1924-05-27

[Stage Direction]
Mr. THOMAS VIEN (Lotbiniere) presented the seventh report of the select standing committee on Banking and Commerce recom-162i
mending that the minutes, proceedings, and evidence taken before the select standing committee on agricultural conditions last session be referred to it.
On motion of Mr. Vien the report was concurred in.

[Stage Direction]
Mr. PIUS MICHAUD (Restigouche and Madawaska) presented the first report of the select standing committee on Mines, Forests and Waters, stating that the committee had had under consideration Bill No. 6, respecting quartz mining in the Yukon territory and had agreed to report the same with amendments.

[Stage Direction]
On the motion of Right Hon. W. L. Mackenzie King (Prime minister) the name of Mr. Ethier was substituted for that of Sir Lomer Gouin on the select standing committee on Privileges and Elections.

[Stage Direction]
Mr. GAUVREAU moved the adoption of the second report of the joint committee on the Printing of Parliament.
Motion agreed to.

[Stage Direction]
Bill No. 129 (from the Senate), to incorporate Dominion Electric Protection Company.-Mr. Marcil (Bonaventure).
Bill No. 130 (from the Senate), respecting Alliance Nationale,-Mr. Archambault.
Bill No. 131 (from the Senate), for the relief of Ruth Ethelind Jackes.-Mr. Ryckman.
Bill No. 132 (from the Senate), for the relief of Wilfred John Mitchell.-Mr. Simpson.
Bill No. 133 (from the Senate), for the relief of Edward James Bentley.-Mr. Sheard.
Bill No. 134 (from the Senate), for the relief of Elizabeth Sylvia Cameron.-Mr. Ross (Kingston).
Bill No. 135 (from the Senate), for the relief of Wilhelmina Aird McKay.-Mr. Preston.
Bill No. 136 (from the Senate), for the relief of Mary Ellen McClelland.-Mr. Garland (Carleton).
Bill No. 137 (from the Senate), for the relief of Annie Jane Bridges.-Mr. Harris.
Bill No. 138 (from the Senate), for the relief of Florance Rathbun.-Mr. Thurston.
Bill No. 139 (from the Senate), for the relief of William Samuel Morrow.-Mr. Stewart (Leeds).
Chicago Drainage Canal
[Stage Direction]
Bill No. 140 (from the Senate), for the relief of Ethel May Macdonald.-Mr. Church.
Bill No. 141 (from the Senate), for the relief of Stanley George Harris.-Mr. Sheard.

[Stage Direction]
On the Orders of the Day:
Mr. T. L. CHURCH (North Toronto):: I should like to call the attention of the government to the fact that several weeks ago I brought the matter of the diversion of water for the Chicago drainage canal before the House on a motion which was debated, and at the request of the government, the debate was adjourned. On my motion an order was made for the production of papers on [DOT]the subject, and later certain papers were tabled. In the meantime great damage is being done to navigation on the Great Lakes, and in several harbours the depth of water is from one to two and three feet lower than last year. What is being done, or what will be done about this matter? Several deputations from Ontario have gone to Washington in relation to the question, although they have done nothing and do not represent Canada. If the League of Nations is such a success, why not let them take a hand in this and also in the matter of the Toronto viaduct? If the government can get nowhere on this subject, when will an opportunity be afforded to again discuss the matter? Furthermore will the government do something?-as I do not wish to occupy further time with it this session.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: The government is represented at the meeting to which my hon. friend refers. Mr. Stewart, of the Department of Marine and Fisheries is representing the government at that meeting.


Thomas Langton Church: What effect will that
have?


Right Hon. ARTHUR MEIGHEN (Leader of the Opposition):: The Prime Minister's
answer does not seem adequate, and I feel, as well, that the House is entitled to a fuller statement as to the present situation of the controversy. The papers laid on the Table do not bring the matter up to date; indeed, they are all quite old. Can the Prime Minister not give the House some information as to what, if any, progress is being made towards curing what is fast becoming an intolerable situation in the condition created by the Chicago drainage canal?


William Lyon Mackenzie King: The hearing
before the Senate committee is in progress I Mr. Gauvreau.1
at the present time, and is still continuing. I think that stage of the proceedings ought to be concluded before any other action can be undertaken.


Arthur Meighen: But the hearing is merely an application for a further diversion. The present diversion is undoubtedly under protest. But that is not what the hearing is called for, as I understand.


Hon. CHARLES STEWART (Minister of the Interior):: Yes, the application is asking
to transfer 10,000 cubic feet of water to be used, and objection is being taken to this and the controversy is now proceeding before the Senate committee at the present moment, as well as an action in the court which presumably will be heard this fall. That is the situation at the moment. A protest from this government has been lodged, Mr. Stewart, on behalf of the Department of Marine and Fisheries, has been present at the hearing, although taking no official part in it.


Arthur Meighen: My point is this: The
hearing before the Senate committee is in effect the hearing of an application for a further diversion, really, no doubt, a confirmation of the present unauthorized diversion up to 10,000 cubic feet per second. Is the government's attitude at the present time merely being represented before the Senate committee? If that is the attitude, I consider it not only inadequate but not dignified, as respects what the government should do under the circumstances.


Charles A. Stewart: The government has protested, as my right hon. friend is aware, against the diversion of the water and the matter will be referred to later on. I might also point out that the fight is being vigorously prosecuted by interests which are opposed to the diversion. The people in the cities surrounding Chicago and other people interested are protesting just as vigorously as it is possible to protest and to fight. It is very questionable I think whether it is advisable for this government to interfere at this moment further than they have done.


Arthur Meighen: I cannot say that I am satisfied with the explanation.


Mr. McMASTER:: We in this corner of the House can hardly hear a word that is being uttered.


Arthur Meighen: The last statement was not important.

C.N.R.-Branch Lines
PRIVILEGE-Mr. NEILL
On the Orders of the Day.


Mr. A. W. NEILL (Gomox-Alberni):: I
wish to correct a mistake made yesterday in committee. It will be found recorded in Hansard at page 2533. The hon. member for Centre Vancouver (Mr. Stevens) is reported as speaking as follows, referring to the Acting Minister of Finance:
-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-Albemi (Mr. Neill)-after, I noticed, a little conference -and if-	.
And so on. The reference is to the amendment I moved to take the sales tax off calf, hog and cattle feed. I wish to state that I had no conference with the minister or any other member of the government yesterday or any other day with regard to this matter. Perhaps the minister was -actuated in accepting my amendment by a conviction that I had a just cause and was not playing politics.



LEAGUE OF NATIONS


[Stage Direction]
On the Orders of the Day:
Arthur Meighen: Has the government received from the British government or the League of Nations any treaties of mutual assistance, such as I believe are being circulated among the members of the League of Nations, and if so what has the government done in respect to these treaties so submitted.


William Lyon Mackenzie King: What mutual assistance
does my hon. friend refer to?


Arthur Meighen: I presume the minister
has not received any of these circulars. What I understand is that certain treaties of mutual assistance have been under consideration by the League of Nations and submitted to its members-treaties looking to the assistance of each other, the purported object being the better security of Europe.


William Lyon Mackenzie King: I am not awaJe of the recent receipt of any such treaties, but I shall make inquiry.


Mr. IRVINE:: I rise to a point of order.
If the right hon. members wish to -have a personal conversation, they might go outside, and not take up the time of the House. In this part of the chamber we cannot hear a word that is being said.



HECTOR CELEBRATION

Mr. DOUCET:: On May 12 last I moved:
For return showing the detailed expenditure of the money voted by the Parliament of Canada at the last session for the Hector celebration at Pictou, Nova Scotia.
A return was brought down, but was incomplete. I wish to direct the attention of the House to the fact that the return is incomplete and would like to have the necessary information.


Mr. ROBB:: I think all the information
available was given to my hon. friend. As a matter of fact there was just one vote, and according to my recollection it was given to the committee. I do not think we have any details.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
Hon. GEORGE P. GRAHAM (Minister of Railways and Canals) moved:
The third reading of Bill No. 46, respecting the construction of a Canadian National Railway line from Lloydminster, in the province of Saskatchewan, northwesterly 45 miles.
Mr. H. E. SPENCER (Battle River):: I
am very much in favour of this bill going through, but I wish to take this opportunity to refer to a statement that was made in this House when the bill was read a second time. The proposed railway will be built from Lloydminster in a northwesterly direction. The Canadian Pacific Railway, to-day have a line that is built from the east as far as the Battle river, some twenty miles south of the town of Lloydminster. It is their intention I understand to eventually go to Vegreville. The shortest way to Vegre-ville would be to go west of where they are, instead of going to Lloydminster and then back northwest and then to Vegreville. If it goes to Lloydminster it means we will have a duplication of railways running northwest from that town. When this was brought up previously in this House, I recommended that we should do all we could to encourage the Canadian Pacific to build westward and so serve a very large country in need of a railway instead of going north to Lloydminister. It is not that I do not wish Lloydminster to have a railway; it will be very well supplied when the Canadian National builds its extra line in there. But when the discussion was taking place in the House, the hon. member for North Battleford (Mr. McConica), in referring to that part of my constituency

Ways and Means-Sales Tax
through which I suggested that the Canadian Pacific should build, referred to it as "not a very good country." Later on in the Railway committee, he informed the members that the country was no good and that there were no people there. This information has gone abroad, and I might say that it is very much resented by the people of that section of country which is very badly in need of railway facilities. I think anything that is said in this House that would have a tendency to stop, any railways, public or private, from going in there, is doing a great deal of harm.
Motion agreed to and bill read the third time and passed.



WAYS AND MEANS


[Stage Direction]
The House in committee of Ways and Means, Mr. Gordon in the chair.
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, 446c, 447, 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; gasoline engines to be used in boats bona fide owned by individual fishermen for their own personal use in the fisheries; insulin; extract of rennet; calf, cattle, hog or 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, 446c, 447, 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; gasoline engines to be used in boats bona fide owned by individual fishermen for their own personal use in the fisheries; 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; ma-

terials, 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, 281a, 410, 410a, 445, 445a, 445b, 446, 446b, 446c, 447, 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; gasoline engines to be used in boats bona fide owned by individual fishermen for their own personal use in the fisheries; 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.
James Alexander Robb: The hon. member for West York (Sir Henry Drayton) yesterday asked me to give some information to the committee regarding the estimated reductions of the consumption or sales tax. These are the figures:
Customs
Tariff	Estimated
Item	Goods	Reduction
45	Milk foods, n.o.p., prepared cereal
foods	 $109,000
46	Prepared cereal foods	 41,056
64 Sago and tapioca	 3,645
173 Books for the blind and deaf and
dumb	 168
175 Text books, etc	 45,659
Text books authorized by Board
of Education	 74,000
209b Nicotine sulphate	 2,020
219a Preparations for disinfecting and
spraying	 10,000
281 & 281a Fire brick	 100,000
352a Church bells	 3,600
410 & 410a Chain	 89,000
445	Mowing machines, harvesters, etc.	99,968
445a Articles enumerated in this item
are exempt when entering into the	manufacture	of	certainspecified	agricultural	implements	nil445b Articles enumerated in this item are exempt when entering into the	manufacture	of	certainspecified	agricultural	implements	nil446	Cultivators, harrows, etc., andcomplete parts thereof	
315,306446b Ploughs and complete parts thereof	
65,945446c Windmills and complete	partsthereof	
12,355447	Portable engines	
48,808447b Threshing machines, etc	
263,554448	Other	agricultural	implementsn.o.p	
171,441449	Axes, scythes, sickles, etc	
9,480*	450 Shovels and spades, blanks, etc.. 15,550
453b Machinery for sawing lumber;
logging machinery, etc	 101,160
453c Mining machinery	 76,498
453d Steel dies etc	 7,500
456a Ingot moulds	 13,573
160 & 460a Mining machinery	 50,000
460b Gas making machinery etc..	..	50,000
460c Blast furnace material	 25,000
460b. Blast furnace material	 5,000
461 Machinery for alluvial gold mining	2,500
461a Pipe for alluvial gold mining..	..	1,008

Ways and Means-Sales Tax
Customs
Tariff	Estimated
Item	Goods	Reduction
466 Surgical and dental instruments
etc	 100,000
466a Scientific apparatus for	hospitals.	4,000469 Well drilling machinery	&	parts.	5,000506a Crutches for cripples	
1*000544 Binder twine	
600,000
591 Farm wagons & logging wagons..
591a Freight wagons, etc	 27,500
663b Articles for manufacture of fertilizers	 4,000
666	Exposives etc	
667	Blasting powder	 8,000
696 Scientific apparatus for educational
purposes	 40,000
1017 Tubing for wells	 2,500
Insulin	 6,000
Extract of rennet	 4,140
Calf, cattle, hog and poultry feed	5,000
Ice cream	 209,000
Rice, cleaned	 270,000
Macaroni and vermicelli	 64,160
Meats, salted or smoked	 2,700,000
Carbolic oil for creosoting logs..	1,000
Cream separators and parts.. ..	34,095
Cars for use at mines, etc.. ..	50,000
Gasoline engines for fishermen..	10,000
Material consumed in process of
manufacture	 10,000
Reduction from six to five per
cent	 16,000,000
50 per cent reduction on
Boots and shoes	 1,652,142
Biscuits	 454,000
86	Vegetables in cans	
235,000105	Fruit in cans	
53,000106	Jellies, jams, preserves, etc.. ..	129,000Creosoted ties	
5,000Total	$24,501,321Agricultural implements on hand April 10, 1924	
224,000Grand total	$24,725,321


Sir HENRY DRAYTON:: I observe that
we have as the winding up item "agricultural implements on hand, April 10, 1924." I take it that that must be a refund. Does my hon. friend propose to submit to the House a vote for that refund, or how is the money to be paid? I should have thought that a vote would be necessary, but I want to hear from the minister himself on the matter.


James Alexander Robb: The matter is dealt with in the act and will have to pass through the Treasury Board. If this is only an estimate we cannot submit a vote. However, I will consider this feature of the subject, and I am glad my hon. friend has directed my attention to it.


Henry Lumley Drayton: The statement
of the minister that the amount is only an estimate, is not to the point, for every single amount voted here is but an estimate. But a sufficient sum of money is provided in supply to meet these estimates. There ii no doubt that a liability is created by statute; but in connection with a matter of this kind,
which arises not by reason of the administration of the tax-which would give some right to the board to take action under the Audit Act-but arises as a matter of new legislation of this House, there should be a vote contained in the supplementaries to justify the payment.


James Alexander Robb: My hon. friend is on sound
ground and I say again, I am glad he has directed my attention to this aspect of the matter.


Henry Lumley Drayton: With regard to
"materials consumed in process of manufacture," what business is contemplated? We have information as to the other lines, because we have the customs items given against each one of them; but we have no information which would enable us to check this one. It is on page 3 of the list, just above the large item.


James Alexander Robb: This is a widespread item, as
my hon. friend can see.


Henry Lumley Drayton: Before the minister answers my question, can he tell us how these amounts are arrived at? Are they deductions from last year's figures, and if they are, are they deductions from those amounts which have actually been collected, or from those which ought to have been collected?


James Alexander Robb: They are based on importations, and records of production in Canada, minus export.


Henry Lumley Drayton: Then they are
not based on actual collections?


James Alexander Robb: No.


Henry Lumley Drayton: They are based on what ought to have been collected. Now, yesterday my hon. friend told me that, of the 3,170 companies which were in arrears, fifty per cent were in arrears previous to the assumption of office by his government. That would mean that they were in arrears under the legislation of 1920 or at least under that of 1921. Has the minister any definite particulars now in regard to that?


James Alexander Robb: I have no further particulars
than those I gave yesterday.


Henry Lumley Drayton: Has my hon.
friend been able to get them?


James Alexander Robb: No.


Henry Lumley Drayton: I pointed out
before that this answer which I have already quoted, and which was supposed to be in reply to a charge mad.e that taxes were not collected, instead of answering that charge only emphasizes the gravamen of it; it shows

Ways and Means-Sales Tax
inordinate delays in collecting taxes which ought to be concurrent taxes. Surely my hon. friend should be able to give us a little definite information in regard to what is a matter of very grave moment. He must see that instead of helping the situation he only aggravates it, when he alleges that fifty per cent of these delinquent corporations or individuals, have been owing taxes as far back as 1920, or at any rate 1921. The thing is assuming absurd proportions, if we are supposed to collect these taxes fairly and honestly, without fear, favour or affection. My hon. friend simply confesses an unreasonable delay on the part of the department, and it seems to me that in justice to his own government he ought to give us some satisfactory explanation. If such explanation is not forthcoming I must tell the minister that in my view it will be the duty of parliament to consider a motion for the appointment of a committee to investigate the matter of the sales tax.


James Alexander Robb: As I pointed out to my hon. friend yesterday, in regard to some of these cases provision is made in the act for appeals, and some of the companies have appealed; some have got into the courts. Other companies, again, have failed. When, however, you take into consideration the total collections already made I think my hon. friend will agree that the arrears are not so very great, after all. I am free to say that in my opinion my hon. friend's criticism may do some good, and I agree with him that as far as possible the taxes should be collected without undue delay, so long as no unnecessary hardship or injury accrues to any firm.


Henry Lumley Drayton: Will the minister not go a little further and agree with me that the House ought to know whether or not there are, in connection with the sales tax, arrears which have been allowed to remain in abeyance ever since his government came into office? And that is not an allegation on my part; it is the statement we have had from the minister, for we have been told that about half of them were of that character. Surely my hon. friend will admit that this information should be given to the House when we are considering the efficiency of this legislation and the manner in which it is being forced.


James Alexander Robb: I will direct these observations to the attention of my colleague so that when he later on brings down some legislation touching the matter he may be prepared to give a statement as to the real amounts that are probably tied up in the courts and as to Wir Henry Drayton.]
the number of firms that have failed. There are some details which I admit my hon. friend is entitled to.


Henry Lumley Drayton: I have already shown, from the information that has been given me, that 442 cases were delayed owing to the firms and individuals being in liquidation, while 431 are retail bakers and confectioners who are awaiting the decision of the Supreme Court in the case of Rex vs. Versailles Sweets. But has not that decision been given?


James Alexander Robb: I cannot say:


Henry Lumley Drayton: Surely the expert would know whether that decision has been given or not.


James Alexander Robb: My hon. friend will realize that the administration of the act is not in my department.


Henry Lumley Drayton: It is a pity that my genial friend the Minister of Customs (Mr. Bureau) has not been here to give us a little light on the subject. But it is not my fault that he is absent, and perhaps my hon, friend will get some one from the department to tell him how the matter stands.


James Alexander Robb: I will ask the department tc have a statement prepared for my hon. friend, and, if it is desired, that statement can be tabled.	.


Arthur Meighen: The minister, I think,
should consider some better method of imposition and security in regard to these taxes. It is somewhat incongruous and undignified that the Dominion of Canada in respect of taxes should be pottering away with four hundre'd or five hundred bankrupt concerns, seeking to collect its toll, or awaiting the time when perhaps these concerns will be able to pay. There may be an odd instance of oversight, or delay, or mistake, or something of that kind, which could be justified; but to have such a general situation as this in regard to hundreds of concerns, in one class of cases, and even thousands in others, is altogether unjustifiable. It is not right that the Dominion of Canada should be standing creditor in this matter, hoping some day to get something. We should not have a tax that necessarily puts us in that position. What I am trying to impress on the minister is this: If we have a tax of such a magnitude that it virtually becomes a tax on capital and therefore not payable in cash, then it ought to be brought to the level where it can be payable in cash. And it is not equitable that a great many people should have to pay the tax

Ways and Means-Sales Tax
immediately while thousands of others should have the tax tossed about on the waves until at last they are engulfed. I think the minister has his tax now at a level where it is virtually a capital levy, because if profits are not made you cannot pay the tax, and that is why the minister finds himself with three thousand odd accounts outstanding. The sales tax should! be at a level where it in no case can become a capital levy, and there should be sucl) methods of collection and security that he would not be standing by with other creditors waiting for "something to turn up."


James Alexander Robb: May I say in justice to the
department and the minister (Mr. Bureau) who is absent that this statement appears in the return brought down on May 7, which will be found at page 1834 of Hansard:
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; 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.
So I think my right hon. friend will admit that the department is following up the matter fairly well.


Arthur Meighen: Very well; what is the
situation? There are some four hundred out of three thousand that claim at least a rightful delinquency; there is a precedent in litigation that they are waiting. Of the balance, about four hundred are in liquidation, with the minister standing by hoping to get his share; and there are some four hundred more in litigation. Altogether I figure, as the minister read the statement, fourteen hundred of fifteen hundred are accounted for in this way, and with regard to the balance there is nothing doing at all. But my point is this: When the minister has a tax which lands him in that position there is something wrong. The minister should not have three thousand cases outstanding in the collection of any tax. Either there is delinquency in the government or there is unsoundness in the tax, one or the other. I am disposed to think there is both, but in all charity to the administration I fancy that the latter is the main cause. A tax on the present scale is unsound and becomes in many cases a capital levy. This is what I want to press home on the minister. There may be delinquency too, I would be rather surprised if there is not. But though there are all these cases outstanding, it does not necessarily follow I
think the main reason for the difficulty of collection is that the tax is on such a scale that it is fundamentally unsound, because the minister should not be in the position of a creditor standing by in three thousand cases of arrears.


James Alexander Robb: It is fair also to the department that, referring to the observations of my right hon. friend, I should give the remainder of the statement brought down on May 7, a portion of which I have already quoted. It continues as follows:
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.
4. In default of satisfactory arrangements for payment of arrears legal action is taken.
I think it is fair to the department to say that they are following up the outstanding cases very well. When one stops to consider the thousands of collections that they are making throughout Canada, I think this condition of affairs will compare fairly well with the collections in any large wholesale business whose operations extend all over the Dominion.


Arthur Meighen: Maybe so; but does the minister suggest that the government should, in respect of its tax collections, be in a position corresponding to that of a wholesale merchant doing business for profit? Not at all. That is What I am trying to drive home. He says the Minister of Customs is corresponding with some thousands of people in arrears, and that in several cases he is getting payment by instalments-I suppose so much a week.


Andrew Ross McMaster: No, longer than that.


Arthur Meighen: Well, a month-I would say, more likely ten years. In other cases he is wet-nursing the situation. All this is not right. No tax should put us in that position. Either the tax is wrong or the collection is wrong. The minister himself, I think, must admit that. I appeal to the new leader of the Progressive party (Mr. Mc-Master). Does he think the government of Canada should, in respect of three thousand cases of tax arrears, be in the position of nursing the accounts and getting payments per week, per month or per year? Is that situation in itself justifiable on any conceivable ground? It cannot be. Does he not think that it is accounted for by one of two things-and more probably by the first I shall name-by the fundamental unsound-

Ways and Means-Sales Tax
ness of the tax as at present imposed and the scale upon which it is imposed, or the securities taken therefor; or, secondly, by delinquency in collection?


Andrew Ross McMaster: The leader of the
opposition has appealed to me in a borrowed name. In reply, I would say to the committee that if there are a number of delinquent accounts I think it is better in the interests of the country and, in the long run, in the interests of the treasury, that these should be nursed along in order that the largest possible amount may be collected, and in order that firms should not be driven to the wall. I think that is reasonable common sense. I would trust that the charity of which the hon. gentleman has spoken would cover any failure of the government in pushing the thing to the extremity which, apparently, he would like.


James Alexander Robb: Mr. Chairman, may I point out to my right hon. friend that the tax system he is criticising came into force on January 1, this year? Now, in the statement tabled the total arrears of three months and under numbered only 704. So he cannot attribute the condition to the unsoundness of the act.


Mr. MANION:: I was going to point out another aspect of the matter, but first I should like to congratulate the hon. member for Brome (Mr. McMaster) on his very ready acceptance of the new title which the leader of the opposition gave to him.


Andrew Ross McMaster: I disclaimed it. There is another instance of Tory unfairness!


Robert James Manion: In listening to these
delinquent tax cases one's recollection is naturally thrown back to the old election cry with regard to the Riordon case. We were abused very severely for having allowed one company to forget to pay its taxes right on time. Now there are some thousands of such cases. There is an aspect of these delinquent taxes which, so far as I have noticed, has not been touched on, and I think it is worth impressing on the minister. When a company is in the position of owing $100,000 or $200,000 of taxes, as some of these companies are, that company is sometimes placed at a very material disadvantage in regard to its future business operations. I had an instance brought to my attention very recently. A very large corporation, through business ventures, is to-day in such a depressed condition that, instead of hiring in the neighbourhood of two thousand men, as it did in the very recent past, it is only able to hire three hundred.


James Alexander Robb: That is not due to the sales tax.


Robert James Manion: No, but it is a case of delinquent taxes-I am not criticising the government in this case, I am simply illustrating the situation. The Minister of Finance recognized the case instantly.


James Alexander Robb: Oh, yes.


Robert James Manion: The fact is it is the business profits tax which the company is in arrears with, but at the same time it brings about exactly the same condition.


Andrew Ross McMaster: Does the hon. gentleman feel that the government should use clemency and consideration in such a case? His leader does not seem to think so.


Robert James Manion: I am not blaming the government. This company probably could have paid its taxes when it made its profits, but at the present time it cannot pay off those arrears, which are in the neighbourhood of $150,000. It is placed in a very difficult position..


James Alexander Robb: Does my hon. friend blame
this government for not having collected that tax?


Robert James Manion: No. I say I am not
criticising this government; I am offering this suggestion as a reason why we should- whether under this government or under some future government-avoid* as far as possible, allowing taxes to get in arrears.


James Alexander Robb: I agree with my hon. friend.


Robert James Manion: This company is in a
difficult position. To-day it is employing only about 300 men. It is in need of money from the bank to carry on its operations, but the bank refuses to give the company money on the ground that the government's claim comes first. They say, "If you go into bankruptcy the government will claim its money, having a first charge upon your goods, upon your debts, and so on; so we cannot lend you a cent unless you can come to some arrangement with the government." I repeat that I do not think in this case the government is subject to any criticism, but I have it from the officers of the corporation that unless some arrangement can be arrived at it will have to close down. Well, it is too bad that at any time, whether under this or any future government, a corporation should be permitted to get away from paying its taxes at a time when it probably can pay them and then at a later day have those taxes hanging over their heads

Ways and Means-Sales Tax
and preventing the financing of their operations. I mention this case to emphasize the necessity for collecting our taxes as they become due. I hold no brief for this company; it is not even in my own constituency; it is a company which cannot by any stretch of the imagination be regarded as able to pay its taxes, according to its own statement. It seems to me that in a case like that a thorough investigation should be made by some capable person, say a chartered accountant, with a view to arriving art some form of settlement that would permit the company in question to deal with the banks and to carry on operations to the best of its ability.


Andrew Ross McMaster: We should wet-nurse
them along, I suppose.


Robert James Manion: Perhaps we should wetnurse them along. At any rate we should close the thing out in some way, get rid of it-take away from the corporation that debt which is hanging over its head.


Arthur Meighen: Will the minister give
us his explanation of the fact that some three thousand cases of companies that cannot pay their sales tax are being nursed, at a time when the country is as prosperous as described in the Speech from the Throne?


James Alexander Robb: The act that my hon. friend
is complaining of, providing for the 6 per cent, came into force on the first of January. The total number of arrears, three months and under, according to' the return brought down, was 707. The others are further back.


Arthur Meighen: More than three months. That will make the question I put still harder to answer.


James Alexander Robb: Oh, with regard to the observations of my right hon. friend that we should collect our taxes when due-*


Arthur Meighen: That is not the question.


James Alexander Robb: I do not challenge that statement at all. I agree with my right hon. friend and with the hon. member for Fort William and Rainy River (Mr. Manion) that it is always good business to collect your taxes when they are due. I do not dispute that.


Arthur Meighen: The minister seems to
have missed my point. How does he account for having to chrry along 3,170 cases of arrears of sales tax at a time when the country is as prosperous as described in the Speech from the Throne?


Henry Lumley Drayton: The minister
knows the joke.


James Alexander Robb: My hon. friend behind (Mr. Putnam) suggests that I ask my right hon. friend if he believes in the Speech from the Throne.


Henry Lumley Drayton: Nobody could.


Arthur Meighen: My answer right off is,
no. I frankly said so at the time, and I did not vote for it.


Andrew Ross McMaster: One could gather that
from my right hon. friend's remarks.


Henry Lumley Drayton: The sales tax
is entirely different from taxes which of their nature are deferred until the end of an accounting period, when profits can be ascertained, a regular rate of interest applied and the excess arrived at after deductions and charges of all kinds have been made against it. If my hon. friend thinks there is any similarity between the two I shall be very much pleased to debate that question with him. I know the case referred to 4 p.m. by my hon. friend (Mr. Manion).
It is the case of a very good supporter of the minister, up at the head of the lakes, and he was treated just as he ought to have been treated. It was only after some considerable time that the amount of the assessment could be arrived at. He got the same treatment as anybody else, the same treatment as Riordon got. The situation was this: After the books had been gone through for the purpose of valuing the properties and other assets and arriving at deductions, much time had elapsed; conditions had changed. Many of these people-and there are not so many of them after all, considerably fewer than these figures indicate, as my hon. friend knows; it is a mere bagatelle-many of them, in response to the demand that the country should be put back on a peace productive basis as soon as possible, invested the whole of their surpluses in plants which would enable them to carry on on a peace basis. I ask my hon. friend if that is not right. He will find, if he takes the trouble to go into these things, that that is the precise position, and I can give him names- yes, I could give him names of his own supporters in this House who were treated just in that way and who had to pay just as soon as it was possible for them to do so. There we were dealing with what in effect was a capital levy. The money had all gone to capital account, and in some instances it was the taking of the major portion of the active assets. That was the real situation, and everybody was treated alike. But they had

TFoj/s and Means-Sales Tax
to Pay just as soon as payments could be made; year by year we had millions paid on those arrears, and on the same basis my hon. friend to-day is getting millions of those arrears. Is there any dispute about that at all?


James Alexander Robb: None whatever.


Henry Lumley Drayton: This is an entirely different thing; it is something which ought to have to do with the current expenses of carrying on business. Surely my hon. friend at least does not object to giving what was very cheerfully given in connection with the other matters that have been referred to, namely, the total uncollected sales tax as of the last date in respect to which he can give the information. Surely that is something we should have.


James Alexander Robb: I will direct the attention of the department to my hon. friend's inquiry so that if possible the information he desires may foe arrived at. I imagined that the return brought down was what he wanted.


Henry Lumley Drayton: When can we
get that information?


James Alexander Robb: I am not the administrator
of that department; I am not responsible for its officers, but I am sure they will not be unreasonable and that they will get it as early as possible.


Andrew Ross McMaster: The inquirers will not be unreasonable either, I am sure.


Henry Lumley Drayton: The hon. member for Brome will admit that we are never unreasonable. When could we have an opportunity of discussing it? There is not much use in giving the information unless we have that opportunity. You see, Mr. Chairman, ordinarily this information is supposed to be before the House when it is dealing with a business to which the information relates. My hon. friend has not got the information; he does not know when he can get it. How are we to be given an opportunity of discussing it?


James Alexander Robb: I should think that would
be a reasonable matter for discussion when the estimates of the minister are up for discussion.


Henry Lumley Drayton: Then I want
to ask my hon. friend as to whether we are having a new set of regulations in connection with the sales tax, or whether there will be an amendment of the many regulations already out, so that traders will be able to understand a little bit better how they can carry on? Take for example this regulation- and I am not going to trouble my hon.

friend in going through the whole of them, because it would take too long:
Consolidated regulations covering consumption or sales tax on lumber.
This is of date January 24, 1924. It goes on:
Manufacturers of lumber and retail or wholesale lumber dealers shall obtain a sales tax license.
Such licensees shall make a monthly return, and account for the consumption or sales tax on their sales of lumber to non-licensees. The tax shall be computed on not less than fifty per cent of their selling peice to such purchasers.
I want to point out two things to my hon. friend there. In the first instance the sale is to a non-licensee. As it is to a nonlicensee the follow-up method which we have on those which are licensed will not apply. The tax is to be computed on not less than fifty per cent of their selling price to such purchasers. What is the basis of reducing the sales tax, or giving a right to reduce a tales tax, by fifty per cent under the circumstances set out in this paragraph?


James Alexander Robb: That brings it to the basis
of what is considered 5 per cent of the cost at the mill. May I say this to my hon. friend: As experience from time to time enables the administrators of the department to simplify the workings of the act I imagine they will make the regulations more simple. However, I will suggest to my hon. friend that also would be a fair question for consideration when the minister himself is here with his estimates.	.


Henry Lumley Drayton: I do not think my hon. friend's expert is right there, that the idea of reducing by fifty per cent is to make it. equal 5 per cent on the mill's prices. Instead of it being on that basis there is a profit to the jobber of a hundred per cent because he is only to pay fifty per cent; he can reduce his tax to fifty per cent of his sales price. Can we get any more information on this matter now? And what does this proviso mean:-?
Provided, however, that sales of lumber by the manufacturer thereof to unlicensed firms, sales tax at the rate of 6 per cent shall be accounted for on the actual selling price to such unlicensed firms.
Can my hon. friend tell me what a trader could make out of that? For he will not have the Minister of Customs sitting next to him and telling him what to do. Here is my hon. friend1-a man o'f business, of great experience, occupied with large things as well as small, a man with a thoroughly good business experience-and I am going to ask him what he makes of it; what does it mean? Is it intended to mystify business men and leave everything to the department

Ways and Means-Sales Tax
so that the latter can make any sort of a charge they like? I point out, Mr. Chairman, that my hon. friend ought not to have to ask any other minister as to what the English language means. Here we have a memorandum issued by the Department of Customs and Excise, and I do not think my hon. friend can give me an answer as to what it means. If he cannot do so, what is the position of the unfortunate public when trying to do business under these regulations?


James Alexander Robb: I shall direct the point to
the attention of the Minister of Customs so that he will be prepared to give an answer to my hon. friend when he brings forward his estimates.


Henry Lumley Drayton: Will not my
hon. friend go a little further? Will he not at least admit that this sales tax should be put upon such a basis that a first-class business man like himself will know what these regulations mean when he hears them read? Will be not at least go that far? My hon. friend takes the regulation in his hands and looks it over. But I have read it three times already. Perhaps he will be able to understand it by a more careful reading. If so I should like him to state what it means.


James Alexander Robb: I think we shall have to call
in a lumber expert to interpret it.


Henry Lumley Drayton: Now, I wonder if the expert can tell us what the law is as to the sales tax on coverings. I have got two circulars here. The first one is dated February 1, 1924 and reads:
The consumption or sales tax is not to apply on materials to be used in, wrought into or attached to taxable goods sold by a licensed manufacturer to an unlicensed wholesaler and resold by the latter to another licensed manufacturer.
My hon. friend sees the limitation there.
Provided the goods are shipped or delivered direct by the first licensed manufacturer to the second licensed manufacturer, and that proof of such direct shipment or delivery, together with a certified'copy of the licensed manufacturer's order, bearing his license number and certificate of use, are filed in the office of the first manufacturer.
That is a little regulation of February 1, 1924. We have another one of March 4, 1924, as follows:
Sales tax is not to apply on usual coverings containing materials imported by licensed manufacturers or licensed wholesalers, to be used in, wrought into or attached, to articles to be manufactured or produced for sale, and which are articles subject to the consumption or sales tax.
The first query one would make at once would be whether the second regulation is to take the place of the first, or whether it is
an addition to it. That would be a very natural query. If I recollect, my hon. friend in the present resolution exempts coverings and wrappings in connection with some of these things now made exempt, carrying out the general terms of the act. His expert can tell him whether that is so.


James Alexander Robb: I think our regulation exempts the coverings on goods that are free from sales tax.


Henry Lumley Drayton: In that case
which of these regulations of the department has the expert in mind? How will the conditions be carried out in relation to the exemption? Will they come under the regulation of February 1, 1924, or that of March 4, 1924? Perhaps it is not fair to my hon. friend to proceed with this matter. There are a lot of others in the same position. I am not going into these matters to show, as was shown last year, that ministers who had charge of this legislation knew nothing whatever about it, but I am doing it because I believe that in the public interest the regulations in regard to taxable goods should be made as plain as they can be made, so that everybody who can read can understand them. This House ought to know what it is legislating about, and we do not know it to-day,- the hon. minister does not know it,-nobody knows it. The only man who is supposed to know it is not here. We saw the tangle we got into last year. My hon. friend is making a better job of it this year, but he will not make it very much better unless he goes right into the regulations and gets them into such shape that any business man in this country will know what he has to do to carry on business properly-and he does not know that to-day. That, I take it to be the first duty of this House.


[Stage Direction]
Resolution agreed to.
Resolution No. 8, appearing as No. 4 in the amendment-Resolved that any enactment founded on the foregoing resolutions Nos. 1 and 3-appearing as No. 4 in the original resolution-is amended now to read-
Resolutions numbers 1 and 3 shall be deemed to have come into force on the 11th day of April, 1924, and to have applied to all goods mentioned in the foregoing resolutions imported or taken out of warehouse for consumption on and after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day; and that any enactment founded on the foregoing resolutions numbers 2, 4, 5, 6 and 7, shall come into force on the 1st day of July, 1924.
Arthur Meighen: When were the amendments read into this clause by the chairman inserted? The chairman, in reading the amendment, inserts certain words after, I think, the word "resolution" in the first line, and also certain words in the latter part of the resolution. Are they moved to-day?

Ways and Means-Sales Tax


James Alexander Robb: I think they were tabled on
the 30th April.


Arthur Meighen: Are these included in
what were tabled on the 30th April?


James Alexander Robb: Yes.


Arthur Meighen: Are the last two lines
usual in a resolution of this sort? It seems to me it would open the door to fraud.


James Alexander Robb: This is prepared by the legal officers of the department.


Arthur Meighen: Who are the legal officers of the Finance department.


James Alexander Robb: Mr. Viets is an officer..


Henry Lumley Drayton: This probably
was prepared in the Customs department.


James Alexander Robb: And it has been approved by the law officers of the department.


Henry Lumley Drayton: It was done by the Customs department in the first instance, and I suppose Mr. Viets went over it.


James Alexander Robb: It has been submitted to the law officers of the department and approved by them, and also approved by the law officers of this House.


Henry Lumley Drayton: The only thing that strikes me in looking at it is that it would apply to goods previously imported for which no entry for consumption had been made up to that date. I do not like that very much.


James Alexander Robb: That is the ordinary form.


Henry Lumley Drayton: I do not think so. I think that everything that should have been cleared and was not cleared before the tabling of those resolutions ought to pay the old rate. Suppose a man waits for a month and neglects to pay his customs, ought he to get a premium on his neglect?


James Alexander Robb: You know there are goods carried in bond for more than a month. It is quite a custom of the trade to carry goods in bond.


Henry Lumley Drayton: If goods are put in bond in the ordinary course of business, that is one thing; but if you have your goods forwarded and get your notice to go down to the customs and pay up and neglect to do so, are you to be bonused for your neglect?


James Alexander Robb: Let me quote to my hon.
friend the amendment of 1916:
This act shall be deemed to have come into force on the 16th day of February, 1916, and to apply to all goods mentioned in the preceding section imported or taken out of warehouse for consumption on and after that date, and to have also applied to goods previously imported for which no entry for consumption was made before that date.


Henry Lumley Drayton: You have precedent for it?


James Alexander Robb: Yes.
Resolutions reported, read the second time and concurred in. Mr. Rcfbb thereupon moved for leave to introduce Bill No. 142 to amend the Special War Revenue Act, 1915.
Motion agreed to and bill read the first time.




[Stage Direction]
The House in Committee of Ways and Means, Mr. Gordon in the Chair.
Resolved that it is expedient to amend the provisions of The Income War Tax Act, 1917, and amending acts and to provide:-
1. For increasing the normal tax exemption for each dependent child under the age of eighteen years from $300 to $500 in respect to income for the period 1923 and subsequent periods.
Mr. SPEAIvMAN:	In cases where the
income tax which was due in April had already been paid on the basis of a $300 exemption, is there a refund, or to what date does this apply?
James Alexander Robb: I understand that the officers of the department have accepted some returns on the basis of $500 exemption, and I imagine that it is the intention to make remission.


Thomas Langton Church: This is a very proper
exemption, but it does not go far enough. It is unfortunate that there should be two rival income taxes, Dominion, and municipal at similar times collected in cities. For example, in Toronto bills were sent out for the municipal income tax on the 18th May, and you have to pay the whole tax in one instalment. Then there is a double-header by the Dominion, payable on 1st May, or in instalments. Both the province and the Dominion cannot be right as to the validity of this tax. The province claims the right to impose an amusement tax-a war tax-in the province; the city has an income tax; and the Dominion comes along and imposes an income tax under what it calls the Income War Tax Act, 1917, under "Militia and Defence", section 91 of the British North America Act. These income taxes by the Dominion, provincial and municipal authorities ought to be co-ordinated, because this is unfair and unjust to small wage-earners in the larger centres of population. No income tax at all should be imposed on those receiving an income under $5,000.
I am glad the minister has seen fit to grant some exemption under section 1, but in England to-day they have marked down the

Ways and Means-Income Tax
income tax by fully 50 per cent, and1 the smaller wage-earners under $5,000 are being given the benefit of that. Under the Mellon bill in the United States, small wage-earners under a certain income of $5,000 have a total exemption. With the high cost of living in the big cities, the working classes, school teachers and other small wage-earners are asking that they be exempted from the provisions of this so-called federal Income War Tax Act, as they have enough municipal taxes to pay.
The war has been over for nearly six years, and when this income tax was first imposed, it was thought that it would last only for the period of the war but it seems a fixture. A man receiving a fixed income of five or six thousand dollars has to bear the big burden of ddbt in this country. He is taxed to death, His rent has not been diminished. His breakfast table, food, coal, and so on-prices are going up and almost nothing coming down. A man cannot even go to a moving picture show without having to pay a double header provincial amusement tax under what the province calls a "war tax". I claim that this provincial tax is ultra vires of the provincial legislature under the system of taxation imposed under the British North America Act under the heading of "Militia and Defence," which is exclusively assigned to the Dominion. The present Minister of Finance (Mr. Fielding), last session, when this matter was up, said, that he was going to look into the validity of this provincial amusement tax. The municipalities are asking the government to relieve them of this war income tax. The municipalities' methods of raising taxation are very limited, whereas this legislature has unlimited methods of taxation. The municipalities are finding it very hajrd to get along with the large number of Dominion and provincial burdens imposed upon them, and I think the income tax field might have been left as it was in pre-war days entirely as a tax for the municipalities, without having the provinces come along and encroach on this ground which the municipalities have had since confederation, and without having the Dominion too, come along and invade that field which should be left entirely to the municipal field. The municipalities have certain rights and municipal conventions throughout Canada. The hon. member for Brandon (Mr. Forke) used to be at the head of one of these associations of municipalities, namely that for his province. These organizations are protesting as to the validity, the necessity and the form of this double income tax. The municipalities of Canada
paid a large part of the war debt. In the city from which I come $14,000,000 of purely Dominion burdens were assumed on account of the war, in insurance grants, to recruiting, Red Cross, Patriotic fund and in many other forms of war burdens which this legislature would otherwise have had to pay for. There should now be some relief for the municipalities, six years after the end of the war, from this intolerable burden. I represent an industrial city, a city in which the working classes are clamouring for the elimination of this unjust income tax. It is very doubtful whether, as a matter of policy, it should ever have been enacted. Surely, the department is now going to adopt the policy of the present Minister of Finance when last session he said that he was going to look into the method of taxation of the provinces, and see whether some of the burden imposed by them could not be eliminated in view of their receiving a federal subsidy to maintain provincial institutions.
I also wish to protest against the method of collecting this tax. Almost the same day and the same month are selected for the collection of this tax as are selected by the municipality, and surely there should be some simpler form of return and method of collecting the tax. A man would have to be a Philadelphia lawyer to figure out what his assessable income is with the exemptions and qualifications and the huge four-page form to be made in triplicate. He gets no proper notice of the tax; has to make up his own bill, and if wrong he is hailed to court and asked to pay a tax which, probably, he does not understand and for which he may be paying on a bill overcharged. However good a mathematician a man may be I am sure he must experience at least some difficulty, or at any rate annoyance, in making out the returns. Speaking for myself, I can frankly say that it is only at the cost of a considerable effort that I am able to get my own returns in in time. I have never been in default in this respect, but it is only by taking the greatest pains and at the expense of a good deal of time that I can get the thing done-and I used to be a fair mathematician. It is a complicated business making out returns for the municipality, the province and the Dominion, and I think that it would be well to have some simpler form on which a man could state in three or four lines just what his income was. At present it is necessary to fill out in triplicate a statement covering four pages and the average man who is willing to pay his tax objects strenuously to this lengthy form.

Ways and Means-Income Tax
Before I conclude I want to urge the government during the coming recess to provide an exemption for all those who are in receipt of an income of less than $6,000. At the present time the men of small fixed income, who can least bear the burden, are taxed to death. The tax collector has no trouble in getting after these $6,600 people; they are more readily got at than war profiteers, the jobbers, or the profiteers of the present day. The city assessor, in the case of these other people, has his work cut out, but it is the small man who gets hit the hardest; in fact, the small men pays the bulk of the taxes, both municipal and federal. I should say that the city and the town people who are receiving modest incomes pay 95 per cent of these income taxes, and this form of taxation is unfair, unjust and inequitable. Futhermore, it does not apply uniformly to the various provinces of the Dominion, for certain classes of citizens do not pay anything. I am not moved by any desire to raise captious objections when I bring this matter to the attention of the committee; I have been asked by many public bodies, including ratepayers' associations and other organizations, to state the case. The tax collector, I emphasise, gets the small man at every turn; be gets him at the breakfast table, he gets him when he buys his coal; and in regard to rent, clothing and everything else the wage-earner and the man with the small income are made the scapegoat. The small man hardly comes into the house without discovering that the municipal assessor has increased his assessment some $300 or $400. I would suggest to the government that the time has come when it should abandon the municipal field of taxation altogether which it has encroached upon now for eight or nine years. The Dominion government should realize that the municipalities assumed burdens during the war and contributed to various patriotic charities such as the Red Cross and the Patriotic fund, besides doing their share sn regard to the Victory loans; and having done that I think they are entitled to some generous reciprocal treatment on the part of the federal government, and the government might leave the income field to them as in the years prior to the war. I do not say for a moment that people should object to paying any taxes that are due in relation to the war, because every one wants to meet his share of the war obligations of this country, and gladly does so. But I do think that the Dominion government has invaded the municipal field too long and should now abandon it; I would say that they might do this after 
this year. I do not see why they could not find some other method of raising the money now obtained through taxation of the small income men; they should tax other people than the wage-earner and the man who gets less than $6,000. There are those on the higher scale of life who could better afford to pay taxation than these people. In the United States the people are refusing to tolerate a similar state of affairs any longer and the state legislatures have presented a petition to Washington, with the result that the Mellon bill is brought down to afford some relief in this income tax respect. This is one of the most unpopular forms of taxation to-day, because the bulk of this tax, which last year amounted to $72,000,000, is paid by the industrial classes of the cities and towns and mainly by the small wage-earners, already over taxed and imposed upon in double header and repeater forms of duplicate taxes. There are those who give in their income at, say, $10,000; but it is difficult for the tax collector to ascertain how much they really do get, because at the end of the year their earnings amount to a great deal more than this and they vote themselves $50,000 and put it in as a bonus and not an income; I repeat, in closing, that the government ought to abolish this form of income taxation or at least to exempt the man who gets less than $6,000, because this form of taxation is quite unpopular and at present it is not equitable and further the government should abandon the municipal field and leave as formerly the income tax form to the municipalities and Check up the illegal amusement taxes of the provinces or deduct from their subsidy the over collections not their due, as the amusement tax is illegal.


Mr. PUTNAM:: Whether my few remarks
will be strictly relevant to the clause under discussion I do not know, but I presume there will be no objection to my brief statement at this stage. Under the present federal income tax law where a married man is living under conditions of such freedom from dependents as allows him an exemption of only $2,000 he is immediately penalized if his wife is taken away by death and his exemption is decreased to $1,000; and conversely if a married woman is enjoying an exemption of $2,000 she is similarly penalized if the husband dies. It has been represented to me in several quarters that therein this is probably an injustice to such widower or widow, and I *wish to submit the matter respectfully to the hearing of the committee. In Ontario in connection with municipal income taxation there is no such law; that is to say, if the

Ways and Means-Income Tax
householder enjoys an exemption of $2,000 that exemption stands independently of the visit of death to his or her marital partner; and even during the last session of the Ontario legislature two private bills were introduced, the purpose of one being to increase the exemption to $2,500 and the other to increase it to $3,000 in the case of all householders. I admit that in neither of these cases was the bill passed, but those circumstances are not unindicative of public opinion in that province in regard to this matter. The object of that phase of the Ontario law, or certainly the tendency thereof, is to make for the upbuilding and maintaining of the home. The Ontario law recognizes the householder, who is assessed as such, and as to the term employed in the Ontario Act: "Householder and assessed as such," I do not believe there is any substantial ambiguity. It also recognizes, or at least it is interpreted as recognizing, the head of the family, who gets an exemption of $2,000, whether he is a householder or not. It does occur to me that the keeping together of the home is an important factor in the success of our Canadian citizenship, the household or the home being peculiarly the unit of the Canadian nation. I submit to the consideration of the minister therefore the facts and considerations which I have so feebly advocated.


Henry Lumley Drayton: I go further
than my hon. friend in connection with this subject which I am glad he has brought to the attention of the committee. Two or three years ago I had a section drafted to deal with this matter but I never got an opportunity of carrying my intentions into effect. It seems to me that there is an absolute anomaly here and I do not know whether any steps have been taken so far to remedjr it. I brought it to the attention of the Minister of Finance (Mr. Fielding) on one occasion. We have a statute giving an exemption of $2,000 to the married man and that exemption is reduced at a time when that man suffers not only the most grievous loss that can come to a man, the death of his wife, but when of necessity he is subjected generally to largely increased expenses. At such a time, if he has no child old enough to take care of the household, he has to engage some one to take the place of the lost housekeeper, and it does appeal to me that something ought to be done to remedy a situation of this kind. I frankly tell my hon. friend that it was mv intention to take steps in this direction. And what I have just said applies not only to the man who has lost his wife but also to the woman whose husband 163
has died. The married woman of yesterday becomes the widow of to-day. She may have a little income, but the support and sustenance which she got from her husband are gone. Yet she has her children still to look after and her house still to keep up. I would think, Mr. Chairman, that the minister would like now to get up and say that he will see that this anomaly is removed and the exemption continued in such cases.


Mr. BROWN:: Mr. Chairman, I wish to endorse the sentiments which have been expressed by the hon. member for West York (Sir Henry Drayton) and the hon. member for Colchester (Mr. Putnam). This matter has been in my mind for the last two years, and I have come across many cases in which the application of the present law has worked a real hardship. I do not think we need add anything to the statement placed before us by the hon. member for West York, and I am heartily behind his proposition.


Mr. ROSS (Kingston):: Mr. Chairman, last year I spoke on this subject, and I should like to see something done this year. I believe it is a fair and reasonable demand.


James Alexander Robb: Let me first deal with the observations of my hon. friend from North Toronto (Mr. Church) as regards the duplication of federal and provincial taxation. Some time between now and next session we propose to have a conference with the representatives of the provinces to discuss the general question of taxation and try to arrive at a fair basis which will avoid so far as possible the present duplication of taxes. But under the British North America Act the federal government is supreme and has the right to impose whatever taxes in the judgment of parliament are deemed to be in the best interests of the country. By the same act the right of the provinces is limited to the levying of direct taxation. My hon. friend also thought we should have a uniform date for collection of taxes. We have at present a uniform date for the collection of federal taxes. I am sure my hon. friend will see the difficulty of arranging with the provinces arid municipalities the fixing of a date that will not conflict with the date on which federal taxes are payable, but the provincial and municipal authorities could probably arrange this among themselves. As to the exemption of $2,000, which my hon. friend wants to raise to $5,000, it will be a matter for consideration as the years go by and we can determine what relief we are able to give to the taxpayers. I am bound to say that when every person is paying a little tax it leads to a better administration of national affairs.



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Andrew Ross McMaster: When they pay direct taxes.


Mr ROBB:: When every person pays a iittle tax he takes some interest in the election of his representative to parliament. My hon. friend from Colchester (Mr. Putnam)- and I think he is supported by the hon. member for West York (Sir Henry Drayton) and the hon. member for Kingston (Mr. Ross)- referred to the exemption that would cease upon bereavement. If a bereaved husband, or a bereaved wife, carries on and has a family to maintain the exemption of $2,000 remains, and there is also the exemption under the act for each child under eighteen years of age. But we must be careful in applying the exemption as my hon. friends suggest, to householders, as it might lead to abuse. I will read the section as amended. It was assented to on June 28, 1922, and is as follows:
Paragraph (a) of subsection one of section four of the said act, as enacted by subsection one of section three of chapter fifty-five of the statutes of 1919, is repealed and the following substituted therefor:
(a) four per centum upon all income exceeding two thousand dollars but not exceeding six thousand dollars in the case of a married person, or any other person who has dependent upon him any of the following persons:
(i)	A parent or grandparent;
(ii)	A daughter or sister;
(iii)	A son or brother under twenty-one years of age or incapable of self-support on account of mental or physical infirmity.


Henry Lumley Drayton: That does not cover it.


James Alexander Robb: That is fairly wide.


Henry Lumley Drayton: It is not wide enough to cover the case of the bereaved parent which my hon. friend started out by saying was covered. Supposing the widow has young children dependent upon her, the section applies; but supposing her children are no longer young, she is outside the section. Does my hon. friend say that she gets exemption then?


James Alexander Robb: If the children are under eighteen years of age.


Henry Lumley Drayton: Certainly; but supposing they are not under eighteen years of age, or supposing they are not invalids, or supposing she has no children but wants to keep up the home in which she and her husband lived: she is penalized by taxation when in those straitened circumstances more than she was when her husband was by her side to carry the burden.


James Alexander Robb: If we should adopt my hon. friend's suggestion, then we would be placing 
the person who was once married in a different position from a bachelor or a spinster who might want to continue his or her home.


Henry Lumley Drayton: I do not see why those persons should not be placed in that position.


Harold Putnam: The chances are very
strong that they will have become householders following marriage, with a much lesser chance of the bachelor, or spinster, being a householder.


Mr. HUMPHREY:: I think the point
brought out by the member for West York is a very good one, and I should like to associate myself with him in regard to it. I have had more complaints brought to my attention of widows or widowers left with dependents and maintaining a household than in regard to any other feature of the income tax regulation. I believe it is a fair and just request and should be taken under favourable consideration by the minister. Undoubtedly the concession would be very much appreciated, and there is a good deal of merit in the various cases referred to which the proposed exemption would cover.


James Alexander Robb: The act specifically provides that if they are left with dependent daughters or sisters the exemption remains at $2,000. If there is a son who is of age and able to work, why should he not pay the tax the same as any other man?


Levi William Humphrey: I had never understood that that applied quite so broadly. It applies to dependents under eighteen only?


James Alexander Robb: Dependents of any age, if they are females.


John Livingstone Brown: Take the case of a farmer who has lost his wife and who wants to carry on the work of his farm and maintain his home. He will have to keep his daughters at home to keep house for him and perhaps a son to help carry on the work of the farm. Is that covered?


James Alexander Robb: Yes, if a daughter or a sister remains at home the exemption remains the same.


John Livingstone Brown: Then I know cases where men in that position, through misunderstanding of the law, have been claiming exemption of only $1,000.


Harold Putnam: His daughter would have to be solely dependent on that taxpayer in order that he get the $2,000 exemption.

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John Livingstone Brown: Naturally she is, when she stays at heme to keep house. There are scores of cases of that kind.


Harold Putnam: I know a case of a naan who became a widower and whose aged mother lived with him. Ordinarily that would seem to equip him for the whole exemption, but another brother was contributing also toward her keep; he was conscientious enough to divulge that brother's fraction of the support and he got the exemption only for the thousand dollars.


Mr. SEXSMITH:: If a father has a girl over eighteen who is attending college and whose expenses he is paying, is she still a dependent?


James Alexander Robb: Yes. And in the case referred to by my hon. friend (Mr. Putnam) the man had a right to get the exemption.


Levi William Humphrey: In the case where a man who through misunderstanding or lack of knowledge of the law has paid on an exemption of only $1,000 when he was entitled to an exemption of $2,000, would he have the privilege of rebate of such amounts as he had overpaid?


James Alexander Robb: Yes. It must be remembered, however, that this act came into force-on the first of June, 1922. Perhaps considerable of the criticism with regard to the act is owing to the fact that hon. members have been dealing with cases that developed before this amendment was introduced.


Henry Lumley Drayton: It is hard to
know what the law is, with the scores of amendments that have been enacted.


Thomas Langton Church: I wish to ask the minister two or three questions:	Is there a uniform
enforcement of this act throughout Canada? Has the department looked into the legality of the imposition of the provincial war tax for similar purposes? What is the
5 p.m. cost of the collection of the taxes imposed under this act? I know the minister has one of the most capable deputies that can be found in the Civil Service, and no doubt he can supply this information. What has been done about the arrears? I imagine that there has not been much trouble with the small income tax man; it is the big income tax man who is the cause of trouble. What is the amount of the arrears? It cannot be legal for a province to collect taxes for war purposes and for this legislature to do the same thing. Then you have the municipalities doing the same thing, making a triple collection of money for the same purposes.
163i


James Alexander Robb: There is a uniform administration of the law through all Canada. The cost of collection is between 2 and 3 per cent-say 3 per cent last year.


John Livingstone Brown: There is another criticism I want to make of the act as it stands. We have been trying to take away some revenue [DOT]from the minister; now I propose to give him some.


James Alexander Robb: You are my friend.


John Livingstone Brown: My proposal is that the incomes received by the husband and wife from whatever source or sources shall for taxation purposes be considered as joint income and shall be taxed as such.


Mr. MARLER:: Not at all-no.


John Livingstone Brown: Now I propose to tell you
why. I expected opposition from that quarter, but I submit that the proposal is eminently fair. Let us take the situation of the farmer; it is the one I am best acquainted with. The farmer and his wife work together, and the wife works judt as hard as the farmer does.


Andrew Ross McMaster: Harder.


Herbert Meredith Marler: That is not the only kind
of wife who works.


John Livingstone Brown: We will come to the other
kind later. The farmer's wife may have her butter, her eggs and dairy produce and very often she is allowed to take the proceeds and use them. But under the act as it stands, the income derived from the farm, whether the result of the husband's or of the wife's labour, is considered as joint income and only $2,000 exemption is granted upon it. I know that if the farmer's wife has an income from some other source it is considered separately and is not taxed unless it exceeds $2,000. But a man in any other walk of life may have a taxable income; his wife may have a large income, and both receive the exemption because they are married. Let me give an illustration that came to my notice and that will bring home to you the point I have in mind. This was placed before me, I may say, by the inspector of taxation in the city of Winnipeg. An unmarried man was a clerk in a certain establishment, getting $2,500 a year. He had an invalid mother; in order to care for her he had to keep his sister to look after her, and because of these dependents he got the exemptions provided for such cases. For himself, however, he could claim only an exemption of $1,000 because he was unmarried. Side by side with him was another clerk, get-

Ways and Means-Income Tax
ting the same salary, a man with a wife but no children. His wife was working as a stenographer and getting $1,800 a year. She was exempt on the whole of her income, being entitled to an exemption of $2,000, so that jointly they were paying income tax only on $500. There is no reason why in a case of this kind the income should not be considered as joint income of $4,300. The taxation would then be on the same plane as that of the farmer and his wife, whose whole income is derived from the farm. I do not think it is necessary to say anything more to emphasize the fairness of the proposal I make. Why should a man and his wife who have separate sources of income be allowed to claim an exemption of $2,000 each simply because they are married? I am informed that under the British act there are no such exemptions. We are laying great emphasis on the unity of the family; it is something we cannot emphasize too strongly. This act will never be as it ought to be until the incomes of husband and wife are considered as one and are subject to only one exemption.


Mr. BRISTOL:: Do I understand that the present law is that where the husband works in one capacity and the wife in another they do not each get the exemption of $2,000 simply because they are married?


James Alexander Robb: They get the benefit of the
exemption.


An hon. MEMBER:: The hon. member
(Mr. Brown) wants to change it.


John Livingstone Brown: I want to change it so
that these two incomes shall be considered one and claim shall only be made for one exemption.


Herbert Meredith Marler: Move an amendment and
we will discuss it.


John Livingstone Brown: I would move an amendment to that effect if it could be put in proper form.


Herbert Meredith Marler: It will not be in order.


Thomas Langton Church: At the last session of
parliament I pointed out what seemed to me the illegality of the provinces invading the field of war taxation which should be reserved exclusively to the Dominion. ,1 now ask the Acting Minister of Finance if he will have this question referred to the Supreme Court so that the rights of the respective governments may be finally determined beyond all question. The provinces receive a subsidy from the Dominion for provincial purposes, and for the maintenance of provincial institutions, and that should 	j .:. ;
satisfy them without their entering the field of Dominion taxation. During the past five or six years the provinces have been imposing and collecting war taxation, and in my opinion this is beyond their powers. I should therefore like the Dominion government to have the question settled as to whether, and to what extent, the provinces can impose and collect taxation for war purposes.
Then I should1 like to see a uniform enforcement of the income tax throughout Canada, and not have it confined to Toronto and a few other large centres. In the next place I should like to know what the amount of arrears of income tax is at the present time, and why it is that men of standing are allowed to be in arrears while if the small man does not pay up, action is promptly and vigorously taken against him. Why should the big man be allowed to pay income tax tardily while the small man is made to do so promptly? I should be much obliged if the Acting Minister of Finance would answer my questions on these points.


James Alexander Robb: Any province can have the
question of its right to impose taxation referred to the Supreme Court. Up to the present we have received no request from any province for such a reference. I said a moment ago that we propose to have a conference some time before the next session and endeavour to arrive at a friendly understanding between the Dominion and the provinces as to sources of taxation.
Now in reply to my hon. friend from Lis-gar (Mr. Brown), I recognize there is room for some improvement in the income tax regulations, and it is proposed between now and the next session to look into the question very closely. I cannot accept the suggestion as to the enlargement of the exemption. It would involve the drafting of an entirely new resolution and at this stage would not be in order. I should like the hon. gentleman who has brought the point up not to press the matter. I would again say that when the act was amended in 1922 fairly wide provision was made for meeting different cases, and in my opinion it would be better not to press for further amendments at this stage.


Thomas Langton Church: What is being done to
bring about co-ordination between the Dominion and the provinces in the matter of taxation? I understood conferences had been held with the provinces to discuss the existing method of taxation and endeavour to arrive at some scheme of co-ordination. May I ask what results have come from these meetings, and whether any legislation will

Ways and Means-Income Tax
be brought down to overcome the present overlapping which is a subject of great complaint throughout Canada.


James Alexander Robb: My hon. friend has misunderstood me. No conferences have so far been held on this question, but it is proposed to hold conferences between now and' the next session of parliament.


Andrew Ross McMaster: I should like to say a word in support of the views expressed by the hon. member for Lisgar (Mr. Brown). It does seem to me that the incomes of husband and wife in most normal cases constitute one income, and that it is unfair to divide that income into two whether it is derived from husband or wife and to grant exemptions in regard to both. It is particularly unfair in the province of Quebec because we have two systems there. One is the system of community of property-where the husband is supposed to own everything, where all the income belongs to him-and the system of separation as to property where the wife can enjoy her separate income, as she does in the English speaking provinces. It means this:	A man may have an income of
$10,000 and if he is married and has community of property with his wife he gets the exemption only on an income of $2,000. There would be an exemption of $2,000 on an- income of say, $10,000. That would leave $8,000 to be taxed. But let us suppose that the man has married under the form of separation as to property.


Herbert Meredith Marler: In the case of community of property, the two incomes being joined, the income tax might be very much greater because the super tax and surtax might be very material. Thus community of property might increase the income tax.


Andrew Ross McMaster: Exactly.


Herbert Meredith Marler: And the separation of property on the other hand might mean a decreased income tax.


Andrew Ross McMaster: That is the point I am trying to make.


Herbert Meredith Marler: That point should be made quite clear.


Andrew Ross McMaster: I will endeavour to
make it still clearer. Under the regime of community as to property the husband is regarded as the sole recipient of income. His income, let us say it is $10,000, will be subject to one exemption of about $2,000, and the taxable portion will be $8,000. Let us suppose another man is married under the regime
of separation as to property and he has the right, under his marriage contract, to donate certain property to his wife even during the community. Under these circumstances he gives part of his savings to his wife and the family income is divided in the proportion, let us say, of $6,000 to the man and $4,000 to the woman.


Herbert Meredith Marler: And under separation as to property?


Andrew Ross McMaster: Under separation as to property the exemption of $2,000 would apply on the man's $6,000, and the exemption of $2,000 would apply on the woman's $4,000.


Herbert Meredith Marler: My hon. friend will forgive me for interrupting him again. Under the income tax law a man cannot donate part of his income to his wife and claim exemption on that.


Andrew Ross McMaster: No, of course not but I am sure my hon. and learned friend in the course of his practice has come across many marriage contracts where, during the course of the marriage, the husband has the right to pay off the donation he makes to his wife at the time of the marriage. I am supposing a case where the husband does that and in which the wife acquires-as a gift from her husband or she may acquire it otherwise as a gift from a stranger-a property which brings a substantial annual income. Now, let us say that substantial annual income of $4,000 a year goes to the wife while the husband's income is $6,000 a year. In that case the total family income is $10,000 but it receives the benefit of two exemptions-one of $2,000 in respect of the man and another of $2,000 in respect of the woman.


An hon. MEMBER:: It escapes the surtax also.


Andrew Ross McMaster: It escapes the surtax
also. The net result is that there are two citizens one of whom has been married under one regime and is paying substantially more taxation than another man with the same income who married under another regime. It seems to me that is an unfair way of applying income taxation. I remember discussing this matter with the late Sir Donald Mc-Master, who was a member of the British House, and who told me that in Great Britain -and there they have separation as to property-they regarded the income of the wife and the income of the husband as constituting for taxation purposes one income-subject to the exemptions that would accrue, but one income. Therefore it seems to me the min-

Ways and Means-Income Tax
ister might take this into careful consideration, because I think most of us dislike paying taxes. Income taxes coming directly upon us have a certain pressure that some other taxes may not have; we have to pay, but one thing that will make us endure the income tax more readily than we otherwise would is the fact that it is levied in as fair a way as possible.


Henry Lumley Drayton: There is something in what my hon. friend says, and yet he does violence to a great many principles which should not be overlooked. I thought we had got to a point where we thoroughly recognized-and I am not speaking of Quebec, but of English Ontario-the rights of the married woman as the femme sole.


Andrew Ross McMaster: Oh, yes.


Henry Lumley Drayton: We have
extended to the woman, as far as I am concerned, every single right the man has. My hon. friend says you are to take it all from her, or take it all from the man, as the case may be. It would depend which has the larger income. I do not know as much about the law of Quebec as my hon. friend, but in Ontario we have marriage settlements and trust deeds which make absolutely inviolable the income of the wife. The husband cannot have anything to do with it at all. It is not his.


Andrew Ross McMaster: I do not propose that it should be regarded as his.


Henry Lumley Drayton: Her right is
absolute, and he has the absolute right of disposition of his income. I do not know how it would work out if you had a joint liability extending, when honest returns are made, to considerable figures, where under our act, you have that absolute right of disposition exercised by both the parties, and where the wife is supposed to be liable for the default of the husband, and the husband liable for default of the wife. That would follow from my hon. friend's statement, and is absolutely at variance with every canon of law in the country.


Andrew Ross McMaster: The law of the larger part of Great Britain is in principle similar to the law of Ontario, and that is the method.


Henry Lumley Drayton: I do not think the hon. member is right. Of course, it is the method, so far as the exemption is concerned. There is no necessity for two exemptions.


Andrew Ross McMaster: That is my main point.


Henry Lumley Drayton: There are not two exemptions; there is only one exemption.


Andrew Ross McMaster: Then that would mean that their incomes would be regarded as a joint income.


Henry Lumley Drayton: Not by any
manner of means. My hon. friend takes too much for granted altogether. They both have rights, and the best way for husband and wife to get along is to regard the rights of each other. I do not think the English law goes any further on the question of exemption. That is not a matter of the larger amount; it is more a question of the super tax. Will the minister tell me whether I am wrong in connection with the United States law? My recollection is that it is the same as ours.


James Alexander Robb: In the United States there
are two incomes allowed, but only one exemption; but keep in mind that the one exemption in the United States is greater than the two exemptions in Canada.


Henry Lumley Drayton: I know that, but the two incomes are taxed. The woman's income in the vast majority of cases is an income from some trust estate; it is an investment which she has. As a general rule we do not find both husband and wife working. One thing I think we have all agreed on is that there is a limitation put upon the taxing power of this country. I do not know anyone who has looked into the subject fairly and honestly who has not come to that conclusion, and that limit to the taxing power is very, very apparent. To a very great extent, much more than we ought to be, we are compelled to pattern our legislation upon what our neighbours to the south do. The hon. member for Brome (Mr. McMaster) nods his head-I am going to ask him, when he gives that assent, how is it practicable for us, in connection with the matter of income arising from investments almost entirely, to have a materially higher rate in connection with income than we have at present in this country. Of all things that can be moved income is one of the easiest. When you have your money coming in it is very easy to move; it does not take an awful lot to move it away and avoid the tax. This is going on all the time. If we were in a country or continent by ourselves, we would not be affected by that consideration. Australia can do things that we cannot do. I think every thoughtful man recognizes that one of the things that is going to worry the government a good deal is as to how they can hold what they

Ways and Means-Income Tax
have got now and keep the money here. The income tax is going down now. My hon. friends may suggest offhand that we should raise the tax here; but I am quite convinced that not one of them, if he were to sit down and consider the situation, would do it.


Andrew Ross McMaster: I would not like to
create any false impression in the minds of the committee. I did not suggest the raising of the income tax. I did suggest that I would consider a very fair adjustment of an income tax.


Arthur Meighen: My hon. friend's colleague from Victoria and Carleton (Mr. Caldwell) very strongly urged doubling up the tax.


Andrew Ross McMaster: Not having any followers, I am unable to reply to that remark.


Henry Lumley Drayton: My hon. friend
will see that if his suggestion were carried to its logical conclusion, the one income would enormously increase-


Andrew Ross McMaster: It would in that case..


Henry Lumley Drayton: -would enormously increase the tax on the individual, and that is the way to get people out of the country. Just consider what is going on now. When I first came into this House we had an income tax collection of $19,000,000. It went up from that amount till we got $81,000,000 during the two and a half or three years that I had to do with it. I am not saying that my hon. friends opposite are not just as anxious as I was to make the best collection possible. I know I was very anxious, spent a great deal of time over it and had a lot of prosecutions; but the fact remains that, although we are told by hon. members that times are infinitely better under their beneficent rule than under our rule, the income tax collections are melting like the snow. In connection with these collections we have to consider not only the income tax collection but the excess business profits tax. The income tax collections are far greater to-day than they would be if the business profits tax had not been abolished, unless we availed ourselves of the provision that whichever was higher should be the basis of the tax. Why, Mr. Chairman, in connection with company taxation to-day, I venture the statement that 70 per cent, yes 75 per cent, of the companies paying under the income tax act to-day are paying far more than they would under the excess business profits tax. There is no question about it. Hon. members can see this by looking up the returns which companies make to their shareholders. It can easily be seen. Under the excess profits tax provision there was no tax until 10 per cent had been earned. To-day it does not matter what dividend a company is paying, it has to pay a gross ten per cent income tax to the government. That is much heavier than could possibly be got under the old excess business profits tax if applied to-day. My hon. friend has his expert here, and if I am making any mistake, I want to be put right at once.


James Alexander Robb: No mistake.


Henry Lumley Drayton: There is no
doubt about it. It is perfectly true. We are getting far more under the income tax to-day as we tax companies that gross ten per cent, than we could under the excess business profits tax. To-day, all the income taxes of companies are coming in under that heading. Before, they were represented in connection with the millions collected under the excess business profits tax, so that the real drop in the income of the regular individual taxpayer is infinitely greater than the drop shown between the figures of $81,000,000 and what we got last year, because when we got $81,000,000, we were at the same time getting $21,000,000 in excess business profits taxes from companies which now have to pay the 10 per cent income tax. The thing is dwindling.
The hon. member for Carleton, N.B. (Mr. Caldwell) says that we should not have any sales tax and that we should get more from income tax. He wants to reduce exemptions and to make everybody pay. Again, there we can throw away money. There is no money whatever to the country in collecting small income taxes. A reasonable exemption is not the generous thing that hon. members might think it to be. The fact is that it does not pay to go to the cost of collecting the very small run of taxation; t'he state is out of pocket. There is a zone where that taxation can usefully be applied, and I do not see how anyone who believes in the integrity of the government can think that that zone can be very much increased at the present time. They have the system that produced the $81,000,000 and the other amount, making a total of $101,000,000 for both business profits and income taxes, and the collections are now cut down almost 50 per cent. The government needs the money; the country needs the money. This is a form of taxation that this government, at least on the face of things, adopted, and' this was a good form of taxation, a form of taxation that hon. gentlemen to my left think a great
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deal of, a form of taxation which we adopted. Nevertheless, no real business suggestion has been made as to any way by which, first, either the methods of collection in force can be improved, or, second, the basis can be increased without loss to the taxpayer. It is all very well outside on the hustings to say that somebody else ought to pay our taxes; that the man who has an income ought to pay; that he should carry it all; but the trouble is to get him to pay it, and to remove Canada from her present geographical position.
Mr. MoMASTER:	That cannot be done.


Henry Lumley Drayton: No, and until
it can be done, and so long as the American nation has a specific income tax, just so long, as regards all wealth which is still transferable, the result of investment and not of labour, must our rate of taxation follow very closely theirs.


Mr. COOTE:: I would like to take this
opportunity of drawing to the attention of the minister the fact that the government are, I think, resorting to usury in charging delinquent income tax payers 10 per cent interest on arrears. I take it for granted' that most of these people who are in arrears cannot very well help themselves, and the government should make a change in the regulation which they are at present enforcing. The case which has been brought to my attention is that of a retailer who 'has been endeavouring for the last three years, or at least the last two years, to get his income tax paid up. He was assessed for income tax because his annual statement showed that he had goods on hand that really made him liable for income tax. But business was not very good for the next two years, and at the end of the two years he finds himself with a great proportion of those goods on the shelf, the value of them somewhat depreciated. In the meantime he has been paying interest on the money invested in his goods, and fire insurance on the goods, and he has not the cash to pay his income tax. He is being pressed for payment, of course, quite properly by the department occasionally, and he is being charged interest at the rate of 10 per cent. I do not think it is proper for the government to charge these people that rate of interest. Will the minister not see that that is changed; that these people should not be asked to pay 10 per cent interest.


Mr. MICHAUD:: Is a fine added to the 10 per cent when a man is delayed in paying his income tax?


James Alexander Robb: No. The rule is that they pay 6 per cent on unpaid assessments, that is assessments that are paid at the time the return is put in. When the assessment is levied and proved by the department, the account finally closed, that is the time to settle. After that, they are charged 10 per cent. That is not an uncommon practice. That is a rule in nearly every municipality in connection with the imposition of municipal taxes. If you pay your taxes before a certain date, you pay so much. If you pass that date, you pay so much more. My hon. friend knows that. It is a common method in different municipalities in the assessment of their taxes. Our inspectors from western Canada tell us that unless we had that rate, people there would prefer paying off mortgages and other accounts to paying the government assessment of taxes. That is the reason for this imposition generally throughout Canada. No person is compelled to pay that 10 per cent if he pays up his taxes at once when they are levied.


Arthur Meighen: Will the minister tell us about somebody in the West who could pay off a mortgage with his income tax?


James Alexander Robb: No, but they use the money for that purpose. That is the experience of the department.
As regards the observations of the hon member for Brome (Mr. McMaster) as to the transfer of propertly from a husband to a wife, or a wife to a husband, to evade taxation, there is no such animal. Under the regulations:
A person who, after the 1st August, 1917, has reduced his income by the transfer or assignment of any real or personal, movable or immovable, property to such person, wife or husband as the case may be, or to any other member of the family, such person shall nevertheless be liable to the tax as if such transfer or assignment had not been made, unless the minister is satisfied that such transfer or assignment was not made for the purpose of evading the tax.


George Gibson Coote: I should like to come back again to the case of those retailers that I was citing to the committee. These men have never had the money in their hands to pay the income tax, that is their difficulty. In the case of incorporated companies I am informed that the department has ruled on certain occasions that if they pay stock dividends to their shareholders no income tax will be levied thereon. These retailers are in exactly the same position; they never had the money, that is they never had the cash, their income being really in the shape of goods. And they have lost that income through depreciation and carrying charges on the goods. They would be willing to pay the tax if they had the money, but they have not got it and

Ways and Means-Income Tax
they are charged 10 per cent interest. I do not think that it is reasonable to ask these men to pay that rate of interest when they are simply not in a position to do so.


James Alexander Robb: The corporations are exactly
in the same position as the retail merchants. As regards stock dividends, they are regarded as dividends and as such are taxed. That is the law.


George Gibson Coote: I believe that in a statement prepared by Dr. McGibbon, one of the commissioners on the Royal Grain Commission, it was shown that in the year 1921 some of the elevator companies in western Canada paid no cash dividends but gave stock dividends which were not liable to income tax.


James Alexander Robb: I am not responsible for any
statement made by Dr. McGibbon. The act says that "dividends" shall include stock dividends.


George Gibson Coote: Will the minister say that
the department has not on different occasions ruled that stock dividends were not liable to taxation?


James Alexander Robb: No; it has always been ruled that they were liable.


Andrew Ross McMaster: As income?


James Alexander Robb: Yes.


Mr. MILLAR:: What is the law at present regarding the making out of forms? There are a great many who know that their incomes are not nearly sufficient to be taxable and who very often are put to a great deal of trouble trying to find out what ought to be done.


James Alexander Robb: The man who knows he is not liable to taxation is not required to make out the forms unless he is called upon to do so.


John Millar: What constitutes such a
call?


James Alexander Robb: A demand made by the department. But a man generally knows when he is liable and if he fails to make out his return he is liable to a penalty; in other words, he is running a risk.


Mr. BAXTER:: There is a matter I want to bring to the attention of the minister. I do not know that this is a good day for getting changes made, but I want nevertheless to submit the facts as they came before me a short time ago. I admit that the circumstances were somewhat unusual. A gentleman wrote me stating that he had been
assessed for income tax and he asked me whether I thought the assessment was correct.
I wrote him that the decision of the department was absolutely in accordance with the law, but he felt that there was a hardship. He had a son who was over eighteen years of age but who was absolutely dependent upon him. The father was trying to give him the best education he could, keeping him at a university, and he felt, and I think not un naturally, that as he was actually dipping into the little bit of capital that he had accumulated in order to keep his boy at the university, he might be remitted the amount of the tax or given the allowance made in respect of dependent children under eighteen. Of course, the department could not do this; but I was impressed with the case as presented to me by this gentleman and I am passing it on to the minister in the hope that he may consider the advisability of adding some qualifying exemption so that in cases of real necessity where children are still dependent upon a parent, although they may be over eighteen years of age,-particularly in a case of this kind where a son is being educated at some institution of learning-some small remission may be granted.


James Alexander Robb: Cases similar to this are
brought to our attention every week and we will take them all into consideration during the year.


John Babington Macaulay Baxter: But what do you do with them? What becomes of the consideration? Is it to find expression in the way in which the consideration will be shown which has been promised the hon. member for Brorne? Or is consideration effective when it is negotiated in the corridor and not across the floor?


Mr. STEWART (Leeds):: I want to call the attention of the minister to what I think is a manifest case of injustice. Where a father has one or more children who because of physical or mental incapacity are totally unable to support themselves it would seem that there should foe a reasonable exemption from taxation even though these children may be over eighteen years of age, or even over, twenty-one. The law as it stands to-day, and as I understand it, does not provide for any allowance or deduction from the assessment of a parent on account of the support of such children, and I strongly urge that some such provision be made.


James Alexander Robb: My hon. friend means that the parent of such children should be given the ordinary exemption allowed for children under eighteen years of age.

Ways and Means-Income Tax


Hugh Alexander Stewart: Yes, or some
special exemption.


James Alexander Robb: These are the cases I had in mind when I told my hon. friend (Mr. Baxter) that representations were made to us every week. However, when we have the acts consolidated, as we hope to have them, all these matters will be considered.


John Babington Macaulay Baxter: But the act does not give any power in this case.


James Alexander Robb: We propose making certain
amendments.


Hugh Alexander Stewart: Representations have been made in the particular case I speak of but the objection is raised immediately that the act does not permit of anything being done.


James Alexander Robb: Not now.


Edward James Sexsmith: If a son is supporting a dependent father or mother, a parent who is entirely dependent upon him, does it make any difference, whether the son is married or single, as to whether or not he shall receive the exemption?


James Alexander Robb: No; if the parent is entirely
dependent upon him the son is entitled to the exemption.


Henry Lumley Drayton: I want to ask the minister two questions. In the first place, what will be the loss of revenue as a result of this reduction? Further, I wrote the minister some time ago in connection with the question raised by the hon. member for Leeds, and I had in mind a pathetic case of a young woman whose father is not at all well to do. This woman is under thirty, or about thirty, and has been an inmate of hospitals for six or seven years and will doubtless be in the same condition more or less until she dies. I wrote to the minister regarding the matter and he replied to me by letter saying that he would consider it. I suppose that by reason of the amount of work he has to do he has forgotten all about it. Perhaps the matter was sent to the inspector of the department;
I do not know. However, the commissioner might probably be able to tell my hon. friend what conclusion has been arrived at in regard to such cases as this.


James Alexander Robb: No, I recall the letter of my hon. friend. It is on file along with others for consideration. Of course, it is pretty hard to deal with the matter in a general statute. Power might be given to the minister or to the Treasury Board, but that would be a very dangerous proceeding, as I am sure my hon. friend will admit.


Henry Lumley Drayton: I agree; I would not give any power to the minister or to the board at all. But I see no reason why a very simple amendment could not be drafted which would cover the case of a permanent invalid child whom, irrespective of age, the parents have to look after at infinitely greater cost than in other circumstances.


James Alexander Robb: We will keep it under consideration. I forgot to answer the other question asked by my hon. friend. I find that the estimated loss of revenue is $2,000000.


Henry Lumley Drayton: What! in connection with this exemption? Did my hon. friend have any idea there would be such a loss?


James Alexander Robb: I am bound to say I did not.


Sir HENRI:: DRAYTON:	On the one
hand we have a one minute talk on income taxation and the necessity of everybody paying; on the other hand we have dropping income tax receipts. Now we have a further exemption brought in which will cost the country $2,000,000 a year. Some hon. gentlemen, Mr. Chairman, when they are outside the House-and when they are in the House, unless there is some direct question of voting-are in favour of income taxation and making it just as certain as it can be made. I wonder what is the real opinion of those hon. gentlemen, in view of their general statements, when an amendment is proposed to grant exemptions which will run up to $2,000,000 a year? That is almost 4 per cent of the total income tax collected last year.


James Alexander Robb: A little over 3 per cent.


Henry Lumley Drayton: It is nearer 4 per cent than 3 per cent. $55,000,000 was collected last year.


James Alexander Robb: Yes; 3J per cent.


Mr.   CHAIRMAN@Mr. Marcil, Bonaven-ture: Shall the resolution carry?


Henry Lumley Drayton: I think, Mr. Chairman, that my hon. friend should tell us just what he thinks of this. He says the reduction is a surprise to him. Does he like to hand out $2,000,000-nearly 4 per cent of our income tax returns?


James Alexander Robb: I am bound to say frankly,
Mr. Chairman, that I did not think the loss

Ways and Means-Income Tax
of revenue would run up to $2,000,000. But, as intimated, the policy of the government is to reduce taxation, and we thought that a fair start in respect to income tax was to give some concession to those who have families, and we will have to stand by it.


Hugh Alexander Stewart: Did I understand the minister to say that he would this session introduce an amendment to provide for the allowance in the case I discussed with him?


James Alexander Robb: No, I said that I had the hon.
member's representations on file for consideration during the year.


Hugh Alexander Stewart: Is there any
serious difficulty in bringing in a simple amendment to cover cases of this kind, leaving them to be dealt with by the minister or by the collector? What is the necessity for leaving such a simple amendment over for consideration for a year? The injustice of it seems so manifest that it should not require a year's consideration to deal with it. I should think it could be dealt with in a few minutes, and would not interfere with any of the other provisions of the act. I think I could draft a simple amendment that would not cause any inconvenience.


James Alexander Robb: I must point out to my hon.
friend that many of the forms, indeed I hope most of them for this year, have already been printed, so it is impracticable to adopt his suggestion so far as the returns which have been made for the year which we now have under consideration are concerned. May I point out further, that this act has been in operation since 1917, so it is not very much longer to wait until next year for the consideration of these proposals. We have already made a considerable reduction this year, and I hope my hon. friend will be satisfied.


Hugh Alexander Stewart: I do not think
any reduction is more worthy or just than the one I have spoken of.


James Alexander Robb: I do not dispute that.


Hugh Alexander Stewart: No alteration of forms will be necessary to meet the case. A special form could be prepared for such applications. Each would be a special application submitting such evidence as might be available.


James Alexander Robb: I will have to ask my hon.
friend to wait another year.


[Stage Direction]
Resolution agreed to.
Resolution No. 2:	For making taxable, profits or
income by non-resident persons selling goods in Canada through employees or agents, or receiving rentals or royalties from sources within Canada.
James Alexander Robb: This, Mr. Chairman, is to
provide that Canada shall receive the advantage of the tax on profits where business profits are made in Canada. As the law appears to be at present, a non-Canadian or a foreign business house selling gpods in Canada through an agent or employee is in many cases not taxable owing to the actual contract being completed abroad. The object of the proposed amendment is to overcome the effect of this 'technicality and to ensure that the Canadian treasury shall receive income tax upon profits made from Canadian business even although the formality of closing the deal takes place abroad.


Henry Lumley Drayton: As I understand, at present the only person you can tax is the local representative.


James Alexander Robb: You can only tax him on his salary or commission.


Henry Lumley Drayton: He is taxable on his personal salary. But if there is nobody else here to tax, so far as the general business that he is carrying on is concerned, why is he not held now?


James Alexander Robb: According to the opinion of
the Department of Justice, we cannot reach them now, but under this amendment we shall be able to reach them.


Henry Lumley Drayton: How can you
reach a man who is outside your jurisdiction? I want you to get something that you can enforce.


James Alexander Robb: If the goods are sold in the
country we shall be able to discover where they are sold and where the payments should be made.


Henry Lumley Drayton: You know that now.


James Alexander Robb: The Justice department rules
that we have no right to tax them, and we are providing that we shall have that right.

Ways and Means-Income Tax


Henry Lumley Drayton: Has the minister a copy of the ruling of the Justice department? It is all news to me; I never heard of that trouble before. I ask the minister to read the letter from the Department of Justice.


James Alexander Robb: I will have it here at eight
o'clock.


Herbert Meredith Marler: The non-residents intended to be taxed1 under this section are merely persons selling goods in Canada? There is no intention under this section to attempt to tax persons by way of domicile instead of by residence, excepting the class to which I refer?


James Alexander Robb: No; my hon. friend is right.


Herbert Meredith Marler: Just that one class of
persons; that is quite clear.


James Alexander Robb: Yes.


Henry Lumley Drayton: Is this modeled on the American law? Because the Americans have a law which they seem to be able to enforce.


James Alexander Robb: It is modeled on both the
British and the United States laws.


Henry Lumley Drayton: But they differ. My recollection is that the British law is one thing and the American another. For instance, I have never seen people held in England as they are in the United States when they go down to the shipping offices with demands from tax collectors which must be met before they can get out of the country, nor have I known of any persons going into England on a trip being held up for these purposes before they could get out.


James Alexander Robb: The Commissioner of Taxation tells me that both in the United States and in Great Britain a transaction such as mentioned here is taxable. We are bringing our law to conform to theirs.
Sir HENRY DRA1TON:	Then if you
are really doing it why not do the whole thing? Why should it not cover all classes of profits of foreigners? I think the minister will find1 that there is a difference between the British and the American law and the methods of enforcement, and what I want to find out is which you are going to follow. The American one seems to be pretty efficient.
I think the minister had better call it six o'clock and find out-it is six o'clock anyway.
At six o'clock the committee took recess. 
After Recess
The committee resumed at eight o'clock.
2.	For making taxable, profits or income of nonresident persons selling goods in Canada through employees or agents, or receiving rentals or royalties from sources within Canada.


[Stage Direction]
Resolution agreed to.
3.	Authority to determine profits realized by:_
(a)	Corporations in Canada purchasing from associated corporations in excess of fair prices.
Henry Lumley Drayton: I suppose this is really something to help the revenue. I should think it was, and if so it is very proper that it should be done. Will the legislation go a little bit further though and prevent the further incorporation of a holding company to defeat the revenue? That is something to which I have drawn the attention of the Minister of Finance.


[Stage Direction]
Resolution agreed to.
(b)	Canadian corporations selling to parent or subsidiary companies at less than fair prices.
Henry Lumley Drayton: That is a
corollary to the other paragraph it seems to me.


[Stage Direction]
Resolution agreed to.
(c)	Non-resident persons producing goods in Canada and exporting them without sale prior to export.
Resolution agreed to.
4.	(a) That income derived from a business conducted by a husband and wife be taxed as income of one of them only.
Henry Lumley Drayton: How will this
work out in detail? Whose income would it be?


James Alexander Robb: The income of the owner of the business.


Sir HENRY DRAT  TON@: Well, the business is conducted by both?


James Alexander Robb: This is income derived from a business conducted by husband and wife, to be taxed on the income of one of them only.


Henry Lumley Drayton: This really is
the case of a partnership is it not?


James Alexander Robb: This resolution is declaratory
of what has been the practice of the department ever since the act came into operation. The authority for the practice was never very clearly stated in the act. It may be said that the provisions are absolutely essential in order to prevent husband and wife committing a fraud on the treasury, as there is nothing to prevent a husband putting his business in the name of his wife and reducing the profit she would derive therefrom by having paid to

Ways and Means-Income Tax
himself a salary, thus dividing the profit from the business into two parts whereas he is in reality the owner of the business. Unfortunately it is not uncommon to find cases where a husband with judgments issued against him carries on business in the name of his wife to avoid payment of such judgments. This practice cannot be allowed to operate to the detriment of the revenue.


[Stage Direction]
Resolution agreed to.
(b) For authority to disallow as an expense, income credited or paid to husband as an employee of his wife, or vice versa.
Mr. BOYS:: It is the simplest thing in the world to get around the provision the way it is worded now. Supposing a wife had a few thousand dollars, she would be able to lend it to her husband, and he would conduct a business on her money and his own. So if you want to avoid the situation of husband and wife carrying on a business together, and having but one exemption of $2,000 you will have to go a little further than the proposed legislation. Let me take the case of a business that really belongs to the two of them, and they want to avoid the situation as it arises here. The wife would simply lend some money to her husband, we will say $30,000. It would be his business, she would get her income upon the $30,000, and would get her exemption. Therefore, if you really want to avoid this difficulty you will have to go further than you are going here.


James Alexander Robb: She would invest her money
anyway.


William Alves Boys: I am aware of that but would it not be a vei'y simple process to do what I have described? What I understand you are trying to do here is to meet the case of a husband and wife who are carrying on a business and are registered as co-partners. They should only get the one exemption. Well, all they have to do to get around this provision is to take the course I have suggested, unless we provide against it.


James Alexander Robb: The administrators of the department think this will meet the difficulty that is presented.


William Alves Boys: They may think so. Perhaps
the minister will consider the suggestion I made. The method of evasion indicated should be guarded against.


James Alexander Robb: The wife would be entitled
to the interest on that investment anyway.


William Alves Boys: I fully agree with that, but
at the same time it must be perfectly manifest that it could be done in that way. It is
merely a method to get around the act, and if you are going to pass legislation which they can circumvent you might as well not. have legislation at all.


[Stage Direction]
Resolution agreed to.
5.	(a) For the disallowance of the annual value of property used in the business except rental actually paid therefor.
James Alexander Robb: The object of this resolution
is to make clear that a taxpayer in business who owns his business premises shall not be allowed as a deduction the annual value of the premises. On the other hand, it is desired to allow rent actually paid to an outside party as an expenditure.


Henry Lumley Drayton: Is that quite
fair?


Alan Webster Neill: Would this not operate to
prevent a man writing off a fair value of depreciation on buildings?


James Alexander Robb: No, he is entitled to reasonable depreciation.


Alan Webster Neill: This would not prevent it.


James Alexander Robb: No.


Henry Lumley Drayton: I think the minister is right in that connection. He would be entitled, of course, to depreciation. But suppose that you have any difference of interest in the business and in the realty, this question would not come up at all. Suppose you have a major partner in the concern also owning real estate and content to charge nothing, this would not be operative.


James Alexander Robb: No.


Henry Lumley Drayton: I take it that it is only operative in the case where you have an absolute community ownership of business and property?


James Alexander Robb: Yes.


Henry Lumley Drayton: If you have a
common ownership of business and property, again there might be a distinction. If the property as such did not form part of the assets of the business, why should the rental not be paid? If the property forms part of the assets of the business then, of course, the rental should not be paid.


James Alexander Robb: This is only to clear the
situation for us, and to provide protection against a situation that might develop. Similar situations developed in Great Britain.


Henry Lumley Drayton: This is following the British act, is it?

Ways and Means-Income Tax


James Alexander Robb: Yes.


[Stage Direction]
Resolution agreed to.
5. (b) That net profits be taxed without reduction by allowances therefrom for sinking funds or other similar reserves.
Herbert Meredith Marler: Will the minister explain
that?


Alan Webster Neill: Would this permit the laying aside of a fund, for instance, to take care of bad debts, where a business does not write off the bad debts every year, those debts actually becoming bad, and where they lay aside a certain fixed percentage for a bad debts fund? It seems to me that should not be forgotten under this section. The word "reserves" there might apply to a reserve made for taking care of bad debts.


James Alexander Robb: No, this is put in to provide
for the case of bonds, where it provides that there must be a sinking fund each year. It would not apply to the case as cited.


Henry Lumley Drayton: If the object of the resolution is to make it clear that this is simply to provide for the replacement of capital invested in a business which operates a sinking fund-a sinking fund after all, is the payment of so much on account of capital invested in a given corporation-I see no objection to it.


James Alexander Robb: That is clearly what it is.


Henry Lumley Drayton: I suppose the
act will make it clear.


James Alexander Robb: Yes.


[Stage Direction]
Resolution agreed to.
6.	For certain modifications of the present law pertaining to the income tax lien and to render certain that the lien shall not take priority over securities validly taken prior to the time at which the lien attaches.
Mr. GOOD:: I wish to bring to the attention of the House certain matters relating to the administration of the business profits war tax, if I am in order. I wish to refer in the first place to three despatches which appeared in the Toronto Globe in the month of February. In the issue of the 20th of February a despatch appeared entitled:
Royal commission may probe collection of income taxes.
The first paragraph refers to the possible appointment of a commission to investigate some features of the methods by which the business profits and income taxes, especially in the case of large concerns, have been collected. The article proceeds as follows:
[.Sir Henry Drayton.]
If and when such an inquiry is instituted it is believed that some interesting information will be disclosed to the taxpayers of this Dominion. It will be recalled that one of the sensations of the 1921 general election campaign was the revelation of the fact that the Meighen government had accepted a note from the Riordon Company in part payment of its business profits tax.
And the article goes on to refer to some other items of a similar character.
In the issue of 22nd February another despatch appears, which opens as follows:
Some astonishing facts showing how the treasury of Canada failed to receive revenue intended for it, it is stated, will be unearthed if and when a thorough investigation is instituted by the Dominion government into the conditions attending the collection of income and business profits taxes, especially during the year 1921, which was a general election year.
It is alleged, for instance, that cheques totalling about $1,700,000, and representing the income and business profits taxes of three well-known concerns in Ontario, were received by the Department of Finance, of which Sir Henry Drayton was the then minister in March, 1921, but that they were not deposited until December 6 of that year. It is alleged that the synchcronizing of the election date-


Henry Lumley Drayton: Will you give
the name or is the letter anonymous?


William Charles Good: This is a despatch which
appeared in the Toronto Globe.


Henry Lumley Drayton: That would be worse than an anonymous letter.


William Charles Good: I am simply referring to this
to serve as an introduction to some investigations I made, to which I shall refer later.


Henry Lumley Drayton: Will the minis-tre kindly give us the names?


James Alexander Robb: My hon. friend sat in the
minister's chair at one time, and he knows that under the act we are not allowed to give the names.


Henry Lumley Drayton: I am quite content with the answer of the minister. I was charged by these very papers with a breach of duty because I did not do it.


William Charles Good: The despatch says:
It is alleged that the synchronizing of the election date with the date of the deposit of the cheques has a significance that warrants inquiry.
And so on. I do not require to read all of it. In the Globe of the 25th February another despatch appeared which reads as follows:
A searching inquiry into the methods of income and business profits tax collection in the years from 1918 to 1921 inclusive, would show, it is asserted, in informed circles, that the treasury of the Dominion was deprived of a sum which it is conservatively estimated would occupy seven arithmetical digits.
Then it goes on to refer to a number of cases without quoting names, but quoting figures. I refer to these three despatches

Royal Assent
which came to the attention of the members of this House just prior to the opening of the present session, and I do so by way of introduction to what I desire to submit to the committee now. Nor will I apologize for detailing to the committee at some length certain investigations of mine which began in the year 1922. Some time, I think, in April, 1922, during the first session of the present parliament, I received some private information concerning the administration of the Business Profits War Tax Act. 1916. with subsequent amendments. Upon the basis of the information thus secured, I drafted the following questions for the order paper, which I shall now read to the committee:
1.	What is the total number of returns made by tax payers under the business profits war tax, from the date when this act was made effective until the present time?
2.	How many such returns have been made each year during this period?
3.	How many tax payers have made returns but against whom no assessment of tax has yet been made?
4.	How many returns in each year have not yet been assessed ?
5.	How many have made returns, been assessed, but have not yet paid their taxes?
6.	How much interest, if any, has been lost by the non-assessment of the taxes on the returns furnished?
7.	How many returns, if any, will it be impossible to collect owing to the failure or liquidation of firms or corporations ?
8.	Have there been any cases of incorporated companies in which a further allowance for capital than that provided by the act (namely the value of the capital stock, unimpaired reserve, rest or accumulated profits) was made and the capital for the purpose of this act allowed to be increased?
9.	If so, on what principle and under what authority?
10.	In	cases of	profits	derived from mines,	how
much, if any, has been allowed to be deducted from the profits for the exhaustion of mines?
11.	In	cases of	profits	derived from mines,	have
there been any cases in which, in addition to the allowance made for exhaustion of mines, there has been at the same time added as a reserve, an allowance for the value of the mine?
12.	If	so, how	many	cases, what was the	totalamount	so added	and what difference has this	made
in the taxes assessed?
13.	Have any similar allowances been made for the exhaustion and for the value of pulp or timber lands?
14.	If so, under what authority?
15.	Have any other methods of accommodation to tax payers been adopted other than acceptance of notes in payments for assessments levied? If so, what methods?
There was a very considerable delay in the answering of my question. I have forgotten the exact date when it was placed on the order paper-I could look it up-but I recall rising in the House on one or two occasions and asking the Minister of Finance (Mr. Fielding) when the answers to these questions would be brought down. Finally, after some time, I received a telephone communication from Mr. Breadner in charge of
the department asking me to call and see him. I did so,-I think, on the 2nd May, 1922,-in company with the hon. member for North Wellington (Mr. Pritchard). We had a long conversation about the questions. Mr. Breadner made a number of explanations and apologies, and finally he virtually asked me to withdraw the questions. I told him that I would give the matter consideration, and I wrote him as follows on the 3rd May, 1922:
Dear Sir:
I have given very considerable thought to the matters which we discussed the other day, and have decided that it is in the public interest that the questions should stand as they are.
The next event in this long story was the answer to my questions on May 11, and I want to read to the committee the answer which I got from the Minister of Finance:
The Minister of Finance is advised that the supplying of all the information asked for would require quite a long time and a large expenditure for clerical work, which he thinks the honourable member would not desire to have incurred. The minister suggests that if it would be convenient to the honourable member he might call on the Commissioner of Taxation, Mr. R. W. Breadner, at the Finance department, and discuss the matter with him, with a view to reducing the scope of the inquiry into $uch limits as might enable the department to supply such information as the honourable member deems most important.
You can imagine my feelings when I got that answer to the question after what had occurred. I then went to see the Minister of Finance (Mr. Fielding) personally. I told him of my previous interview with Mr. Breadner, of which he had no knowledge. He was evidently surprised and, I think, somewhat annoyed. He promised, however, to see Mr. Breadner and to report to me. Nothing was done. I got no reply, and on the 2nd June when I spoke on the budget, I made reference to the specific case which had been drawn to my attention, giving it in brief. It occurred to me that if I thus pointedly called the attention of the government to what seemed to be a violation of the law and a very serious loss of revenue-


THE ROYAL ASSENT
[Stage Direction]
SUSPENSION OF SITTING

A message was delivered by Colonel Ernest J. Chambers, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, His Honour, the Deputy of His Excellency the Governor General, desires the immediate attendance of this Honourable House in the Chamber of the Honourable the Senate.
Accordingly, the House went up to the Senate.
And having returned.
[Stage Direction]
Ways and Means-Income Tax
Mr. SPEAKER informed the House that the Deputy of His Excellency the Governor. General had been pleased to give in His Majesty's name the royal assent to the following bills:
An act to amend The Patent Act (French version). An act to amend The Fruit Act (French version).
An act to amend the Penitentiaries Act.
An act to amend The Northern Pacific Halibut Fishery Protection Act.
An act to amend the Judges Act.
An act to change the name of "The Travellers Life Assurance Company of Canada" to "Montreal Life Insurance Company".
An act respecting The Canada Southern Railway Company.
An Act to confirm an agreement between The Ottawa Electric Railway Company and The City of Ottawa.
An act respecting the Detroit River Tunnel Company. An act to incorporate The Roman Catholic Episcopal Corporation of Prince Rupert.
An act for granting to His Majesty certain sums of money for the public service of the financial year ending the 31st March, 1925.


[Stage Direction]
The House resumed in committee of Ways and Means.
6.	For certain modifications of the present law pertaining to the income tax lien and to render certain that the lien shall not take priority over securities validly taken prior to the time at which the lien attaches.
William Charles Good: I was remarking a few minutes ago that I drew the attention of the House to the specific case that had been submitted to me privately when I spoke on the budget on June 2, 1922, but that my doing so had not elicited any response from the Minister of Finance or from the government. At the end of the session, therefore, on June 29, 1922, I wrote the following letter to the right hon. Minister of Finance (Mr. Fielding):
You may recall a conversation which we had some weeks ago in regard to the answer made to certain questions which I had on the order paper. You stated,
I think on that occasion, that you would see Mr. Breadner and let me know the result of your interview with him. I did not hear anything from you and, subsequently, in my speech on the budget, gave detailed particulars in regard to one corporation which had apparently escaped the proper taxation. I thought that perhaps the specific figures which I gave in that case might lead to some reply on the part of the branch of the Finance department concerned; however, since the question has not been replied to, and the specific case ignored, I am taking this opportunity of calling your attention again to what seems to me a matter of very considerable importance.
I proceeded at some length in the letter to outline the situation and in conclusion I said:
I hope that you will look into this matter at your earliest convenience, as I feel sure, from what information has reached me, that some investigation and some real clean-up is highly desirable.
I am sending a copy of this letter to the Premier, Mr. Mackenzie King.

I sent a copy of the letter to the Prime Minister.	.
I did not hear from the Minister of Finance in reply until January 22, 1923, on which date he wrote me as follows:
Referring to your letter of the 29th June, 1922, concerning a certain assessment under The Business Profits War Tax Act, in view of your expressed dissatisfaction with the decision reached by Mr. R. W. Breadner, Commissioner of Taxation, I deemed it expedient to have an independent inquiry made. For the purpose, I had the matter placed in the hands of Mr. George Edwards, of the firm of Edwards, Morgan and Company, chartered accountants, whose services had already been engaged for other departmental work. I now send you a copy of Mr. Edwards' report. You will notice that it is dated November 24, 1922. I should explain, however, that it only came before me since my return from Europe a few days ago.
Enclosed with the letter was the report from Mr. Edwards which I have in my hand. In this report Mr. Edwards deals in detail with the specific case, without mentioning the name of the company concerned. I shall read one or two extracts from the report.
Comparing the figures, I note that the share capital is correctly stated at $250,000 but the reserves amount to $5,731,350.20 or exactly $5,000,000 more than reported in Hansard. The gross profits are correctly stated at $1,571,626.17, but after deducting income tax, inventory adjustments and depletion allowances, the balance or net profit remaining is $1,086,573.23, an amount which is less by $337,191.08 than reported in Hansard. The actual assessment is correctly stated at $214,312.36. From the foregoing it will be evident that the suggestion of an under assessment is based upon information which is incomplete and in part incorrect. The capital employed is $5,000,000 greater, and the profits in this particular year were some $337,000 less. Upon the statements of fact presented by the departmental files, the amount assessed has been correctly computed.
He goes on to say that he personally visited the office of the company, and further on the report states:
It will be noted, therefore, that no occasion has arisen for determining the constantly accumulating value of the capital assets of the company, until required to do so by the provisions of The Business Profits War Tax Act. No books, other than the statutory books, and a cash book had been found necessary and therefore apparently no others had been kept.
The report, which continues at considerable length, is an endorsation of the assessment made by the department. When I received it I submitted it to my original informant who was a gentleman in the city well acquainted with the administration of the Business Profits War Tax Act; and after discussing it with me he gave me a memorandum which I should like to present to the House.


Henry Lumley Drayton: Will the hon.
gentleman have any objection to saying who wrote the memorandum?


William Charles Good: I am not at liberty to mention the name at the moment, Mr. Chairman.

Ways and Means-Income Tax


Henry Lumley Drayton: What does the
Chairman rule as to the reading of an anonymous memorandum?


The CHAIRMAN:: The hon. member
may read from a memorandum without giving the author's name. The rule applies only to a minister who reads from a public document; it requires him to read the whole document and to disclose the author. The rule does not apply to private members.


William Charles Good: If there is any objection to
my reading the memorandum, Mr. Chairman, I will simply give the substance of it.


Henry Lumley Drayton: I have no objection, only I should like to know who is the author.


William Charles Good: I do not think its authorship
makes very much difference. It is the argument contained in it which I should like to submit to the House.


Some hon. MEMBERS:: Read it.


William Charles Good: This is the memorandum:
The report of Mr. Edwards, chartered accountant, on this matter, shows that the difference between my information and his is that he puts in the reserves $5,000,000 more than I do. There is no mention in the report what this reserve of $5,000,000 consists of. I would judge, however, from the latter part of his report that the department and Mr. Edwards have determined or have fixed the value of the mine of the company at $5,000,000 and class it as a reserve.
It is quite evident that this is merely an accountant's method of avoiding the business profits war tax. I would be very glad, if you thought it advisable, to discuss the matter with Mr. Edwards, as he may be able to convince me that there is some provision in the business profits war tax that allows a company to add $5,000,000 for the value of its mine, but I must confess that a somewhat careful examination of the act and the amendments does not show me any provision that can be so construed.
The business profits war tax, section 3, provides, there shall be levied and paid to His Majesty a tax of 25 per cent of the amount by which the profit earned in any business exceeded in the case of a business owned by an incorporated company the rate of 7 per cent per annum upon the capital employed in such business. The 25 per cent was amended subsequently. Then the word "profits" is defined in section 6 as the net profits, with a provision that the minister when determining the profits derived shall make an allowance for the exhaustion of the mines. "Capital" is defined by section 7 as being, "The amount paid up on its capital stock."
Then the definition of "capital stock" is given, and there is some further explanation and quotations from the act.
The memorandum proceeds:
Subsection 4 then provides that reserves may be included in the capital. The words are "the actual unimpaired reserve, rest or accumulated profits of an incorporated company shall be included as part of its capital." These words have no application to the value of what Mr. Edwards calls "the capital assets".
Reserves are savings set aside for various purposes and not distributed in dividends to the shareholders. Capital assets are the assets for which the capital stock stands.
That is all that is material to the point I am making. Then I have before me the two statements, the original submitted to me on which I based some of my questions, and the amended statement which was endorsed by Mr. Edwards. The main distinction between the two statements is that in the one case there is $5,000,000 allowed for the value of the mine, and in the other case there is not. The point which hon. members should grasp is that by the allowance of $5,000,000 for the value of the mine the very large exemption of 7 per cent could be claimed, which would allow this particular concern to pay about $200,000 instead of about a million dollars which they were liable for under the other construction. I do not need to go into the statements in detail. I have them here if any hon. member wants to look over them.


Mr. RYCKMAN:: What is the point?


William Charles Good: The point will be apparent
very soon, Mr. Chairman, if the hon. gentleman cannot see it now.


Edmond Baird Ryckman: We have been waiting
for it a long time.


William Charles Good: On Feb. 8 of last year I wrote to Mr, Fielding. The substance of my letter was that I was not satisfied with the report of Mr. Edwards and desired to discuss the matter with him in the expectation that possibly he would be able to clear up some of the mysteries that seemed to surround this case. I also asked for permission to look into the particular file. Mr. Fielding wrote me on February' 9 as follows:
I beg to acknowledge receipt of your letter of 8th instant in relation to the income tax matter concerning which we have had some correspondence.
Mr. Edwards has been in Ottawa for several days, but has returned to Toronto. I will communicate with him and ask him when he is again in Ottawa to call and see you.
In reply, I wrote to Mr. Fielding calling bis attention to the fact that he had not said anything about my getting access to the file in question. Writing to me on February 20 he told me that Mr. Edwards was in town that day and would call and see me, but that the files were not accessible to the public and that therefore I would not be at liberty to examine this particular file.
Mr. Edwards called to see me shortly afterwards. I had a long discussion with him and we went into the case in detail. I discovered that he justified the assessment on different grounds from those upon which he had justi-



Ways and Means-Income Tax
fied it in his memorandum. This was his summing up of the condition of this particular concern:
$250,000-original investment 45 years ago.
$431,000-stock of merchandise on hand 1918.
$2,000,000-buildings, equipment, etc.
$3,300,000-value of mine.
Now, Mr. Chairman, I cannot see any justification in the act for the allowance of $3,300,000 for the value of the mine. You will observe that in the former communication $5,000,000 was allowed as the value. On discussing the matter with Mr. Edwards he divided the property into the plant and the mine, and he said the value of the plant, which to some extent might be counted as a reserve, was in his opinion about $2,000,000, and the value of the mine he put in as $3,300,000. I inquired as to the justification for this, and his argument was, roughly, that what seemed to be a bona fide offer for the property had been made some years ago of about $6,000,000, and that if any attempt were made to place the valuation too low the company could easily go through a form of sale to establish a higher valuation for the property, and he could not see how the higher assessment could have been enforced under the act. Thus he confirmed his original opinion as to the assessment, although he based it on somewhat different grounds. I may say that the discussion I had with him was very satisfactory from the point of view of getting information, and I left the case in that position towards the end of last session.
Now, Mr. Chairman, I do not wish to take up the time of the committee much longer with regard to this matter, but I would call attention again to the charges made in the three Globe articles, which I think are sufficiently serious to demand on the part of this House a thorough investigation by the government into the administration of this department. I have no interest in this matter from a party point of view. Possibly the Globe has; if the ex-Minister of Finance thinks that the Globe is trying to make party capital he is entitled to that opinion and there may be something in it; I do not care a rap for that. But my own investigation has suggested to me that in connection with the administration of these acts- whether or not too much latitude has been allowed I cannot say-there is very much that we should know, very much that we do not know, and I am going to ask that a thorough investigation be made into this whole matter in order to prove or disprove the charges made in the three articles in the Globe and to throw light upon the adminis-

tration of these acts. I am moreover not satisfied with the explanations which I finally got from Mr. Edwards through the department in the particular case cited. It was one case out of possibly a great many cases. I say I am not satisfied; but at the same time I do not wish to make any- charges as to the violation of the law, though it would seem to me that t'he law has been violated. I say I would like a thorough investigation to determine whether there has been any violation of the law and to expose the violation if there has been any; if not, then to establish that justice has been done to all parties. If the allegations made in the Globe are correct, or anywhere near correct, the country has lost a tremendous amount of revenue running to about $800,000 in the particular case I have mentioned. I ask the Minister of Finance and I ask the government to institute a thorough investigation into the administration of this department.


James Alexander Robb: The question under consideration is the income tax, and under that head my hon. friend has brought up the question of the administration of the business profits tax and the income tax. My hon. friend was not a member of this House when that legislation was put through. I am not sure whether had he been a member of the House he would have taken the attitude that most hon. members took at that time, namely that secrecy was the essence of the act. It was pointed out by many hon. members from all parts of Canada when the act was first introduced that one of the results of its operation would be that every man's business would be known to his competitors and that unfair dealing would follow. A pledge was given by the then Finance Minister-and it was put in the act- that there w-as to be secrecy as to the returns filed with the department regarding the business and the revenues of people throughout the country. Until recently, so far as I know, that, generally speaking, has been fairly well observed, but it is apparent that in some ways certain information coming into the department is leaking out, with a consequent disturbing effect in the country. Though I have been Acting Minister of Finance for some months I have never taken advantage-and under the act the minister is a member of the taxation commission-of that information in order to dig into any man's business.
In the first place my hon. friend brings up the question as it affects a mining corporation, I think it was, and he referred to the Minister of Finance (Mr. Fielding) in that connection. Mr. Fielding, acting upon information given to him by the hon. member

Ways and Means-Income Tax
for Brant, employed a chartered accountant, one who is recognized in all parts of Canada as at the head of his profession. That chartered accountant went very carefully into the matter, visited the mine and submitted a report to the minister. Associated with Mr. Edwards was Mr. Hutchison, of Riddell, Steed and Hutchison of Montreal, so that we have the statement of two reputable chartered accountants who, on instructions of the Minister of Finance, went carefully into the reports as filed with the department. My hon. friend has read part of the report to the minister in that connection; I think I might as well put it all on Hansard so that hon. members of the House and the people of the country will have it before them. It is dated November 24, 1922 and is as follows:
The Honourable,
The Minister of Finance,
Ottawa, Ontario.
Sir,-I have the honour to acknowledge your instructions to investigate the circumstances respecting an asessment made under the provisions of the Business Profits War Tax Act 1910, to which reference was made by Mr. Good, M.P., in the House of Commons, and reported in Hansard No. 55, 2nd June 1922, as fallows:
"A certain company in a certain year had a capital stock, according to this statement, as follows: $250,000; reserves, $731,350.20, making a total capital employed of $981,350.20. The gross profit of that company, according to the statement submitted, was, I am told, $1,571,626.17. Deducting from that the income tax-I will not read the figures; I have them here-the decrease in the inventory and the depletion, I find there is left a net profit of $1,423,764.31. According to the act, I am informed that the assessment levied on that company in that particular year should have been $1,111,983.99, made up as follows: 7 per cent of the capital employed, exempt from taxation; 8 per cent, one-quarter taken by the government; 5 per cent, of capital employed, one-half taken by the government and of the balance of profits, which was considerably over $1,000,000, six-sevenths should have come into the federal treasury. The total assessment which, according to this statement, ought to have been levied on that particular company, was considerably over $1,000,000. What was the actual assessment by the department?- $214,312.36. In connection with this one company for one year, if these figures are correct, and if there is no good justification for the action which the department has taken, there is an apparent loss to the country of $897,671.63."
That was the statement placed on Hansard by the hon. member for Brant, referred to by Mr. Edwards in his report to the minister on the date which I have given. Then follows his report:
I have been supplied by the Department of Taxation, at your request, with the files relating to a mining company, an examination of which identifies this company with the one referred to by the member. Comparing the figures, I note that the share capital is correctly stated at $250,000, but the reserves amount to $5,731,350.20 or exactly $5,000,000 more than reported in Hansard.
The gross profits are correctly stated at $1,571,626.17 but, after deducting income tax, inventory adjust-
164*
ments and depletion allowances, the balance or net profit remaining is $1,086,573.23, an amount which is less by $337,191.08 than reported in Hansard. The actual assessment is correctly stated at $214,312.36. From the foregoing it will be evident that the suggestion of an under assessment is based upon information which is incomplete and in part incorrect. The capital employed is $5,000,000 greater, and the profits in this particular year were some $337,000 less. Upon the statements of fact presented by the departmental files, the amount assessed has been correctly computed.
I have personally visited the office of this company, which is located at the mines, where also all the operations are carried on. I have been afforded every facility for forming an independent opinion upon the questions involved. The auditors of the company, a firm of the highest repute, have given to me their certified statements and reports upon the company's position.
The company was incorporated in 1877, and has therefore operated fox 45 years. During that time there has been no change of share ownership, the present shareholders being either the original proprietors or their estates, and their respective interests are likewise unchanged. During this entire period the policy has been maintained of distributing periodically to the shareholders, the cash balances remaining on hand after making all necessary expenditures, including capital charges for development, plant and other facilities. It will be noted, therefore, that no occasion has arisen for determining the constantly accumulating value of the capital assets of the company, until required to do so by the provisions of the Business Profits War Tax Act. No books, other than the statutory books, and a cash book have been found necessary and therefore apparently no others had been kept.
It is evident from the statements I have obtained from the officers of the company, the auditors, and the officers of the Department of Taxation, that a sincere effort was made to arrive at a fair and just decision as to the value which should be placed upon the company's physical assets for taxation purposes in accordance with the conditions prescribed by the act. The prescription applicable to this case is contained in subsection 4 of section 7, which reads as follows:
(7) (4) For the purposes of this act, the actual unimpaired reserve, rest or accumulated profits held at the commencement of an accounting period by an incorporated company, shall be included as part of its capital as long as it is held and used by the company as capital, and dividends paid during an accounting period shall be considered as a reduction of unimpaired reserve, rest or accumulated profits.
Then Mr. Edwards continues:
I have taken the statements separately of the persons who took part in the inquiry and these statements are in substantial agreement. A competent departmental officer was deputed to visit the company's office and make a report. Similar reports were procured respecting other mining companies producing like commodities, and comparative data was thus obtained. The representatives of these companies were then invited to Ottawa in turn to confer with a view to reaching a reasonable basis for determining capital. I have asked for and have been given access to the files of the department dealing with the cases of a number of these companies. For the most part they had changed hands one or more times within a comparatively few years, and it was possible therefore to test fairly well the true commercial value of the classes of physical assets which they had in common. There was no other possible method of determining the extent of the company's reserves.
I am quite convinced from the evidence I have examined, and from an inspection of the physical assets of

Ways and Means-Income Tax
this company, and with the advantage of my previous knowledge of undertakings of this general description, that the capital and the profits of this company have been fairly determined, and the assessment made was a just and reasonable one.
Yours very truly,
George Edwards,
Chartered Accountant.
That report was endorsed by Mr. Hutchinson, of Riddell, Stead & Hutchison. Now, what more could' the Finance Minister have done? He sent a chartered accountant to look carefully into the valuation of the company's property, and to conduct a careful review of the returns made by that company. The chartered accountant did so and reported that in his judgment the report had been fair and1 the assessment made according to the act. My hon. friend (Mr. Good) finds some fault with what was done. The Minister of Finance wishing to satisfy the hon. member authorized the chartered accountant to go to him, learn all that he had discovered, and go into the matter carefully and thoroughly with him. But my hon. friend, not satisfied with that, desired to see the files. Well, hon. gentlemen all know the Minister of Finance as well as I do and unless it was absolutely necessary he would not have allowed-


William Charles Good: May I correct the minister?
When I made the request to examine the files I did not know they were considered confidential. I had no objection, and did not register any objection, whatever, to being denied access to the files when the minister told me they were regarded as confidential; nor did I express any dissatisfaction with the minister for undertaking the investigation- instructing Mr. Edwards to make the investigation. I think he did the only thing he could do under the circumstances, and I have no objection to that at all.


James Alexander Robb: I am very glad to have that
statement from my hon. friend. I was going on to say that I gathered1-it may be incorrectly-that he was rather finding fault because he had not been given access to the files.


William Charles Good: No.


James Alexander Robb: I was going on to say that
to grant access to the files would not only have been a breach of faith, it would have been a breach of trust. It is true my hon. friend makes no charges. He does, however, make what might be termed insinuations that the department were not fairly administering the act. We have before us the report of a chartered accountant engaged, by the Minister of Finance to go carefully into 
the matter, and that chartered accountant certified to the minister that the assessment was properly made in that case.
Now we come to the items that were published in the Toronto Globe. No names were mentioned in the Globe but I think I may as well put these statements on record. This is an extract from the Globe of 25th February, 1924:
1.	A thorough probe it is stated would reveal that one prominent Toronto concern was assessed in July, 1921, to be taxed by over $60,000, but that the notice of assessment was held until late in December of that year, no interest being collected or charged for the lapsed time.
2.	Another Toronto company it is alleged had its assessment reduced by $18,000 principally through extra salary allowances. This assessment was made in April, 1921, and the company paid on the instalment plan $2,000 monthly. It's notice of assessment was sent out in August, 1922, no interest being charged or collected as the notice was withheld until the instalments were completed.
Now as to case No. 1 there is sufficient in the article to determine just about who they were. I do not know who they were but I have the statement from the record that the capital was $907,190.85. The profits as reported in returns and as set forth in the auditor's statement signed by Edwards, Morgan and Company, chartered accountants of Toronto, were $154,375.93. The tax collected on the above figures would amount to $27,292.46, but the tax levied by the department was not $27,292.46 but $61,926.68. So that the House will observe that they were assessed for more than their chartered accountants claimed they should be; and there is no suggestion in this House that the statements of the chartered accountants or of the company are not reliable. The comparison is merely for the purpose of showing that the Dominion exchequer has benefited to the extent of approximately $57,000 in two years from what the taxpayer himself considered his liability.
In regard to No. 2, in this concern the capital was, $373,289.07. and the profits, after deducting depreciation and reasonable salaries were $79,326.13. The assessment based on those figures would be $20,301.34, but the department levied a tax of $36,051.35. So that, in addition, on account of salary adjustments, further assessments to the extent of $976.80 were levied against the individuals under the income war tax. I mention this to show that the reports, in so far as the companies are concerned, were not justified. Every person knows that the tax collector in a community, whether it be a municipal tax collector or a school municipal collector, or any tax collector, is not the most popular man in the country; and the Commissioner of Taxation

t	Ways and Means-Income Tax
for Canada possibly has not earned popularity among many people who are compelled to pay taxes. But I desire to say that this government and the Commissioner of Taxation have nothing to hide, and if any gentleman has the courage to make any charges and to submit them to the Public Accounts committee, they will be thoroughly examined and gone into, and he will have permission to bring his witnesses before that committee.


Henry Lumley Drayton: The hon. member for Brant (Mr. Good) has perhaps fallen into a very natural error. He does not know, for example, the Globe as well as some of us know it; and he is in the unfortunate position of having confused Philip Drunk with Philip Sober. He is exactly acting on the position taken by some at least of the present occupants of the treasury benches when they were not Philip Sober. He is remembering the wild and silly charges that were made in regard to the Riordon case. He is remembering that in that campaign it was said that as soon as the government came into power there was to be an investigation, which I have been courting ever since. But he has forgotten that sometimes the wildest insanity becomes sanity; and after all there is a morning after the night before. And to-day the government are charged with carrying out the laws of this country. They are not concerned to-day with making improper and false statements as to political opponents and what they have done. They are concerned with carrying out the law. At that time they and the papers supporting them were concerned in saying that the very sections that the hon. the Acting Minister of Finance (Mr. Robb) has properly referred to to-night were framed for the purpose of protecting Drayton. But as I say that is gone; they are in a position of responsibility now. I have always courted an investigation and I do so now. My position now is just as it was then. There ought to be regard for law and regard for the statute. There ought to be regard for the confidence of the ratepayer, and it is for the government to say whether it is to be violated or not.
So far as this particular case is concerned, my hon. friend is again in an unfortunate position. He has relied upon the Globe, and the first case he cites shows that the Globe has been interested in running down some Toronto ratepayer. I do not know how this information was obtained; but I do know that the ratepayers of this country are going to be interested in finding out why it is that some newspaper or some people can gain access to confidential documents. That is a breach of the law, and a breach of
the situation as described by the Acting Minister of Finance. Somebody has been giving information but from the date of the assessment, and although I do not know what it was, I should imagine it was still the same old game of trying in some way or other to show something wrong was done in 1921. I would assume it is for that purpose, and, as it appears in the Globe, my assumption is altogether more likely to be correct. But there is a place where there might be an investigation. What chance has the honest man in business to get along properly if perchance his competitor here or his competitor there is allowed to obtain knowledge of everything he is doing and his resources and salaries? If it be open for the Globe in some way or other to get these particulars, why is it not open to anybody else? Well, my hon. friend is wrong, because he again trusted the Gldbe. We see, according to a report given to the acting minister, that as a result of the delays which took place for the purpose of ascertaining the truth, making proper valuations, and writing up values where values were written down, the tax in the first instance referred to is raised from $27,000 to $61,000. Was the delay not worth it? Was the department not doing the right thing in writing up the values and obtaining a true knowledge of the situation?
The second case he refers to is not very much more fortunate. How did the delay work out there? It has been alleged that the assessment was not made soon enough. Fancy anyone talking about interest on an improper amount of $20,000 as a matter of loss, when we find that, as a result of the delay and of getting the actual value, instead of the country getting $20,000 it got $36,000. There is the whole situation. I have a good deal of sympathy for my hon. friend from Brant. He has been misled. He has become mixed up with Philip Drunk and Philip Sober. He has become mixed up with the Globe and the family Bible, but I will say again, as I have said more than once,-and this has been corroborated both by the right hon. Minister of Finance (Mr. Fielding) from his place in this House and by the Acting Minister of Finance (Mr. Robb)-that there is nothing to bide in this matter, so far at any rate as one Drayton is concerned, and that I look for an investigation, if anyone is rash enough to bring it on. I have absolutely nothing to hide. My position is just as it was before. Then I was bound by the ordinary decencies of public life to keep quiet. I could not give the details. I had no right to do so. The details now are with hon. gentlemen on

Ways and Means-Income Tax
the other side. Any breach of decency today will not be my 'breach, and if they want to make that breach, I can assure them that so far as I personally am concerned, I will welcome an investigation.


William Charles Good: In regard to the case which I mentioned, which has been referred to by the ex-Minister of Finance (Sir Henry Drayton), I should like to make my position absolutely clear, because I am afraid that it has been misunderstood. I have no desire to question Mr. Edwards' ability as an accountant, but I want to state very frankly that I can see no justification for the conclusion to which he came. It may be my fault, but I submit to the committee that, under the act, there seemed to be no justification for the allowance of $5,000,000 that was made. The further explanation made to me personally by Mr. Edwards divided that amount into an allowance for the plant, for which allowance there might be some justification, and a very large allowance for the value of the mine, for which allowance I can see under the act no justification whatever. The section quoted by Mr. Edwards, subsection 4 of section 7 reads:
For the purposes of this act the actual unimpaired reserve, rest or accumulated profits of an incorporated company shall be included as part of its capital.
If the value of the plant is to be taken as the accumulated profits-and I suppose it is in this case; what were not paid out to the shareholders as dividends were put into the plant-the reserve, so to speak, then that is all that can be allowed for and what can be said about the allowance that both the department and Mr. Edwards justify of over three million dollars, at least, for the mine.


Herbert Meredith Marler: That is the capital.


William Charles Good: The capital is defined under
the act as being not more than the par value of the capital stock, $250,000, which is negligible in this case. I ask the government to make an investigation. I am sorry if, in any way, I should be party to such an investigation as will throw into discredit any particular person or persons. I regret that, in a matter of this sort, certain persons seem to be, necessarily, reflected upon. I cannot help that; there is no way of avoiding it; but I think there is a sufficient amount of information now evident to require an investigation by the government. If it is desirable to have a private investigation, let the government assume responsibility for whatever kind of investigation they see fit to institute. But I contend that the information which we have already secured and the charges, if such
[Sir Henry Drayton.)
they may be taken to be, contained in the Globe articles are sufficient to require an investigation. In fact, I would think it is highly desirable to clear up the charges and not to allow them to stand there as suggestions and insinuations, if you like, against the probity of certain persons in this House and elsewhere. Should they not be cleared up? I do not wish to be considered as desiring to reflect discredit upon any individual; but I feel that in this particular case a certain favouritism has been exercised towards a particular concern, a concern which made profits amounting to a million and a half dollars in one year, whereas, the country at that time secured only about $200,000 of taxes out of $1,500,000 profits from a company that started with $250,000 of a capital and which had, at most, according to Mr. Edwards' statement to me, about $2,000,000 worth of a plant. I submit to members of the committee that something seems to be wrong with that. Let it be investigated. I am only calling for an investigation, and I think it is up to the government to provide for an investigation of whatever kind they think most suitable


James Alexander Robb: May I point out again that
this resolves itself purely into a difference of opinion as between the chartered accountants and the hon. member for Brant (Mr. Good)? May I remind him again that the Public Accounts are available, and the government and the Commissioner of Taxation welcome any investigation the hon. member desires to bring before the Public Accounts committee.


William Charles Good: Do I understand that the
gover ment decline to take further action in the matter? Do they decline to make any investigation?


James Alexander Robb: The government have made
an investigation and I insist upon that point. The government sent one of the most respectable, recognized chartered accountants in Canada to go carefully into the matter. He had associated with him another chartered accountant, of a respectable firm. They have made a report satisfactory to the Minister of Finance. The hon. member for Brant is not satisfied with that. The difference of opinion is between the chartered accountant and'the hon. member for Brant. As a member of this House, my hon. friend has recourse to the Public Accounts committee. All he has to do is to bring the case there and bring forward the evidence that he says he has.


William Charles Good: Is the Acting Minister of Finance himself satisfied with the report of Mr. Edwards?

Ways and Means-Income Tax


James Alexander Robb: I am bound to say that I have always found Mr. Edwards' reports accurate.
I have never had any reason to dispute them.


Henry Lumley Drayton: What the hon.
member says about capital does not come under that particular act. It is not the amount of the face capital at all. Very often the face capital is ever so much more than ought to be deducted. On the other hand, when the face capital is nominal, manifestly you have to apply the same rule. What you have to arrive at is the value of the vehicle that is producing the results. That is putting the matter in a rough way, but that is really what it is. Never mind about the paper capital or the paper reserve. What is the real value of the thing used? Mr. Edwards says that the real value is this $5,000,000, and he also says, as regards the real value, that it was offered for $6,000,000. If my hon. friend will look at this particular act, he will see that the ordinary rule does not apply.


Andrew Ross McMaster: I would ask the hon.
member (Sir Henry Drayton), as he was once responsible for the administration of this act, to consider whether the act cited by the hon. member for Brant (Mr. Good) contemplates this fixing of the value of the assets at their real value. It would almost appear by the citation from the act made by the hon. member for Brant, that, the capital must be the capital of the company and not the real value of the property.


Henry Lumley Drayton: I can assure my hon. friend that it would have been a very easy act to administer if that had been the case, and the returns in the great majority of cases would have been very small. We have watered capital, and if that reading were to be given to the act, many companies, that had to pay heavy rates would have got off with nominal taxation. We had to do that in order to get revenue, and that meant going into the whole thing and finding out what real values were.


Andrew Ross McMaster: Is the real difficulty in this case not a difficulty of legal interpretation of the act? It seems to me that that is where the difficulty comes in. If, under the act, the taxing power had the right to assess what was the real value of the property producing the income, then it occurs every day, especially in companies that are owned in a family, that the nominal capital may bear no relation to the real value of the property. If under the act the assessment could be computed upon the real value of the property then it appears to me the difficulty might disappear altogether. I have never examined
the matter as a practising lawyer with any [DOT]great care and I should be gladi to hear from the Minister of Justice (Mr. Lapointe), if he has looked into it, as to whether it is proper under the act to compute the rate of taxable profits not upon the nominal capital but upon the real value of the institution.


Henry Lumley Drayton: That is what we did at any rate; we took the real value.


William Alves Boys: The section we are discussing is as follows:
For certain modifications of the present law pertaining to the income tax lien and to render certain that the lien shall not take priority over securities validly taken to the time at which the lien attaches.
I want to enter as strong a protest as I can against the department taking a lien against the property of a taxpayer, which lien, could, by any possibility take priority over existing securities. This section states that there are to be certain modifications. I do not want to continue the discussion unduly if the proposed modifications will meet the situation, and I would therefore ask the Acting Minister of Finance to indicate just what those modifications are to be.


Herbert Meredith Marler: Perhaps the hon. member will recall that when this amendment to the act came up last year under section 25 I raised the most strenuous objections to its being put into effect at that time; and finally, after many solicitations, I induced the Minister of Finance to put over the operation of that particular section until the accounting period of 1924, that is to say, around May 1, 1925, the income tax statements being submitted, as my hon. friend is aware, on April 30, 1925. That section last year constituted a lien on all property movable or immovable of the tax payer over all assessments made or to be made; that is to say, the income tax created a lien ranking prior to a mortgage	or even a sale, irrespective	of
whether the income tax was assessed before or after the security was created. And that in my opinion was a very unfair attitude for the department to take. The amendment now submitted by the Acting Minister of Finance changes that completely, providing that the income tax lien will take effect and be a lien only in relation to that part of the tax which is assessed before the execution of any particular security such as a mortgage, a conveyance or a collateral security.


William Alves Boys: Is my hon. friend speaking for the Acting Minister of Finance? I dto not know, but apparently he is familiar with the nature of the probable modifications.

Ways and Means-Income Tax


Mr. JACOBS:: He is trying to enlighten the House.


William Alves Boys: I understand that quite well.


Samuel William Jacobs: Does the hon. gentleman think that the Anting Minister of Finance alone can interpret the section?


William Alves Boys: Certainly not; but I do think that the committee is entitled to an explanation from the Acting Minister himself. It makes no difference to me however where that explanation comes from so long as I am assured that the statement which the hon. member is making is an indication of what the minister intends to do.


Herbert Meredith Marler: For the information of my hon. friend I want to say that, naturally, I am not speaking for the government. I am speaking for a reason which I shall state; and perhaps the hon. member will not consider me impertinent for undertaking to offer a word of explanation in regard to the section.


William Alves Boys: I did not mean to be rude to my hon. friend; all I wanted to know was whether what he has suggested are the proposed modifications which are ultimately to be submitted by the acting minister.


Herbert Meredith Marler: I am speaking for this
reason. Last year I raised strong objections to the enactment of a section similar to this, and I have been taking up this particular question with the department with a view to having a clause passed which would seem to me to be fair both to the department and to the public at large. This matter has been brought to my attention by very many persons in Toronto, in Montreal and in various other parts of the Dominion; and this owing largely, in fact entirely, to my having offered the objection I did last year, when my remarks were published in Hansard. For that reason alone, and not because I consider myself an authority on the subject, I have undertaken to refer to the subject. In my opinion the suggested amendment is a fair one inasmuch as it only allows the unpaid income tax assessed prior to the execution of a security to rank as a lien on taxable property. In other words, a mortgage being registered on a certain day and income tax being clear up to that date, then the creditor has no necessity to examine the income tax statement of the debtor after the registration of the mortgage; and provision is made by the department so that the usual waivers or certificates, or whatever you choose to call them, will be issued on demand, showing that there is nothing owing by the debtor mortgaging or selling a security.


William Charles Good: There seems to be an evident desire on both sides of the House to change the subject, but I want to add a word in conclusion to what I said before regarding the matter I have already brought up. So far as the particular case which I personally investigated is concerned, I am not attaching a tremendous amount of importance to it, but I want to tell the committee frankly that I see no justification for what was done. The contention may be made that one could not keep to the act, that one had to violate it, in that it was not fair. If the officials take that view then perhaps the action taken can be justified on that basis. Nevertheless, I submit that the act was violated in this particular case. As I have remarked, however, I do not attach supreme importance to this case because there may be some extenuating circumstances that would seem to justify it, although personally I cannot see it. But I do think that in view of the subsequent charges, of a very serious and very varied character, made by the Globe, some action should be taken. Am I to understand that the government has investigated all the allegations made in the Globe articles, and in consequence denounces them as untrue? If that is the case, and the House is to be given to understand that these things have all been investigated, and if the government declares them to be baseless, I personally shall be well satisfied and pleased to know that things are properly conducted. I ask the Acting Minister of Finance to make a statement now that these matters have all been inquired into and that the government is satisfied that everything is O.K.


James Alexander Robb: I repeat that from the items as they appeared in the Toronto Globe we were able fairly to trace tue accounts, and I have read to the committee a statement of account to show that the Globe was very much misinformed. I should like to return to the resolution. I do not want to be discourteous to my hon. friend but I have already told him that the Public Accounts are open to any member of the House and that the government will welcome any investigation into any department of the public service which hon. members may wish to make before the Public Accounts committee.


William Lyon Mackenzie King: Mr. Chairman,
I should like to supplement what the hon. Acting Minister of Finance (Mr, Robb) has just said as to the government welcoming an investigation into any matter which can be placed before it in a way sufficiently concrete and substantial to justify investigation. As the minister has said, it is open to any member of

Ways and Means-Income Tax
the House before the Public Accounts committee to ask for the production of papers in which he is interested, and to secure examination of relevant witnesses. That course is open to my hon. friend in regard to the matter he has brought up to-night. As to the charges contained in the Globe articles, I would direct his attention to the fact, that so far as we have heard those articles as read to-night they do not name any persons, they are general charges. The government has to be careful in regard to instituting inquiries into the work of departmental officials, for in five minutes if we started investigating without some concrete and specific charge before us it couid be charged against the government that we were seeking to persecute such officials. If my hon. friend or any other member of the House will submit to the government a charge of a specific and serious character with relation to any official of any department of the government, I will undertake to see that that charge is investigated.


William Charles Good: I am glad to have the assurance of the Prime Minister to that effect.


James Alexander Robb: Now, coming back to the resolution, and replying to my hon. friend from South Simoce (Mr. Boys) who asked me a few minutes ago if I would endorse what had been said by my good friend from St. Lawrence-St. George (Mr. Marler), if he refers to this item now under discussion and to the hon. gentleman's explanation of the act as he understands it, I say yes; if he means in a general way, I would hesitate to give my endorsement. I may say to my hon. friend that the proposed bill has been submitted to the representatives of the Bond Dealers' Association of Canada, the Canadian Bankers' Association, the Life Assurance Association, the Dominion Mortgage and Investment Association, the Ontario Association of Boards of Trade, the Associated Chambers of Commerce, the Toronto Board of Trade, the Builders' Exchange and Construction Industries Associated of Toronto and the Toronto Real Estate Board, and they are quite satisfied that the amendments will meet any objections.


Henry Lumley Drayton: I wonder if my hon. friend could let us see the proposed bill?


James Alexander Robb: Just as soon as this resolution is passed I will introduce the bill.


George Gibson Coote: With the permission of the
committee I should like to refer to a question which I raised this afternoon respecting a statement which I understood had been made by Professor McGibbon. Let me read this
one sentence from the report made by him in regard to the earnings of certain line elevator companies in western Canada. He said:
In 1921 many companies, with the permission of the income tax department, converted surpluses into capital stock by declaring stock dividends.
I wish the minister would explain to me, if he can, why Dr. McGibbon would make that statement if the income tax department had not ruled that such stock dividends were not to be subject to income tax.


Henry Lumley Drayton: I can answer
my hon. friend at once from my own recollection. Under the old law they were not subject to income tax, and a great many of such dividends were accretions of moneys earned before any income tax was payable. I brought in an amendment in 1921, Mr. Chairman, providing that any more of such distributions would be taxed as income.


James Alexander Robb: ,So Dr. McGibbon must have been referring to a period prior to 1921.


George Gibson Coote: The minister will admit
that this was the case in 1921?


Henry Lumley Drayton: I should like
the hon. gentleman to have it right. My recollection is pretty clear on the point, although it is some time since I had occasion to refer to it. In so far as all profits of any kind made during that tax accounting period were concerned, whether they were distributed in cash or otherwise, did not make any difference, they were profits earned during that period. But hon. gentlemen will see, Mr. Chairman, that there might be companies with undistributed reserves that were not made in this tax accounting period. It looked to me as if it gave too much opportunity of working one against the other, so I proposed the amendment making all these distributions taxable.


James Alexander Robb: The commissioner tells me
that the point raised by my hon. friend applied only to dividends accrued and undistributed surpluses that were on hand prior to the act coming into force.


Henry Lumley Drayton: Prior to the
accounting period.


George Gibson Coote: I desire to get my position
right before the committte. From what the minister said this afternoon I understood that the statements I had made in regard to what Professor McGibbon said in this report were in his opinion impossible. I think perhaps we have got the matter straightened out as far as I understand what the minister has said.

Ways and Means-Income Tax


[Stage Direction]
Resolution agreed to.
Resolutions reported, read the second time and concurred in. Mr. Robb thereupon moved for leave to introduce Bill No. 143 to amend the Income War Tax Act, 1917.
Motion agreed to and bill read the first time.

[Stage Direction]
Hon. J. A. ROBB (Acting Minister of Finance) moved the second reading of Bill No. 122 to provide for the superannuation of civil servants.
Henry Lumley Drayton: Will the minister inform the House as to the personnel of the committee to which this bill is to be referred?


James Alexander Robb: I have not the names in front of me, but it will be practically the same committee which considered the matter last year, with the exception that I should like to put on the name of the Acting Minister of Finance. If the chief Whips have any suggestions to make as -to the personnel of the committee we will change it to suit them.


Henry Lumley Drayton: I quite agree,
Mr. Speaker, that this is a matter which should be expedited, it having stood over for a long time. I am perfectly willing to facilitate my hon. friend in every way. I presume he will name the committee afterwards.
Motion agreed to and bill read the second time.


James Alexander Robb: That Bill No. 122, an act to provide for the superannuation of civil servants, be referred to a special committee consisting of the following members:- Messrs. Brown, Carmichael, Chevrier. Drummond, Hughes, Garland (Carleton), McBride, McKillop, Mc-Murray, Malcolm, Marcil (Bonaventure), Martell, Parent, Rinfret, Robb, Shaw and Simpson, with power to send for persons and papers (to print for the use of the committee from day to day its proceedings and evidence taken) and to report from time to time, and that rules 11 and 74 be suspended in reference thereto.


Mr. SPEAKER:: By unanimous consent.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The House in committee of Supply, Mr. Gordon in the chair.
Soldiers' Civil Re-establishment-capital, $10,000.
Robert James Manion: Will the minister explain
what this item refers to?


Hon. H. S. BELAND (Minister of Soldiers' Civil Re-establishment):: This item is for
minor repairs and improvements to leased property, and for small ^pieces of furniture and equipment. There is a reduction of $20,000 this year. Last year we spent $5,616.


Robert James Manion: Would the minister give
us a few of the details with respect to the amount spent last year?


Henri Sévérin Béland: Small pieces of furniture- chairs for instance, small pieces of machinery; equipment and furnishings for hospitals and sanatoria; minor structural additions and expenses. All the major repairs and all substantial additions to hospitals are made by the Public Works department.


[Stage Direction]
Item agreed to.
Care of patients and medical examination of pensioners, $2,600,000.
Robert James Manion: Will the minister tell us
how much of the vote last year was spent, giving some of the larger items in detail?


Henri Sévérin Béland: There is also a substantial reduction in this item. The main items of expenditure consist of: Care of patients and medical examination of pensioners-food and subsistence, fuel, light, power and water rates; medical, surgical, dental and X-ray supplies; laundry; professional services in outside hospitals; maintenance of patients in outside hospitals. Then, indirect charges, such as transportation of patients and pensioners; expenses of escort, funeral and burial of patients; expenses of travelling medical boards. Under this item also is included the expenditure in connection with the Orthopaedic Surgical Appliances branch, the providing of artificial arms and legs, of boots, shoes and repairs for the same; also optical appliances and supplies, wheel chairs and so on. The amount voted last year was $3,500,000, of which $2,984,043 was spent.


Robert James Manion: How many hospitals are
there at the present time, what are their locations, and how many were there last year? How many patients are in the hospitals and how does the number compare with that of last year?


Henri Sévérin Béland: Last year we had 16 hospitals and sanatoria entirely operated by the department; this year we have reduced the number by six. The hospitals and sanatoria entirely operated by the department are as follows: Ste. Anne's Hospital, Montreal; Camp Hill, Halifax; Lancaster, St. John; Mowat Memorial Sanitorium, Kingston; Christie Street Hospital, Toronto; Westmin-

Supply-Re-establishment
ster Hospital, London, Ontario; Deer Lodge Hospital, Winnipeg; Colonel Belcher Hospital, Calgary; Central Alberta Sanitarium, Calgary; Shaughnessy Hospital, Vancouver; a total of ten. The number of patients in the institutions entirely operated by the department was, on the 31st of December last, 1,924. Now, besides the institutions which are entirely operated by the department there is a large number of other institutions in which we have patients. If my hon. friend desires a list of all these institutions I can give it to him.


Robert James Manion: How many patients are
there in those which are partially occupied by the Department of Soldiers' Civil Re-establishment?


Henri Sévérin Béland: On 31st March, 1924, there were 1,449 patients in those institutions not operated by the department. On the same date in the departmental institutions there were 1,995 patients, in round numbers 2,000, a small increase on the number on the 31st December last. The total number of patients on 31st March, 1924, was 3,560.


Robert James Manion: Has the minister the total figures for the year previous?


Henri Sévérin Béland: I have the figures here
for the last five calendar years. They are as follows:
Number of
Year	Patients
31st December,	1923	
3,74431st December,	1923.. '	
4,30731st December	1921	
5.93031st December,	1920	
6,431
So that from the 31st December, 1920, there was a reduction from 6,431 to 3,744.


Mr. ARTHURS:: And last year?


Henri Sévérin Béland: During last year there was a reduction from 4,307 to 3,744.


James Arthurs: Does this justify the reduction you are making?


Henri Sévérin Béland: It is expected that the
amount now asked for will provide for the needs of the present fiscal year.


Robert James Manion: Can the minister give me the number of the complete staff of totally occupied persons, that is to say, the nurses, doctors, and so forth, throughout the whole country at the present time, amd also the figures for previous years?


Henri Sévérin Béland: On January 1, 1924, the
total staff was 3,094.


Robert James Manion: Has the minister the
figures for the staff in previous years?


Henri Sévérin Béland: I think so.


Robert James Manion: That is the full time staff. Mr. BELAND: Yes.


Mr. SHAW:: Can the minister give us an idea when we may expect the elimination of this department?


Henri Sévérin Béland: On 31st December, 1919,
the total staff was 8,126. On March 31, 1920, the number was 8,791. Skipping over two years, t'he number on July 1, 1922, was 4,367; and on July 1, 1923, the number was 3,524. On 1st January 1924, the staff had been reduced to 3,094, and 3rd April last it had been further reduced to 2,881.


Robert James Manion: I will cease asking questions in a moment and give other members an opportunity to question the minister. I presume there is a part time staff as well?


Henri Sévérin Béland: Yes.


Robert James Manion: Has the minister the
figures for the part time staff?


Henri Sévérin Béland: Yes, there are only medical men in the part time staff.


Mr. MacLAREN:: Does this item include
the salaries for professional services?


Henri Sévérin Béland: No.


Murray MacLaren: Does it include the
medical staff?


Henri Sévérin Béland: No, it does not include
the salaries of the medical men.


Murray MacLaren: Is it the case that for
a total number of 3,444 patients there is a staff numbering 3,094.


Henri Sévérin Béland: I would not say that statement is correct because the staff have other duties in addition to attending the patients in the hospitals. The figures which I have given apply not only to service in the hospital, but to the medical examination of pensioners-all possible services in connection with unemployment relief, the discharge of duties in connection with Imperial pensioners and Imperial patients in hospitals. In a word the duties in question embrace the whole work of the department.


Murray MacLaren: I do not wish to imply that the duties of each member of the staff are confined to attendance in hospital, but I understand it is the case that there is a total staff of 3,094 and the number of patients is 3,444.


Henri Sévérin Béland: That is right.
Supply-Re-establishment


Murray MacLaren: Is the pension board staff included in the number as well?


Henri Sévérin Béland: Yes, all the staff.


Murray MacLaren: Even including the Pension board staff, and all the other officials, it seems to me that is a large personnel for the number of patients. Does the minister see in the near future the prospect of the staff being reduced from what it is now?


Henri Sévérin Béland: The staff is being reduced at the rate on an average of about 20 a week, and one must bear in mind that of the main staff of the department a proportion, I think 95 per cent, are returned men, and a proportion again are disabled men. The purpose of the department is to exercise all possible care and diligence in reducing the staff. The employees receive notification in advance; and in the meantime, before the date arrives when they shall be released, we undertake to do everything possible in order to secure employment for them. Many of our employees are disabled to an extent that we feel sometimes that it is the duty of the department, of the government and of the country to keep them a little while longer, and I venture to say that it will not be possible at any time in the future to reduce the staff at a faster rate than 20 a week, or about 75 a month, or 900 to 1,000 a year. If we continued to reduce the staff at that rate it would mean that in three or four years they would all have been let out. Although I do not think, perhaps, the department should remain as it is to-day, I believe that it will require two or three years before the number of employees will be reduced to such a point that it will not be worth mentioning. At one time the staff was composed of pretty nearly 9,000, and if we include the work of the pension commissioners it was at that time 10,000. In 1921 I think all the staff of the Board of Pension Commissioners was taken over by this department, and from that time the department has been reducing constantly at the rate on an average of 1,000 a year, or even more, and I submit we are doing fairly well. We may not reduce the staff as rapidly as my hon. friend would wish, perhaps, but were he in my place, knowing his heart, and his good nature, I can assure him that he would not reduce the staff any faster. Representations have been made to me by men who are deserving, men who have done brilliant service, and men who have suffered disability, the heads of families, and so on, and we exercise all possible care when it comes to dispensing with their services. Nothing would please me more than to reduce the expenditure further.


Thomas Langton Church: The minister shows a
reduction of $900,000 in this 'particular item. I think the most important department in the public service is the one over which the minister presides. He has given us the figures at the time the last estimates were passed, and the number now in the hospital is included in his 1924 estimate. Although there is a reduction in the estimate of $900,000 there is not an equivalent reduction in the number of patients receiving clinical treatment, and when you consider the number of patients receiving general treatment, the ordinary patients, tubercular patients and so on, the grand total figures out at an average daily of 4,307. The people of Canada expect that the government will not shelter themselves behind any technicality or code of rules in regard to their treatment of these men. A g:eat deal of complaint has been made since last session about the administration of this particular branch of the department. When we considered this item previously there were some co-ordinations and some consolidations made which might account for the difference. The Sydenham hospital at Kingston has been closed, and Euclid Hall at Toronto, Brant House at Burlington, Jordan memorial at River Glade, N.B., and Ste. Agathe Sanatorium were also closed. Can the minister tell us if the veterans are getting the same kind of treatment now as previously? Have the recommendations which have .been in the Colonel Ralston report been carried out? Are there any changes in the regulations? Will he tell us something about the general care and medical treatment in these institutions? Is there any change? I know in Toronto there have been a great many complaints, and they had through a citizens committee to pass the hat around and collect $48,000 on a tag day in April for the benefit of a lot of veterans who contracted disease overseas, and whose cases were thrown out by the doctors in the department. I refer to the Smith case, Mr. Smith being a soldier resident in Davisville near Toronto. The hon. member for South York (Mr. Maclean) is not here to-night. He intended to take it up. Then there is the Strickland case, Strickland being a destitute soldier, the Taylor case, a soldier on Portland Street and some others. These gentlemen come under this particular vote. The doctors examined them and I have a lot of correspondence with the department in regard to them. The civilian doctors, of repute, who had considerable experience, and who examined these men, do not agree with the DjS.C.R. board of medical men. The

Supply-Re-establishment
best the country can do for these soldiers is none too good for them. They are not going to live forever, and they are dying off by hundreds. Many of them have been struck off the pension rolls on technicalities and the number averages about 4,307. At page 671 of last year's Hansard the minister gave for the years 1919-22 and 1922-23 the details of the number of cases and he has repeated these details to-night, and 'added those for 1924. There is a great deal of dissatisfaction in the city I come from, and the ladies' organizations with the city government and the board of trade and other civic organizations had to get together during the dark days of January, February, March and April to obtain assistance for soldiers in need and distress by way of a tag day. Many of them were without work, they and their families were without food and clothing and some could not obtain medical treatment. The ex-service men and the different associations, the board of trade, and the city treasurer did what they could. The members of the various patriotic funds and other organizations had to be recalled, and they organized a campaign and parties went around from door to door in Toronto and collected $48,000. which the people of Canada should have contributed. I would like the minister to tell us about the care and treatment of these cases at present in the hospitals and the medical examination of the men. In many cases the applications for pensions or aid for these men were thrown out or curtailed. I mentioned three cases to-night. Then there is the case of Pte. Boxall. Lieutenant Colonel Campbell, an overseas soldier, came to me with a pile of papers to-day and the file re this Boxall case. Boxall was a returned soldier. His oase has been ruled out by the department on some technicality. This man contracted his disease overseas and the department's doctors ruled him out although five or six civilian doctors backed up his statement that he should receive a pension.
There is too much red tape in the administration of this department in their treatment of the soldiers in the city from which I come. The Christie Street hosptial is the largest hospital in Canada for the treatment of soldiers, and they are doing splendid work. The minister's heart is in the work, and he has my sympathy and support. The findings of the Ralston commission should be brought up to date, there should be no delay in bringing in their final report and the relief set out therein should be brought into effect at once. In many instances the doctors of the department rule cut cases, while civilian doctors of
good professional ability certify to the contrary as to the facts in individual cases, and with all respect to the department, I think something should be done to take care of these men denied a pension by red tape. There should be a more liberal interpretation of the act. The soldiers are dying by tens, twenties and thirties in Toronto and Ontario every month. They are not going to live for ever or to be a drag on the government for all time. Last year the estimates of this department were $14,000,000. This year the amount has been reduced to $9,000,000, a reduction of $5,000,000. Next year, if we have a proportionate reduction, the estimates will amount to about $5,000,000. This department shows a reduction of about 37}- per cent. Is this the only department that is going to be cut down in that way and singled out for economy? One-half of the estimates goes for administration. The minister's figures may be all right as to the number treated. The Ralston commission went over the whole of Canada and it made two reports. One report was brought down the other day, and it is about time that we had the final report and put it all into effect. Let us have the facts and find out how many men have been struck off the books, turned on a cold, uncharitable world for a living, without anything, and allowed to shift for themselves. You cannot expect these men to be 100 per cent efficient after spending two, three or four years overseas. Some people will not give them a position and the country owes them a proper pension.
As regards the amputation cases, getting $75 a month, I know of a young soldier, a hardworking man, an amputation case. He has two arms off, and he cannot get any work. After weeks spent in endeavouring to get a position for him, he cannot get a position, nobody will have him. Nine hundred dollars a year is not sufficient for him with his wife and children, who sometimes are sick. He is sometimes sick too. All these things have to be taken into consideration. The minister has a good deal of courage; let him not be afraid to bring down proper estimates, because this is a department that should not be cut down 40 per cent, and it is not economy at all to economize at the veteran's expense. The people of Canada are well able to pay a proper debt of gratitude which they owe to the soldiers who went overseas for one, two, three, four or five years, and who, on their return to Canada, have technicalities and law dealt out to them, to deprive them of their rights, and who are done out of proper pensions and proper medical treatment by technicalities. They should have proper medical treatment
Supply-Re-establishment

and sufficient pensions to enable them to maintain themselves and their families. The medical treatment is all right, but some who should have pensions are ruled out by the doctors on technical grounds.


Murray MacLaren: I would not wish the
impression to exist that I think these patients are not receiving proper and adequate attention. On the contrary, my observation, such as it is, is to the effect that they are being satisfactorily and well cared for. The fact of the personnel being reduced in the last year or two, especially in the last year, more rapidly than the reduction in the number of patients, I think will be explained, by the fact not that the staff has been reduced below what is sufficient but rather that there has been an overstaffing in previous years. I think that there having been overstaffing, a reduction out of proportion to the number of patients has been made possible, and yet the patients have not suffered, so far as I am aware, in any way on account of the reduction in the staff.


Robert James Manion: How many patients has
the minister in the .hospital at Montreal? What hospitals are there in Montreal and what staff is there?


Henri Sévérin Béland: In that district there is
only one hospital operated by the department. at Ste. Anne. At Ste. Anne's hospital on the 31st December, 1923, we had 452 patients. I presume my hon. friend wants to know' the other institutions in Montreal in which we have patients.


Robert James Manion: Is the hospital at Ste.
Anne handled by the staff in Montreal?


Henri Sévérin Béland: Yes.


Robert James Manion: What other patients are
in Montreal at the present time?


Henri Sévérin Béland: In Montreal General hospital, 6 patients; in the Royal Victoria, one patient; in Jeffrey Hale hospital, Quebec, four patients. That is in the unit of the province of Quebec,


Mr. GUTHRIE:: The criticism which
struck me in looking over the estimates of the Department of Soldiers Civil Re-establishment is that the department has become top heavy. It may be a difficult thing to reduce the number of officials and the amoam: that is voted for salaries; but the amount that is at present paid for salaries in the department is entirely out of proportion to the amount that is expended for the relief of soldiers. I placed on Hansard early during the present session a comparative statement which I be-
lieve to be correct and which is taken from the Auditor General's report for the year 1923. It shows that out of a total expenditure of $13,375,000 odd, for the year ended 31st March, 1923, no less than $6,000,000 odd went for salaries, $3,065,000 for administrative charges other than salaries, maintenance, hospitals, supplies, transportation and contingencies, and $4,309,000 odd for payments to soldiers and their dependents, also relief. If one looks at the percentage of these various subdivisions of this expenditure, one will find that salaries take 44.88 per cent, administrative charges, 22.92 per cent and payment to soldiers 32.21 per cent of the total. It can be seen at a glance from these figures that the amount for salaries, $6,000,000, is entirely tor large a sum for the administration of a tota of $13,000,000; or, in other words, in the expenditure of $13,000,000, $6,000,000 of that sum goes for salaries, $3,000,000 for hospitals, maintenance and the like, and $4,000,000 odd for payments to soldiers and their dependents. 1 learned from the minister fo-night that the total number of patients which he has as of the 31st March of this year is 3,444. Last year he had 3,744, so that there is a reduction of 300. He has a staff on the first of January of this year, as he has stated, of 3,094, which staff includes all kinds of officials and assistants in his department. The trouble with the item under discussion now is that it also includes salaries, although they are not shown in the item itself. I should like to draw the minister's attention to this. Item No. 293 is entitled:
Care of patients and medical examination of pensioners.
The appropriation proposed this year is $2,600,000. Last year the House voted $3,-
500,000,	so that there is a reduction of $900,000. But the minister said that last year the amount expended w'as about $3,000,000. According to the Auditor General's report, the amount expended under this item was $2,922,547.41. Of this expenditure no less than $291,979.54 was for salaries. The second vote after the present one is also expressly for salaries. But in the item we are now considering, of the expenditures of 1923, $291,000 or almost $300,000 of the amount for care of patients and medical examinations was actually expended in salaries. If the minister wants the references to the pages of the Auditor General's report, the person who has prepared the memorandum for me has given the page and the section of the report in regard to each of the figures I have mentioned The figures I have last mentioned will be found on pages YY100 and XX142. Last

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year under the item "salaries" there was a total vote, comprising three items, of 84,-
425,000.	But the total expenditure in salaries was actually 86,000,649.30. So that in the various items that make up the total estimate there is a substantial amount included for salaries not shown in the estimates at all. The estimates we voted last year totalled, for salaries, 84,425,000; but according to the Auditor General's report, last year-and I have every reference-the total was over $6,000,000. My submission is that the salary end is far too heavy; there are too many men employed or else they are receiving too much salary for the work they do. This should be considered as a vanishing department. We rejoice in one way to know that the number of patients now is reduced to 3,444 and. no one would grudge even an extravagant expenditure for the care of these men. But the House would like to know that the men are getting the benefit of the greater part of the expenditure, and unfortunately the figures show that they are receiving only a very small proportion of it. The whole part of the expenditure from which the men derived a benefit, according to the figures of 1923, is the rather insignificant sum of 83,-
065,000,	or 22 per cent.


Henri Sévérin Béland: That is, in direct payment.


Hugh Guthrie: Then, in addition to that,
in payments to soldiers' dependents there is the sum of 84,309,000 or 32 per cent, totalling between them some 87,000,000. But to spend that 87,000,000 we pay 86,000,000 in salaries to officials. I want to bring this matter as forcibly as possible to the attention of the minister, because I do not think that the soldiers are getting the benefit which they ought to get from that vote of 813,000,000. If more is required for the soldiers, by all means let us vote the money. But surely there can be some economy; surely it is not necessary to pay men salaries totalling 86,000,000 in order to administer the expenditure of $7,000,000. One has only to state the case to show how very much out of proportion the whole system is. The figures I have given are correct down to a cent; all the references to the pages of the Auditor General's report are on the memorandum which I have. I have also checked the additions myself, and I believe my facts are accurate. The salary items, which are submerged and not shown in the estimates now before the House, are to be found under this item now being considered, No. 293; and during 1923 we paid under this item the large sum of $291,000 in salaries, which is not disclosed in the item.
Again, for operating expenses, and so forth, which will be found under item 300 of the present estimates, there was included for salaries no less than $148,843, not shown as salaries in the estimate. When we come to Unemployment Relief, which is item 299 in this estimate, we find that in 1923 of the amount we voted salaries accounted for $58,000 which was not shown in the estimates. Then again, in regard to recommendations, pensions, and so forth, salaries in that item amount to $21,406. Adding all these various salary items to the amount expressly voted for salaries we find that the total expenditure under this head in 1923 was over $6,000,000. I wish a better division of the money could be made in the interests of the soldiers themselves. I know the department is a difficult one to manage; it is one which it is difficult to carry on successfully; and I congratulate the minister on what he has done. But I do think that a better division of the money could be made.


Henri Sévérin Béland: I will give my hon. friend a complete answer. But first let me ask him a question. The money which is paid in salaries to nurses does not go directly to the soldier, does it?


Hugh Guthrie: It does indirectly.


Henri Sévérin Béland: Does the hon. member think that the patient benefits by means of it?


Hugh Guthrie: I think it can fairly be classed as salary.


Henri Sévérin Béland: What about doctors?


Hugh Guthrie: That is fairly classed as salaries.


Henri Sévérin Béland: Does my hon. friend think that these salaries should not be paid but that the money should be handed over to the soldiers even though they might die from want of care?


Hugh Guthrie: I cannot imagine that the nurses and the doctors can account for $6,000,000


Henri Sévérin Béland: Those are only two instances; I will give the whole list in a moment. But I want to make the difference clear now.


Hugh Guthrie: I know it is a fact that in the department right in Ottawa, according to returns laid on the table by the minister, there are 741 employees, or one for every 5 patients in Canada. And that is right in the city here. It passes my comprehension, for I cannot see why there should be such a large number of officials around Ottawa. Certainly they are not all nurses.
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Henri Sévérin Béland: My hon. friend said that the department spent $13,000,000. Well, let me tell him that the department paid out during the last fiscal year $52,000,000. So that the hon. gentleman, who seems to be so well posted, has made a slight mistake to the extent of $39,000,000.


Hugh Guthrie: That is for pensions.


Henri Sévérin Béland: Where did the pensions go?


Hugh Guthrie: I am talking of the vote we have now, the total vote for the department.


Henri Sévérin Béland: The department has a turnover of $52,000,000, and when my hon. friend speaks of salaries does he not include the men who are employed in making 40,000 pension examinations in one year? Undoubtedly he does; but he did not say so. Does he mention anything about the 167,000 clinic treatments from which the men have derived some benefit? That money did not go direct to the men but they profited by it nevertheless. My hon. friend says that so much money is paid in salaries. What about the doctors in the hospitals? What about the nurses in the hospitals? What about the men who make the artificial limbs for the disabled? What about the men who make their boots and repair them? That money is not paid into the pockets of the returned men. My hon. friend says: "Oh, you are paying so much in salaries. You ought not to pay so much." Who is going to make the artificial limbs for the disabled men? Will my hon. friend do the work for nothing? Is that money paid direct to the men? No. Do they profit by it? They do. But let us go on a little bit further, because this pasteboard castle which my hon. friend has put up must be taken down. I have before me a carefully prepared statement by the supervisor of expenditure of this department, an appointee of my hon. friend's government and a man who, I think, stands high in the financial accounting profession of the country. This statement contains the following figures:
Salaries and wages, general appropriation.. $4,491,142
Civil government vote	 39,861
Provisional bonus	 314,495
Total	 $4,845,498
Pensions as per vote	 $32,815,756
I pause there for a moment. Did this money go into the pockets of salaried officials?


Hugh Guthrie: It is not part of the


Henri Sévérin Béland: No, it is part of the
$52,000,000. That is what we spent.


Robert James Manion: Is not the payment of
these pensions of $32,000,000 simply the writing out of so many cheques every six months or every month, as the case may be?


Henri Sévérin Béland: My hon. friend is right
to a certain degree. But all the pensions are controlled every month by officials of the department. My hon. friend smiles.


Hugh Guthrie: That is the trouble, perhaps.


Henri Sévérin Béland: The Board of Pension
Commissioners alter the pensions at the rate of a few thousand during each month. Pensions are being increased, decreased, cancelled and new pensions awarded every month. Of course my hon. friend is aware of that. But I think we will get together on this-my hon. friend will agree with me that the $32,000,000 which is controlled by the department goes direct to the soldiers.


Levi William Humphrey: Would the minister
kindly state what percentage of that $32,000,000 goes for administration purposes?


Henri Sévérin Béland: None at all.


Levi William Humphrey: That goes direct to
pensions?


Henri Sévérin Béland: Yes.


Hugh Guthrie: Let me point out to the minister before he leaves this point, that all these salaries in connection with the pension fund only account for the small sum of $21,000 out of a total of $6,000,000. He will find this information on page YY176 of the Auditor General's report.


Henri Sévérin Béland: My hon. friend is referring to the small clerical staff of the board. He ought to be aware of this, since he was a member of the government which consolidated the two branches.


Hugh Guthrie: The pension staff was
not-


Henri Sévérin Béland: No, the pension staff has
been transferred to the department.


Hugh Guthrie: I understand that.


Henri Sévérin Béland: Of course my hon. friend
is aware of that. I proceed:
War service gratuity payments	 $31,000
Board of Pension Commissioners vote	 98,000
That represents the salaries of the commissioners and their personal staff.
Pension payments on behalf of British govern
ment	$5,283,762
Refunds on appropriations	accounts	
707,000Returned soldiers'	insurance	premium income 1,351,105Policy payments	
454,501
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All these figures refer to the calendar year 1023.
Total turnover submitted to Auditor General and Ministry of Pensions, $52,100,002.
Now, what are the direct payments made to the men? They are the following:
Pensions, Canadian	 $32,150,638
for European war and active militia.
Northwest rebellion	 42,460
Fenian raid	 633
Militia Pension Art	1901	 621,000
Civil government, flying	 992
Total direct payment for pensions.. .. $32,815,756
Pensions, Imperial, in Canadian currency.. $1,419,714 In sterling funds	 3,864,048
Total	 $5,283,762
Pay and allowances,	treatment	  2,234,154
Training	 201,464
Total pay and	allowances	 $2,435,618
Vocational loans	 32,000
Relief	 389,000
Transportation of blind	 2,500
War service gratuity	 31,103
So we have direct payments to the men totalling $41,450,740. It is money which they get, which they touch, which they receive.


Arthur Edward Ross: Mr.. Chairman,
does the minister contend that the $41,000,000 has anything to do with this $2,600,000? Not a thing. We will discuss that afterwards when we come down to the other part of it.


Henri Sévérin Béland: I know; but the discussion has been opened on this subject by my hon. friend the member for South Wellington (Mr. Guthrie). He took occasion to make a great display to the committee and I think he said it required $6,000,000 to spend $7,000,000. Is that it? It requires explanation. Nobody knows better than my hon. friend does that he is mistaken.


Hugh Guthrie: I am not very much
mistaken.


Henri Sévérin Béland: He must know that he is
mistaken. He will not deny that the returned men received $41,000,000 in cash during the calendar year. Why does he spread around the country the statement that they received six or seven millions and that to give them that we spent six or seven millions? It is misleading and my hon. friend knows it. Let us go a bit further. According to the figures prepared by the supervisor of expenditure, the cost of administration has been as follows :	Salaries, general executive and assistants, in round figures, $67,000; administration, $1,035,000; accounts and audit, $426,000; provisional bonus, $198,000.


Robert James Manion: Will the minister explain
what he means by administration? Is that in the city of Ottawa?


Henri Sévérin Béland: Yes, and outside. It also includes the administrative officials in the units.


Robert James Manion: How many employees are there in Ottawa? The minister gave us the figures for the patients and for the staff generally throughout the country from 1920 on; would he give us similar figures with respect to the staff at Ottawa?


Henri Sévérin Béland: With pleasure.


Arthur Edward Ross: May I point out
that this comes under item 295, general administration, which I wanted to discuss in connection with some of the figures the minister is now giving? Under that item we will have occasion to deal with many of the items the minister is now referring to.


Henri Sévérin Béland: My hon. friend is probably right.


Arthur Edward Ross: I would like to
stick to this $2,600,000.


Henri Sévérin Béland: My hon. friend will have an opportunity. The hon. member (Mr. Guthrie) under this item launched into an attack on the department. We are not perfect, but we do not want to be painted as black as my hon. friend would make us.


Arthur Edward Ross: The minister
launched into just the other extreme.


Henri Sévérin Béland: I will finish this statement, which is instructive. We have also attributable to administration, telephones, telegrams, postage, car fare, $36,000. My hon. friend referred to tha/t; he said that in the operating expenses item there were a number of salaries which we did not detect; I am giving them now. Transportation and travelling of staff, $37,000; stationery, printing and office supplies, $75,000; rent, taxes and insurances, $8,000; light, heat, power, fuel and water, $18,000; maintenance and repairs, furniture and fixtures, $11,000; automobile expenses, $18,000; freight and express, $3,800; advertising and publicity, $15,000; relief investigations, $80,000; miscellaneous expenses, $7,000, a total of $2,040,770. Deduct credits and you bring it down to $2,014,047. You must add to that figure the medical share of that administration, $427,000, making the total administrative expenditure of the department, $2,441,982. Add to that the expenditure by the Board of Pension Commissioners for salaries of commissioners, staff and expenses, $98,143, and you have a total for administra-

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tion of $2,540,126.17. My hon. friend, in his desire to convey the impression that the administration costs were extremely high in comparison with the amount spent, and undoubtedly with the view of creating the impression throughout Canada that this department was spending more for administration than any other department, concluded by saying that the administration on expenditure was 20 per cent of the whole, and I think he came pretty nearly saying was 30 to 35 per cent of the whole. My hon. friend seems not to remember what he said some weeks ago. He made reference to 35 per cent, as he will see if he reads his remarks.


Hugh Guthrie: I said as much as 44
per cent for the salaries.


Henri Sévérin Béland: That is still worse.


Hugh Guthrie: It is right too.


Henri Sévérin Béland: The total turnover of the
department was $52,182,795 and the administration charges were $2,540,125, or a shade over 5 per cent. I am informed that at present the administrative costs of the department are actually below 5 per cent. I am not doing any different from what my predecessors did, and I think they were worthy predecessors; they were colleagues of my hon. friend. When did he raise his voice to say, Oh, you are paying 44 per cent in administrative expenses? Moreover, at that time the Board of Pension Commissioners were administering the pensions, whereas to-day this department is doing that. So that to sum up the few remarks I have made and the figures I have given, I point out that less than 5 per cent of the total expenses of the department constitute the administration expenses. It might be better, but we are improving every day; we are trying to reduce the staff. It is unjust and unfair for my hon. friend to suggest that the salaries paid to medical men who render medical services in the hospitals are not of benefit to the men. Moreover, as to the salaries paid to orderlies, nurses, laundry women, men connected with the kitchen who prepare food for the soldiers-all employees, in fact, who are paid out of the public funds- it is unfair to say that the services which these salaries pay for are not profitable and beneficial to the men themselves, even though the amount expended does not go to the men in cash.


Robert James Manion: Would the minister give
the figures I asked for regarding the staff in Ottawa?


Henri Sévérin Béland: At the head office in Ottawa, 689.
[Mr. B&Uuul.l


Robert James Manion: Is that at the present time?


Henri Sévérin Béland: That was the number on 31st December, 1923.


Robert James Manion: I think there must be some mistake. I have a statement which the minister laid on the table himself, which gives the number as 741.


Henri Sévérin Béland: What is the date?


Robert James Manion: I think it was April 1.


Henri Sévérin Béland: There is a unit called the eastern Ontario unit which has ,a certain number of employees also located in Ottawa. That must be included.


Robert James Manion: The question I asked was:
What is the total number of employees of all classes in the Department of Soldiers' Civil Re-establishment in Ottawa ?
That answer was 741. Would the minister give me the number of employees in Ottawa in the previous year? He gave the number of the staff all over the country; would be give me the number of the staff in Ottawa from 1920 on?


Henri Sévérin Béland: In the head office in Ottawa in 1921 the number was 1,078, plus 338 in C unit, making a total of 1,416. In 1922 the number was 805, plus 261, making a total of 1,066. In 1923 the number at the head office was 689, and in C unit located in Ottawa 142, making a total of 831. That is a steady reduction and a substantial one too, as it ought to be.


Robert James Manion: What does the minister
mean by C unit?


Henri Sévérin Béland: There are a number of
units in Canada, I think nine in all. There are three in Ontario-eastern Ontario, central Ontario, and western Ontario. The work done in each district of course influences the number of staff required. The eastern Ontario unit has its headquarters in Ottawa, the central Ontario unit in Toronto and the western Ontario unit in London.


Robert James Manion: Would the figures 689 given by the minister a minute ago include C unit?


Henri Sévérin Béland: No.


Robert James Manion: What would the staff be at the present time including C unit?


Henri Sévérin Béland: I gave the figures a moment ago.


Robert James Manion: That was for 1923.


Henri Sévérin Béland: Yes.

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Robert James Manion: Is the staff the same, or practically so at the present time?


Henri Sévérin Béland: I will repeat the figures. There were 689 plus 142, a total of 831.


Robert James Manion: What do the figures 741
mean in the statement given to me some time ago? In the statement signed by the deputy minister it was stated there were 741 at the head office which included the easten Ontario unit?


Henri Sévérin Béland: That might be attributable to a difference in the date. I have the date here, December 31, 1923, for the figures I have quoted above.


Hugh Guthrie: Just a word or two in reply to the explanation offered by the minister in regard to the expenditure of his department. The figures I gave had reference to the vote that is now before the House for this department, and the same vote that was before the House last year. Last year-1923-24-the expenditure asked was $13,264,000. This year-1924-25-the total expenditure asked is $9,550,000. Of last year's expenditure the sum of six millions odd was spent in the salaries of officials, and if you analyze the figures you will find that is exactly 44.87, almost 45 per cent of the total amount voted for the Department of Soldiers' Civil Reestablishment. Now the minister says that the same percentages, or worse, prevailed under the previous government. They did not prevail under the previous government.


Henri Sévérin Béland: They did.


Hugh Guthrie: Well, I will give my hon. friend these percentages. I start in the year 1920 and the total amount that was expended according to the Auditor General's report was $47,198,718.19. The total amount spent for salaries was $9,660,283.85, which was 20.47 per cent of the total expenditure. This year for salaries the percentage is 44.87 of the amount voted for the Department of Soldiers' Civil Reestablishment. Of course, the minister can get away from that by lugging in, as he has done, the pension expenditure of $32,000,000. There is not much administration in regard to the pension expenditure. I grant that a good deal of administration is still required in regard to the hospitals, in regard to the care and treatment of ex-soldiers; but the mere issue of cheques for one month, or for three months, requires little but clerical assistance ; and the main charge for salaries in respect of pensions was $21,406.48 in the year 1923 according to page YY-176 of the Auditor General's report. But the total expenditure for salaries was $6,000,000. Now, my hon.
165J
friend says "Why not consider that the payment of a salary to a nurse, the payment of a salary to a physician, is a payment directly for the benefit of the soldier?"


Henri Sévérin Béland: Hear, hear.


Hugh Guthrie: I suppose on the same principle the salary of the minister, or of the deputy minister, might be considered a payment for the benefit of the soldier. Why, .the office of Minister of Soldiers' Civil Re-establishment only exists by reason of the fact that there are disabled soldiers that have to be taken care of. If the salary of a medical man is to be considered as a direct or indirect payment to the soldier, so I believe you might view the salary of every official in the Department of Soldiers' Civil Re-establishment. But I do not view the salaries in that way, and what shocked me, and what will shock the minister, is the small amount that goes in payments to soldiers and their dependents out of this vote of $13,000,000. Mark you, Mr. Chairman, it is $4,309,000 odd and for salaries $6,000,000 odd. Out of this vote the payments for administrative charges for hospitals-other than salaries

maintenance, hospital supplies, transportation, contingencies and so on, amount to $3,065,000 odd. Come back to percentages again if you will. They are: For salaries 44.87 per cent; for administration of hospitals, supplies, and the like 22.92 per cent; for payments of soldiers and their dependents 32.21 per cent. Everyone knows if you add to that amount the thirty, thirty-five or forty million dollars that is paid out for pensions you can reduce these percentages very materially, you can make them practically valueless. But the vote we are dealing with to-night is the vote for the Department of Soldiers' Civil Re-establishment. We know what it is, we know what we voted last year and we know from the report of the Auditor General last year just how much money was expended.


Henri Sévérin Béland: We do.


Hugh Guthrie: If there is any doubt about these payments for salaries I can give the minister every page of the Auditor General's report where the amounts have been computed, the page where every item appears.


Mr. CARROLL:: Does the hon. member
not think that, notwithstanding the fact -that the cost of looking after the returned soldiers is getting less, it is necessary to have the same number of officials in various parts of the country to look after them as they had two years ago?
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Hugh Guthrie: Oh no, the figures do not show that. The minister has substantially reduced the number. The figures now show that the total number of officials is 3,094 and the total number of patients 3,444.


William F. Carroll: Has the proportion of
salaries paid to returned soldiers gone down?


Hugh Guthrie: No.


William F. Carroll: Could it go down in the same proportion?


Hugh Guthrie: Yes, in my judgment it could.


Henri Sévérin Béland: I take issue with my hon. friend.


Hugh Guthrie: You have already done
so.


Henri Sévérin Béland: Does the hon. member say that the staff should be reduced in proportion to the reduction in the number of the men that are being treated?


Hugh Guthrie: I say there should be
substantial reductions both in the staff and in the salary.


Henri Sévérin Béland: A proportionate reduction?


Hugh Guthrie: I said substantial-not
proportionate. I will give the reductions as they have taken place. The salaries were as follows:
1920		$ 9,666,283 85
1921	
10,673,473	641922	(March 31)	
6,921,432	621923	
6,000,649	30
That is a decrease from March, 1921, to March, 1922, of approximately $4,000,000. Between March, 1922 and 1923, the decrease was $921,000. Taking this by percentages alone in 1920, the salaries represented 20.47 of the total expenditure of the Department of Soldiers' Civil Re-establishment, excluding pensioners. In 1921 it was 29.43 per cent. In 1922 the salaries represented 38.84 per cent, and in 1923 it got up to 44.87 per cent. That calculation is based upon the amount spent by the department out of the vote which we pass annually for that department, and is exclusive of those payments which my hon. friend the minister sought to work in for pensions and the like.


Henri Sévérin Béland: No, no.


Hugh Guthrie: I do not take that into
consideration in the account which I have submitted. I am dealing solely and only with the vote submitted by the department
[Mr. Carroll.)
last year. I take the vote submitted last year and the money spent last year, according to the Auditor General's report.


Henri Sévérin Béland: My hon. friend must keep in mind that when we vote $32,000,000 odd for pensions, not one dollar of that will go for administration. The money which we vote tonight will be for the purpose of administering pensions. Now my hon. friend has made some allusion to the decrease in the work of the department. In some respects there is a substantial decrease in the work, but in others there is a substantial increase. Take, for instance, the case of the Imperial pensioners in Canada; we had about four or five thousand formerly; we have now eighteen thousand Imperial pensioners in this country.


Mr. CLARK:: How much does it cost
to administer?


Henri Sévérin Béland: Six or seven hundred
thousand dollars. The money is refunded.


John Arthur Clark: What is the cost of administration in regard to the 18,000 Imperial pensioners?


Henri Sévérin Béland: I have not the figures
before me, but this is only to show that in some regard the work of the department has increased considerably.


John Arthur Clark: We get all that back, do we not?


Henri Sévérin Béland: Yes, but still we have to
do the work. Perhaps it is a little more work if we get it back .


John Arthur Clark: But that does not increase
the cost to the department.


Henri Sévérin Béland: No, but we vote the
money.


Robert James Manion: When the minister spoke
about the number of Imperial pensions having increased, he said in some regards they had increased. Are there any other branches that have increaised besides Imperial pensioners?


Henri Sévérin Béland: I think the number of
pensioners has increased.


Robert James Manion: The figure is less than last year.


Henri Sévérin Béland: I think it is about the
same.


Arthur Edward Ross: I have some proposals to make in regard to the reduction of this work. I do not intend to make my proposals tonight, but will the hon. minister

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give me some information which I wish to incorporate in what I am going to say? For instance, can he give me the number of medical officers employed at present in the St. Anne Hospital, Montreal?


Henri Sévérin Béland: Five full times and five
half times.


Arthur Edward Ross: These do not include medical officers in connection with D. unit.


Henri Sévérin Béland: No.


Arthur Edward Ross: That is separate?


Henri Sévérin Béland: Yes.


Arthur Edward Ross: How many nurses
are employed?


Henri Sévérin Béland: Thirty-five nurses in St.
Anne Hospital.


Arthur Edward Ross: How many dietitians are employed there?


Henri Sévérin Béland: One.


Arthur Edward Ross: How many bed
patients are there in the hospital?


Henri Sévérin Béland: There are 462 patients.


Arthur Edward Ross: How many are up, and how many are in bed?


Henri Sévérin Béland: I am sorry, I am unable
to say how many patients are actually in bed.


Arthur Edward Ross: Will the minister
tell me how many medical officers are employed in Christie Street hospital, Toronto?


Henri Sévérin Béland: Seven full time and six
part time.


Arthur Edward Ross: How many nurses?


Henri Sévérin Béland: Fifty-four.


Arthur Edward Ross: How many dietitians?


Henri Sévérin Béland: Two.


Arthur Edward Ross: How many patients?


Henri Sévérin Béland: There are 409 patients.


William F. Carroll: Referring to the assertion made by my hon. friend from South Wellington (Mr. Guthrie) with regard to the proportion of the decrease of the cost in administering the act, I would like to point out to him and the committee that in a hospital it is absolutely impossible to have a proportionate decrease in expenditure, so far as officials are concerned and so far as
patients are concerned. In the Camp Hill hospital in Halifax some years ago they had four or five hundred patients. I presume at one time they had upwards of a thousand. The various doctors were looking after these people. When they had a thousand patients it was absolutely necessary to have the medical attendance, but they would require the ordinary medical attendance if they had only fifteen-


Robert James Manion: Surely my hon. friend
wouM not claim for a minute that the doctors should be paid the same salary for looking after a small number of patients? Could they not be paid for part time?


William F. Carroll: That is not the question that the hon. member for South Wellington (Mr. Guthrie), brought before the House at all. He said that the fee should be proportionate. My hon. friend is a medical doctor, and so is his deskmate (Mr. MacLaren), who are good friends of the soldiers and who both are returned soldiers. But I went into this matter last November With the various departments of Camp Hill hospital. I am interested in this matter as a citizen, and I wanted to find out exactly where Camp Hill hospital stood as regards the proportionate decrease in attendance of patients and everything else. They have their specialists who come certain days in the week. You cannot get a specialist to go to a hospital-I do not care if it is a soldiers' hospital or any other kind of a hospital-without paying his fee. They go on certain occasions and they receive the same fees. If there are ten patients in Camp Hill hospital now as compared with 1,000 patients three years ago, there cannot be the same proportionate decrease in expenditure.


Robert James Manion: Not the proportionate
decrease.


William F. Carroll: I appeal to my hon.
friends as men who know something about this, to be fair.


Robert James Manion: I agree that the proportionate decrease would not be as one thousand to ten, but the hon. member stated that you practically have to pay the same money to the doctors.


William F. Carroll: No.


Robert James Manion: He denies it now.


William F. Carroll: I am discussing a statement made by the hon. member for South Wellington (Mr. Guthrie), who ordinarily is a fair-minded man, a man for whom I have every respect. He stated, as I understood it
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and as, I think, the minister understood it when he replied, that the decrease should be proportionate.


Robert James Manion: He denied afterwards that he said that.


William F. Carroll: He said it. I will wager that his name will appear in Hansard as having said that very thing. It is just as well for us to consider everything in connection with this matter. Various hospitals have been closed down in this country and the decrease there, of course, is not proportionate to the decrease in the number of patients who may be in the district, because those patients will be sent to some other hospital. I appeal to my bon. friends who know something about this matter, that if there be ten, fifteen, or twenty patients in a hospital, outside of nursing care, you are not going to get doctors in this country for nothing. They may, of course, be part-time men. I know medical men who visit Camp Hill hospital at the present time to see friends, and who do that gratis, who charge no fees, who aire not connected with the Department of Soldiers' Civil Re-establishment or the Pensions Commission in any way. At the same time, after some consideration of the matter, I submit that a proportionate decrease is absolutely impossible, because you must have the hospital, you must have the attendants in smaller numbers, you must have the doctors to look after the various cases. If there is a case of incipient insanity, you must bring in -a doctor who will be able to cope with the matter. If there is a case of tuberculosis amongst the ten patients that I have mentioned, you must bring in a doctor who is able to cope with a case of tuberculosis. If there is a case of kidney trouble and the department requires a certificate or description of the man's case, you must bring in a specialist in that disease. In that way I say that the hon. member for South Wellington is rather wrong in his analysis of the whole situation; that the decrease as regards the officials is not and cannot be proportionate to the decrease as regards the patients. I am one of those who think that, whatever amount of money is necessary to look after the unfortunate patients who are in our hospitals at the present time, it does not matter whether it is proportionate to the number of patients or not. The patients should have absolutely the same attention and care if there are only ten as if there were one thousand. I find fault sometimes with my hon. friends on the other side of the House, and I sometimes find fault with the Minister of Public Health and

the minister who looks after the Soldiers' Civil Re-establishment and pensions. I feel that hospitals in this country were closed dlown without justification, and that if there were fifteen or twenty patients to be treated in a district, the hospital should be kept open. When those men were asked to enlist in Canada, they were promised everything; they were promised that nothing that Canada could do for them would be too good. Nevertheless, I find some hon. gentlemen-I am glad to say there are not returned soldiers amongst them-on the other side of the House and sometimes on this side, Who complain about the amount of money which the Department of Soldiers' Civil Re-establishment and the Pensions Commission are costing this country. Personally, while I feel that we must -act carefully and justify the various steps that we take, we must still continue for years to come to give our returned- soldiers, who happened to come back to this country in an unfortunate condition of health, the very best of -care that this country can give them. If we do that, the hon. member for South Wellington is far wrong in his suggestion that the number of officials who are treating those patients or the officials in connection with the Department of Soldiers' Civil Re-establishment is over-proportioned to the number of patients Who are being treated.


Robert James Manion: I should like to say a few
words in reply to the hon. member, because the impression might be left from his remarks that the hon. member for South Wellington suggested not giving proper attention to the soldiers or the pensioners.


William F. Carroll: I did not say that.


Robert James Manion: 
William F. Carroll: Was that not what the
hon. member for South Wellington complained about, that they were not proportionate?


Robert James Manion: My hon. friend'complains
that it is impossible for them to be proportionate.


William F. Carroll: Yes.


Robert James Manion: They were nearly proportionate. In 1923, there were 3,744 patients with 3,524 of a staff. This year there are 3,444 patients with 3,094 of a staff. Roughly the decrease is proportionate. In fact, the decrease in the staff has been greater than the decrease in the number of patients.


William F. Carroll: My hon. friend does not
agree with his friend the hon. member for South Wellington.


Robert James Manion: I do not know exactly
what my hon. friend means by not agreeing with the hon. member for South Wellington.


Henri Sévérin Béland: The hon. member had
better stick to his own ideas.


Robert James Manion: I am pointing out that there is more or less of a proportionate decrease in the staff and the number of patients. I agree that you cannot make a cast iron rule in this case. I do not agree with my hon. friend when he says that ten or fifteen patients must receive the same care as 1,000 patients. That was the expression he used. As a matter of fact, when you get down to a low number of patients you naturally can put the doctors on part time and pay them according to the work they do. Certainly for 100 patients you should not have to pay for anything like the same amount of medical attention as you do for 1,000 men, and of course for 15 you would pay enormously less in proportion. You pay the medical men in proportion to the work they do, and as a matter of fact that is what the department has generally done. In my own city for example there was a medical officer doing work for the department. He was not giving full time and was receiving $200 a month a year or two ago. To-day he receives half that because the work has decreased. It is true doctors must be paid, but they are paid in proportion to
the work they do. Now, Mr. Chairman, I suggest to the minister that as it is 11.45 we adjourn. There is bound to be further discussion on this item and it would be well for the minister to report progress.


Henri Sévérin Béland: I have no objection, but we have passed only one small item. I would suggest that we allow this item to carry, with the understanding that the discussion can be held later.


Robert James Manion: I do not want the minister to think that we are trying to obstruct; there will be :io obstruction at all. But hon. members wish to discuss this item further and I would suggest that he move the adjournment.


Arthur Edward Ross: There are just one or two points on which I should like some information before we adjourn to-night. What institutions of the department are at present in operation?


Henri Sévérin Béland: We have only two, Mowat in Kingston and the Central Alberta in Calgary. These are two exclusively tubercular institutions.


John Arthur Clark: What about Tranquille?


Henri Sévérin Béland: It is not operated by the department. I take it that the hon. member is referring to institutions that are entirely-operated by the department, of which we have two.


Arthur Edward Ross: I wish to know what institutions for treatment of tuberculosis are wholly under the control of the department, and the minister says there are two. At the. present time he is proposing to relieve himself of the Mowat memorial hospital.


Henri Sévérin Béland: Yes.


Arthur Edward Ross: And to hand it over to the provincial authorities or some one else.


Henri Sévérin Béland: To the owners; the hospital is under lease.


Arthur Edward Ross: The point I want to make when the matter comes up for discussion again is that this is only shifting the responsibility in this matter. I will criticise the department in this respect, and at the same time I shall have some suggestions to offer as to how the department could carry its responsibility and still relieve itself of a good deal of its burden. At present, however, the minister says there are only two such institutions. Are there any tubercular cases in Gravenhurst?
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Henri Sévérin Béland: There are 32.


Arthur Edward Ross: Can the minister
tell us how many ex-serviee men are in Gravenhurst not under the care of the Department of Soldiers' Civil Re-establishment?


Henri Sévérin Béland: I have not the information.


Arthur Edward Ross: Does the minister not know how many there are in that institution not receiving support from the department?


Henri Sévérin Béland: I have no idea.


Arthur Edward Ross: Does the minister
know there are nearly 30?


Henri Sévérin Béland: I do not know.


Thomas Langton Church: Are you paying for Canadian tubercular patients in the United States and England? The annual report says there are 95 such patients.


Henri Sévérin Béland: We have tubercular
patients in the United States and in the British Isles, yes.


Levi William Humphrey: Will the minister have available, when next this matter comes up, information as to the number of the staff in the British Columbia unit-Unit J.-on part time as well as those on full time, including medical officers of the Department of Soldiers' Civil Re-establishment?


Henri Sévérin Béland: The hon. member is referring to the number of officials and doctors?


Levi William Humphrey: The officials and doctors of the medical examination branch and the travelling boards.


Henri Sévérin Béland: Is my hon. friend referring to Vancouver?


Levi William Humphrey: No, I am referring to the whole province.


Henri Sévérin Béland: We have in J. Unit 6
medical men on full time and six on part time. In Shaughnessy hospital we have three on full time and four on part time. In Victoria we have two medical representatives, one is on full time and one on part time; and in Kamloops we have one representative on part time. This makes a total for that unit of ten on full time and twelve on part time.


Levi William Humphrey: Has the minister any
information available for the year 1921 in regard to this particular matter?


Henri Sévérin Béland: On January 1, 1922, in
that unit there were seventeen on full time and twenty on part time. I move, Mr. Chairman, that the committee rise and report progress.


George Newcombe Gordon: Item 292 has been
agreed to. This item stands.
Progress reported.


CIVIL SERVICE SUPERANNUATION
William Lyon Mackenzie King: With the permission of
the House I should like to move the following resolution:
That said bill be referred to a special committee of the members of this House, with instructions to send for persons, papers and records and to report from time to time.


[Stage Direction]
Motion agreed to.
On motion of Mr. Mackenzie King the House adjourned at 11.55 p.m.
Wednesday, May 28, 1924