 what he said. What did I say. I showed
Ways and Means-Sales Tax

-and I gave him chapter and verse for it- that in connection with the first 1 and 1J there was no increase to the public. The tax was absorbed.


James Joseph Hughes: That is another thing altogether.


Henry Lumley Drayton: That is the
proper function of the sales tax-to get it so low and keep it so low that it may be absorbed. Then the next thing was the increase of the Minister of Finance. That was then so large that it was not absorbed. It was passed on. Then the next thing, where the 11% per cent came in, was in connection with the increase last year of 6 per cent.


James Joseph Hughes: That was paid once only. That could not be increased.


Mr. McMASTER:: I think the object of
the amendment moved from the other comer of the Bouse is not far to seek. It is an endeavour to deceive the low tariff people, whether they sit on one side of the House or the other. As to the question whether the sales tax is higher now than it was under the regime of my learned and genial friend in the other corner of the chamber, that all depends on how many hands the goods pass through under the old regime and under his regime. We had this matter up before the committee which examined into agricultural conditions last year and there was a circulation made, not by gentlemen of the legal profession who sit in this House, but by a practical worker, a gentleman of the profession or business to which the hon. member who has just spoken from this side of the House belongs.


Henry Lumley Drayton: What was his
name?


Andrew Ross McMaster: Mr. I. E. Pedlow, the
member for South Renfrew, and a more courageous public servant has seldom been in this Chamber. I read the following from his evidence:
A wholesaler in Montreal imports from the United States a bill of goods to the value of $100 on which the duty is 35 per cent. He sells to a manufacturer at an advance or trading profiit of 25 per cent, which manufacturer makes it up into garments, and disregarding labour resells the goods in manufactured ^nn at a profit of 33J per cent to the retailer who resells at a further trading profit of 33J per cent to the consumer.
I do not think the number of hands through which the goods pass or the rates of profit are exaggerated. What was the result?
The treasury received the following sales tax:	First
sales tax $5.06, plus $1.11 plus 15 cents plus 33J per cent, $8 43; second sales tax $3.93 plus 33J per cent $5.24; third sales tax, $10.74.
Sir Henry Drayton.]
The amount which the- treasury received from these sales taxes was $19.73, but the consumer paid these taxes plus profits, amounting to the difference between $32.55 and $19.73, or $12.82 more than was received by the treasury. The duty can be computed in the same manner. The sales tax under the old regime amounted to $19.73, and that was all the treasury got, and on top of that the consumer had to pay the profits of the sales tax which aggregated on a bill of goods on $100 no less than $12.82; so that the total sales tax which the consumer paid on a bill of goods of $100 was $32.55.


Arthur Meighen: My hon. friend makes
out that there were so many sales taxes collected before that $19 on the $100 or 19 per cent was collected, and that much less per cent is now collected.


Andrew Ross McMaster: I believe now the sales tax is collected at one stage of the proceedings and it is 5 per cent. There would be one profit collected on that 5 per cent; and, therefore, the sales tax in many cases-and this does not apply to all businesses- collected to-day is less than the old sales tax. I have authority for that statement.


Arthur Meighen: My hon. friend says that on account of there being so many points of imposition it reached 19 per cent before whereas, now it is only 6.


Andrew Ross McMaster: It would be more than
6.


Arthur Meighen: No, it should not be.


Andrew Ross McMaster: Oh, no.


Arthur Meighen: It would be 5. Last
year it would be 6.


James Joseph Hughes: From the 3rd of January.


Arthur Meighen: What the hon. gentleman has said is that the amount collected, and going into the treasury, was about 19 per cent before, and now only about 6 per cent. I want the hon. gentleman to remember that he said the amount collected. How does he account for the fact that under that system in 1921 $72,000,000 were collected, and this last year the government collected $120,000,000. Was there more business and if so, how is it that in that year we collected $101,000,000 of income tax, and last year they collected on $58,000,000?


Andrew Ross McMaster: I am not prepared to
answer those questions-


Arthur Meighen: I do not think so.

Ways and Means-Sales Tax


Andrew Ross McMaster: -but I would point
out to my right hon. friend that we have not had a whole year under the new system.


Arthur Meighen: We will collect less
under the new system then?


Andrew Ross McMaster: I do not know if less
will be collected. I think, perhaps, less will be collected under the new system than under the old.


Arthur Meighen: Oh, oh.


Andrew Ross McMaster: My right hon. friend
may laugh-


Arthur Meighen: Does my hon. friend not know-?


Andrew Ross McMaster: Just allow me for a
moment, and then my right hon. friend can ask me a question. The point I want to make is that as regards the imposition of a sales tax, which is placed upon many transactions, the weight upon the taxpayers of the country will depend upon the number of transactions upon which the sales tax is placed and upon the rate of profit that the different merchants and manufacturers will add to the sales tax as they collect it. That is perfectly plain. The tax pyramids. In the case under consideration, where I do not think my right hon. friend will object either to the number of transactions or to the rate of profit, the sales taxes which applied under the former regime aggregated $19.73, and on those the profits that were collected amounted to $12.82, making the total sales tax amount to over 30 per cent. I say that in cases like that the burden on the consumer was heavier than under the present regime.
The object that hon. gentlemen in the coiner opposite have in proposing resolutions of this sort is easy to be seen. For a number of years they had the control of the treasury in their hands. They had the power of reducing sales taxes on lumber and such things as that. They did not reduce the tax. They propose now to reduce a sales tax to a level which their sales taxes had; but it seems to me that we have to consider this in the House:	The government are responsible,
not only for the burdens that they place upon the taxpayers of this country, but for the financial condition of the treasury. They have made their plans. Their plans provided for substantial reductions in the sales tax. I presume nothing in the world is easier than to make some cheap political capital by taking this that or the other thing into consideration solely and by itself, asking the House to concur in resolutions reducing taxes
on that thing, and appealing to the low-tariff and non-taxing sentiment of the country. But it is hardly fair and it is hardly consistent coming from a party which prides itself upon being a high-tariff and protectionist party of this country.


Arthur Meighen: The hon. member's remarks are such a tangle of absurdities that I scarcely know where to commence.


Andrew Ross McMaster: Rudeness, which is very unusual coming from my right hon. friend to me, is not argument.


Arthur Meighen: Does the hon. gentleman consider it rude to refer to his argument as a tangle of absurdities?


Andrew Ross McMaster: Certainly. I do not
think I applied such language to any remarks of his.


Arthur Meighen: I think my hon.
friend has used worse language in regard to my arguments without any justification at all. I would not call it rude. I think whatever else he suggests in regard to my statement, he would not suggest that it is rude. For example my hon. friend says that it is extremely inconsistent on our part to make this motion. This motion is what? To put this tax where we had it, where we endorsed it, where we supported it and where we left it, in which position we. resisted the attacks of the hon. member himself to make it still less, resisted the attacks of the present Minister of Finance who severely criticised us for imposing this tax on the building of a home or a barn and whose words were re-echoed with wonderful eloquence by the hon. member for Brome. Oh, he says, you are inconsistent; you are not logical; he almost said: You are rude, in venturing to stand exactly where you were. But we are a model of consistency, we who tried to beat down a II per cent tax and are now standing up for it at 5 per cent or was it 3?-whatever it was. Now we move to reduce it. Oh, he says, these men are fixing now what we need for the treasury; do not interfere. If the hon. gentleman's argument is right, this motion is a motion to increase, and it would help hon. gentlemen opposite. Now, perhaps he thinks I dignified his speech when I called it a tangle of absurdities. Then he says, under that old tax, according to the high and mighty authority of Mr. Pedlow of Renfrew, the tax meant 19 per cent of the value of sales going into the treasury.


Andrew Ross McMaster: I do not want to be misrepresented.

Ways and Means-Sales Tax


Arthur Meighen: I do not want to misrepresent my hon. friend.


Andrew Ross McMaster: I accept that. I said that in a series of sales such as the one exposed in my example, the aggregate of the sales taxes amounted to some 19.73 per cent.


Arthur Meighen: Does the hon. gentleman imagine that any man is worth while quoting who would suggest that in any case 19 per cent or in any case 30 per cent was added to the cost to the consumer? The thing is so monstrous that it does not appeal to the mind of the hon. member. I know it does not. I know he would not look me in the face in private conversation and say so. The thing is utterly ridiculous; it is monstrous; it is a joke-30 per cent to the consumer on a one and one-half and one and one-half per cent tax, and! the cost of living, all the while the tax was on, reduced 28 points according to the official records of this government! How could such a thing occur? The taxes were never imposed at those points at all, and not a member of' this ministry, that has collected them on the same system, with the tax increased 50 per cent at each point, will stand up to-night and say that in one instance was it ever collected at the points cited by the hon. member for Brome. I know they will not. I defy them to do so now. If it was and if that applied!, under that we collected 373,656,489. Under the system of this government, which included, I know, only three months of the latest imposition-but the three months were equal in the average revenue to the nine months that went before -and that answers the hon. member-they collected $120,574,000 with business declining all over this country, as is evidenced by the collections of income tax and by every other return.


Andrew Ross McMaster: I do not think that is a true evidence, because you might have as large a business, run it on a lower percentage of profit and have a smaller income tax.


Arthur Meighen: That is amusing too.
Imagine accounting for a falling off of income tax collections by such reasoning as that. Even conceding that,-and I do not concede it, but I will let the hon. member dlo that if he likes-that there was a somewhat greater business in 1923 than in the year that ended the 31st March, 1921, there was very much better business in the year 1921 than there was in 1924, as every hon. member who is in business knows. But conceding a fractional increase, how does the hon. member account 
for the difference between 373,000,000 and $120,000,000? Does he suggest that he can account for it? He can account for it only by the higher imposition of the sales tax, and he knows it. I will not follow his lead in trying to introduce the subject of protection into a sales tax issue; they are as distinct as any two classes of taxes that ever existed. When we come to protection we will discuss it, and all we hope and pray is that the hon. gentleman and all his friends will stand by their guns when that issue comes to be decided.


Andrew Ross McMaster: I do not propose to detain the committee by referring at any length to the observations of the right hon. member, but I would refer the committee to the transactions of the special committee appointed to inquire into agricultural conditions, part I at page 788, exhibit No. 8. Hon. gentlemen will find the subject set out there, every element of cost being given, whether prime cost, invoice cost, sales tax or duty. The whole subject is worked out. I believe that the calculations are right, because they were made by a man whose knowledge of the business is as great at least as that of the right hon. member who last addressed the committee. It will prove interesting to hon. gentlemen.


Henry Herbert Stevens: detail, Mr. Chairman, but to put them on Hansard. They are the following:
The $179.00 is made up as follows.
Invoice cost	of goods	$100	00Duty	
35	00Sales tax	
5	06Wholesaler's	overhead	22 per cent of $100 goods.	22	00Wholesaler's	overhead	22 per cent of $35 duty.	7	70Wholesaler's	overhead	22 per cent of $5.06 salestax	
1	iiWholesaler's	profit, 3	per cent of $100 goods..	3	00Wholesaler's	profit, 3	per cent of $35 duty.. ..	1	05Wholesaler's profit, 3 per cent of $5.06 sates tax 15 Sales tax, manufacturer to wholesaler	
3	93

The cost price to the manufacturer is, therefore, $179.00. To this the manufacturer adds a profit of 33$ per cent, 30 per cent of which is to provide for his overhead charges and 3$ per cent to provide a profit for himself. He also charges his sales tax of 4$ per cent on $238.56 or $10.74, making the cost to the retailer $249.40. The $249.40 is made up as follows:-
Goods, $100 plus overhead $22, plus profit $3.. $125 00
Duty	
35	00Overhead on duty	
7	70First profit on duty	
1	05
Manufacturer's overhead 30 per cent of $125
goods	 37 50
Manufacturer's overhead 30 per cent of $35 duty 10 50 Manufacturer's overhead, 30 per cent of $7.70
overhead	 2	31
Manufacturer's overhead, 30 per cent of $1.05
profit on duty	* ..	31Manufacturer's profit,	3$	per	cent of $125	goods.	4 16Manufacturer's profit	3$	per	cent of $35	duty.	4 16Manufacturer's profit 3$ per cent of $7.70 overhead	
26
Manufacturer's profit, 3$ per cent of $1.05 first
profit on duty	 04
First sale tax, $5.06 plus $1.11 plus 15 cents
plus 33$ per cent	
8	43Second sale tax $3.93	plus 33$ per cent	
5	24Third sales tax	
10	74

On the resale of these goods to the consumer the retailer adds his trading profit of 33$ per cent. He adds, therefore, to the cost to him $249.40, 33$ per cent of this or $83.19 , 30 per cent of which is overhead and 3$ per cent of which is profit, making the cost to the consumer $332.55 which we may dissect as follows:-
Goods, $125 plus overhead $37.50 plus profit
$4.16	$166	66Duty	
35	00First profit on duty	
1	05Second profit on duty	
1	16Profit on first profit on duty	
04
First overhead on duty $7.70 plus overhead on
second $2.31 plus profit	
10	27Second overhead on duty	:.	10 50Overhead on profit on duty 30 per cent of $1.05.	31First sale tax, $8.43; second, $5.24; third, $10.74.	24	41Retailer's overhead, 30 per cent of $166.66 goods.	49	99Retailer's overhead, 30 per cent of $35 duty.. ..	10	50
Retailer's overhead, 30 per cent of accumulated
profits on duty, $2.25	 67
Retailer's overhead, 30 per cent of accumulated overhead on duty $10.27, $10.50, 31 cents.. ..	6 32
Retailer's overhead on 30 per cent of accumulated sales taxes $24.41	
7	32Retailer's profit 3$ per cent of $166.66 goods..	5	55Retailer's profit 3$ per cent of $35 duty	
1	16

Retailer's	profit	3$	per cent	of	accumulated
profits on duty, $2.25	 07
Retailer's	profit	3$	per cent	of	accumulated
overhead on duty, $21.08	 75
Retailer's profit 3$ per cent of accumulated sales taxes, $24.41	 82

In respect to duty the treasury received.. ..	35 00
The consumer paid	duty $35 00
Wholesaler's profit on duty	 1 05
Manufacturer's profit on wholesaler's
profit on duty	 04
Manufacturer's profit on duty	 1 16
Retailer's profit on duty	 1 16
Retailer's profit on accumulated profits on duty	 07

The treasury received, $35.00.
The consumer paid, $38,48.


Charles A. Stewart: Does he add the sales tax too?


Henry Herbert Stevens: Yes.


Charles A. Stewart: There are
three collections in that transaction.


Henry Herbert Stevens: Now, what I want to point out to the House is this. The argument is constantly used that when these goods are sold .the full cost is charged with the addition.of the duty. This point has been brought up in the House so frequently that I think it would pay hon. members to study the schedules. They are too intricate to go into in detail at the moment, but they will appear in Hansard and are very enlightening. Manufacturers generally, as well as wholesalers and other business men, do not fix their price in that way at all. Rather they take the cost of production, and this cost, whether it is of the goods in the hands of the manufacturer or in the hands of the wholesaler, is primarily the cost of the raw material, secondly the freight and carriage, and then if there is a duty it is added as a part of the cost of the goods. It makes no difference whether it is the sales tax or any other kind of tax, it is added. If there is insurance, if there is rent, if there are taxes on the building, all these things, or a great many of them, naturally enter into the overhead charges of the business, and only such charges enter into the cost of ithe goods as directly affect the goods themselves. It does not follow that because the duty is 10, 20 or 30 per cent the price of the goods manufactured is increased by that percentage, nor is that duty pyramided along the whole line of these transactions. But certainly wherever a tax is imposed, whether it be income tax, sales tax, stamp tax, real estate tax or a rental,-any and all of these enter into the general overhead cost of the business; there is no question of that.- And there is no question at this point that the

Ways and Means-Sales Tax
aggregate of these taxes and charges, insurance and so forth, is entered as part of the cost of the goods so produced. In 1922 a duty was imposed on imported clothing, and the wholesaler importing such goods paid the duty of 30 per cent, we will say-I have forgotten the exact duty; it was 30 or 35 per cent-and $100 worth of the goods when they reached the wholesalers' warehouse represented a cost of $130. But there was a general fall of prices all over the country, and in nearly every case in the clothing business the slump was such that the wholesale price to the retail dealer was actually below the cost of the goods plus the duty paid by the wholesaler, and the goods were sold to the retailer 10 p.m. and passed on to the public at a figure less than their cost plus duty. In that case the wholesaler assisted in the paying of the duty; he paid more duty than the consumer paid. Does my hon. friend get that point?


Andrew Ross McMaster: Yes.


Henry Herbert Stevens: If that is the case, and
undoubtedly it is, why was it charged by Mr. Pedlow in his memorandum that this duty is always pyramided and passed on to the consumer? I will admit that such a condition does not always obtain; but the point we ought to keep in mind is that the dealer in goods has to absorb the loss on a falling market, just as he receives sometimes the advantage on a rising market. What I want to complain of, if I may, is that attitude of mind which invariably attaches to the business men of Canada some sort of an offence against the public because the duty is made a part of his cost. But let me repeat this: The duty is no more a part of his cost than his real estate taxes.


Andrew Ross McMaster: Just as much a part of it.


Henry Herbert Stevens: Just as much a part of it. It is a tax on his business and is a part of his cost. A man, for instance, pays taxes on his factory, pays insurance on his factory, pays interest on the money he borrows to handle his business, what we call working capital-ail these things go into the general cost of his business; they all play a part in the cost of production, and when the article is finished it represents the cost of material, plus rent or taxes as the case may be, insurance, interest on capital, interest on working capital or bank overdraughts, as the case may be. These all form a part of his cost, and the cost price of that article is then fixed.
I do not wish to pursue the point any further, but I did think my hon. friend might
have given to the committee this memorandum as well. Furthermore, he will recall that this thing was submitted to an economist, unless my memory plays me false, and I do not think it does; it was submitted, if I remember rightly, to Dr. Adam Shortt, a gentleman for whom I have the highest regard, and there was a conference between the chairman, Dr. Adam Shortt, and Mr. Sparks, and, I believe, Mr. Pedlow, although I am not sure of that. I see the hon. member nods his head; Mr. Pedlow was there also. But why did not my hon. friend call Dr. Adam Shortt before the committee, and let the committee of his fellow-members have the benefit of consultation with Dr. Shortt? I recall, if I am not mistaken again, that while at first Dr. Adam Shortt subscribed to the doctrine that Mr. Pedlow advanced, after a study of these schedules presented by Mr. Sparks he agreed that they were just as sound or more sound than the schedules presented by Mr. Pedlow, and the criticism I would offer of my hon. friend's action is not only his presenting it in the way he did to-night, but in failing last year to give the agricultural committee the privilege and the opportunity of following this intricate question to an ultimate conclusion, and it could only be done before such a committee with ample time for study.


Charles A. Stewart: The example that my hon. friend cites I am bound to say is a fair one. It is an example that would apply generally in the ordinary course of business. There were three different operations, three different taxes collected. When my hon. friend criticised me a moment ago for saying that the taxes were pyramided


Henry Herbert Stevens: I was not criticising my hon. friend, but the general practice.


Charles A. Stewart: And as now proposed, it is one tax collected at one place. True, that will be pyramided to the extent of the tax in each transaction, and the profit charged on that. I am very glad that my hon. friend confirms me, because that seemed to be very vague in the minds of the committee.


Henry Herbert Stevens: I do not want to be drawn into an analysis of this long and very intricate question to-night. I did not confirm the suggestion of the absolute pyramiding, except this: In all business, when the first operation takes place, take steel for instance-


Charles A. Stewart: All I wanted my hon. friend to admit was that in most transactions there were at least three places in which the tax was collected.

Ways and Means-Sales Tax


Henry Herbert Stevens: No. My hon. friend is now referring to the old sales tax?


Charles A. Stewart: Yes.


Henry Herbert Stevens: Not necessarily at all.


Charles A. Stewart: My hon.
friend has just cited a case himself, and my hon. friend from Brome cited a case of the same character. It possibly would not apply to the item under discussion, that of lumber, but taking the whole field of sales generally in Canada, it does apply.


Andrew Ross McMaster: I will not detain the
committee long in reply to my hon. friend. I first, however, wish to make this point perfectly clear, that there was no difference between Mr. Sparks and Mr. Pedlow on the question .as to what the sales tax amounted to. Just as the hon. member who has taken his seat has disclosed to the House, I read from the proceedings of the special committee, part 1, page 910 from the exhibit quoted by my hon. friend:
First sales tax, 3f per cent on invoice price plus duty $5.06; second sales tax, manufacturer to wholesaler, $3.93; third sales tax, $10.74.
Now if you add those three sales taxes together, according to Mr. Sparks, you find that the sales tax aggregated $19.73 on this $100 bill of goods, so there is no difference between Mr. Pedlow and Mr. Sparks as far as the aggregate amount of these three sales taxes in this example are concerned. Where they did differ, and I am perfectly frank to say there was a difference of opinion, was that Mr. Pedlow said that when importers paid duty and sales tax they regarded that as constituting the price of their goods, and they made a percentage of advance, not upon the invoice price, but upon the full amount the goods cost laid down in their warehouse; that when the wholesaler sold to the retailer, that is the same amount on which he calculated his profit, and when the retailer sold again to the consumer, he calculated his profit, not upon any percentage of his overhead, but knowing what the goods cost him, he added a certain percentage. That was the theory of Mr. Pedlow, and I think it is the theory which every merchant in this country follows. Mr. Sparks had a somewhat complicated and refined way of putting on only a certain part of the advance that Mr. Pedlow put on. He made long and intricate calculations of overhead, but I believe Mr. Ped-low's was the simple and the more usual way of conducting business and of calculating prices, and I think most merchants in this House will agree with him. But my remarks are characterized as this tissue of absurdities

-no that is not the exact word-this knot of absurdities,-and the leader of the opposition took that from Macaulay's essay on Southey's Soliloquies on Society; it is interesting to know just where he got these somewhat, I hope, badly applied words which he used to pour ridicule on my devoted head-because I had said the three sales taxes aggregated $19.73. Then one of his seconds-in-command, or thirds-in-command, or fourths-in-command, got up in the House and praised Mr. Sparks to the highest, and then made out from Mr. Sparks' own statement that he calculated the aggregate sales tax exactly at the same figure Mr. Pedlow reached. The difference between the two was this. Mr. Pedlow estimated that the sales tax plus profit on sales tax amounted to $32 and some odd cents; Mr. Sparks calculated that the sales tax, and profits on sales tax, amounted to $24.41. In one case Mr. Sparks thought that the pyramiding of the sales tax amounted to $4.63. Mr. Pedlow put it at a very much higher figure. But the point I want to make is this and after all these differences of opinion between merchants are a secondary matter: That both these men- who are honest and who are intelligent-came before the committee and they both agreed that the sales tax in this case was 19.73 per cent; they both admitted they pyramided the tax and took considerably more out of the consumer than the treasury received.


Henry Lumley Drayton: I do not know that we will ever get to a common ground in connection with this matter, but there are some things that are absolutely common to everybody and we know of them. For example, we know where the 6 per cent came from, we know the gentleman who prepared it, we know his pamphlet which was adopted, and we know that the whole scheme was a scheme of the manufacturer in one particular line of business. We also know what the trade papers say, and I am very much more interested in what the general trade papers say than in what is said by an isolated merchant here or an isolated merchant there. My hon. friend from Brome himself would not think for a moment that was a fair example of the manner in which business was done in Canada. He could not because he knows that if he did all the government figures are simply absurd. Now I take the trade papers. I take a reference which I find at page 2705 of last year's Hansard. Hamilton is a great place for jobbers, and this is what I find at the page mentioned:
Hamilton, Ont., May 12.-Jobbers are particularly pleased with the budget especially in its treatment of the sales tax.

Ways and Means-Sales Tax
" It's a good budget for the jobbers," stated St. Clair Balfour, of Balfour Smye Limited, wholesale grocer.
" It gives us just what we have been after for a long time. Hitherto with a one per cent tax we had to absorb the sales tax."
" We could not avoid it. Now, however, this tax will be placed on at the point of manufacture and we will be relieved of this trouble."
Asked if this would not result in pyramiding Mr. Balfour readily admitted it would be the case.
" Oh, yes, certainly " he said, " If the article costs $100 and the manufacturer puts on the $6 sales tax, we will collect our profit on the $106."
The real truth is that merchants and manufacturers found they could not pass it on altogether, and in many cases not at all. They do pass this on now and you see it in connection with the cost of living expenses. But all this is by the way. There was one particular line of business, it was pointed out, would mean more than two transactions as a rule. That line of business was lumber, in the way that lumber is handled and, the number of people whose hands it passes through, it was shown, and particularly on the prairies, that there were often more than two transactions in lumber; and, of course, it would be said then that therefore our taxation was much higher. That is the argument at once. But in order to prevent that, our law provided that in respect of lumber an excise tax of 3 per cent should be imposed, levied and collected on sales and deliveries by the Canadian manufacturer, and that further excise taxes would not be payable on resales. So that apart from all argument we have to-day got five per cent on lumber as against three per cent under the old law. Now, I ask my hon. friend if he was wrong in 1921? Wore his figures incorrect? Were the principles he was advocating incorrect?
I ask him that plain and simple question?


James Alexander Robb: My hon. friend has quoted
against me this evening the speech I made in 1921 when we were imposing new taxes upon the people. He appears to have forgotten, however, that in introducing the budget we remitted some 824,000,000 of taxes that had been imposed, we remitted all the taxes upon agricultural implements, and this afternoon we have made some further concessions in the shape of remission of taxes on certain appliances used on the farm and in the fisheries. I want to say frankly to my hon. friend that while I am not at all out of sympathy with 'his idea as it will apply to rough lumber only, it is my duty to provide revenue and to see that we have sufficient revenue to carry on the business of the country for the year. Under these conditions I would ask my hon. friend not to press his amendment. I am told by lumbermen-lumbermen of experience-that they like the present rates better than the rates that prevailed prior to January 1. As the tax applied before it was three per cent on the rough lumber but when it was worked up into doors, sashes, panelling, and all other things used in the construction of a house, the cost was added so that in the end it cost very much more. All things considered I think my hon. friend would be very well advised if he would not press his amendment. It is true that I did make suggestions to Sir Thomas White at that time but I did not go so far as to offer an amendment to his resolution.


Mr. STANSELL:: I feel that some figures have been given to the House to-night that should not go unchallenged. I am not so much concerned as to the basis upon which they are made-whether upon statements made by Mr. Sparks before the agricultural committee or by Mr. Pedlow. Naturally as I was a member of that committee I am somewhat interested. I presume both gentlemen were honest and that both of them gave what they believed to be correct figures. I assume also that the hon. member for Brome (Mr. McMaster) was honest in quoting these figures or using this illustration. However, to my mind the statement is not perfectly clear based upon the illustration that he uses. He stated that because there was pyramiding, and in one case the sales tax was paid about three times, the amount actually paid into the treasury on $100 of the first investment was $19.73, being practically 19.73 per cent. I believe I am correct in this statement. That was the amount he says actually paid into the treasury. Now he says, under the present system there is only 6 per cent collected at the source and only $6 is actually paid into the treasury. Unless the hon. member for Brome can explain the situation satisfactorily the remainder of his argument must naturally fall to the ground because when 19.73 per cent was actually paid into the treasury the total amount of the collection was $72,000,000, but when it was reduced to 6 per cent and $6 actually paid in, the total receipts were about $120,000,000. These figures are so much at variance, so completely ridiculous, that the hon. member will have difficulty in extricating himself from an awkward position, and his well meant advice so frequently directed to this comer of the chamber must continue to fall on deaf ears.


Arthur Meighen: I do not intend to proceed with the argument further, but I understand the hon. member (Mr. McMaster) has sought to rob me of the originality of the
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expression to which I took exception. I cannot submit to that even though it is attributed to a name very much revered. I only ask, now that he finds that someone else whom I know he admires used the expression, he will no longer think it rude.


Andrew Ross McMaster: I accept the statement so graciously made by my right hon. friend.


Robert Forke: I should have been out of the House some time ago to fulfil another engagement, but if I left the House before a vote was taken I know what remarks would be made by some of my hon. friends to the right; so I will stay until the vote is taken.
I happen to remember some of the choice phrases which I heard the right hon. leader of the opposition (Mr. Meighen) use, and I am going to give the House one or two of them, just to show what a tremendous vocabulary he can employ at times. These expressions are as follows: Shameless duplicity; Sickly affectation; Blazing madness. These are a few of the phrases. I rather admire them. They are quite forcible and count for something in debate. They are all right. I am not finding any fault with them. I must say I enjoy the speeches of the right hon. member. They are generally very telling, and forcibly delivered.
In regard to the question before the committee, it seems to me it is, simply: Should there be a sales tax on lumber? That appeals to members in this part of the House immediately-to reduce taxation if possible on any materials that may be of ordinary use on the farm and elsewhere. But there have been material reductions made. I realize that we require a revenue. I had considerable concessions made to me with regard to certain articles used on the farm. On the other hand, I am pretty sure that the amount of lumber that will be used upon the farm during the coming summer will not be very great, and it will not make very much difference to the average agriculturist what the price of lumber is during the next summer.


Mr. SPENCE:: Is the hon. member thinking of the farm only?


Robert Forke: I am speaking of the farm only-exactly what I am speaking of. Lumber may be used in other directions, but I know very well that the trouble has been handed over to this part of the Hoflse because it will affect the farmer. The sales tax is not one that we like to pay. We realize that it is burdensome, and would like to see it abolished altogether but I feel, under the circumstances, that I cannot support the amendment at the present time. I know very well the purpose to which all these votes will be 
put. I have no hesitation in endorsing what the hon. member for Brome (Mr. McMaster) has said but I have no intention of being made a catspaw to pull the chestnuts out of the fire for any person in this House. I will be judged on my record just exactly the same as other hon. members, and I am not at all afraid. I think I can form an opinion myself and act accordingly, and no member will have the ability to drive me from what I think to be the right course.


Mr. BOYS:: Did my hon. friend make his proposals to embarrass? If he did not why should he ascribe any such motive to members on this side of the House?


Robert Forke: Members on that side of the House rarely rise that they do not turn to hon. members to their left.


William Alves Boys: Let the leader of that great party answer my question.


Robert Forke: What is your question?


William Alves Boys: Did you make your proposals to embarrass?


Some hon. MEMBERS:: Order, order.


William Alves Boys: Did the hon. leader of the Progressive party make his proposals to embarrass the government, or from the standpoint of necessity and of need? If he made the proposals for the latter reason, why should he ascribe other motives to any other hon. member of the House?


Robert Forke: For the simple reason that
nearly every hon. member who rises in that corner of the House turns to members to his left. It is a favorite trait.


An hon. MEMBER:: We like to look at you.


Robert Forke: That is all very well. If such is not the fact, do not get annoyed.


William Alves Boys: I am not annoyed.


Henry Lumley Drayton: In the opinion of the hon. leader of the Progressive party, is it better to have exemption from sales tax on fancy goods than on lumber? I will give the hon. member another question. Does he think ice cream is more important than lumber?


James Alexander Robb: Mr. Chairman-


Henry Lumley Drayton: I have asked the hon. member for Brandon a question, and the hon. member need not answer.


Arthur Meighen: The minister will not
answer questions addressed to himself; why should he answer questions put to the Progressive leader?

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Mr. SUTHERLAND:: After the lecture
we have received from the hon. member for Brandon (Mr. Forke), I am sure hon. members are not at all surprised that some of us who have sat here silent for some time should have something to say. We have become accustomed to receiving advice and lectures of this kind from the leadter of the group to our left. It appears that he is quite satisfied that he has been driving a bargain with the hon. members who represent the government, or the government themselves, and he says "Because they have granted my demands along certain lines, I think it is up to me now to concede something in return." This is the kind of bargaining to which we have been subjected during the whole session. This is something that was in effect even before the House met; and yet we are supposed to remain in our seats and take a lecture from the hon. member for Brandon. It is a bargain and sale-nothing short of it- and it has been going on all during the session. The hon. member for Brandon now rises in his place and says, "This would be a very nice thing for the farmer, but the farmer has already received a great deal in the way of concessions at the hands of the government." What about the people living in the towns and cities who have to buy building material for their houses? We were granting loans to the poor people to enable them to build houses. The hon. member has no sympathy with those people when considering the tax that is now being imposed upon them. I would not have spoken on this matter had it not been for the remarks which the hon. member has just made. Rest assured that if the government finds itself in an indefensible position we will find the hon. member for Brandon attempting to defend them, and, judging from the defence he puts up, I do not think the government are very grateful to him sometimes for his attempt to come to the rescue.


Robert Forke: I am sure I accept the
reprimand I have received in a very grateful spirit. This afternoon I moved an amendment which was carried by a majority in this chamber, and the hon. member for South Oxford (Mr. Sutherland) said that I was bargaining with the government. I do not see what bargaining there is when you move an amendment and it is carried.


John Arthur Clark: When was that amendment
voted on?


An hon. MEMBER:: The hon. member was
out of the chamber.


John Arthur Clark: I was not.


Henry Lumley Drayton: I am going to ask the Chairman if there was a vote in this House to-day on the amendment proposed by the hon. member for Brandon.


George Newcombe Gordon: It was declared carried.


Henry Lumley Drayton: No vote and no discussion. What happened was that my hon. friend went over, discussed it with the minister, got his consent, and it was declared carried.


Arthur Meighen: All we find fault with is that the hon. member does not go over there and stay there. Let him stand out true before this country exactly what he is, a bargainer with the government, a bargainer day by day, an accessory to the government and all its works. That is what he is. Let him go and merge with thern^ and present a straight front before the people of Canada. Then we have something we can understand. But this procedure of playing at one end, and sticking by a group party in the West, to pretend to be urging for one policy when his party is really supporting the government in another policy, is what we object to. That is not straight politics. Instead of looking across the aisle, with his eye meeting that of the leader of the government in a confession of mutual virtue, and claiming that there is no bargain when the bargain is written across the face of everything done in this House, let him go over as a straight supporter of the government and take all he can with him. Let us have two parties and fight the issue in this country, and let the will of the majority rule.


Robert Forke: I have just one remark to
make and then I am through. I think the language used by the leader of the opposition (Mr. Meighen) is not language that is fitting coming from the leader of a great party in this House to myself.


Henry Herbert Stevens: My hon. friend referred
to resolutions moved-I moved two of them this afternoon and my colleague, whom I joined, moved the third-as motions deliberately designed to obstruct and to embarrass and moved for no other reason. That statement is absolutely without the slightest foundation in fact. I moved two resolutions genuinely designed and based upon one idea, namely, to give effect to what the government says, to reduce the tax upon food. What were those two resolutions? The first was
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that canned fish, including salmon, herring, sardines, lobsters and oysters, should all be placed on the free list. My hon. friend rose in his place-


Robert Forke: I do not recollect-


Henry Herbert Stevens: I saw him. My hon.
friend's recollection is very faulty. He rose in his place and he said to the minister that he thought it was a very good move and resolution, with the exception that it included oysters and lobsters. The resolution was before the Chair. We voted on it and it was voted down. Then, in order to meet the objection of my hon. friend (Mr. Forke), I moved a second resolution, exactly what he asked for, and again the resolution was voted down. Now, he comes along and gives this comer of the House a lecture upon how to present resolutions. He impugned our motives. He is constantly impugning our motives, simply because we have principles, ideas and convictions whfth we are not afraid to stand by in this House. My hon. friend stands in his place and, with a great deal of sanctity in his expression and tone, in a tone of superiority, of self-righteousness, the tone that the Pharisees used-


Some hon. MEMBERS:: Oh, oh.


Henry Herbert Stevens: Let my hon. friends say "oh, oh," if they like. We have been sitting here long enough listening to these lengthy lectures from the leader of the Progressive party (Mr. Forke). Not a move is made by hon. members in this section of the House but its motives are impugned.. He also moved one or two resolutions; but my hon. friend (Mr. Forke) pussy-footed across the chamber, whispered for a few minutes in the ear of the minister, came back and moved two resolutions regarding two items which I have before me. These two items were windmills which he wanted on the free list and portable engines. What was the little by-play? Why, a child couldl see through it. After tripping across the floor of the House and whispering for about five minutes in the ear of the minister, he came back again and, with an air of innocence and sanctity, he moved his resolution. The minister, completing the childish by-play, got up and said. "Yes, I think we will accept it; it is a perfectly proper resolution." Why, it is part of the price the government is paying for support: It is part of the blood money of the politics of this country. That is what it is.


Some hon. MEMBERS:: Oh, oh.


Henry Herbert Stevens: It is part of the price being paid for the votes of hon. gentlemen in this 
House to pull this government through, and nothing else, and it would not be considered for five minutes by the government if the government had a majority behind them. Then, my hon. friend not only stands in his place, but goes out before the public constantly making insinuations as regards the morals, intentions and motives of hon. gentlemen in this section of the House. We are just a little bit sick of this and we do not purpose standing it very much longer. I reiterate- and I stand behind what my leader has said-let hon. gentlemen to my left, under the leadership of the hon. member for Brandon, who has given and who is giving slavish support to this government, join the government forces honourably and manfully, and stand behind them. Then, at least, we shall , have respect for them. We have respect for hon. gentlemen wherever they sit when they bring forward their opinions of policy upon which they are prepared to stand and fall but as regards this seesawing and pussyfooting, going across the floor and saying to the minister "Now, if you will accept this, I will move it, but if you do not want to accept it, I will rot move it. Will it embarrass you? If it does not embarrass you, I will move it." Or, "Mr. Minister, let me move this. You see you did not bring this down in the budget; but if you let me move this item, it will help me with my farmer friends in the West and I shall be able to go back West and say: ' Look at what I have done; I have got windmills on the free list'- this pussy-footing and bargaining does not become the hon. gentleman very well. In fact, he has no particular qualifications which warrant him in standing, not monthly, but daily in hie place and reading little curtain lectures to us for our actions in this House. These actions that we are taking, the part that we are taking, the position that we take on the tariff, we take fairly; we do not take it simply because it is helping us here or there, but because it is our policy. We believe in protection; we believe in a consistent, intelligible principle of protection running through the tariff of this country. We propose to light for it wherever we have the opportunity, and we do not propose to be diverted from it by insinuations as to our motives by such an hon. member as the representative for Brandon.


Robert Forke: I have no intention of replying to the statements made by the hon. member (Mr. Stevens). Hon. members know me; they know all about me so far as that is concerned, and they are able to judge for themselves. He made one statement to which

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I want to take exception. He said that I go outside the House and impugn the morality of members in that part of the chamber. I defy the hon. gentleman to find in any speech or any remarks that I have made at any time any words that ever imputed wrong motives to hon. gentlemen in that part of the House. What I have said, I have said on the floor of this House. I have often been found fault with because I have not used stronger language, because I have not been bitter enough against my hon. friends. In my own locality they will tell you that I am not bitter enough. I have paid tribute time and and time again to the leader of the opposition (Mr. Mcighen), and newspapers have come out in the West with the heading "Forke lauds the leader of the opposition." That has occurred time and again, and yet hon. gentlemen in this House to-night say that I have impugned the morality of hon. members in that part cf the chamber. I deny it. I never used any language of that kind. [DOT]


James Alexander Robb: It is only fair to the leader of the Progressive party to say that when he crossed the floor this afternoon, it was to ask me if a certain item that he pointed to in the Customs Act was free from the sales tax. That is the only conversation we had.


Henry Lumley Drayton: My hon. friend addressed a question to me some time ago and I think it has been lost sight of.


James Alexander Robb: We have gone far afield.


Ernest Lapointe: Hear, hear.


Henry Lumley Drayton: My hon. friend
says: "hear, hear." He must recognize that there is a time for justifiable anger. I have seen him very angry at very much smaller things. He used to have a dreadful way of being angry when he sat on this side. If you could only have seen my hon. friend perform at top speed when he was in opposition-I am sure he could have been heard on Sparks street-you would know what either real or simulated anger was. The acting minister asked me to withdraw this motion. It is perfectly true that while my hon. friend made the speech which I have read and which, I think, he will agree with me more than justifies everything that I am suggesting to-night, he did not press it to a motion. It is also true that what my hon. friend then wanted was to have lumber made entirely free. He was attacking a 3 per cent tax and nothing would satisfy him but absolutely free lumber. All I suggest is that he go back to the tax which he attacked. Three per cent was entirely too high then, but 5 per cent is
reasonable now. My hon. friend says he has given other concessions to the farmers and therefore I should not press the point. Now, one of the things I dislike about the whole of this budget, and the entire manner in which the sales tax exemptions are arrived at, is the total lack of anything like principle, the utter lack of any motive, except apparently that of expediency: whoever shouts the loudest and longest or can make the most trouble will get something. For the life of me I cannot see any justification in a scheme of sales taxation that exempts in part luxuries-and there are luxuries exempted here-and not only retains but even multiplies the tax on a common necessity of everybody, namely, lumber, to the taxation of which my hon. friend formerly objected. At the time the former tax was in effect the general field of taxation was infinitely broader than it is now; lots of things that were taxable then along with lumber were far less necessary than this article. And to the degree in which my hon. friend has exempted these other commodities, for which there is less justification for exemptions than in the case of lumber, just to that degree is the case for this particular exemption all the more strengthened. Fancy biscuits and the like are to be exempted from taxation; but what about this underlying national necessity? All I ask the minister to do is to put it where it was before; not to do what he says, namely, put it on the free list, but leave it where it was formerly. But, says my hon. friend, he cannot do that on account of the revenue. Well, if he pays attention to the hon. member for Brome and that gentleman's arguments with reference to the old tax, he will put this article back where it was and make more money. He will do that if the whole trouble is the revenue. And the trade will thank him for doing so. The trade know that (here is a great deal of difference between the three and the five per cent, and the trade will take a chance.


Mr. TOBIN:: Does the hon. member say that the trade would rather go back to the old tax of 3 per cent than have the 5 per cent tax? If he says so he has been misinformed, because the manufacturers, the wholesalers and the retailers of this country are in favour of the present tax, and I know what I am speaking of.


Henry Lumley Drayton: There is no
doubt that the wholesaler and the jobber got what they wanted.


Edmund William Tobin: And the manufacturer.
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Henry Lumley Drayton: Only the manufacturer of certain articles did. The whole of that scheme was brought out in Ripley's report.


Edmund William Tobin: It will cost the consumer
less to-day than under the old tax and I can prove that if the hon. member wishes to be fair.


Henry Lumley Drayton: My hon. friend has a great task ahead of him, because he has in bis path facts that are absolutely incontrovertible. If the hon. gentleman desires now to prove his point I am quite content to give way to him. However, let me ask him to take the question of rough lumber and show the committee how much cheaper that article will be under a tax of 5 per cent than under one of 3 per cent.


Edmund William Tobin: That tax was repeated and
the consumer did not know what he was paying; the wholesaler had to charge it and the jobber passed it on to the retailer, so that when you came to the factory of the manufacturer who produced sashes and doors you found that the tax was Ilf per cent in some cases.


Henry Lumley Drayton: I am sure the hon. member thinks he has done what he said he would do. What did he undertake to do? He said he would prove that it cost the people more, under a tax of 3 per cent, for rough lumber that it does under a tax of 5 per cent, and he talks about the multiplication procedure. Well, here is the old act which provides that there shall be no further taxes charged on re-sale. If the hon. member would only take the trouble to read the law we should not have so many absurd statements.


Edmund William Tobin: I took the matter up with
the Commissioner of Customs who informed me that they could not charge less than Ilf per cent. I do not know the law, but he does; at least he is supposed to know it. He is one of the hon. gentleman's nominees.


Henry Lumley Drayton: I did not quite catch that.


Edmund William Tobin: I said I did not know the
law but that I went to one of the hon. gentleman's nominees and that was the decision he gave me.


Henry Lumley Drayton: Well, you know Mr. Chairman, the kind of decision you get depends very often on the kind of question that is asked; and judging from the way in which my hon. friend is dealing with the question I should not be surprised at any answer he might get.


Edmund William Tobin: The hon. member ought to
be fair. A complaint was made by one of the manufacturers in my county who stated that the tax finally amounted to Ilf per cent. He took the matter up with me as representative of the constituency and I submitted it to the Customs department. I received an answer from Mr. Farrow in writing to the effect that they could not rule otherwise under the law and >the tax had to be collected.


Henry Lumley Drayton: I have no doubt that the hon. gentleman is prefectly sincere, but I am confident that the whole files of the department will be searched in vain for a collection made by Mr. Farrow of Ilf per cent-


Edmund William Tobin: The manufacturer had to
pay that and charge it all to the consumer.


Henry Lumley Drayton: Let us get back to the act. I am sure the hon. member must be referring to the present sales tax, because that is how it works out now. It was all worked out for him last year; it came to 11 decimal something. However, I am going to take the act. Surely there should be no debate on that score; there should be no idea of misrepresenting the law as it actually is:
Provided that in respect of lumber an excise tax of 3 per cent shall be imposed, levied and collected on sales and deliveries by the Canadian manufacturer, and further excise tax will not be payable on re-sale.
Now, that is the law to which I want to go back in the case of lumber. What idle nonsense it is to talk about duplication in connection with the motion which I have submitted in respect to lumber! What nonsense it is to refer to the evidence of Mr. Pedlow, who never mentioned lumber at all! What nonsense it is to say that three is greater than five-for that is what is being said!


James Alexander Robb: My hon. friend quoted a
moment ago the maximum tax on lumber as 3 per cent. There should be no further tax on the resale of that particular lumber. But when manufactured into furniture or into doors, sashes or panels there is a further tax.


Henry Lumley Drayton: My hon. friend was not referring to furniture in his speech of 1921. I am staying with him on lumber.


James Alexander Robb: That is quite right. But
let me point out to my hon. friend, who has had considerable experience in the administration of the Department of Finance, that if we accept his suggestion I do not see how it can be carried out as a matter of administration. In the first place we impose, according to his suggestion, 3 per cent on the raw

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material. Then what are we going to do when it is manufactured into doors, panels and sashes? We will get into the same difficulty pointed out by the hon. member for Richmond and Wolfe (Mr. Tobin), who is a practical lumberman. He states that the tax now is generally satisfactory to the lumbermen. I think we had better leave it where it is.
Amendment negatived: Yeas, 33; Nays, 84.


George Newcombe Gordon: Shall t'he resolution
carry?


Henry Lumley Drayton: Mr. Chairman,
this afternoon before adjournment I asked my hon. friend for the losses of revenue in connection with each of these reductions in taxation. Of course, as the Chair is well aware, this is something we ought to have in considering these matters. My hon. friend did not have his sales tax memorandum with him, which he had had prepared when he brought down the budget. He has since been good enough to tell me that he has not been able to find it but he hopes to be able to have it to-morrow. I would suggest that we should now adjourn consideration of this resolution and go on with something else, if he desires, so we can have the memorandum to-morrow when the House is sitting.


James Alexander Robb: I will promise to get the
memorandum for my friend to-morrow. I think it is in the office in the East Block. But we might pass the resolution.


Henry Lumley Drayton: The only
trouble is that the memorandum is in connection with these very matters of exemption, and it is not of much use unless we have it before us when considering them. Why not take up resolution 3?


George Newcombe Gordon: We are at resolution No. 2, which is changed to No. 3.


Henry Lumley Drayton: Well, take up
the next resolution, if you will have the promised information to-morrow.


James Alexander Robb: Very good. The next resolution becomes No. 4.
4.	Resolved, That it is expedient to amend The Special War Revenue Act, 1915, and amending acts as follows, that is to say:	,
(a)	By repealing subsection three of section nineteen BBB of the said act and substituting therefor a new subsection three providing that if at any time it appears to the Minister of Customs and Excise that payment of the consumption or sales tax is being evaded by a licensed manufacturer or producer or licensed wholesaler or jobber the minister may require that the consumption or sales tax shall be imposed, levied and collected on any material specified by. the minister sold to any licensed manufacturer or producer or licensed wholesaler or jobber or to any class
of licensed manufacturers or producers or licensed wholesalers or jobbers specified by the minister, at the time of sale of such material when produced or manufactured in Canada, or at the time of entry for consumption by such licensed manufacturer or producer or licensed wholesaler or jobber when such material is imported, subject to deduction thereafter on submission by the licensed manufacturer or producer or licensed wholesaler or jobber of proof that such material has been used in the manufacture of an article which is subject to the consumption or sales tax and on which the said tax has been paid.
(b)	By repealing subsection five of said section nineteen BBB.
(c)	By striking out subsection six of said section nineteen BBB and substituting therefor the following:
" (6) Subject to the provisions of subsection three of this section, every manufacturer or producer shall take out an annual license for the purpose aforesaid, and the minister may prescribe a fee therefor, not exceeding two dollars, and the penalty for neglect shall be a sum not exceeding one thousand dollars. Provided that the minister may direct that any class of small manufacturer or producer selling his product exclusively by retail shall be exempt from payment of consumption or sales tax on goods manufactured or produced by him and persons so exempted shall not be given a license. Such exemption may be withdrawn by the minister."


James Alexander Robb: In connection with this resolution, Mr. Chairman, I want to make this statement:
The section is designed essentially to protect the revenue. If evasion occurs in scattered individual cases the section would be invoked only in such cases, but if in any particular branch or class of industry there should appear widespread evasion, the section provides power for dealing with such cases as a "class." It may be and it is to be hoped that no occasion would ever arise for invoking the section as to a class or classes of industry, but it is felt desirable, in order to facilitate administration, that power should be given to deal with widespread evasion in a general way. Further, it may be that the nature of a particular line of business lends itself to evasions, and in such a case the only effective safeguard to the revenue would be to deal with the class and not the individual. But the committee may rest assured that the section will certainly not be invoked to cause hardship to the innocent majority on account of evasions by one or a few of their class.
This statement is given to me by the officers of the excise department, who have had experience in administering the act.


Henry Lumley Drayton: I am very glad my hon. friend has made the statement. Perhaps he will be able to go a little further. Perfectly reputable merchants have written to me in connection with the matter, and their point is very simple. They say that if a merchant offends he should be dealt with at once. But what they object to very strongly is that the whole of a decent trade should be



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stigmatized and treated in this way because there happen to be one or two unscrupulous people engaged in it. It does make business infinitely more difficult to carry on, as my hon. friend well knows. I quite agree that he must protect the revenue, but instead of penalizing a whole class possibly-and I know the department will not want to do it, and simply because of their disinclination will render it all the more difficult to carry out the plan-I would suggest that an effective way to protect the revenue would be to make this offence of such a character that it would not be repeated; in other words, provide for very stringent penalties against offenders as individuals and not penalize a whole class, because perhaps 90 per cent of the class should not be penalized. It is a matter entirely for my hon. friend, and I am not going to say anything further. I agree with the object of the amendment, but I do not think it is at all wise to penalize in the omnibus way in which penalties can be inflicted under this section as amended.


James Alexander Robb: I am satisfied that we can
trust the officers to use reasonable discretion. I do not think they would ever dare attack a class unless it was absolutely necessary.
Resolution as amended agreed to.
5.	Resolved, That it is expedient to introduce a measure to amend subsection seven of section nineteen BBB of The Special War Revenue Act, 1915, by providing that any bona fide wholesaler or jobber may be granted an annual license for the purposes of the said section and that the license of any wholesaler or jobber who contravenes any requirements of the said section shall be cancelled forthwith and shall not be restored within a period of two years after the date of cancellation.


Henry Lumley Drayton: Would not the minister like an amendment to that, in view of the other amendment?


James Alexander Robb: This resolution provides that any bona fide wholesaler or jobber may be granted an annual license. The present act provides that only a wholesaler or jobber selling not less than 50 per cent of his total sales t.o a licensed manufacturer may be granted a license. This will remove a condition that was most difficult to operate.


[Stage Direction]
Resolution agreed to.
James Alexander Robb: I beg to move that the following be added as No. 6 of these resolutions:
6.	Resolved, That it is expedient to introduce a measure to amend The Special War Revenue Act, 1915, and amending acts by providing that a refund or deduction of the amount of the consumption or sales tax paid under section nineteen BBB may be granted to a wholesaler, jobber or other dealer on goods enumerated in tariff item 445a when sold to manufacturers to be used as specified in the said item.

The purpose of the resolution, is to put Canadian material which is in the hands of wholesalers, jobbers or other dealers on the same footing as imported material used in the production of articles covered by tariff item 445a.


Henry Herbert Stevens: Is it the purpose of this resolution to remove the sales tax from material sold by Canadian dealers to manufacturers of agricultural implements?


Henry Lumley Drayton: I would suggest to my hon. friend that as this resolution is not printed, he had better rise and report progress.


James Alexander Robb: This gives authority to give a *refund to the manufacturer who may have sold to his own agent; it is to cover the case where he sells to any person where it comes in free under the act.


[Stage Direction]
Resolution agreed to.
James Alexander Robb: I beg to move that the following be added as No. 7 of these resolutions:
7.	That a refund of the consumption or sales tax may be granted on imported goods which are free of customs duty and which are found not to be according to order, provided such goods are exported under customs supervision within three months from the date of the customs entry.
The purpose of the resolution is to put imported free goods in practically the same position as is already provided for by subsection ten in the case of imported dutiable goods.
I draw the attention of the committee to section ten of the Special War Revenue Act, 1915:
A refund of the consumption or sales tax may be granted on imported goods on which customs duties have been refunded on exportation; and a refund of the said tax may be granted on domestic goods exported, under regulations prescribed by the Minister of Customs and Excise.
This is to put free goods on the same basis dutiable goods are already on.
'Sir HENRY DRAYTON:	Dutiable goods
are a little different. In the case of dutiable goods a refund may be given at any time the minister may direct. What I mean is this: The merchant knows very little about the taxes, or about a defect in the article being brought in, and as I understand the Customs Act, the minister could at any time later on, after three months, upon a defect being apparent, allow a refund to be made. But this ties you down to three months'exactly.


James Alexander Robb: If they paid the duty, not if
they came in free and paid sales tax.

Ways and Means-Sales Tax


Henry Lumley Drayton: Should it not
be the same in both cases?


James Alexander Robb: The customs people have
approved of this change.


Henry Lumley Drayton: Why not add:
"or within such time as the minister directs?"


James Alexander Robb: The other is three months.
This is the regular clause.


Henry Lumley Drayton: I think my hon. friend is wrong about that. It seems to me that there is no question that when reports are made to the Minister of Customs that hardship would result unless a refund was made, the refund can be made even after the three months has elapsed. Supposing the three months have gone, without any fault on the part of the person injured; should it not be within the discretion of the minister to recommend a refund?


James Alexander Robb: The expert tells me that
formerly it was one month, so far as customs is concerned, and then three months. The memorandum given me says:
The purpose of the resolution is to put imported free goods in practically the same position as is already provided for by subsection ten in the case of imported dutiable goods.


Henry Lumley Drayton: I would suggest that my hon. friend should let this stand and consult with the Minister of Customs.


James Alexander Robb: The Minister of Customs gave me this.


Henry Lumley Drayton: I think you will find that the Minister of Customs himself very often recommends a refund outside of the statute of limitations.


James Alexander Robb: Oh, yes, but this would go to the Treasury Board.


Henry Lumley Drayton: I see. So long as that is clear I am quite content.


[Stage Direction]
Resolution agreed to.
Progress reported.
On motion of Mr. Mackenzie King the House adjourned at 11.15 p.m.
Tuesday, May 27, 1924