1941-05-20

[Stage Direction]
MEMBERS OF PARLIAMENT AND NATIONAL DEFENCE TAX-REFERENCES TO "GLOBE AND MAIL*' EDITORIAL
Mr. J. L. O'BRIEN (Northumberland, N.B.):	On a question of privilege, Mr. Speaker: on May 15, when the national defence tax was being discussed in this house I made reference to the method by which it was deducted from the indemnity of members. At that time I said, as reported at page 2850 of Hansard:
Now that we are pondering the problems of those in the lower income 'brackets, it seems to me that we should attempt to unscramble our
[Mr. Pouliot.l
own positions as members of parliament. We, of course, have to pay the national defence tax, and I wish it to be clearly understood that I am not objecting to paying that tax, but I am objecting to the method by which the tax is collected.
I quote the following from the editorial page of the Toronto Globe and Mail of May 19:
Members of parliament will pay national defence tax on their sessional indemnities. They'd better. Such exemption-and it has been discussed-would be for the average taxpayer about the last straw.
I submit, Mr. Speaker, that from my remarks no such implication could properly be attached to any hon. member of this house. I made my point crystal clear-that I was not objecting to the deduction, but only to the method used to deduct it, in that an indemnity is not a salary.
The Globe and Mail item does not mention my name, but since I was the only member making such a reference I here and now protest against statements of members of this house being twisted by any editor in order to attempt further to lower the standing of members of this house in the public opinion by implying that they seek to avoid their obligations.
Mr. R. W. GLADSTONE (Wellington South):: On a further question of privilege relating to the same article, which said the members of parliament will pay, it should have read that members of parliament "have been paying" the national defence tax.



RAILWAYS AND SHIPPING


[Stage Direction]
Mr. J. P. HOWDEN (St. Boniface) presented the first report of the standing committee on railways and shipping owned, operated and controlled by the government, and moved that the report be concurred in.
Hon. R. B. HANSON (Leader of the Opposition) :: I am not opposing this motion; but what is the reason for the reduction of the quorum from twelve to eight? Eight is a small quorum for such a large committee.


Mr. HOWDEN:: It was felt that at this late stage of the session we might have difficulty getting a larger quorum, and the change is being made in order to ensure that we shall be able to carry on the work of the committee.


[Stage Direction]
Motion agreed to.

Bren Gun


Hon. J. L. RALSTON (Minister of National Defence):: Yesterday I answered verbally a
question asked by the hon. member for Temiscouata (Mr. Pouliot). The latter part of my answer related to a question the purpose of which, the hon. member explained, was to inquire as to who represented the government in connection with the drafting of the Bren gun contract. I replied at that time to the effect that the government was represented by the judge advocate general and by the officials of the Department of Justice. I spoke from memory; as a matter of fact I had not understood the hon. member's question. But last night I had the matter checked up, and I find that I was quite in error in my reference to the officials of the Department of Justice. What I find is that the judge advocate general himself represented the department in connection with the contract, and that he did not consult the Department of Justice about this particular contract. What the judge advocate said, and what I must have had in my mind, was that there was a clause in this contract which was similar to a clause in previous contracts, about which clause he had consulted the Department of Justice, and as I remember, what he said was that he considered that what was good enough for the Department of Justice was good enough for him to insert in the contract.
I regret the error and hasten to correct it.



INTERNATIONAL FORWARDERS


[Stage Direction]
On the orders of the day:
Mr. M. C. SENN (Haldimand):: I should like to direct a question either to the Minister of National Revenue or to the Minister of Transport, based on a telegram which I have received and which I understand has been received by a number of other hon. members. The telegram reads:
Understand International Forwarders requesting permission to transport bonded goods on number 3 highway between border points. We urge opposition to move on grounds transportation facilities already adequate and heavy trucks would damage our highway system.


Mr. MACDONALD (Brantford):: Who
signed the telegram?


Mark Cecil Senn: My question is: Has a request been received by the government and, if so, has the government reached a decision with respect to the matter?



H873-187

William Ross Macdonald: Who
signed the telegram?


Mr. HOMUTH:: Don't be so suspicious.


Mark Cecil Senn: There is no reason why I should not say who signed the telegram. It is signed by the reeve of a municipality in my county.
Mr. NORMAN J. M. LOCKHART (Lincoln): Before the question is answered I should like to supplement what has been said by the hon. member for Haldimand. I have received a similar telegram from one of the municipalities in my constituency, asking for the same information.


Hon. C. W. G. GIBSON (Minister of National Revenue):: There is an application before the government from International Highway Forwarders, requesting permission to bring trucks in bond through Canada between different points in the United States. Up to the present time that request has not been approved; and while further representations have been and are being made, no decision has been arrived at.



PARLIAMENT BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. A. R. ADAMSON (York West):: Mr. Speaker, to-day I notice that this parliament is being guarded by soldiers in uniform. Is this parliament hill your province, Mr. Speaker, or is it not? Whom do these men obey, the king or this' parliament? Have they the right to apprehend persons about to enter this building? If so, the government could prevent its opponents from entering this chamber. If they have not the power to prevent entry and guard this building, what useful purpose are they serving?


Some hon. MEMBERS:: Order.



REGULATIONS GOVERNING DELIVERY- OF THIS YEAR'S WHEAT CROP

[Stage Direction]
On the orders of the day:
Mr. E. E. PERLEY (Qu'Appelle):: I desire to direct a question to the Minister of Trade and Commerce based on order in council P.C. 3281. This order in council was passed on May 14, six days ago, and I should like to know why it has not been tabled. In effect it is an amendment to the Canadian Wheat Board Act. Since it contains some drastic regulations I should like to ask the minister

Wheat

why he did not amend the wheat board act, which would have given us an opportunity to discuss the matter in this house.


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: The order in council referred to by the hon. member was passed on May 14. Immediately afterwards representations were made by the wheat board that they wished to make further investigations in connection with the matters referred to in the order in council. That investigation has been completed, and I anticipate that! either the present order in council will be amended or a new order in council dealing with the regulations governing the delivery of this year's wheat crop, including the material contained in the present order in council, will be substituted.


Ernest Edward Perley: May we expect this to be done within the next day or two? The news of this order in council is going out through the west and upsetting the morale of the producers.


James Angus MacKinnon: I expect to have the new order in council within two or three days.


Mark Cecil Senn: Will the provisions of this order in council apply to the wheat and grain products of Ontario, or only to the west?


James Angus MacKinnon: It is my understanding that the order in council deals with the regulations governing the acceptance of wheat under the government's wheat policy for this year.


Mr. T. C. DOUGLAS (Weyburn):: Last Friday, May 16, I asked the minister about these regulations concerning delivery of the 1941 wheat crop, and he said it would not be possible to make them public. Later I discovered that they had been dealt with in an order in council passed two days before I made my inquiry.


James Angus MacKinnon: In the answer I gave to the hon. gentleman's question I dealt with the matter about which I thought he was asking, namely, the regulations regarding the quota, not the question of deliveries.



DECENNIAL CENSUS


[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: A month ago I asked the Minister of Trade and Commerce if it would be possible to allow the ratepayers to have the forms used in connection
fMr. Perley.]
with the census a couple of days ahead of time, in order that they might fill out the forms themselves. The minister said he would consult his officials in the matter. One of these forms contains 168 questions.


James Angus MacKinnon: The hon. gentleman did ask that question; I promised to consult the officials of the bureau of statistics, and I have done so. They told me that if it did not interfere with the secrecy that must be maintained in taking the census, there should be no practical objection to the change. However, they also told me they were considering whether or not they might have these questions appear in the public press, instead of distributing copies individually. I expected to have an answer before this time, but I will try to get it as soon as possible.



CANADIAN PACIFIC RAILWAY


[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANQOIS POULIOT (Temis-couata): Mr. Speaker, I would ask the government to make at the earliest possible day, if possible to-morrow, a statement as to the purchase by or transfer to this government of Canadian Pacific Railway securities, stocks or bonds, held in England. As the matter has been referred to in the press it is of vital importance that we should know what has been done.
Hon. J. L. ILSLEY (Minister of Finance):: Does the hon. gentleman ask for a statement to-day or to-morrow?


Mr. POULIOT:: To-morrow.


James Lorimer Ilsley: I will make it.



CANADIAN ARMY


[Stage Direction]
On the orders of the day:
Mr. NORMAN J. M. LOCKHART (Lincoln): I should like to direct a brief inquiry to the Minister of National Defence based on two or three letters received to-day. Is it true that the permanent huts or quarters in some of the established camps have been turned over to the four-months trainees, while the regular units that formerly occupied them have been put under canvas some distance away? That is the advice I have received to-day.
James Layton Ralston: I do not know what the local situation may be to which the hon. gentleman has

Succession Duty Act
reference, but I can say that both active and reserve recruits are being trained together in the same camps. I will ascertain whether the situation that he describes does exist.


Mr. LOCKHART:: Perhaps in fairness to the minister I should be a little more specific. My question is in connection with Petawawa camp. I am informed by letter to-day that permanent troops have been moved twelve miles out and placed under canvas, while the new trainees have been moved into the permanent quarters.


James Layton Ralston: I shall be very glad to make inquiries.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Fournier (Hull), in the chair.

[Stage Direction]
1.	That succession duties be levied upon or in respect of the following, that is to say: -
(a)	The succession to property, wherever situated, and beneficial interests therein, except real property situated outside of Canada, where the deceased was at the time of his death domiciled in Canada or in one of the provinces thereof;
(b)	The succession to property situated in Canada, or to beneficial interests therein, where the deceased was at the time of his death domiciled outside of Canada.
Resolution agreed to.
2.	That, in addition to the properties owned by the deceased at his death, the succession shall be deemed to include, for purposes of taxation, the following properties, namely:
[Stage Direction]

_ (a) Property transferred by the deceased in his lifetime in contemplation of death;
(b)	Property transferred by way of donatio mortis causa;
(c)	Property transferred by gift in the lifetime of the deceased after April 29, 1941, and within three years prior to his death;
(d)	Property transferred by gift in the lifetime of the deceased where benefits -are reserved to the deceased during his lifetime;
(e)	Property -held jointly by the deceased and one or more persons and payable to or passing to the survivor or survivors, except that part of such property Which was contributed by the survivor or survivors, provided that where the joint tenancy or holding is created by a person other than the deceased and the survivor or survivors, such property shall be deemed to have been contributed to equally by the deceased and the survivor or equally by the deceased and each of the survivors;
(f)	Property comprised in a settlement;
(g)	Annuities or other interests purchased or provided by the deceased to the extent of the beneficial interest arising on his death;
(h)	Money received or receivable under policies of insurance effected by the deceased or by a personal corporation on his life in proportion to the premiums paid by the deceased or by such personal corporation;
(i)	Property of -which the deceased was at the time of his death competent to dispose;
(j)	Property transferred to or settled on any person after April 29, 1941 by the deceased and within three years before his death in consideration of marriage;
(k)	Property transferred for nominal or insufficient consideration to the extent of the difference between the consideration and the value thereof;
(l)	Estates in dower or by the curtesy.
Jean-François Pouliot: I am opposed to this resolution, just the same as I was opposed to Bennett's social legislation. I am opposed to it in its entirety, and if I do not speak on every resolution called, it does not mean that I am not against it. I am against this piece of legislation from the first to the last, for reasons stated yesterday and for other reasons I could give in proper time. It is bad, rotten and dangerous legislation.


Mr. FRASER (Peterborough West):: Paragraph (a) of resolution 2 refers to "property transferred by the deceased in his lifetime in contemplation of death." Does the federal department intend to proceed as the Ontario government has done, and search bank accounts for thirty years back? As to the expression "contemplation of death," every man contemplates death. How far back is the government going?


James Lorimer Ilsley: I cannot say how far back the investigations will go, but if I am correctly informed, in Ontario gifts made many years ago are deemed to be property passing on the death, whether made in contemplation of death or not. Under this resolution, for a gift simply to be recorded as property passing on the death it must have been made within three years before the death.


Gordon Knapman Fraser: Would it not be wise to put in paragraph (a) an addition indicating that -this would go back only three years?


James Lorimer Ilsley: No; this is an entirely different thing. The gift to be regarded as property passing on the death must be made after April 29, if I remember correctly. But gifts are not covered by paragraph (a) of section 2. That paragraph covers something else, namely, property transferred by the deceased in his lifetime in contemplation of death. It would include some gifts, but something more than gifts is required under paragraph (a); it must be a gift -made in contemplation of death. That is regarded as property passing on the death, even though it may be made many years before such death.


Gordon Knapman Fraser: Then the government could go back even thirty years? The Ontario government has done that, and it does not seem fair.
Succession Duty Act


James Lorimer Ilsley: As I said before, the hon. member is talking about something which is different.


Gordon Knapman Fraser: No.


James Lorimer Ilsley: Yes, he is talking about gifts made, whether in contemplation of death or otherwise. I am quite sure that under the Ontario act gifts are regarded as property passing on the death, even though they were made many years ago. I believe that those are the investigations to which the hon. member refers. The instances in connection with property transferred by a deceased in his lifetime in contemplation of death would be very few in number, and it would be extremely difficult to prove what was transferred or made in contemplation of death unless it were done comparatively recently. But there is no limitation as to time.


Mr. ROSS (St. Paul's):: Resolution 2 (g) refers to "annuities or other interests purchased or provided by the deceased to the extent of the beneficial interest arising on his death." It would seem that a tax is here to be paid in respect of succession duties, both on capital and on interest, in addition to income tax. It is true that annuities are taxable under the income tax legislation?


James Lorimer Ilsley: Yes.


Douglas Gooderham Ross: And according to this resolution they are again taxable under the succession duty provisions. Is there not some conflict in regard to what is capital in the passing and what is income? It seems to me that only the interest on annuities should be subject to income tax, or there should be no tax on the annuities.


James Lorimer Ilsley: The annuities taxed here
are those beginning at the date of death. They are annuities after the death, payable to someone after the decease. The deceased is not taxed on those for income tax.


Douglas Gooderham Ross: Is there not double taxation here?


James Lorimer Ilsley: No.


Douglas Gooderham Ross: It looks as if the government is taxing the succession in the form of succession duty and then taxing it again by way of income from year to year.


James Lorimer Ilsley: That is correct. If $100,000 passed to a beneficiary he would be taxed on the $100,000 under the Succession Duties Act, and he would be taxed on the income from that $100,000, as the years went by, by way of income tax.	'


[Stage Direction]
Resolution agreed to.

3.	That the rates of taxation be based upon the following factors, namely:-[DOT]
(a)	The "aggregate value" of the succession, that is to say, the fair market value of all property, wherever situated, owned by the deceased at the time of his death together with the fair market value of the properties mentioned in paragraph two of this resolution, after funeral expenses and debts are deducted therefrom;
(b)	The value of the individual property or benefit passing to each successor; and
(e) The relationship, if any, existing between the successor and the deceased.
Mr. MacNICOL:: Do "funeral expenses"
include medical expenses prior to death?


James Lorimer Ilsley: Ordinarily medical expenses would be included in debts. Funeral expenses and debts may be deducted. The amount owing to the doctor would be a debt.


Mr. STIRLING:: Yesterday the leader of the opposition raised a question in respect of an estate being mulcted once, twice, or three times in rapid succession, in the event of deaths. I am not sure whether the minister gave a final answer. He will be aware of instances in other countries-I am thinking of one or two cases in the United Kingdom which have come to my knowledge-when two and even three deaths in less than two years have played havoc with the property distributed under the terms of a will.
Mr. ILSLEY': No provision is made in these resolutions, nor do I think there is any in the bill to afford relief against several impositions of succession duties at short intervals, or what are called quick successions. The matter could perhaps be considered before the bill is introduced, but as at present prepared there is no such clause. In that regard I believe it is similar to many other succession duties acts.
Under the Consolidated Revenue and Audit Act there is power to remit penalties and duties and amounts due the crown. That power is used very sparingly. It is exercised only in well-recognized classes of cases. It is very rarely indeed that an exception is made to the rules laid down, but that power does exist in the crown and could be utilized if it were considered proper to do so in order to relieve a particular case.


Grote Stirling: It seems to me that it would be well worth serious consideration. As the minister says, the need would not arise often, but it would be wise to make provision for it in the act.


Mr. COLDWELL:: I take a somewhat opposite view. I think the proposals now before us are modest compared with succession duties

Succession Duty Act
elsewhere, and in no event would any great hardship be imposed upon an estate under this particular resolution even if there were three or four deaths in quick succession. Even if the imposition were much heavier, in my opinion death duties are long overdue in this country. They provide a method of distributing wealth which under modern circumstances is very badly needed. This legislation is to be commended, and I do not think we should give the government power to vary it on any grounds.


Karl Kenneth Homuth: The one piles on top of the other.


John Ritchie MacNicol: I have in mind a case that occurred in a city in Ontario. I shall not mention the place, because many would know the estate to which I refer. The father, the head of the house, died. At the time of his death he was operating a large plant which employed five or six hundred men. Most of his estate was left to his son. Shortly afterwards, apparently not too long afterwards, the son also passed away and another succession duty had to be paid. This resulted in the closing of the plant and the throwing out of employment of a number of men. Surely my hon. friend to my left would not be in accord with anything like that. This may be an extreme case, but perhaps the regulations should be such as to prevent such a plant being closed up because of two or three taxes being imposed in quick succession.
Will funeral expenses cover a lot in the cemetery and a tombstone?


James Lorimer Ilsley: The commissioner informs me that it is intended that a suitable monument would be included in the funeral expenses. I do not believe the term "funeral expenses" is defined in the bill. When the bill itself is before us I think it will be found that some of these things are provided for.
I am obliged to the hon. gentleman for bringing to my attention this case of quick succession, and also to the hon. member for Rosetown-Biggar (Mr. Coldwell) for expressing his views. It shows the difficulty that a moderate, sane government faces when attempting to meet all views. I should think the reasonable course to follow is to make no provision at all in the bill. In another year's time we shall know what our experience is. Under the Consolidated Revenue and Audit Act there is power to grant by order in council relief in such cases if it is considered desirable so to do. I am not saying that it is desirable, and it might be that years would go by before such a case would arise. At such time relief can be granted by order in council, or we can come to the house and state the case and propose an amendment.


John Ritchie MacNicol: In the case I mentioned the succession duties were somewhere around $100,000 upon the decease of the head of the family. The son took over the plant, but he died within a short time and the two succession duties ruined the estate so far as the plant was concerned.


James Lorimer Ilsley: The question that arises is whether power should be given by the bill to the governor in council, apart from the powers it already possesses, to deal with such cases and if so, with what limitations, or whether the whole matter should be dealt with legislatively. I understand that in some acts it is provided that a portion, perhaps half the succession duty, is payable should certain conditions exist. I am not prepared to insert such a clause in this measure. It may be different from the other acts; it may be different in its incidence, and it may be that that would be improper for this act while it is proper for others.


Mr. JACKMAN:: In many cases, particularly where the estate is small, the husband will leave his whole estate to his wife and nothing to the children. The wife may die in a few years, as happens quite often when she is about the same age as the husband. Then the estate is subject to double succession duties, which would be in addition to the provincial duties. This makes the tax very high in the aggregate. Those of moderate means who do not consult solicitors or notaries when drawing their wills do not realize that they can leave a life interest to their widow and have the property pass on to the children upon her death. This is of some consequence to people in moderate circumstances who quite often draw their own holograph wills, and the result is that in a few years the estate is subject to two or more succession duties. This point should be considered if the minister will not consider some amelioration of the tax itself.


Mr. SLAGHT:: In considering hardships
that may arise in connection with quick succession matters, I suggest to the minister that one form of relief which ought to be considered in dealing with estates such as the one mentioned by the hon. member for Davenport (Mr. MacNicol) is to give the commissioner authority to receive the succession duty on the second estate in instalments over a period of years with interest at, say, three per cent. This would enable a going concern to carry on. Such a firm would be required to pledge its assets primarily to the department to ensure payment over a period of years. I think this would cure the difficulty. Like the hon. member for Rosetown-Biggar, I am opposed to any exemption on
Succession Duty Act

the second or even the third estate when quick succession occurs. In the case instanced by the hon. member for Davenport, the man apparently was able to employ 500 men, and the hon. member said that the succession duties were very large. On the theory ot having an eye to what is left, there would even in that case be plenty left for those who take an unearned increment which falls into their lap by devolution. My suggestion is that by giving power to amortize over a period the succession duty to be paid we would do away with the hardship and protect the country so far as insistence on payment of death duties is concerned.


James Lorimer Ilsley: I will bear in mind what my hon. friend has said. A bill will be placed before the house, of course, when the resolutions are through, and I think it contains a provision which meets substantially the views my hon. friend has just expressed. If not, I will see that the matter is given full consideration.


Mr. HAZEN:: Will the word "debts" include the cost of taking out probate or administration? It is not really a debt due by the deceased, but one incurred afterwards by his
estate.


James Lorimer Ilsley: All these questions can be
answered better on the bill, which is much longer than the resolutions. To answer them now would make it necessary for me to refer to the draft bill. I should say that the hon. gentleman is quite right, that provision must be made for deduction of the probate expenses, and I shall be very much surprised if it is not provided for in the bill. At any rate I will keep the point in mind so that it can be considered when the bill is before us.


Mr. GRAYDON:: In Ontario they allow
the surrogate court fees plus, I believe, up to 8100 for ordinary solicitor's fees in connection with an estate. It depends of course on the size of the estate.


James Lorimer Ilsley: Yes.


Mr. GREEN:: Will the minister take into
consideration allowing as a debt any succession duty that is paid to the province in which the deceased was domiciled? I think every province has a succession duty, and if some such provision is not made it will mean that there will be taxation on the money that is actually paid out to the province in succession duties.


James Lorimer Ilsley: That is introducing a very
important departure in our fiscal legislation. I may say right here that we are going on the assumption that succession duties due to the province would not be regarded as a debt.


[Stage Direction]
Resolution agreed to.
i. That, for the purposes of taxation, the successors or beneficiaries shall be divided into four classes, as follows:
(a)	Class A.-The widow of the deceased, any child under eighteen years of age at the date of the death of the deceased, and any child who at that date was dependent upon the deceased for support on account of mental or physical infirmity;
(b)	Class B.-The grandfather, grandmother, father, mother, husband, son-in-law, or daughter-in-law of the deceased or a child of the deceased eighteen years of age and over at the date of the death of the deceased, and who, at that date, was not dependent upon the deceased for support on account of mental or physical infirmity;
(c)	Class C.-A lineal ancestor of the deceased (except the grandfather, grandmother, father or mother) a brother or sister of the deceased or any descendant of a brother or sister, or a brother or sister of the father or mother of the deceased or any descendant of any such brother or sister;
(d)	Class D.-Any person in any other degree of consanguinity to the deceased than as previously mentioned, or a stranger in blood to the deceased.
Gordon Knapman Fraser: Referring to the words "any child" in paragraph (a), what relationship would the child be to the deceased? Does it mean a daughter or a son?


James Lorimer Ilsley: Oh, yes.


Gordon Knapman Fraser: It does not say so. It says "any child."


James Lorimer Ilsley: It means a child of the
deceased.


Gordon Knapman Fraser: It
does not say that. Could it be an adopted child?


James Lorimer Ilsley: Yes.


Gordon Knapman Fraser: It is not veiy clear.


James Lorimer Ilsley: No, I know it is not. These are the resolutions, and this is all expanded in the bill.


Gordon Knapman Fraser: That point will be covered in the bill?


James Lorimer Ilsley: Yes.


[Stage Direction]
Resolution agreed to.

Succession Duty Act
5. That the rates of taxation shall be according to the following scale for the value mentioned, the rates for intervening amounts to be specified in greater detail in the bill:-
[Stage Direction]
Aggregate value of the succession to property passing in the case of initial duties dependent on such value	Initial rates dependent on aggregate value	Value of individual benefits, including exemptions in the case of additional duties	Additional rates dependent on value of the individual benefits, including exemptions	Class A	Class B	Class C	Class Ds	%	$	%	%	%	%1,000	1,000	1	2	2-55,000	5,000	2	2	2-5	310,000	10,000	2-25	2-5	3	3-525,000	0-5	25,000	2-5	3	3-5	435,000	1	35,000	3	3-5	4	550,000	1-5	50,000	3-5	4	5	675,000	2	75,000	4	5	6	7100,000	2-5	100,000	5	6	7	8125,000	3	125,000	6	7	8	9150,000	3-5	150,000	7	8	9	10200,000	4	200,000	8	9	10	11300,000	4-5	300,000	9	10	11	12400,000	5	400,000	10	11	12	13500,000	5-5	500,000	11	12	13	14750,000	6	750,000	12	13	14	151,000,000	6-5	1,000,000	13	14	15	161,500,000	7	1,500,000	14	15	16	172,000,000	8	2,000,000	15	16	17	173,000,000	9	3,000,000	16	17	17	175,000,000	10	5,000,000	17	17	17	17
Douglas King Hazen: Would the minister explain how the first column works out? It is not clear to me. I looked it over once or twice, but I do not understand just how it works out.


James Lorimer Ilsley: Let us take an estate of $100,000, which descends to two adult children. Each of them will receive $50,000. If the hon. member will run down the first column until he comes to $100,000, and then move across to the right, he will come to a rate of 2-5 per cent. Take 2-5 per cent of $100,000. Each of the children receives $50,000, and we are trying to ascertain what each of these children pays in succession duties. Let us move across to class B, where we find the rate is 4 per cent. That is 4 per cent of $50,000.


Some hon. MEMBERS:: No, 6 per cent.


Karl Kenneth Homuth: You go up above the $100,000 bracket.


James Lorimer Ilsley: I am taking an adult child who gets a $50,000 share of a $100,000 estate, and the rate is a combination of two rates- 2-5 per cent of $100,000 and 4 per cent of $50,000. Those two have to be added together.


John Ritchie MacNicol: That makes it 6-5 per cent.


James Lorimer Ilsley: I am wrong about that. It is only on the S50,000 that each child pays, and the rates he pays are 2-5 per cent plus 4 per cent. That is 6-5 per cent of $50,000.


John Ritchie MacNicol: It would be two and a half per cent taken off.


Karl Kenneth Homuth: And does it work out that, if there are two children left, in the first place you deduct $2,500, at 2-5 per cent on $100,000?


James Lorimer Ilsley: No. I am sorry if I got the hon. member off on the wrong track. You do not take a percentage of the $100,000 at all; you take a percentage of the value of the share which descends, but you apply two rates to that: 2-5 per cent, because that is the rate applicable to the $100,000 estate, and 4 per cent, because that is the rate applicable to a $50,000 share in the estate.


Karl Kenneth Homuth: So, then, the total rate is 6-5 per cent on the $100,000?


James Lorimer Ilsley: No, on the $50,000.


Karl Kenneth Homuth: The minister said that
where there is an estate of $100,000, and it is left to two children, each one receiving $50,000. the rate will be 6-5 per cent on the $50,000.


James Lorimer Ilsley: For both the children, yes.
Succession Duty Act


Karl Kenneth Homuth: On each of the $50,000
legacies?


James Lorimer Ilsley: No, not on each, on both. You do not take 6-5 peT cent of the whole value of the estate and take it away from each of these children. It just happens that there are two children; there may be ten children getting $50,000 apiece; that is, you have a $500,000 estate, and it would be ridiculous to take the proportion of the whole estate and subtract it from each of them; you take the proportion of the value of the estate which goes to each child.


Karl Kenneth Homuth: I may be stupid about this thing, but the minister says, first, that the $100,000 is subject to the 2-5 per cent rate.


James Lorimer Ilsley: That is the way to find
the rate.


Karl Kenneth Homuth: Then you go up two
columns to the $50,000. Here are two children sharing in the $100,000 net estate. Each gets
S50.000.	The rate which is payable by each of these children is 6-5 per cent. Am I wrong in that?


James Lorimer Ilsley: You are right.


Karl Kenneth Homuth: That is, on the amount passing to each of these children. So that you have 6-5 per cent on the $50,000 passing to John, and 0-5 per cent on the $50,000 passing to Mary?


James Lorimer Ilsley: That is correct.


Karl Kenneth Homuth: So that you have a 6-5 per cent rate on the $100,000 estate.


James Lorimer Ilsley: But not from each child,
as the hon. member said before.


Karl Kenneth Homuth: Oh, no; not from each
child. But the total rate on the estate is 6-5 per cent.


James Lorimer Ilsley: Correct.


William Ross Macdonald: Suppose, then, the estate had been $5,000,000, and one child receives $50,000. Do I take it that in that case the rate of duty which the child would pay would be 10 per cent plus 4 per cent?


James Lorimer Ilsley: That is correct.


William Ross Macdonald: So that according to this scale, the larger the estate the larger the duty, no matter what amount each individual receives?


James Lorimer Ilsley: The larger the duty for the same amount received.


William Ross Macdonald: But my point is that if the whole estate were $100,000, the duty each child would pay would 5-5 per cent?


James Lorimer Ilsley: It would be 6-5 per cent.
CMr. Ilsley.]


William Ross Macdonald: But if it is $5,000,000, then the child, although getting only $50,000, would then pay 14 per cent?


James Lorimer Ilsley: That is correct.


Mr. McCANN:: Is it not a fact that you cannot distribute an estate in that way? If this is a $100,000 estate, and the rate is two and a half per cent, that duty is the first charge against the estate, which brings it down to $97,500; so that there could not be two equal bequests of $50,000 each?


James Lorimer Ilsley: No; that may be the case in the provinces, but it is not so under this act. The only reason we are concerned about the value of these estates is to get the rate. We have a combination of two rates here, one set of rates graded in accordance with the value of the estate, and the other graded in accordance with the amount received. The hon. member for Brantford City is quite correct in saying that a person receiving $50,000 from a $5,000,000 estate is taxed at a considerably higher rate than a person receiving $50,000 from a $100,000 estate. If we had adopted the principle of the estate duty, we would have graded it wholly in accordance with that-


James Joseph McCann: Is this first division here not the estate duty, which is the first obligation on the estate?


James Lorimer Ilsley: No, it is not the first obligation on the estate.


James Joseph McCann: Then my understanding is that the duty is paid by the beneficiary both on the sum left to him and the aggregate value of the estate?


James Lorimer Ilsley: He does not pay on the
aggregate value of the estate; that is the mistake I started out with. He pays only on the value of what he gets. But the percentage is a combination of two rates, and one of those rates is higher, the higher the estate is; the other is higher, the higher the amount he receives. A pure succession duty would mean that we would have no regard whatever to the value of the estate; we would grade our rates entirely in accordance with the value received. A pure estate duty would mean that we would have no regard for the amount received, but would grade the rates entirely upon the value of the estate. When a person having a $5,000,000 estate died we would simply send our bill for 20 per cent, or whatever the rate might be, without regard to whether it went to the descendants in small amounts or in large amounts. But we did not adopt the pure estate duty, although there

Succession Duty Act
are many who thought we should; it is so much easier to administer. Instead we combined the estate duty principle and the succession duty principle. The amount in any case depends on three factors: (1) the size of the estate; (2) the amount received; (3) the relationship.


John Ritchie MacNicol: I wish to point out what strikes me as a very considerable unfairness to the child who happens to be one of a family of ten to whom the father left $5,000,000, $50,000 to each child, as against the child of the father who left a family of two and an estate of only $100,000, $50,000 to each child.


Mr. CASTLEDEN:: That is not the
minister's fault.


John Ritchie MacNicol: The child of a family of two whose father left S100,000, or $50,000 to each, would receive a net legacy of $46,750; but the child of a father who left $5,000,000 and ten of a family, each of them bequeathed $50,000, would receive only $41,000. It would therefore be much better to be the son of a father who left only two children and $100,000 than to be the son of a father who left ten children and $5,000,000.


William Ross Macdonald: It is much worse when you come to the case of a friend and put it in class D.


John Ritchie MacNicol: I am talking about the
sons.


[Stage Direction]
Resolution agreed to.
6.	That the exemptions from duty under the said Succession Duties Act shall be as follows:
(a)	Where the whole property passing does not exceed $5,000 no duties shall be payable;
(b)	Property passing to or for the benefit of the widow of the deceased to the extent of the first $20,000 in value or amount;
(c)	Property passing to or for the benefit of the widow to the extent of $5,000 for each child of the deceased under 18 years of age at the time of the death of the deceased or dependent upon him for support at that time, if such child does not benefit in respect of property passing on the death of the deceased, provided that if such child does benefit the exemption shall be $5,000 less the amount of the benefit;
(d)	Property passing to or for the benefit of a child of the deceased under the age of eighteen years or dependent upon him for support at that time on account of mental or physical infirmity to the extent of the first $5,000 in value or amount;
(e)	Property passing to or for the benefit of the orphan child or children of the deceased under eighteen years of age at the time of his death or dependent upon him for support at that time on account of mental or physical infirmity, where such property does not exceed $15,000 in value or amount, provided that this
exemption shall be in addition to those provided for in the preceding paragraph (d), and provided further that where more than one child benefits the exemption herein provided for shall be divided among such children in proportion to the value of the property or benefit passing to each of them;
(f)	If the deceased died from wounds inflicted, accident occurring or disease contracted on active service with the Canadian naval, military or air forces in or beyond Canada, in such circumstances that if the deceased left a widow she would be entitled to receive a pension in respect of his death under the Canadian Pension Act; (i) the exemptions granted in the preceding paragraphs (b), (c), (d) and (e) shall be increased by 50 per cent; (ii) the amount of the tax payable in respect of the succession by persons in Class A and Class B shall be reduced to the sum which, if accumulated at compound interest at the rate of 3 per cent per annum from the date of death with half-yearly rests, would at the expiration of the period of the normal expectation of life of a person of the age of the deceased at the time of death (calculated in accordance with approved mortality tables) amount to the tax which would otherwise be payable;
(g)	Property passing to any one person and not exceeding $1,000 in value or amount;
(h)	Property passing to or for the benefit of any charitable organization in Canada operated exclusively as such and not operated for the benefit or private gain or profit of any person, member or shareholder thereof;
(i)	Property passing to or for the benefit of the Dominion of Canada or any province or political subdivision thereof;
(j)	Property given by the deceased in his lifetime and representing the ordinary or normal expenditure of the deceased;
(k)	Property on which gift tax has been paid under the provisions of the Income War Tax Act, except to the extent to which the duty payable under the act exceeds the gift tax so paid.
Howard Charles Green: There is one paragraph of this resolution which, I think, should receive very careful consideration; I refer to paragraph (f), which provides for the exemption in the case of a man in the active army being killed or dying of wounds or disease. This succession duty tax is put into effect because of the war. It is the war that has brought it about. Here we have our young men offering their lives, going overseas; many of them will not return, and it just does not fit in to have succession duty tax imposed in respect of those men. The psychological effect of imposing the tax in a case like that is not good; it is too much like blood money. These men are serving Canada, they are not serving a province. We were told yesterday that in Ontario there is an exemption in the case of men killed overseas but under this new dominion legislation, by paragraph (f), succession duty will be levied on their estates. It is true that some consideration is given; where a man's widow would get a pension the

Succession Duty Act

exemptions in paragraphs (b), (c), (d) and (e) are increased by 50 per cent, and the amount of the tax is also reduced where the money goes to the close relations under classes A and B. There should be no succession duty tax at all in such cases. Let us leave alone the estate of the man who is killed overseas or dies as a result of wounds or disease.
Furthermore, as the paragraph reads now even this exemption can be obtained only where the widow would be entitled to receive a pension. The present pension provisions are so framed that where a soldier dies in Canada, certainly *where he dies as a result of disease, it is extremely difficult for his widow to qualify for pension. The exemption should be absolute. In other words paragraph (f) should read:
If the deceased died from wounds inflicted, accident occurring or disease contracted on active service with the Canadian naval, military or air forces in or beyond Canada, there shall be no tax levied.


James Lorimer Ilsley: I anticipated that this point would be raised, and had I thought a minute I might have anticipated that it would be raised by my hon. friend. This is a matter about which I would ask hon. gentlemen to be calm. Just consider the position. In the first place there is an exemption of $30,000 for the widow as against an ordinary exemption of $20,000. That will cover the case of the overwhelming majority of persons in the forces, practically all of them. There will be some persons for whom that exemption of $30,000 for the widow and a 50 per cent increased exemption for the children also, if there are children-


Howard Charles Green: $7,500 for the children.


James Lorimer Ilsley: Yes, for each child. In some cases a certain amount of succession duty may be payable. But let us say a member of the forces dies as a result of active service, leaving a brother here in Canada. It is the brother who is taxed, not the member of the forces who was killed. Is there any reason why the brother should completely escape succession duty taxation? What we do here, I should like the committee to understand, is to make full provision for any reduction in the expectation of life. If a person is killed at forty and his normal expectation of life would be sixty-five or seventy, we take the present value of what his estate would be at sixty-five; in that case it might be discounted as much as 50 or 75 per cent. I think this fairly meets the situation.
This principle is taken from the English act. When I read the section over I thought it did sound a little actuarial, if I may use that

expression, to put in an act relating to members of the forces, but unless we exempt them altogether, which they have done in Ontario, and which I do not think is fair, the only thing we could do would be to leave it to the governor in council to grant exemption where they think it desirable to do so. Unless it is left to the governor in council we must spell it out in the act, and that puts us to the unpleasant necessity of writing here as fair a section as we can. My information is that this is based on the English section, except that the English section has a limitation of the privilege which is less favourable to the members of the forces than this.


John Ritchie MacNicol: With respect to paragraph (a) of section 6, I have in mind the widow of a man who operated a corner grocery in the west end of Toronto. They owned their store, stock, and so forth, but had a bitter struggle, as the average corner grocer has, and to-day the struggle is greater than ever owing to the operation of chain stores and the early closing by-laws which compel them to close in the evening before they otherwise would. In one way I think the early closing by-law has merit; it gives them a chance to go out and enjoy life, but many would rather stay in their stores and try and make a dollar or two.
I have been trying to visualize the result to a widow who is left a corner grocery which, with the stock in trade-much of it old- would amount to $5,000-


James Lorimer Ilsley: There is an exemption of $20,000 in favour of widows.


John Ritchie MacNicol: Then my argument on that is unfounded.
In connection with paragraph (b), the words "for the benefit of the widow", would the husband who receives his wife's estate be exempt?


James Lorimer Ilsley: No.


Gordon Knapman Fraser: With reference to paragraph (i) "-or any . . . political subdivision thereof", does that mean to the Liberal party or the Conservative party?


James Lorimer Ilsley: No. A municipality would be the best example I can think of.


Gordon Knapman Fraser: Would that be in the bill?


James Lorimer Ilsley: I think it will be clear in the bill.


Mr. BENCE:: Paragraph (b) provides that a widow shall be exempt up to $20,000. That is whether she has children or not? It is

Succession Duty Act
presumed that 820,000 is the minimum that would be exempt going to a widow whether she has children or not?


James Lorimer Ilsley: That is correct.


Alfred Henry Bence: A child is entitled to only $5,000 exemption if its mother is living, yet if its mother is dead the child is entitled to $15,000 exemption. What is the reason for the distinction? And what is the reason for the distinction between an only orphan child for whom $15,000 would be exempt or say two orphan children who would receive $7,500 each?


James Lorimer Ilsley: The mother gets an exemption of $20,000 on her own account and $5,000 on account of the child.


Alfred Henry Bence: Section 6 (c) in part: "-if such child does not benefit in respect of property passing on the death of the deceased, provided that if such child does benefit the exemption shall be $5,000 less the amount of the benefit".


James Lorimer Ilsley: It will be $20,000 in that
case, if the child gets $5,000, so they will get the full amount of the exemption. Then the widow only gets $20,000, but with the widow getting $20,000 that reduces very greatly the necessity for an exemption at all in respect of the infant.


Alfred Henry Bence: That was why I asked in
the first place whether $20,000 was the amount the minister felt was the minimum to which a widow was entitled, whether or not she had children.


James Lorimer Ilsley: That is correct; she is
entitled to $20,000.


Alfred Henry Bence: I suggest that there is not
such a great distinction between an orphan and a child who has a mother as these sections would indicate. There is a difference of $10,000 in the case of a single child.


Arthur Graeme Slaght: She has $20,000 with which to help support her child.


Alfred Henry Bence: But she is entitled to $20,000 if she has no child, so that this must be considered to be the minimum necessary for her to get along.


James Lorimer Ilsley: What is the objection again? I am afraid I cannot follow this.


Alfred Henry Bence: Perhaps I have not explained it very clearly. It appears to be taken for granted that out of her $20,000 the widow can assist in the support of her children. Otherwise there would not be a distinction in the exemptions between an orphan child and one who has a mother.


James Lorimer Ilsley: Follow that on through.


Alfred Henry Bence: The suggestion I was going
to make was that if under subsection (e) an orphan child is entitled to $15,000, then a child who has a mother should be entitled to the same exemption.


Arthur Graeme Slaght: No.


Alfred Henry Bence: Otherwise you are contemplating that the mother is going to take care of that child out of the $20,000.


Mr. MARTIN:: Is not the point really
this, that since the mother, who is a widow, under subsection (b) is given $20,000, why should she be exempted only for the same amount under subsection (c) when she has a child? If that is the observation I think perhaps there is something to be said for it, because the exemption where the widow has a dependent is the same as where she has not.


James Lorimer Ilsley: The widow gets $20,000 on
her own account and $5,000 for each child. That is fhe situation if the child receives no exemption itself. If the child gets an exemption it means that the child is getting a substantial amount of property, does it not?


Alfred Henry Bence: It means the widow does
not get the $5,000.


James Lorimer Ilsley: It is not necessary, because
the child will have a substantial amount of property; otherwise the child would get the exemption.


Alfred Henry Bence: If the child gets exactly
$5,000 on the death of the father the widow does not get the $5,000 under the provisions of subsection (c); yet if that child has no mother it is entitled to an exemption of $15,000. I do not understand the reason for the distinction.


James Lorimer Ilsley: There the child has received not an exemption of $5,000 but a benefit or legacy of $5,000, and the mother has received an exemption of $20,000. The orphan child has no mother and should have an exemption of $15,000 where there is the equivalent of $25,000 in the other case. It is not an exemption of $25,000 but of $20,000, and the child has some property in its own right.


Howard Charles Green: The minister mentioned the
type of legislation they have in Great Britain in connection with men in the forces. In Great Britain men are conscripted into the army while in Canada they are volunteers. In Canada we are trying to raise a large number of men, and as time goes on wo will want to raise more. I suggest that it is unwise to levy succession duties on the estates of men who are killed overseas. The house should
Succession Duty Act

see that these estates are exempted. Certainly some provision should be made in the case of a soldier dying in Canada, whose widow cannot qualify for pension because of the fact that our pension legislation is so restrictive. Those cases should get all the benefit possible under subsection (f). I do not think this matter should be rushed through and passed without discussion. It goes too far, in a country that is doing its best to persuade young men to enlist in the fighting forces.


Paul Joseph James Martin: Is the phrase "charitable organization" in subsection (h) defined, or is it to be defined in the bill?


James Lorimer Ilsley: No, it is not. The expression "charitable organization" is to be used in the bill. I have received a number of letters urging that the words used should be "charitable, educational or religious," and at the time the resolution wras drafted this point was discussed. The words "charitable organization" are the same as those used in the section of the Income War Tax Act which provides that gifts to charities may be deducted from income for taxation purposes, and the income tax division has always interpreted "charitable organization" as including religious and educational institutions and organizations. Indeed it has gone further than that. The English cases relating to charitable trusts give the word "charitable" a very wide meaning, and it was considered desirable to keep the expression "charitable organization" in the form in which it is used in that section of the Income War Tax Act. There is no question but that it will be interpreted as including educational and religious organizations. I do not want to make trouble for myself, but I must point out that we are not altogether consistent because in the gift section of the Income War Tax Act those other words are inserted; but it has been decided by the Department of Justice and uniformly held by the income tax division that this is unnecessary, that "charitable organization" covers the whole field.


Arthur Graeme Slaght: Perhaps some exception
should be inserted here. If "charitable" means "religious," and a member of Jehovah's Witnesses died leaving a million dollars to that organization, the bill as drafted would exempt that amount from taxation, notwithstanding the fact that this institution has been declared illegal. Perhaps words to this effect should be added: "Provided that such institution has not been declared illegal."


James Lorimer Ilsley: I forget what the English cases say, but I imagine they would stop at the bounds of legality.


Arthur Graeme Slaght: Why leave it to a court? Why not make it clear that we are not exempting gifts of this kind? Suppose a deceased person who was entirely sincere in his belief that a particular religious institution was a proper one to which to belong, notwithstanding the fact that this country has declared it to be subversive, leaves his son a million dollars; we are going to exempt that gift from succession duties. I do not think we ought to make that possible, or even leave it in such doubt that we would have to go to the courts for a couple of years to find out.


Mr. FAIR:: I think that is a good way to get rid of the amount that is left, because the courts would take the greater portion of it. It is not good business to leave it to any individual to say which religious institution is right and which is wrong, because we have a number of interpretations with which some of us do not agree. That is true so far as religious organizations are concerned. I think the remarks of the hon. member for Parry Sound are not sound.


James Lorimer Ilsley: I think it would be odd to refer in the bill to charitable organizations which are not legal, or to legal charitable organizations. Their legality is understood.
I do not believe there will be any substantial gifts to Jehovah's Witnesses.


Arthur Graeme Slaght: Well, the minister is taking a chance.


Mr. MacINNIS:: As I understand it, the property of the Jehovah's Witnesses organization is in the hands of the national custodian, and I should imagine that any bequests to one of those organizations would go to the same place. However, if, as the hon. member for Parry Sound suggests, a member of the Jehovah's Witnesses sect should die and bequeath a million dollars to his son, that would be an altogether different thing, because such bequest would come under ordinary succession duties provisions. I do not believe the condition he has described could arise.


Arthur Graeme Slaght: Suppose he were to leave it to the custodian, what would happen?


Angus MacInnis: Then it would go to the custodian.


Thomas Clement (Tommy) Douglas: The custodian of enemy property, who now holds all their assets.


Paul Joseph James Martin: I assume that the description "political subdivision" will not be used in the bill.

Succession Duty Act


James Lorimer Ilsley: I believe it is in the bill.


Paul Joseph James Martin: Surely "political" is the
wrong word?


Angus MacInnis: It is all right.


Mr. ROSS (Souris):: I dislike very much paragraph (f). The very fact that we are taxing the widows and dependents of those who may be killed overseas is not conducive to our all-out war effort, and will not help our recruiting campaign. I find in line 5 the following: "The exemptions granted in the preceding paragraphs (b), (c), (d) and (e), shall be increased by fifty per cent." Does that mean that the widow would be entitled to an exemption of $30,000?


James Lorimer Ilsley: Yes.


James Arthur Ross: And the dependent
children $7,500?


James Lorimer Ilsley: Yes.


James Arthur Ross: That is a step in the right direction. But I still dislike very much any proposal to tax the w:dows and dependents of those who are offering all they have so that we may maintain our way of life. Surely it is not conducive to an all-out war effort.


John Ritchie MacNicol: Under paragraph (h)
would a general hospital be considered a charitable institution?


James Lorimer Ilsley: Yes.


Gordon Graydon: Would the exemption of these soldiers affect very substantially the succession duties collections?


James Lorimer Ilsley: I have no idea; I do not think it would.


Gordon Graydon: Why could not the gesture be made? Surely it would not be a serious matter for anyone.


James Lorimer Ilsley: It is just a matter of principle, that is all.


Gordon Graydon: Then if it is a matter of principle, surely there is no justification for not exempting them.


Angus MacInnis: I shall have to support the minister in this matter. If we are going to have so many exemptions the legislation will be neither equitable nor understandable. Very few of those in the armed forces who may die are going to leave large estates from which much may be derived by way of succession duties. When they do leave large estates there will be enough left to look after the families. They are not likely to suffer. But there will be thousands, possibly hundreds of thousands of families who will suffer after this war is over, as they suffered after the last one, not because they did not leave
sufficient property, but because they were not given sufficient pension. If we are to be realistic in looking after the returned soldiers, we shall not be doing much for them by granting exemption from succession duties. If we are going to look after their welfare, we must provide adequate pensions.


Gordon Graydon: That is one step.


[Stage Direction]
Resolution agreed to.
7.	That there shall be a provision in the said Succession Duties Act making the executor or administrator liable in his representative capacity for all the duties imposed thereby, and making each successor personally liable for the duty on the share of the property or benefit passing to him, with the proviso that if the executor or administrator pays the duty he shall have the right to deduct the same from the property or benefit passing to the successor.
Alfred Henry Bence: May we have a general idea as to how collections will be made, and how the minister proposes to protect the dominion government in respect of collections? The provinces have the right to file caveats against land, to hold up the issuance of letters probate, and that sort of thing, until the money is paid. Has the minister in mind any plan under which the treasury will be protected?


James Lorimer Ilsley: The executor will be personally liable to the extent of property coming into his hands, and I believe that will protect the treasury in practically all cases.


Alfred Henry Bence: The integrity of the executor is the only protection?


James Lorimer Ilsley: The estate will be pretty well tied up. There will be bank deposits, and all that sort of thing. However, there is detailed provision in the bill.


Alfred Henry Bence: That is what I want to find out. Can the minister tell the committee generally how the estate will be tied up?


James Lorimer Ilsley: If the hon. member will wait until the bill is introduced, he may read it all. Instead of discussing the draft bill, which is in only my hands and not in those of hon. members of the committee, I would rather leave discussion of that kind until the hill is introduced. I believe it is the function of the committee to make suggestions, as have been made. Then, before the bill is brought in, I shall see that they are covered, or that there is some reason why they should not be covered.


Alfred Henry Bence: Unless we have in mind what the minister is going to introduce, we cannot make suggestions. That is why I asked the question.


[Stage Direction]
Resolution agreed to.
Succession Duty Act
[Stage Direction]
8.	That any enactment founded on the foregoing resolution shall come into force on the date when it is assented to and shall apply to deaths occurring after that date.
Richard Burpee Hanson: I regret that because of having to attend to an important public matter, I was not present during the discussion of the provisions of the resolution. It would seem that the committee has passed all the paragraphs. I have noted, however, one or two requests I should like to make.
I find in resolution, 3	(a) the words
"aggregate value". In connection therewith I suggest that the minister include with "funeral expenses and debts" the fees paid to the provinces, and especially in my province, for the probate stamps. It is quite a substantial item. It is not heavy, relatively, but it is important. In New Brunswick these payments have always been allowed as exemptions. To indicate the extent, I would point out that an estate of something less than $300,000 would pay just a little less than $1,000. An examination of the New Brunswick probate act will show the scale of fees. It is relatively large on the first $5,000, and after that it is something like $3 per $1,000. That is a tax; it is not a service charge. Will the minister give consideration to exempting the amounts actually paid for probate stamps, but not proctor's costs or anything of the sort?
I do not know whether there has been any discussion of the classifications, but I note that a distinction is made between a husband and a widow. I have been looking through the statutes of the various provinces and speaking generally I find that the husband is always included in the preferred class, as we call it in New Brunswick. Is there any reason why there should be a distinction between a widow and a husband?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: I should like to have that elaborated. I do not know whether it was discussed this afternoon.


James Lorimer Ilsley: The question was asked.


Richard Burpee Hanson: In Ontario the husband and wife are in the preferred class, and this classification exists in Nova Scotia, Manitoba, Alberta, New Brunswick and the Yukon territory. So far as I am able to ascertain, Prince Edward Island is the only jurisdiction which does not place the husband in the same category as the widow. Why has this almost universal practice not been followed? For many years in the province of Quebec lineal ancestors or descendants were included in the preferred class. This covered

grandfathers, grandmothers and grandchildren, but in most jurisdictions this classification is restricted to the immediate ancestors and descendants. There may be a good reason for that, but I am curious to know why the resolution does not put the husband in the same class as the widow.


James Lorimer Ilsley: I think I am correct when I say that in all provinces they have three classes, (a), (b) and (c). We have split class (a) into (a) and (b). The question now is whether the husband should go into the (b) subdivision or the (a) subdivision. We have put the widow and the dependent children into the a) subdivision because they are presumed to be in need of support. We have put the husband into the (b) subdivision because he is presumed not to be dependent upon his wife. It seemed much more fitting to put him in with the sons and daughters rather than with the dependent children and the widow.


Richard Burpee Hanson: That
assumption would not in every case be based upon fact.


James Lorimer Ilsley: In nearly every case.


Richard Burpee Hanson: I should not think so. I know there are cases where that assumption could not be founded on fact. The husband and wife are in the same contiguous position, and in all the provinces, with the exception of Prince Edward Island, they are treated the same. The minister is basing his position upon an assumption which may be true in the majority of cases, but which is not universally true. I ask the minister to consider this before he brings in the bill.
I should like to refer also to the limitation of $5,000 in resolution 6(a). I think this * limitation is too low, and I believe it will be found that a great deal of effort and time and expense will have to be expended in deciding border-line cases. In no jurisdiction is it as low as $5,000 except where the property passes to strangers. I am quite certain that for administration purposes it will be found that this base is too low. None of the provinces go as low; why should the dominion tax these small estates, especially when they are being divided up? When you have an estate of $5,050 I do not think it is necessary to scalp some of the capital for taxation purposes. The amount obtained will necessarily be quite small.


[Stage Direction]
Resolution agreed to.

Income War Tax Act

[Stage Direction]
10. That the tax of five per centum on nonresident persons, other than corporations, in respect of the total amount of the royalties, rentals or similar payments for the use in Canada of patents, real or personal property, or for anything used or sold in Canada, be increased to 15 per centum.
James Lorimer Ilsley: I think I can come near to meeting the hon. member for Vancouver South (Mr. Green) despite my argument the other day. I have gone into this matter as carefully as time would permit, and I believe the ends of justice will be met if it is provided that in respect to real estate rentals the taxpayer may file an income tax return and pay on a net income basis in Canada, and any overpayment by way of deductions at the source may be refunded. That is different from charging 15 per cent on a net rental basis or permitting deduction of collection costs from rentals and paying 15 per cent on the net. While there may be some difficulty in checking expenses abroad and all that sort of thing, I think we shall just have to run that risk. I will ask my colleague to move this amendment.


Mr. MACKENZIE (Vancouver Centre):: I move:
That resolution 10 of the Income War Tax Act be amended toy adding thereto the following words:
"Provided that in respect of real estate rentals the taxpayer may file an income tax return and pay on a net income basis in Canada, and any overpayment by way of deductions at the source may be refunded."


Richard Burpee Hanson: So far as I can observe that is a substantial concession. I do not know what the implications of the last clause may be, but since we met yesterday a number of representations have been made to me against the tax as previously proposed, among others from the Winnipeg real estate board. I was surprised to learn that very large real estate holdings in the city of Winnipeg are owned by English people, and that had the original proposal been adopted many of these properties would have been lost to the mortgagees because they could not stand the taxation. I am quite satisfied with the amendment, so far as I understand it.


Howard Charles Green: Will the effect of the amendment be to put the owner of real property m the position of filing an income tax return; then the tax will be assessed, and if the 15 per cent which has been deducted is more than his income tax should be, a refund will be made?


James Lorimer Ilsley: That is correct. The deduction of the 15 per cent is made in the first instance, and then there is a refund if upon the filing of the income tax return it is shown that there is a surplus to be returned.


Howard Charles Green: In essence you change it from a 15 per cent levy to an income tax levy under our regular income tax rates?


James Lorimer Ilsley: That is correct.


Richard Burpee Hanson: I suppose there is no way of handling it so that they could make a return on the basis of the income tax and pay on the net, without having first to pay on the full amount and then look for a rebate. There will be a lot of trouble getting the rebate-I do not mean in law, but in practice.


James Lorimer Ilsley: No more trouble than it would be for us to get the tax if we did it that way.


Howard Charles Green: It certainly is much better than it was before.


Richard Burpee Hanson: I agree.


[Stage Direction]
Amendment agreed to.
Resolution as amended agreed to.
18. That any enactment founded on resolutions numbered 3, 7, 8, 10 and 16 shall come into force on April 30, 1941.
Resolution agreed to.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the War Exchange Conservation Act, 1940, and to provide:-
1.	That section 7 of the said act be repealed and the following substituted therefor:-
"7. (1) Goods enumerated in schedule two to this act, the growth, produce or manufacture of the United Kingdom, when imported into Canada in a manner and under conditions which entitle such goods to entry under the British preferential tariff of Canada, shall be exempt from the rates of duty set out in schedule A to the customs tariff and shall, in lieu thereof, be free of duties of customs. [DOT]
(2) Goods enumerated in this subsection (other than those enumerated in schedule two to this act) the growth, produce or manufacture of the United Kingdom, when imported into Canada in a manner and under conditions which entitle such goods to entry under the British preferential tariff of Canada, shall be accorded discounts on the amount of duties of customs computed under the British preferential tariff as follows:-
Goods enumerated in items 551,551a, 552, 553, 554, 554b, 554d, 554e, 555, 568, 568a (i), 611 and 611a of the customs tariff-25 per cent.
Goods enumerated in groups I, V, VI, VII, VIII, IX, X, and XI of the customs tariff (but not to include goods enumerated in tariff items 551, 551a, 552, 553. 554, 554b, 554d, 554e, 555, 568, 568a (i), 611 and 611a, and not to include fabrics
[Stage Direction]
War Exchange Conservation Act
composed wholly or in part of silk or goods of any kind in which silk is the component material of chief value)-50 per cent.
Provided, that the discounts established by this subsection shall be accorded in lieu of, not in addition to, any discount to which the said goods otherwise might be entitled under section 5 of the customs tariff."
Richard Burpee Hanson: This would seem to be the only place where I may appropriately ask the minister with respect to the special provisions which were enacted in the legislation of last year regarding arrangements on contracts to be made with companies attempting to increase their exports to the United States, we will say, for the purpose of improving our foreign exchange situation. I have not the particular section in front of me, but the minister, I am quite sure, is familiar with the legislation and knows what I am referring to. Will he make a report to the house and tell us what the position is, how many special contracts have been entered into, if any, and whether he has ever had applications from Canadian nationals or Canadian corporations to establish businesses in the United States which might have the effect of bringing into Canada more foreign capital? I mention this because I have heard it suggested that that would be feasible and might be desirable. I do not know myself whether it would or not, but we all agree that if anything could be done to increase within a legitimate range our supply of United States dollars from that source it would help out the exchange situation, no matter how small the amount might be. There are two aspects of the situation. Will the minister tell us what has been done? My recollection is that the contracts were to be laid before parliament. That not having been done, am I to gather that none has been entered into?


James Lorimer Ilsley: That is right. The situation is that six agreements have been authorized and orders in council have been passed in all six cases, I think, with copies of the draft contracts appended, but none of the contracts has yet been signed. The orders in council have been going through recently.


Richard Burpee Hanson: Therefore they have not been tabled.


James Lorimer Ilsley: No. The section provides for the tabling of the agreements, and I have no doubt the agreements will be signed promptly. As soon as they are signed they will be tabled. A number of cases are under consideration. The negotiation of these agreements takes a great deal of time and careful consideration, because naturally the government does not want to lay itself open to criticism in respect of these agreements. The powers given to the government are extensive, including the

power to permit a certain rate of depreciation, to reduce taxes otherwise payable, and so forth. So that great care is being taken in all cases to make the agreements such that they can be defended in the house.


Richard Burpee Hanson: Would the minister care to state to what particular field of activities they pertain? Is it the lumber field? That was mentioned in the press not long since. Is it in the pulp and paper field? If the minister does not care to make a statement, I will not press him to do so.


James Lorimer Ilsley: Perhaps it would be well
to wait and see the agreements. There are the newsprint and pulp fields; there is one manufactured product, and so on.


Richard Burpee Hanson: Has the
minister received any. applications to carry the theory into the field of Canadians going over there and setting up manufacturing establishments which would, if successful, have the effect of bringing capital back to Canada, thus improving our foreign exchange position? There have been applications, have there not?


James Lorimer Ilsley: If there have been, they have not come before me.


Richard Burpee Hanson: I know of one, but I should not like to mention it.


James Lorimer Ilsley: I did not realize that we had any jurisdiction to deal with the setting up of industries in the United States.


Mark Cecil Senn: Why do the goods enumerated in the first paragraph of clause 2 of the resolution carry a duty of 25 per cent while those in the next paragraph carry a duty of 50 per cent? This is the British preferential tariff, but why is there discrimination between these two lines of goods?


James Lorimer Ilsley: Some commodities imported from Great Britain do not get any reduction at all. I think I had better put an explanation on Hansard.


Richard Burpee Hanson: It would be well to have an explanation of the whole resolution.


James Lorimer Ilsley: Yes. It is an important resolution. The resolution does three things: (1) It continues the exemption from customs duties granted last December to cottons and artificial silks, jellies and jams, firebrick, furniture, and bituminous coal.


Richard Burpee Hanson: That does not change the position; it just continues it?


James Lorimer Ilsley: Yes. (2) In conjunction with the amendments to schedule 2 provided for by resolution 5, it gives free entry to some additional British products.

War Exchange Conservation Act


Richard Burpee Hanson: Could the minister tell us at some stage the value of the importations under those items?


James Lorimer Ilsley: Yes, at some stage I will give the amount of the duties on them, at any rate, and perhaps I can give the values. (3) It accords a discount of 50 per cent from the British preferential tariff to all other United Kingdom goods except woollens and footwear, which are given a discount of 25 per cent, and except liquors, tobacco, sugar and its products, and silks, on which the duties remain unchanged.
Some hon. members have suggested that all imports from the United Kingdom be given free entry into Canada. The government does not propose to adopt such a course, because our objective is to grant concessions which will enable British goods to remain competitive without reducing revenue duties more than necessary.
It is proposed to retain the full rates of duty on alcoholic beverages, primarily because it is not desired to sacrifice revenue on these goods. Other considerations are the inadvisability of stimulating consumption and the fact that imports of British liquors have shown no tendency to decline or to be supplanted by imports from outside the sterling area.
Tobacco products and sugar products are not given any concession because they are not normally imported from the United Kingdom in substantial volume and because their production requires the use of imported raw materials which are in short supply in Britain.
To have reduced the duties on silks would have been inconsistent with the restrictions placed on the production of such goods in Canada.
It is believed that a discount of 25 per cent from the British preferential tariff should be adequate to enable British woollens and boots and shoes to remain competitive. These products are not handicapped to the same extent as most with respect to either raw materials or labour, and due to their relatively high value in relation to weight they are affected less by increased transportation costs. Moreover, there has not been apparent any tendency for imports from foreign countries to replace British woollens and boots and shoes in the Canadian market.
No one can say how large our imports from the United Kingdom will be in the coming year or how much less they would have been if no reductions were made in the duties. Accordingly, it is impossible to give any definite figure as to the amount of duty to be remitted under these proposals. However, my staff have prepared a table which shows, as nearly as can be estimated, what the concessions would amount to on the basis of dutiable imports from the United Kingdom in the calendar year 1939. I shall place this table on Hansard for the information of the house:
Dutiable Imports into Canada from the United Kingdom in the calendar year 1939, duty collected thereon, and estimated net rebate which would result from application of the proposed concessions to 1939 imports
Commodity or group
Commodities not given any reduction:
Alcoholic beverages	
Sugar and manufactures	
Tobacco and manufactures	
Silk and manufactures	
Sub-total	
Commodities given free entry:
Cotton and products	
Artificial silk and products	
Other goods made free December 2/40	
Goods made free April 30/41	
Sub-total	
Commodities given 25 per cent discount:
Woollens	
Boots and shoes	
Sub-total	
Commodities given 50 per cent discount:
All dutiable goods except those specified above as
subject to different treatment	
Grand total	
Dutiable	Duty	Amount ofimports	collected	proposed1939	1939	concession(000)	(000)	(000)$ 4,744	$ 5,509	nil437	75	nil503	181	nil300	65	nil$ 5,984	$ 5,830	nil$ 7,314	$ 1,184	$1,1841,899	369	369796	94	94583	80	80$10,592	$ 1,727	$1,727$13,431	$ 3,497	$ 600*377	77	13*$13,808	$ 3,574	$ 613$22,205	$ 3,055	$1,050**$52,589	$14,186	$3,390
* Effect of direct shipment discount is allowed for in this estimate.
** Effect of direct shipment discount and inclusion in import statistics of tea and other United Kingdom reexports are allowed for in this estimate.

War Exchange Conservation Act
The table shows that if the War Exchange Conservation Act, with the amendments now proposed, had been in force in 1939 the net duties collectable on British goods wmuld have been reduced by about 83,400,000. About
81,800,000	of this total is accounted for by the removal of the duties on cottons and artificial silks and by other concessions made last December, and about 81,600,000 by the new or additional concessions now proposed.


Richard Burpee Hanson: That is, on the 1939 figures. Have you anything for 1940?


James Lorimer Ilsley: No, 1940 figures are not available. I am informed that they would not be greatly different.


Mark Cecil Senn: Could the minister tell us
the amount of woollens and the duty collected thereon for that year?


James Lorimer Ilsley: The dutiable imports of
woollens in 1939 amounted to 813,431,000; the duty collected thereon was 83,497,000, and the amount of the proposed concessions is $600,000.


Richard Burpee Hanson: What
are the comparable figures with respect to boots and shoes?


James Lorimer Ilsley: Importations were small.
The value of dutiable imports in 1939 was $377,000 and the duty collected was $77,000. The amount of the proposed concession is $13,000, which is pretty small.


Mark Cecil Senn: The item of woollen goods
is fairly substantial. Has the minister any break-down of that into fabrics, yams, knitted goods, and so forth?


James Lorimer Ilsley: Yes, there is something
here. It is very long.


Mark Cecil Senn: All I really wanted was the
three items:	fabrics, knitted goods-particularly-and yarns.


James Lorimer Ilsley: There is a long table here
which I can place on Hansard, or I can give my hon. friend the three main items he inquires about.


Mark Cecil Senn: That will do.


James Lorimer Ilsley: These are the three items
inquired about by the hon. gentleman. However, the words he used will go to a certain extent beyond these items. The three main items are:
551a. Yams and warps composed wholly of wool or in part of wool or hair, imported by manufacturers for use exclusively in their own factories, n.o.p.-I will leave out the rates. The imports from the United Kingdom in 1939 were $1,599,190 worth, and in 1940, $2,145,882 worth. These are calendar years.
[Mr. Hsley.J
554b. Woven fabrics, composed wholly or in part of yarns of wool or hair, n.o.p.: the imports in 1939 were $8,636,144 worth; in 1940, $11,533,203 worth.


Richard Burpee Hanson: That is a
substantial increase.


James Lorimer Ilsley: Yes, that is the big item. Then in respect of 568, the third item, knitted garments, knitted underwear and knitted goods, n.o.p., the imports in 1939 amounted to 8781,619, and in 1940 to $821,837.


Richard Burpee Hanson: That is
knitted wool?


James Lorimer Ilsley: Yes. Those are the three main items.


Richard Burpee Hanson: I think the government's policy should be endorsed. I raise no objection to it. I would, however, ask the minister to give an undertaking that this is for the duration only, and that the whole position will be reviewed at the end of the war. I am surprised to leam that importations of boots and shoes are so small; I should have thought they would be much larger. With respect to cottons, there seems to be no objection raised by the trade; nobody seems to be injured; no representations have been made to me. Therefore I conclude that they do not consider that they will be much hurt. If it will help the British at this time I am in accord.
With respect to woollens, the item has grown. Probably, apart from the question of price, there is a reason for that, such as matters of quality and variety. I have had no representations made to me against this policy, and therefore I do not see any reason why I should not affirm the statement I just made.


James Lorimer Ilsley: I readily give the undertaking that the matter is only for the lifetime of the War Exchange Conservation Act. It is an amendment to that act; it is not a change in the tariff itself. That act expires automatically upon the issue of a proclamation that a state of war has ceased to exist.
I am glad to have the hon. gentleman's endorsement of the policy. While it may not be necessary for me to say it, there is throughout the country quite a body of sentiment that rather loosely advocates the complete abolition of all duties, but of course that position will not stand for a moment when we begin to consider such imports as Scotch whisky and numerous excisable articles of that kind. With regard to woollens, it would be quite a serious matter from the revenue point of view to sweep the duties off at once.

War Exchange Conservation Act
The customs warehouses have large quantities of woollens in them, and it would mean that these goods would come out without any duty instead of a substantial one. We would lose large sums in duty. I do not think the retention of the very moderate duties that have been retained largely for revenue purposes on these items on which we have retained the duty is going to interfere materially with the importation of goods that would otherwise be imported from Great Britain.


Mark Cecil Senn: I understand woollens of all kinds were in a category on which the reduction would be twenty-five per cent. Is that correct?


James Lorimer Ilsley: Yes; twenty-five per cent
of the existing duties.


Mark Cecil Senn: There is a large volume of goods on which the reduction will be fifty per cent.


James Lorimer Ilsley: Yes.


Mark Cecil Senn: What are they, and are they manufactured to a large extent in Canada?


James Lorimer Ilsley: I do not know. It is a large item. Of the goods that are given the fifty per cent discount, $22,205,000 were imported in 1939.


Richard Burpee Hanson: What are the principal items?


James Lorimer Ilsley: Practically everything apart
from the free and the 25 per cent items.


Mr. REID:: What was the duty collected
on the $22,205,000?


James Lorimer Ilsley: It was $3,055,000.


Richard Burpee Hanson: Have any representations been made against this proposal by the trade affected? I have heard of none. The proposal was set out in the budget, and if no one has made any direct representations against it, they must be taken as acquiescing.


James Lorimer Ilsley: Yes; I have not had any
representations or protests against them. The British government is much pleased with this action. I think I may say it did not expect us to make this reduction on woollens at all.


[Stage Direction]
Resolution agreed to.
2.	That part one of schedule one to the said act be amended by deleting therefrom items 560d, 560e, 569d and 634 (ii).
Richard Burpee Hanson: Just what does this mean?


James Lorimer Ilsley: Items 560d and 560e are
being replaced in both the customs tariff and in this act by a new item 560c. The latter
item henceforth will cover all cut-pile fabrics previously classified under the other two items and will also include silk and artificial silk, plushes and velvet which have been coated or impregnated. This change will put a stop to the practice of coating the back of velvet or plush fabrics and importing them under item 561a in order to avoid the intent of the tariff and of the War Exchange Conservation Act. Item 561a covers coated or impregnated fabrics and is not on the prohibited list.


Richard Burpee Hanson: Is it correct to say that this item is largely a reclassification?


James Lorimer Ilsley: Yes, it is.


[Stage Direction]
Resolution agreed to.
3.	That part one of schedule one to the said act be further amended by inserting therein the following items and enumerations: ex 28a, ex 29a. Black tea. ex 506, et al. Games and puzzles; mirror frames.
560c. Woven fabrics with cut pile, whether or not coated or impregnated, wholly or in part of silk or artificial silk, but not containing wool, n.o.p.
Provided, that any enactment founded on this resolution shall not apply to goods which on or before the twenty-ninth day of April, 1941, were in Canada or in transit to Canada.
Richard Burpee Hanson: What is
the effect on tea?


James Lorimer Ilsley: The first item adds black
tea to part 1 of schedule 1 in order to ensure that all our imports of this product are paid for in sterling.


Richard Burpee Hanson: What
countries are shut out?


James Lorimer Ilsley: Black tea is imported from
parts of the British empire and from Java. Some black tea comes from Japan and China.


Richard Burpee Hanson: Anything
from outside the sterling area is prohibited?


James Lorimer Ilsley: Unless it is paid for in
sterling.


Richard Burpee Hanson: If it is
bought through London then it would not be prohibited because it would be paid for in sterling?


James Lorimer Ilsley: Correct. That is by virtue
of an order in council. I am not sure that that is true without some qualification, but there is an order in council substantially to that effect. For example, if Java will accept sterling we will allow imports of tea from that country. This is to help the United States dollar position.


[Stage Direction]
Resolution agreed to.
[Stage Direction]
War Exchange Conservation Act
James Lorimer Ilsley: I should like to move an amendment to these resolutions which does not relate to anything in them.


Richard Burpee Hanson: A new
subject?


James Lorimer Ilsley: Yes. The amendment is for the purpose of altering the wording of section 624a (iii) in schedule 1 of the War Exchange Conservation Act, to correspond with a minor change being made in the customs tariff item. The amendment reads:
Resolved that part one of schedule one to the War Exchange Conservation Act, 1940, be further amended by striking out item 624a (iii) and by substituting therefor the following:
624a (iii). Juvenile construction sets of metal or rubber, consisting of various stamp-mgs, punched or moulded, and connections therefor; parts of the foregoing.
The words "or rubber" and "or moulded" are inserted. This change does not add to the prohibited list, but merely maintains the status quo.
It has been discovered that unless this change is made, the tariff amendment provided for in the budget-which is for the purpose of giving a permanent concession to certain British goods-would have the unintended, incidental result of removing juvenile construction sets of rubber from the prohibited classification. They no longer would be prohibited as "toys, n.o.p.", because they w'ould be specifically provided for in the revised tariff item 624a (iii), and they would not be prohibited by item 624a (iii) in schedule 1 of the War Exchange Conservation Act, because this item is now specifically restricted to construction sets of metal.
I am taking most of this on faith, and I hope the committee will do likewise. It is a technical change which the officials of the department inform me is necessary.


[Stage Direction]
Amendment agreed to.
Resolution as amended agreed to.
4.	That part two of schedule one to the said act be amended by inserting therein the following item:
ex 711, et al. Vegetable oils provided for in items 258, 259a, 259b, 262, 266, 276, 276a, 276b, 277, 277a, 278, 278a, 278b, 278c, 278d, 280, ex 711, 824 and 831 of the customs tariff.
Provided, that any enactment founded on this resolution shall not apply to goods which on or before the twenty-ninth day of April, 1941, were in Canada or in transit to Canada.
Mark Cecil Senn: What are the implications of this change? As I understand it, importation of vegetable oils of all kinds will be prohibited except under permit. What will be done about permits? Is it intended to issue permits indiscriminately to any firm that wishes to 
get that particular commodity into the country? If so, it seems to me that the change would be of little benefit and would make little difference. If I am correctly informed, for the past year or so very little vegetable oil of any kind has been coming to Canada from British possessions or through Great Britain itself. The greater part of these oils has been coming from foreign countries such as Brazil, China, the Dutch East Indies, and so forth. These importations amount to many millions of dollars annually, and I am also told that they are paid for in United States exchange, which certainly is not helping our exchange situation. Who will issue these permits for the importation of vegetable oils into Canada, and on what basis will they be issued? Will they be issued having regard to the real need for this commodity, or for what reason?


James Lorimer Ilsley: The permits will be issued by the Minister of National Revenue on the advice of the oils administrator, under the war-time prices and trade board. The effect of the resolution is to place under permit the importation of vegetable oils from nonsterling countries. The Department of National Revenue, with the assistance I have mentioned, will issue permits with the objective of obtaining our supplies, as far as practicable, for sterling or Canadian dollars. Prior to 1939, about seventy per cent of Canada's imports of vegetable oils came from empire sources, chiefly the United Kingdom. When the war broke out, imports from the United Kingdom declined sharply, and have now practically ceased. Shipments from other empire countries declined in 1940 to about one-half the pre-war level. Reduced supplies from empire sources have been offset in large part by increased imports from nonempire countries, most of which are not in the sterling area. In 1940 our total imports of vegetable oils of all kinds were 205,600,000 pounds, valued at $8,895,000. Imports from non-empire countries were 168,100,000 pounds, valued at $7,375,000. The principle of the War Exchange Conservation Act is the conservation of exchange, and the issuing of permits will have to be based on that principle.


Mark Cecil Senn: It seems to me that this should not, be the only principle upon which the issuing of these permits ought to be based.
If Canada has sufficient animal and other fats, so that vegetable oils are not required, it seems to me that should be a primary reason why these oils should not be brought in. I know there has grown up in this country quite a demand for certain kinds of these vegetable oils, particularly when they are made into vegetable shortening of various

War Exchange Conservation Act
sorts, because the people have been educated by means of the radio and other advertising methods to use shortening of this kind. I think this would be a good time, for the conservation of exchange as well as for the benefit of our own producers, to keep out goods of that kind as far as possible. I believe the oil controller, if he has the say as to whether or not these goods should be imported, should have in mind not only the need of conserving exchange but also the need of providing our farmers with a market for their animal fat of various kinds, which at the present time are being displaced by vegetable oils. What was the amount of duty collected last year on vegetable oils coming from non-sterling countries, or countries not within the British empire?


James Lorimer Ilsley: I am sorry I have not
that information at the moment. I gave the importations, but I have not the amount of the duty.


Mr. HATFIELD:: Are vegetable oils still coming in from these foreign countries free of duty?


James Lorimer Ilsley: I do not know of any type of vegetable oil that comes in free of duty. Vegetable oils are not just one commodity; they are as varied as the sands of the seashore. There are all kinds of tariff classifications; there are all sorts of vegetable oils, and, generally speaking, the rate of duty is about ten per cent on most of the importations.


Mark Cecil Senn: Not when it comes from empire countries?


James Lorimer Ilsley: Not when it comes from empire countries.


Richard Burpee Hanson: Are these oils free coming from empire countries?


James Lorimer Ilsley: Yes, generally speaking.


Richard Burpee Hanson: Perhaps under this item I might be permitted to direct the attention of the minister to a matter of some importance with respect to the oil controller. As we know, and as the minister has stated, the conservation of exchange is a matter of great importance to us and a problem of considerable magnitude. In furtherance of that effort, the oil controller has placed a limit upon the importation and consumption of fuel oil by any one consumer.


James Lorimer Ilsley: That has nothing to do with this.


Richard Burpee Hanson: I know, but I wish to speak about that matter. I shall not be long, and perhaps I shall not have
any other opportunity to do so. I desire to draw the matter to the attention of the government, so that it might intervene, and improve the situation.
The point is this: As I understand, until the war a substance known as dextrine has always been made in Holland, or at some point outside Canada. That substance is used in the sizing of cotton textiles, and has not heretofore been manufactured in this country. It has been imported. If I am not stating the facts correctly, I shall be. pleased to have any correction made.
Dextrine is made from starch, and as a rule in the continental countries it is made from the starch of wheat or other grains. In Canada, and particularly in New Brunswick, there has grown up a starch industry, made from potatoes. That starch is quite capable of being further manufactured into dextrine. The chemical process is well understood and, if other arrangements can be completed, there is an opportunity to-day to establish in Canada with foreign capital-capital which would come in, without drawing on our own capital resources-a plant for the manufacture of dextrine in this country.
One of the remarkable complications in the matter is that the product has to be heated by a high and continuous heat, which coal will not supply-at least I am so advised. The only thing which will produce that heat is fuel oil. A plant would have to have twice the amount of the limit stipulated by the oil controller in respect of the importation and consumption of oil by any one plant in Canada. For instance, if the limit is 4,000 gallons, the plant in question would require 8,000.
If there is a bona fide prospect of establishing in Canada a brand new industry for the manufacture of a product, namely, dextrine, the importation of which is now shut off from Europe, would it not be possible for the government to prevail upon the oil controller to view with favour an application by those promoting the new industry, so that they could have the required heat, which can be derived only from fuel oil? In this way the government would help in opening up a fine market for starch, especially that manufactured in New Brunswick.
My colleague, the hon. member for Victoria-Carleton, is very well informed on this matter. If I have not made the position clear, I should be glad to have him supplement what I have said. Will the minister see if ways and means cannot be provided whereby the promotors of this proposal may secure an increased allotment for the establishment of a

War Exchange Conservation Act
new industry which, I believe, will remain permanently in Canada, and displace importations which heretofore had come from other countries.
I have stated the facts as precisely as I can, and I would ask the minister to give the matter sympathetic consideration. I realize that perhaps it comes under the jurisdiction of one of his colleagues, who does not happen to be in his seat. It is, however, a matter of some importance, and I did not know at what other point I might discuss it. I had thought of seeking an interview with the oil controller. I found, however, that he is located in Toronto, and I might not have an opportunity to see him. Through the medium of the minister I should like to convey my survey of the situation, if I have made it at all intelligible.


James Lorimer Ilsley: I shall bring the matter to the attention of the Minister of Munitions and Supply (Mr. Howe).


Heber Harold Hatfield: Corn dextrine is manufactured in Canada. This is a potato dextrine plant.


James Lorimer Ilsley: I shall bring these representations to the attention of the Minister of Munitions and Supply, under whom the oil controller branch is established. It will be understood that that is different from the oil administrator, who has been mentioned. The oil administrator is Doctor Hilton, and he does not deal with this kind of oil.


Richard Burpee Hanson: I thought
they were the same.


James Lorimer Ilsley: No. The officials working
under the war-time prices and trade board are called administrators, not controllers. The officials of the Department of Munitions and Supply are called controllers.


Mark Cecil Senn: I should like, if possible, to have the same assurance from the minister with regard to a consideration of the reasons why the oil administrator, as he has been described, should allow vegetable oils to come into Canada. I would ask the minister to point out to the administrator that not only should permits be refused, for the conservation of exchange, but also that the whole situation in connection with the fats industry in this country be considered. It should be urged that we have a sufficiency of that class of goods, without importing at all. It seems to me that if changes were made they would not only help the conservation of exchange, but also help the whole agricultural industry, and be of great assistance to it.


James Lorimer Ilsley: I shall bring my hon. friend's representations to the attention of the Minister of National Revenue. It is he who would be issuing permits.
Before I resume my seat I would ask my colleague to move an amendment to resolution 4. The amendment is required to make the list complete.


Mr. McLARTY:: I move:
That resolution 4 of the resolutions amending the War Exchange Conservation Act, 1940, as introduced on April 29, 1941, be amended by striking out item ex 711 et al and by substituting therefor the following:
ex 711 et al. Vegetable oils provided for in items ex 208t, 258, 259a, 259b. 262, 266, 276, 276a, 276b, 277, 277a, 278, 278a. 278b, 278c, 278d, 280, ex 711, 824 and 831 of the customs tariff.


James Lorimer Ilsley: This amendment is made
at the request of the oil administrator, and merely adds item ex 208t to the list of items covering vegetable oils. Castor oil is classified under item 208t, and the oil administrator desires that the permit requirements apply to castor oil, the two grades of which are known as first pressure and second pressure. These grades are used in the paint industry.


[Stage Direction]
Amendment agreed to.
Gordon Graydon: With regard to permits
for importations of vegetable oils, I would make a suggestion to the minister. I suggest that he should point out to the Minister of National Revenue that before permits are granted some consultation be had with the Minister of Agriculture. The farmers have an important stake in this matter, and should be consulted. In my opinion, the Minister of Agriculture should take part in the issuance of these permits. I know the minister will do his best to protect the farmers in this matter, and it is one which certainly should not be left entirely to the Department of National Revenue.


James Lorimer Ilsley: I shall take note of the
hon. member's suggestion.


Mr. WOOD:: I am led to believe that prior to the passage of the War Exchange Conservation Act we had to import large quantities of cod liver oil. Is it true that we have reached the point where we supply our own demands, and have almost reached the place where we have an exportable surplus? If that is true of cod liver oil, it seems to me that the solution of the points raised by the hon. member for Peel and the hon. member for Haldimand is that of shouldering the responsibility of investigating the possibility of processing our own products and supplying our own needs. I should like to have an answer from the minister.

War Exchange Conservation Act


James Lorimer Ilsley: I will ask the Minister of Labour to answer.


Norman Alexander McLarty: The information of the hon. member for Brant (Mr. Wood) is entirely correct. I have no figures before me, but speaking from recollection I would say that we imported eighty per cent of our cod liver oil requirements prior to the war, about half from Great Britain and half from Norway. Early in the war, the British government advised us that they would require their own supply of cod liver oil. Later on, Germany moved into Norway, and importations from that country were definitely cut off. The wartime prices and trade board investigated the matter to see if we could not make up the reduction in our importations, and as a result we are producing on both Pacific and Atlantic coasts, not only our domestic requirements but sufficient to place us in a position to export some of this oil. This is an accomplishment of the war-time prices and trade board which gives one some pride to announce to the committee. My recollection is that the total consumption of cod liver oil prior to the war was about 300,000 gallons.


Gordon Graydon: Tons?


Norman Alexander McLarty: No; it would not be tons. Perhaps I had better delete that figure, but from recollection I believe it to be correct. At any rate, about one-half was used for human consumption and the other half for feed.


Mark Cecil Senn: Could the minister give us a comparison of prices prevailing to-day with those prior to the war?


Norman Alexander McLarty: I would have to give
them from recollection, but I shall be glad to give the actual figures at the appropriate time. I may say, however, that there has been a remarkably small increase in the price of cod liver oil used for medicinal purposes. I should not like to put my memory to the task of giving the exact figures.


John Ritchie MacNicol: Do we import cod liver oil from Newfoundland?


Norman Alexander McLarty: My information is that the only countries from which we imported were Great Britain and Norway. R is possible that some was imported from Newfoundland, but it would, in any event, be an extremely small quantity.


Mr. BRUCE:: I should like to commend the department for what they have done in this regard. I never could understand why we had to import cod liver oil. As some hon. members may know, this oil contains very valuable vitamins, especially useful for children, but they are also found valuable for adults recovering from serious illnesses.


Norman Alexander McLarty: 
Grote Stirling: Is this resolution in the
nature of a reclassification?


James Lorimer Ilsley: No; it is a reduction in
duty. This resolution does two things. First, it deletes from schedule 2 of the War Exchange Conservation Act certain items in respect of which the United Kingdom was given a reduced rate last December, but not free entry. These items will now be accorded a fifty per cent discount from the rates under the British preferential tariff. Twelve of the fifteen items will get a rate still lower than that granted by schedule 2, and there will be no change on the other three. In no instance will the rate applicable to United Kingdom goods be increased. This resolution inserts in schedule 2, five additional tariff items in connection with which it has been decided to give the United Kingdom free entry for the duration of the war. All items already in the schedule as free remain unchanged.


Gordon Graydon: I do not know whether
this is the proper time at which to bring up this matter, and I certainly do not wish to weary the minister who has had an arduous task to perform. I should like, however, to ask whether any consideration was given to the time-honoured problem of fruits and vegetables and their importation into Canada.


James Lorimer Ilsley: We did not feel free to add fruits and vegetables to the prohibited list, for the reasons which I have stated on several occasions.
2986	COMMONS
War Exchange Conservation Act


Gordon Graydon: I do not wish to prolong the argument, and perhaps the minister will consider what I have said previously as read.


James Lorimer Ilsley: There is an amendment
which is really an addition, as follows:
Resolved, that schedule two of the War Exchange Conservation Act, 1940, be further amended by striking out items ex 560d and ex 560e and by substituting therefor the following:
ex 5G0c. Woven fabrics with cut pile, whether or not coated or impregnated, wholly or in part of artificial silk, but not containing silk or wool, n.o.p.
Items 560d and 560e are replaced in the customs tariff by a new item 560c. This amendment to schedule 2 of the War Exchange Conservation Act providing for a change in wording now makes it quite clear that the United Kingdom goods formerly covered by items 560d and 560e are to continue to get free entry into Canada.


Grote Stirling: That seems to be a repetition of the item 560c which appears on page 11 of the resolutions, except that the word "silk" is not included.


James Lorimer Ilsley: The goods covered by the items in resolution 3 are placed in the prohibited list, and the effect of this resolution is to put the same goods, with some additions, in the free list from Great Britain. The items are for two different purposes.


Grote Stirling: It applies to the same thing, but the items are treated in two different ways.


James Lorimer Ilsley: Yes; they are treated a little differently, as the hon. gentleman says. I find it a little hard to fathom the technicalities here, but the effect is to take this class of goods and to prohibit them from coming in from non-sterling areas and to ensure that they come in free from the United Kingdom, except in the case of silks.


[Stage Direction]
Amendment agreed to.
James Lorimer Ilsley: I think, Mr. Chairman, that at the end of resolution 5 is the most suitable place for that amendment to come.


Mr.   CHAIRMAN@: Yes.
Resolution as amended agreed to.
6.	That any enactment founded on these resolutions shall be deemed to have come into force on the thirtieth day of April, 1941, and to have applied to goods imported or taken out of warehouse for consumption on or after that date and to have applied to goods previously imported for which no entry for consumption was made before the said date.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
1.	Resolved, that schedule A to the customs tariff, being chapter forty-four of the Revised Statutes of Canada. 1927, as amended by chapter seventeen of the statutes of 1928, chapter thirty-nine of the statutes of 1929, chapter thirteen of the statutes of 1930 (first session), chapter three of the statutes of 1930 (second session), chapter thirty of the statutes of 1931, chapter forty-one of the statutes of 1932, chapters six and thirty-seven of the statutes of 1932-33, chapters thirty-two and forty-nine of the statutes of 1934, chapter twenty-eight of the statutes of 1935, chapter thirty-one of the statutes of 1936, chapters twenty-five and twenty-six of the statutes of 1937, chapter forty-one of the statutes of 1939 (first session), chapter two of the statutes of 1939 (second session) and chapter twenty-nine of the statutes of 1940, be further amended by striking thereout tariff items 219e, 264, subdivision (ii) of item 409e, 410d, 427f, subdivision (a) of item 429, 443a, 476a, 5G0d, 560e, 569d, subdivision (iii) of item 624a, 634 (ii). 655a, 761, 824, 825, the several enumerations of goods respectively and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A:
Customs tariff item-199g. Duplex backing papers or wrappers including those printed and/or skived for use in the packaging of photographic roll films; interleaving and wrapping paper, black, for packaging flat photographic films and photographic papers: when imported by manufacturers of photographic films and photographic papers for use in their own factories in the packaging of such films and papers: British preferential tariff, 5 per cent; intermediate tariff, 12£ per cent; general tariff, 35 per cent.
James Lorimer Ilsley: There is an amendment to this item, Air. Chairman, which I will ask my colleague to move.


Norman Alexander McLarty: I move, Mr. Chairman, that this item be amended to read as follows:
199d. Duplex backing papers or wrappers including those printed and/or skived for use in the packaging of photographic roll films; interleaving and wrapping paper, black, green, or red, for packaging flat photographic films and photographic papers; when imported by manufacturers of photographic films and photographic papers for use in their own factories in the packaging of such films and papers: British preferential tariff, 5 per cent; intermediate tariff 124 per cent; general tariff, 35 per cent.


James Lorimer Ilsley: This is a new item to cover film wrapping and film packaging papers. The rate to the United States is being reduced from 27J per cent to 12^ per cent, and the British preferential rate from 20 per cent to 5 per cent. This paper is not made in Canada. The 15 per cent reduction is made to restore partly to the Canadian manufacturer the competitive position enjoyed in the Canadian market prior to the reduction made on United' Kingdom finished films from 15 per cent to

Customs Tariff
free under the Canada-United Kingdom trade agreement, and from 25 per cent to 20 per cent in respect of imports of finished films from the United States under the Canada-United States trade agreement. It is also intended to compensate for the imposition of the war exchange tax of 10 per cent on Canadian manufacturers' raw material, which tax is not levied on imports of English finished films.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Item 211b agreed to.
Customs tariff item-219e.	Chloropicrin,
ethylene oxide, methyl formate, cyanides, carbon bisulphide, or mixtures containing any of these, for use in combating destructive insects and pests: British preferential tariff, free; intermediate tariff, free; general tariff, free.
James Lorimer Ilsley: There is an amendment to this item. The wording of the item introduced on budget day is being amended to provide for methyl bromide, which was omitted when the new item, 219e, was drafted.
Mr. McLARTY; I move, Mr. Chairman, that item 219e be amended to read as follows:
219e. Chloropicrin, ethylene oxide, methyl bromide, methyl formate, cyanides, carbon bisulphide, or mixtures containing any of these, for use in combating destructive insects and pests: British preferential tariff, free; intermediate tariff, free; general tariff, free.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Customs tariff item-232g. Inedible gelatine, when imported by manufacturers of photographic films, photographic plates and/or photographic paper, for use exclusively in the manufacture of such films, plates and/or paper in their own factories, under such regulations as the minister may prescribe: British preferential tariff, 5 per cent and two cents per pound; intermediate tariff, 124 per cent and five cents per pound; general tariff, 25 per cent and five cents per pound.
Grote Stirling: Is there Canadian production?


James Lorimer Ilsley: No. This is a new item to cover inedible gelatine for use in the manufacture of photographic films, plates and paper. The rate to the United States is being reduced from 25 per cent and five cents per pound to 12-4 per cent and five cents per pound, and the British preferential tariff rate from 174 Per cent and two cents per pound to 5 per cent and two cents per pound. The 124 per cent reduction under the British preferential and intermediate tariffs is made to partially restore to the Canadian manufacturer the competitive position enjoyed in the Canadian market prior
to the reduction made on the United Kingdom finished films from 15 per cent to free under the Canada-United Kingdom trade agreement and from 25 per cent to 20 per cent in respect of imports of finished films from the United States under the Canada-United States trade agreement. It is also intended to compensate for the imposition of the war exchange tax of 10 per cent on the Canadian manufacturers' raw material, which is not levied on imports of English films.


[Stage Direction]
Item agreed to.
Item 264 agreed to.
Customs tariff item-355a. Rods containing 90 pel- cent or more of nickel, when imported by manufacturers of nickel electrode wire for spark plugs, for use exclusively in the manufacture of such wire for spark plugs, in their own factories: British preferential tariff, free; intermediate tariff, 5 per cent; general tariff, 10 per cent.
James Lorimer Ilsley: There is an amendment to this item which I will ask my colleague to move.


Norman Alexander McLarty: I move, Mr. Chairman, that this item be amended to read as follows:
355a. Rods containing 90 per cent or more of nickel, when imported by manufacturers of nickel electrode wire for spark plugs, for use exclusively in the manufacture of such wire for spark plugs, in their own factories: British preferential tariff, free; intermediate tariff, free; general tariff, 10 per cent.


James Lorimer Ilsley: The only change being made in this item is a further reduction of the intermediate tariff rate from 5 per cent to free. It is claimed that some of the rods provided for in this new item are already being admitted duty free and that if the rate of 5 per cent under the intermediate tariff were continued it would have the effect of increasing the tariff on certain nickel rods.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.
Customs tariff item-409e. (ii) Fruit and vegetable grading, grating, washing and wiping machines and combination bagging and weighing machines, and complete parts thereof; machines for topping vegetables, and machines for bunching and/or tying cut flowers, vegetables and nursery stock, and complete parts thereof; machines and complete parts thereof for making or lidding boxes for fruit or vegetables; egg-graders and egg-cleaners, and complete parts thereof, not including aluminum parts: British preferential tariff, free; intermediate tariff, 5 per cent; general tariff, 10 per cent.
Gordon Knapman Fraser: Are electric motors for running these machines included?


James Lorimer Ilsley: No, they are not included.
Customs Tariff


Gordon Knapman Fraser: But it says here, "complete."


James Lorimer Ilsley: The only change here is to include "machines and complete parts thereof for making . . . boxes for fruit or vegetables", when the former item already provided for box-lidding machines. The rate on the importation of these box-making machines from the United States is reduced from 10 to 5 per cent. They are not made in Canada. The item has nothing to do with the motors. The hon. gentleman is, I think, reading other parts of the item.


Gordon Knapman Fraser: No, the first part of it, where it says, "grating, washing and wiping machines". I understand that an electric motor is used to run those machines.


James Lorimer Ilsley: No change in the duty on electric motors is being suggested.


Gordon Knapman Fraser: That would not include the motor?


Heber Harold Hatfield: That would include
scales, grading and weighing machines. It is a complete machine; it would include the scales and the motor. It says "complete machines" in the item.


James Lorimer Ilsley: There is no change in respect of weighing machines or washing or wiping machines at all. I should not like to give an interpretation on an item which has been in existence for some time. The hon. gentleman could get that interpretation from the Department of National Revenue. The only change in the item is to add these box-making machines for fruits and vegetables. It is a very minor change. Generally speaking, my recollection is that, for customs purposes, great pains are taken to separate the motor from the rest of the machine, but I should not like to be dogmatic about that.


Grote Stirling: These machines used to be subject to a duty of 7i per cent, and now it is S per cent.


Heber Harold Hatfield: These machines are
made complete. It is hard to get the motor in Canada.


Gordon Knapman Fraser: The General Electric will make them in Peterborough for you.


James Lorimer Ilsley: Two hon. gentlemen opposite are apparently opposed to each other as to what should be done.


[Stage Direction]
Item agreed to.
Customs tariff-410d. Well-drilling machinery and apparatus, and complete parts thereof, for use exclusively in drilling for water, natural gas or oil, or in prospecting for

minerals, not to include motive power; machinery and apparatus of a class or kind not made in Canada for maintenance and testing purposes in connection with gas or oil wells; well-packers and complete parts thereof, for oil or gas wells; seamless iron or steel tubing of a class or kind not made in Canada, for use in casing water, natural gas or oil wells: British preferential tariff, free; intermediate tariff, free; general tariff, free.
Grote Stirling: What is the addition here?


James Lorimer Ilsley: The existing item covering well-drilling machinery and apparatus is being widened to include "machinery and apparatus of a class or kind not made in Canada for maintenance and testing purposes in connection with gas or oil wells." The articles covered by the amendment were mainly dutiable at the rate of 25 per cent when imported from the United States. Articles that may be imported under this item are limited to those of a class or kind not made in Canada and are used in maintaining an oil well in operation, in determining the physical characteristics of oil and gas reservoirs, in determining the productivity and value of oil wells and, in some instances, in bringing old wells back into production. The amendment is, I think, of some importance.


[Stage Direction]
Item agreed to.
Item 427f agreed to.
Customs tariff-429. Cutlery of iron or steel, plated or not:
(a) Knife blades or blanks, and table forks, of iron or steel, in the rough, not handled, ground nor otherwise manufactured; spoon blanks, of iron or steel, not further manufactured than stamped to shape; blanks, of iron or steel, for scissors and shears, in the rough, not ground nor otherwise manufactured: British preferential tariff, free; intermediate tariff, 7$ per cent; general tariff, 10 per cent.
Grote Stirling: What is added here?


James Lorimer Ilsley: The words "in the flat" used in describing spoon blanks which may be imported under tariff item 429 (a) are deleted. It is claimed by manufacturers of ordinary household spoons that these articles are not imported in the flat, but moulded to shape.


[Stage Direction]
Item agreed to.
Items 443a and 443b agreed to.
Customs tariff-476a. Glassware and other scientific apparatus for laboratory work in public hospitals; chairs and tables for surgical operating purposes, and complete parts thereof; infant incubators and complete parts thereof; infant identification bead sets including cases, and integral parts thereof; electro cardiographs and complete parts thereof, and sensitized film and paper for use therein; apparatus for sterilizing purposes, including bedpan washers and sterilizers but not including washing nor laundry machines; all for the use of any public hospital, under regulations prescribed by the minister: British preferential tariff, free; intermediate tariff, free; general tariff, free.

Customs Tariff
Grote Stirling: Would the minister
explain this item? There is considerable alteration.


James Lorimer Ilsley: In the existing item 476a, the portion covering hospital equipment is being amended to include "infant identification bead sets including cases, and integral parts thereof". This amendment is in order to simplify administration, because these bead sets were dutiable according to material under three different items in the customs tariff.


Grote Stirling: They are not made in Canada?


James Lorimer Ilsley: No; they are not made in Canada.


[Stage Direction]
Item agreed to.
Items 560c, 597c and 624a agreed to.
Customs tariff-655a. Lead pencils and crayons, n.o.p.: British preferential tariff, 10 per cent; intermediate tariff, 35 per cent; general tariff, 35 per cent.
Grote Stirling: What does this item mean? These articles are certainly made in Canada.


James Lorimer Ilsley: It is proposed to divide the former item 655a, the item covering lead pencils and crayons, into two tariff items: one to be known as 655a, covering "lead pencils and crayons, n.o.p." and the other to be known as 655b, to cover crayons of chalk. No change is being made as regards the existing rates on item 655a.


Grote Stirling: It is just being divided into 655a and 655b?


James Lorimer Ilsley: Yes.


[Stage Direction]
Item agreed to.
Items 655b, 761, and 824 agreed to.
Customs tariff-825. Woven cord tire fabric, wholly or in chief part by weight of artificial silk or similar synthetic fibres, not to contain silk nor wool, coated with a rubber composition, when imported by manufacturers of rubber, to be incorporated by them in pneumatic tires, in their own factories: British preferential tariff, free; intermediate tariff, 174 per cent and 34 cents per pound; general tariff, 25 per cent and 4 cents per pound.
Grote Stirling: What is the effect of this item?


James Lorimer Ilsley: The existing item in the tariff covering rayon tire fabric was due to expire on July 1, 1941. It is being continued without any expiry date at rates slightly higher than those established by order in council in June, 1937. The new rates are similar to those applicable to cotton tire
fabric. Rayon tire fabric is not made in Canada. The production of the rayon yam used in weaving this fabric is still in the experimental stage.


[Stage Direction]
Item agreed to.
Item 826 agreed to.
Resolution agreed to.	.
2.	Resolved, that any enactment founded upon the foregoing resolution shall be deemed to have come into force on the thirtieth day of April, one thousand nine hundred and forty-one, and to have applied to all goods mentioned in the foregoing resolution imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
Resolution agreed to.
The CHAIRMAN:: Shall I report the
resolutions?


James Lorimer Ilsley: Yes. There was, however, notice given of a further resolution in Votes and Proceedings of May 7. This deals with the duty on wines; it was necessary to complete the tax structure in respect of wines. The excise tax on wines was increased from 15 cents to 40 cents per gallon, but no change was made in the customs tariff resolution, so [DOT]there is a suggestion to alter the duty to accord with a change in the tax. The resolution is found in Votes and Proceedings of May 7:
Resolved, that schedule A to the customs tariff, as amended, be further amended by deleting from the Customs Tariff Amendment Act, 1939, being chapter two of the statutes of 1939 (second session), the following enumerations of goods and rates of additional duties of customs:
Wines of all kinds except sparkling wines, containing not more than forty per cent of proof spirits, 74 cents per gallon.
Champagne and all other sparkling wines, 75 cents per gallon.
and by substituting therefor the following enumerations of goods and rates of additional duties of customs:
Wines of all kinds except sparkling -wines, containing not more than forty per cent of proof spirit, 324 cents per gallon.
Champagne and all other sparkling wines, $1.25 per gallon.
Resolved, that any enactment founded upon the foregoing resolution shall be deemed to have come into force on the thirtieth day of April, one thousand nine hundred and forty-one, and to have applied to all goods mentioned in the foregoing resolution imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.


Colin William George Gibson: I so move.
Special War Revenue Act


Thomas Vien: That would come after item 826?


James Lorimer Ilsley: It would be right after 826 if it were in the enumeration.


[Stage Direction]
Amendment agreed to.
Resolution as amended agreed to.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act and to provide:
1.	That the definition of "British company" in section thirteen of the said act be amended by deleting therefrom the following words "and includes any association of persons formed in the said kingdom or in any such dominion or possession on the plan known as Lloyds whereby each associate underwriter becomes liable for a stated, limited or proportionate part of the whole amount insured by a policy."
2.	That subsection one of section sixteen of the said act be amended by deleting the words "or of any province thereof" where they appear in the fourteenth line thereof.
James Lorimer Ilsley: There are a few of these resolutions that I should like to have stand because of the fact that representations have been made and are still being made with regard to them, and I desire to give full consideration to those representations. Among the resolutions I should like to have stand are 1 and 2, so I would ask that the committee go on to the	consideration of
resolution 3.
Resolutions 1 and 2 stand.
3.	That the tax on long distance telephone calls be increased from six per cent of the charge made to ten per cent; provided however that upon long distance telephone calls made from any public pay station there shall be paid in lieu of the tax hereinbefore provided for the sum of five cents for each such call for which a charge of more than twenty-five cents and not more than fifty cents is made and five cents for each additional charge of fifty cents or any fraction of fifty cents; and provided further that the tax imposed shall in no case be greater than fifty cents on any one call.


Thomas Langton Church: The working classes of
this country, who utilize the long distance telephone for business and personal matters, are being asked to pay too much by this increase from six to ten per cent. In 1908 the telephone companies were placed under the jurisdiction of the railway commission, but even to-day we have one of these companies coming to parliament and asking for
IMr. Ilsley.]
vast powers. It is well known that there has been no regulation of these telephone rates since the city of Toronto applied some years ago for an order compelling the Bell Telephone company to reduce its charges. The commercial and domestic rates charged by the telephone companies are exorbitant, when one remembers that they are paying huge dividends on stock that is very greatly watered. Residential rates have gone sky high. 1 had an application myself before the railway commission in an endeavour to have those rates reduced. Why, they were charging $60 and $70 for a residence telephone north of Bloor street in Toronto. That city spent over 860,000 for experts who gave evidence at the hearing of the application, and the company was compelled to bring its rates down to a more reasonable level.
To raise this tax from six to ten per cent is beyond all reason. I do not believe this would be done if the government had to pay for the transatlantic telephone calls they make every day, and dear knows they are not accomplishing very much by those calls, if we are to judge by the apologies made in this house every few days. This tax is too high. Our rates do not compare at all well with those charged in other countries, where telephone companies are subject to some sort of regulation. There is no attempt at regulation of the Bell Telephone company in this country at the present time. There has not been even an application for an order reducing the rates, but now the government comes along with a fiat increase in the tax from six to ten per cent. We must remember that this will react on a great many Canadian homes. Between 1921 and 1930 over six hundred thousand people, nearly half of them returned soldiers, were forced to leave this country for which they had fought at the risk of their lives and go to the United States to look for jobs, thanks to the tariff and free trade policies of hon. gentlemen opposite. These people need to telephone home once in a while. Many of these poor people who lived here like their friends at home to telephone them, and now the government comes along and penalizes them by a six to ten per cent nuisance tax.
The government has gone far enough in attacking in this way the working classes of this country, and in loading up the budget in order to save the dollar. This tax will be passed on to these people to pay. If only the government had been as busy, through its great diplomats at Washington, something might have been done to help us. China can get relief, but Canada can get no relief under the lease-lend bill. As one prominent man

Special War Revenue Act
has said, after all it is only a lend and lease measure, and some day someone will have to pay for it. If Canada had skilled negotiators at Washington, we would not have items in the budget like this. We would not have nearly a billion dollars in the .estimates, because the United States would have to pay for the defence which this country is giving them, and which the mother country gave them for two hundred years. Parliament might as well adjourn to-morrow for all the good we are doing here. We are sitting here day after day, but we have no control whatever over taxation. We have surrendered our power. Nobody can strike a word or a cent [DOT]off the budget, and I protest, on behalf of the wage-earners. They are the people who will have to pay the bill.
We see what the telephone company do in [DOT]connection with long-distance charges. They name a rate, and then they add toll charges, and a number of other charges. The charges are exorbitant. The railway commission [DOT]could not regulate them. They cannot regulate even a few passes. When this company was placed under the control of the railway commission, it was notified that any application with respect to rates or charges would be submitted to the railway commission, to find *out if such rates or charges were reasonable. I say that they are not reasonable, and that in the cities and towns they are twice what they ought to be.
The hon. member for Peel and the hon. member for Ontario will know that I had an .application before the commission for a flat rate for the whole of greater Toronto and Y'ork county, including what is known as the suburban counties of Peel and Ontario. The rates charged were found to be exorbitant. I protest against this provision. If I am the only person who protests against these rates, then I shall continue to protest against their being charged workers in Canada. Has the minister made any survey of the company? Has he made any survey as to the ability of the people to pay? What are the urban and suburban rates with this tax added? What regulation is there of the rates of the Bell Telephone company, and the other municipal companies which operate under franchises?


Richard Burpee Hanson: Has resolution 1 passed?


James Lorimer Ilsley: It stands.


Thomas Langton Church: I am asking the minister for a reply. Surely I am entitled to the courtesy of a reply. If we do not have a reply
now, we shall get it on the third reading of the bill to be founded on these resolutions, and it will take much longer.


James Lorimer Ilsley: The explanation of this resolution is that the new rate of ten per cent on long-distance telephone calls takes the place of the six per cent rate, which has been unchanged since 1932. The tax continues to apply under the new rate only to calls for which the charge is in excess of fifteen cents, as was the case under the former rate.
In the case of calls made from public pay-stations, because of the difficulty involved in collecting a percentage tax, a tax at a flat rate is collected. Under the new rates this flat rate tax is five cents on all calls costing more than twenty-five cents and less than fifty cents, plus five cents for each additional fifty cents or fraction thereof, which compares with the former rate of five cents on all calls costing more than twenty-five cents and less than eighty cents, plus five cents for each additional eighty cents or fraction thereof.
It is estimated that the increased rates of tax will produce 1600.000 additional revenue in a full year, and $550,000 in the remainder of the present fiscal year. The revenue from long-distance telephone calls was $804,218 in 1939-40 and $921,331 in 1940-41.


Richard Burpee Hanson: The amount is increasing, I assume?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: With the impetus in business?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Is there any cost of collection? Do the companies bear all the expenses?


James Lorimer Ilsley: Yes, they do.


Richard Burpee Hanson: No cost to the country?


James Lorimer Ilsley: No.


[Stage Direction]
Resolution agreed to.
4.	That part V of the said act be amended to provide that every purchaser of a ticket or right entitling the purchaser to transportation by railway, bus or aircraft to any place in or outside of Canada or by vessel between places in Canada or from a place in Canada and return thereto shall, in addition to the regular charge for the ticket or right, pay to the person selling such ticket or right, for the consolidated revenue fund in addition to the price paid therefor, a tax equal to ten per cent of the said price, provided that such tax shall not apply on the charge for a ticket or right of transportation, if the regular one way charge for such ticket or right to any place in or outside of Canada is fifty cents or less.
Special War Revenue Act
Thomas Reid: I think every hon. member is pleased about the announcement made to the house by the minister that the ten per cent tax on transportation will be taken off fares issued to service men.
Could the minister explain why a class which is well able to pay for its transportation should be exempt from the ten per cent tax? Most of those who travel on railway passes are of a class who are in a position to pay. Many of them hold high offices. While I am not one to impose taxation on any group, yet on the other hand I think it most unfair to take the ten per cent tax from those who have to pay for their tickets on steamships, railways or aeroplanes and not take it from those who mostly travel free. Why should that class be exempt?


John Ritchie MacNicol: Does the ruling with respect to the elimination of the ten per cent tax on soldiers' tickets include the tax on tickets purchased by nurses engaged in war work?


Karl Kenneth Homuth: Anyone engaged in war work.


James Lorimer Ilsley: Nurses in the armed forces, yes. Then, with regard to passes, I believe the suggestion made by the hon. member for New Westminster reflects great credit upon him. He comes from British Columbia, and the effect of taxing members' passes would be that members from British Columbia would pay in taxes many times the amount of the tax of a member living nearer Ottawa. That is, however, only a small consideration.
The important point is that a large number of pass holders are employees of the railway companies. They assume, and I presume rightly so, that free transportation is part of their remuneration. It is one of the privileges or advantages they have.


Richard Burpee Hanson: It is one of the working conditions.


James Lorimer Ilsley: It is part of their remuneration or wages. I consider that if we were to begin collecting transportation taxes from these employees of the railway companies, many of whom have to use the railways to go from one place to another, in the discharge of their duties on the railways, we would be following an improper procedure.


Thomas Reid: That is all very well, but I do not think the minister has looked into the matter as fully as he might. I have in mind classes of railway employees who are well able to pay. I refer to the office class and the superintendent class, and from there up to the president. Those people are in receipt of large salaries. From conversation

with them I know they do not take into account the fact that they travel free, as part of their salaries. This is the class of traveller who is well able to pay. He may step on the train, take his wife and family, and pay no tax; yet the poor traveller who buys a ticket will have to fork out ten per cent as a tax. This is not fair legislation, and, I believe, will bring about a great deal of unrest in the minds of many people. The reason given by the minister is not a just reason why this class should be exempt.


Mr. COLD WELL:: I should like to emphasize a point I made when the budget was under debate. I said that this tax should not be imposed at all. I am not going to enter into any argument about the taxation of somebody else in connection with transportation; but I do not think this tax should be imposed at all, because the people who can afford it have passenger automobiles, and often travel in that way. In many instances those who use our railway and bus systems of transportation are those who have no other way of travel, and who frequently travel of necessity.
The railway fares in this country, a country of great distances, are very high compared with those in other parts of the world. I am firmly of opinion that this tax is wrong in principle because, in a very large degree, it is taxing a group of people who must travel, and who have no means other than the public transportation systems.
I was pleased to hear the minister announce that soldiers in uniform would be relieved of this transportation tax. I am asking him to give some consideration to the point which I have raised and about which I am sure other members feel as I do. If we need to raise money by a tax on transportation, let us impose a heavier tax upon the more luxurious forms of travel such as the compartment, the drawing-room and the chair. Many people have no other means of travel than the railways and bus systems of transportation, and they often travel in search of work or because of sickness or something of that kind. Let us relieve these people of this additional burden. As I said before, Canada is a country of great distances, and the imposition of a tax of this description will be a real hardship upon those groups of people who have no other means of transportation.
I ask the minister to give this particular suggestion further consideration.


Douglas Gooderham Ross: 
Mr. QUELCH:: I also appreciate the fact that the minister has seen fit to eliminate this tax in so far as soldiers are concerned.
I believe considerable dissatisfaction would have been caused among the troops had that not been done. While we are dealing with this matter, I wish to protest at the failure of the government to provide free passes for embarkation leave and furlough. We all appreciate-


James Lorimer Ilsley: I must rise to a point of order. If we get on to the question of free transportation for soldiers, it will take the rest of the evening.


Victor Quelch: I was just going to point out that if free transportation had been granted to our soldiers, this question of a tax on their fares would never have arisen. I consider that this proposal to place a ten per cent tax on transportation is a vicious practice. Generally speaking, the burden will not be placed upon those who are best able to pay. The greater proportion of people travelling on trains to-day are either in the exempted class or the lower income brackets. One needs only to pass through a transcontinental train to see how few people there are occupying drawingrooms, to see how few there are in the parlour car, to see the slightly greater number in the tourist car, to see the day coaches crammed full. It is the poorer classes of our people who provide the greater part of the traffic on our railroads, and they are the ones who will have to bear the greater burden under this proposal. I would suggest, as did the hon. member for Rosetown-Biggar (Mr. Coldwell), that there be an increased tax upon the more luxurious forms of travel, such as the standard coaches, drawing-rooms and tourist travel, but no tax whatsoever upon day-coach travel.
If the idea of this tax is to restrict holiday travel, then I (hink the government is making a serious mistake. People suffer a certain amount of nervous tension during war time, and they are more in need of vacations than
in peace time in order to keep up their morale. We all know how hard it is for certain classes of our people, especially our farming classes, to find the money for a holiday. Very often it is a matter of saving for several months in order to scrape together S9 or $10 with which to provide a holiday at the side of a lake. Some of these people are lucky and have cars; others have cars but have no money to buy licences, while others have no money to buy gas. Many of our people must travel by railway, and this ten per cent tax might make it impossible for them to take a holiday.
If the idea of this proposal is to raise revenue, then I am satisfied that there are more equitable means of doing this. If the minister is so much in love with indirect taxation, I can suggest one tax. He should place a tax upon advertising in the press and over the radio. This would accomplish three things. First, it would reduce the amount of labour required to produce the advertising. Second, it would reduce spending, because I think everyone admits that advertising increases spending.


Karl Kenneth Homuth: No.


Victor Quelch: What is the use of advertising if it does not increase spending?


Karl Kenneth Homuth: What is the use of having a business if you do not advertise?


Victor Quelch: Third, it would produce revenue. Time and time again the minister has stressed the point that taxation should be imposed upon those best able to pay. We all know that indirect taxation does not do this; indirect taxation is inequitable and unequal. Direct taxation takes the money from those who have it. The other day I suggested to the minister that instead of having indirect taxation, he should increase the taxation against those people who have money to buy bonds. At that time he protested that a tax of that kind would be in the nature of a capital levy.
I would remind the minister that the surplus income of to-day becomes the capital of to-morrow. The correct time to tax that capital is when it is still income. If, however, we fail to tax that when we should, that is no excuse for our failing to tax it after it becomes capital. So long as we recognize the fact that in many instances that capital has resulted from war profits, then I would not for one minute protest against a capital levy. The excess profits tax could be increased from 75 per cent to 100 per cent, and the taxes upon incomes in the higher brackets could be increased. As has been stressed so many times from this side of the house, it is not the amount a person pays, it is the amount he
Special War Revenue Act

has left after his tax has been paid that really matters. People throughout this country are not going to be satisfied simply to be told that the government is going to insist upon the principle of equality of service and sacrifice and place taxation upon those best able to bear it unless the government itself puts that principle into force; and so long as the people have to pay this form of tax and the kind of taxes provided for in the next few resolutions, they are going to feel that the government is laying itself open to the charge of hypocrisy and lack of sincerity.


Karl Kenneth Homuth: Will the bill to be founded on these resolutions provide for soldiers' fares being exempt?


James Lorimer Ilsley: Yes, it will.


Richard Burpee Hanson: Will there not have to be a resolution to that effect?


James Lorimer Ilsley: That is not necessary because the exemption will mean a reduction in taxation. It can be put in the bill without any addition to the resolutions.


Thomas Langton Church: This resolution is to provide for a tax on those who travel by railway, bus, or aircraft. According to the Duff report of 1930, 550,000 free passes have been issued over the railways of this country. This ten per cent tax will not apply to them. True, the minister eliminated the ten per cent tax on soldiers' fares, but I ask him-I have asked him and the whole front bench five or ten times in the last two years-what is the policy of the government going to be with regard to free transportation for the soldiers? If you are going to continue exempting the 550,000 civilians who have now free passes issued to them, why not give the soldiers free passes as well as granting them exemption from this ten per cent tax? There is a large body of public opinion in this country favourable to eliminating all passes, and I-


Thomas Vien: The point of order
has been taken that the question of free transportation of soldiers is not now before the committee, and it is out of order to discuss it.


Thomas Langton Church: That ruling is correct,
Mr. Chairman, but there is a principle involved, and it is this.


Thomas Vien: Order. My ruling has been given.


Thomas Langton Church: The principle is that you are going to tax-


Thomas Vien: Order. It is a rule
of the house that the hon. gentleman-
[Mr. Quelch.l


Thomas Langton Church: I think I am quite in
order.


Thomas Vien: The hon. member is
not in order.


Mr. BLACKMORE:: Why not?


Thomas Vien: It is not in order to
discuss free transportation for soldiers.


Thomas Langton Church: Resolution 4 reads:
4. That part V of the said act he amended to provide that every purchaser of a ticket or right entitling the purchaser to transportation by railway, bus or aircraft to any place in or outside of Canada or by vessel between places in Canada or from a place in Canada and return thereto shall, in addition to the regular charge for the ticket or right-
Shall do what?
-pay to the person selling such ticket or right, for the consolidated revenue fund in addition to the price paid therefor, a tax equal to ten per cent of the said price, provided that such tax shall not apply on the charge for a ticket or right of transportation, if the regular one way charge for such ticket or right to any place in or outside of Canada is fifty cents or less.
I contend that if you are going to tax the people who pay cash for their transportation, you should also tax the people who do not pay cash but get free passes. Lastly, the soldiers should be given free transportation. Has the minister anything to say to that?


James Lorimer Ilsley: No.


Angus MacInnis: I imagine that the sole reason for this tax is the raising of revenue, and on that ground I oppose the tax because I believe it will defeat its own ends. For a number of years the railways of Canada have been offering special fares, excursion rates and various other inducements to people to travel. Railway fares will be increased considerably by this ten per cent tax, depending of course upon the distance travelled. I have been living in British Columbia and have had to travel to Ottawa several times a year, and on those train journeys I have seen, as the hon. member for Acadia has pointed out, the large number of people who travel in the day coaches. I have seen women travelling all the way by day coach from British Columbia to some point in eastern Canada. Instead , ' being taxed, they should be paid a bonus foi having to travel in that way. These are the people who, in large measure, will be compelled to pay the increased railway fares.
Again, a large number of the people who travel from one place to another in Canada are travelling to work or to look for work, and the government is charging them an extra ten per cent for travelling.

Special War Revenue Act
As a means of raising revenue, this tax will defeat its own ends because it will curtail railway travel. People in Canada should be encouraged to travel from one point of the country to another whenever possible. That should be a matter of public policy, because people living in one province, in British Columbia, for example, know as little about Nova Scotia or New Brunswick or Quebec as they know about England or Scotland or Ireland. We should make it as easy as possible for people to travel from one part of Canada to another, rather than make it more difficult by taxation, because travelling helps to develop a national consciousness. I know the difficulties of the minister. I do not think he imposed this tax just to be cantankerous or anything of that kind. I know he has to look for money where he can find it, But this is not a logical place to look for it because the tax will fall on people who are already overburdened.


Mr. McIVOR:: Perhaps I do not agree entirely with the arguments which have just been advanced. If I were the Minister of Finance, I would ask those who are opposing this tax to suggest a substitute tax. Money must be raised, and taxation in some form or another is necessary. I travel a , little, and when I go home over the week-end I think I should pay a tax because I have all the fun and enjoyment of going home instead of staying in the city of Ottawa over the weekend. Anyone who travels on the trains must have noticed that the dining-car is packed at meal time, and any man who can pay $1.25 for a meal can afford to pay tax on his railway ticket. I know that the day coach is well filled too but a good many of the people in the day coach go into the diner. The only reason I could see for not imposing this tax would be the number of workers who have to travel. I am reminded of the old proverb, "a rolling stone gathers no moss." If a man has a job, he does not need to travel from Vancouver to the maritimes to look for work. He can build up his body and mind right at home. I am only one of those who would pay my own fare and have the railway pass lifted rather than have the soldiers taxed when travelling. I am not sure, however, that other travellers should not pay the tax.


Mr. CRUICKSHANK:: Has the minister considered imposing a tax on speeches?


George Hugh Castleden: Joining my voice with those of other hon. members who have objected to this tax-


An hon. MEMBER:: Make it short.


George Hugh Castleden: -I am afraid I shall have to repeat what I said last night.


Thomas Vien: Order.


Karl Kenneth Homuth: The hon. member will be out of order if he does.


George Hugh Castleden: I was thinking particularly of people in the western part of this dominion;. In the large open spaces, travelling is quite a problem. In many parts of that area where people are becoming poorer, doctors have moved out, and persons who require medical attention have to travel long distances. The imposition of a ten per cent tax on transportation will involve them in increased hardship. With regard to substituting something which, I believe, would be a suitable alternative, I notice that the government has been very careful not to tax alcoholic liquor. I do not understand why this form of luxury of a certain group of people should not be taxed.


John Ritchie MacNicol: Nobody on the government side uses it.


George Hugh Castleden: I believe that between $90 and $100 million a year is spent on liquor in Canada. The government taxes the beer of the working man, but it has made no move to increase the tax on spirituous liquors. I believe that such an increase would compensate for any revenue the government might lose by dropping the tax which is now proposed, which will hit the people who cannot afford to pay it, and, in some instances will work tragic hardship.


James Lorimer Ilsley: Just to correct my hon.
friend, I would point out that this parliament has increased, since the outbreak of the war, the tax on spirits from $4 to $7 a gallon.


George Hugh Castleden: What percentage
does that increase represent?


James Lorimer Ilsley: Seventy-five per cent.


Mr. CASSELMAN:: There is one part of this resolution which, so far as I know, has not been covered by the minister. I notice that transportation is divided into two classes. With respect to transportation by railway, bus or aircraft one class of words is used, but as regards vessels a different expression is employed, "or by vessel between places in Canada." I think there is no doubt about that; but the sentence continues, "or from a place in Canada and return thereto." That, it seems to me, is a definite attempt to tax travel in a foreign country. With respect to international ferries, I do not think there is any doubt that all a proprietor company would have to do, provided their charge is not more than $1 return, would be to change their tariff to make it fifty cents one way,

Special War Revenue Act

and thus evade the tax. To my mind this tax on international ferries is a very bad one. If there is one thing more than another which we desire, it is to have United States visitors in this country leave United States funds here, and it would seem only natural that, the cheaper the fare, the more likely they are to come. I suggest that if we refrained from taxing the international ferries, the benefits to Canada would more than make up for the loss of the few dollars represented by this tax.


James Lorimer Ilsley: I am afraid I do not understand the hon. gentleman's difficulty. He is interested in the tourist traffic, is he not? A United States tourist coming from the United States to Canada by ferry and returning by ferry escapes the tax: it is only when a person leaves Canada on a trip to the United States and comes back on a return ticket that he is taxed.


Frederick Clayton Casselman: The point is this: I do not believe there is any jurisdiction in this parliament to tax people for travelling in another country; and that is exactly what the minister is trying to do.


James Lorimer Ilsley: I do not think there is any question about jurisdiction. Certainly, if a traveller buys a return ticket in Canada, we can tax him on that purchase.


Agar Rodney Adamson: Does the minister mean that, if you buy a ticket from, shall we say, Toronto to New York, you are taxed ten per cent on the journey in Canada, from Toronto to Niagara and from Niagara back to Toronto; or are you taxed on the journey from Niagara to New York and from New York back to Niagara?


James Lorimer Ilsley: I was talking merely about vessel transportation. That is what the hon. gentleman who spoke last was discussing. The resolution is quite clear on that, that the fare between points in Canada is taxable; the return fare from a point in Canada abroad and back, by vessel, is taxable.


Agar Rodney Adamson: And by train.


Karl Kenneth Homuth: If a man purchases a return ticket from Ottawa to New York he would have to pay ten per cent on the full cost of the ticket, would he not?


James Lorimer Ilsley: According to the resolution he is taxable on the fare. If he buys a ticket from here to some point in the United States, he is taxable on that whole fare.


Richard Burpee Hanson: He is taxable on the transaction of the purchase of the ticket, whether he travels or not.


James Lorimer Ilsley: That is it, exactly.


Agar Rodney Adamson: But he could buy a ticket from the point in Canada to a border point, and then buy his American transportation in the United States, and so avoid the tax.


George Hugh Castleden: Did I understand the minister to say that in this budget there is a tax on spirituous liquors?


James Lorimer Ilsley: No; the tax has been
increased since the outbreak of the war. The hon. gentleman said that the government had not touched liquors.


George Hugh Castleden: I meant, in this budget.


James Lorimer Ilsley: Well, we raised the taxes on them seventy-five per cent before this budget. They are two years ahead of this budget.


Robert Fair: The hon. gentleman said that the government did not touch liquors. I do not believe that would be quite correct.


George Hugh Castleden: I shall be pleased to correct that.


Robert Fair: The tax on fares as they stand at the present time means that the government is collecting taxes on railroads operating in other countries. That does not seem to me to be quite fair. Some people who are not bright enough to buy tickets no farther than the border will be "soaked."


[Stage Direction]
Resolution agreed to.
5. That the excise tax on cigarette paper tubes be increased from five cents for each one hundred cigarette paper tubes or fraction thereof to ten cents.
Karl Kenneth Homuth: Mr. Chairman-


An hon. MEMBER:: Sit down.


Karl Kenneth Homuth: Who said, "sit down"?
Whoever said it is not running this committee yet. We of the opposition still have some rights.


Thomas Vien: Order.


Karl Kenneth Homuth: It is quite in order, only some hon. member said, "sit down," and I am not going to sit down until I get through with what I have to say.


Thomas Vien: I am not suggesting that the hon. gentleman is not in order; I am calling the committee to order.


Karl Kenneth Homuth: Well, that is a good idea.
Last year, when the budget was brought down, we put an extra tax on cigarette papers. As a result of this excise tax, instead of the price of cigarette papers being charged at the old rate plus the increase in excise, representing the odd cent, it went up, in some instances, by two cents. I received a good many com-

Special War Revenue Act
plaints from people who are users of cigarette papers, that advantage was being taken of the tax by some companies manufacturing cigarette papers; that instead of charging eight cents or whatever it was for a package of cigarette papers, they charged ten cents. As a result, the people were mulcted two cents more than the amount of the tax. In levying taxes on these articles, some of which I admit are not important, yet are important to some extent, we should be very careful. The price control board might use some of their powers to see that when an excise tax is placed on some commodity, some simple thing such as cigarette paper or tubes, the companies who have to pay these excise taxes are not given an opportunity to charge an extra profit, as was done with cigarette papers after the last budget.


[Stage Direction]
Resolution agreed to.
6. That there shall be imposed, levied and collected an excise tax of three cents per imperial gallon on gasoline imported or produced or manufactured in Canada; and that where the gasoline is imported, such excise tax shall be paid by the importer or transferee who takes the gasoline out of bond for consumption at the time when the gasoline is imported or taken out of warehouse for consumption, and where the gasoline is manufactured or produced and sold in Canada, such excise tax shall be paid by the manufacturer or producer at the time of delivery of such gasoline to the purchaser thereof.
Ernest Edward Perley: I wish to lodge a protest against this tax on gasoline. It will cause a great hardship to many producers in western Canada. I am thinking of some refineries that have started up recently, particularly in Saskatchewan, with consumers behind them. In Saskatchewan the horse has practically disappeared; work on the farm is done with the tractor. Especially at this time when we expect the farmers to reduce their seeded acreage and do more summer-fallowing, to impose this tax is a hardship. I suggest that the minister consider cutting it down to not more than one cent.


James Arthur Ross: I urge that this tax be rebated on gasoline used for agricultural purposes. Under existing conditions in western Canada, it is inevitable that present standards of farm operation cannot be maintained. There is no need to say much about the intolerable situation of agriculture throughout Canada in these times.
I have here a few figures relating to the province from which I come. The farmers of Manitoba used last year for strictly agricultural purposes 6,846,705 gallons of gasoline. Three cents a gallon on this would amount
to $205,401.15, comparable in value with 400,000 bushels of wheat or 760,745 pounds of butter fat at to-day's prices.
From 1926 to 1940 Manitoba's wheat income declined from $41-6 million to $21-2 million and its general farm income from $89-4 million to $60-4 million.
What happened, in Manitoba is only a small percentage of what has taken place in Saskatchewan and Alberta, and the same intolerable situation exists in all the other provinces so far as agriculture is concerned. An added tax of three cents a gallon on gasoline used for agricultural purposes is most unsound and unfair at this time. The Minister of Agriculture, who, I believe, is also a member of the treasury board, should at this time use his influence with the Minister of Finance to see that this tax is rebated on gasoline used for agricultural purposes.
Mr. MaoNICOL:	Maybe he hasn't any
influence.


James Arthur Ross: He has intimated on
the floor of the house that the agricultural population of Canada has not been given anything like the consideration that has been given industry and organized labour at this time. This tax is simply adding to the difficulty of these people, and I urgently plead with the minister to consider rebating this tax for this purpose.


Major James William Coldwell: I support that contention. When the budget was under discussion I suggested that it might be possible to follow a method which has been adopted by some of the western provinces and have a coloured gasoline of a distinctive type for agricultural use. In Saskatchewan the colour used is purple. I am informed by the hon. members to my left that it is the same in Alberta.


Karl Kenneth Homuth: Alberta is pink.


Major James William Coldwell: It seems to me that
the representations being made on this point have particular force at this time. The agricultural situation is very much depressed. That is particularly true on the prairies, where we are not adjacent to any large markets which can consume certain classes of products raised on farms nearer to centres of population. This tax will impose a heavy burden on an industry which relies to such an extent on tractors, trucks and combines. I should like to see this tax eliminated at least so far as the agricultural industry is concerned. I believe also that the fishing industry on the coasts has practically the same difficulty and ought to have the same relief.
I do not like to rise again and again, as one has perhaps been compelled to do to-day, and
Special War Revenue Act

object to taxes, when I know that the government has to raise more money than it has ever raised. It seems to me, however, that there are other ways whereby money could be raised much more equitably and justly than by taxes of the description we have been discussing this evening. Advertising was mentioned. Once before I mentioned in the house that I had read in a trade magazine an authoritative article, reprinted from another periodical, to the effect that soap advertisers, for example, are spending in the United States $30,000,000 a year for radio time, exclusive of the script and the voices. I do not know what they spend in Canada. It seems to me that these are sources of revenue which could be taxed and relieve the government of the necessity for taxes of this description, which work a hardship on a depressed industry. The same thing applies, of course, to other forms of advertising. I am not singling out soap particularly. Occasionally I hear on the radio advertisers urging people to buy war savings certificates, and in the next breath they tell them that if they will bring their old knives and forks to a firm in Ottawa, that will be taken as a down payment on new tableware, which can be paid for over an extended period of time. That kind of thing is ridiculous, when we are urging people to give all the money they can for our war effort.
In my opinion the government could raise a substantial sum by imposing greater taxation on firms that are obviously making far more money than is necessary for them to operate their business, and are spending it on advertising such as I have mentioned, soap and so forth, and then giving away money, paying their radio listeners to listen to their programmes. This is a source of taxation that might well be investigated, instead of having a tax like this on gasoline used by agricultural producers.
I am not objecting at all to a federal tax at this time on gasoline used in private automobiles for pleasure purposes. Those of us who object are objecting, I believe, to another imposition on a depressed industry.
Since I do not like to suggest the elimination of a tax at this time without suggesting some alternative, I suggest that some of these other avenues of taxation be explored and that this tax be eliminated so far as the agricultural and fishing industries are concerned.


Richard Burpee Hanson: I think it was generally expected throughout this country, in the consideration not only of this budget but of the last one, that some attention would be given by the ministry to the

question of imposing a federal tax on gasoline. I do not think there has been any universal outcry against the principle of this tax, and I do not intend to make any attack on the principle of the tax to-night.
There are, however, certain inequities with respect to it that I think should be pointed out. Hon. gentlemen to my left, and some hon. members immediately surrounding me, have pointed out that a tax on gasoline without any provision for a refund will bear harshly on the agricultural industry, and I am impressed by what they have said in that regard. I am also aware of the fact that another class in this country, whose plight I think on the whole is far worse than that of the agriculturists

I refer to the fishermen along our coasts-have been given no consideration whatever. When I was a boy I lived on the coast. There was no such thing as an internal combustion engine, and we made our passage by the use of the strong spruce oar and the elbow-grease in our arms. That situation has been entirely revolutionized; to-day the gasoline engine is an absolute necessity for the fisherman. If he were obtaining a fair and reasonable return for his labour and the capital he has to invest in his vocation, I am certain he would not object at all to the payment of this tax. The fact is, however, that the ordinary fisherman on our Atlantic coast, at all events, is not only not getting a fair return for his labour or on his capital investment, but is not getting anything like a living wage. I hope the war has brought him some relief, but I doubt it; export markets, which were bad enough before the war, have been closed.
I solicit from the minister consideration on behalf of the fishermen on our Atlantic coast. That goes also for the fishermen on other coasts, although I have no intimate knowledge of their position. I know that the fishermen on the bay of Fundy and particularly the fishermen on Passamaquoddy bay have had ten lean and hungry years. Many of them have not been able to keep body and soul together; many have been unable to renew their equipment. We need only review what has been done by the government in days gone by, in attempts to relieve the plight of the fishermen, to realize their position, and I think the minister should reconsider applying this tax to everyone and should give some consideration to the fishermen of New Brunswick, Nova Scotia, Quebec and Prince Edward Island. I am making a special plea for them, not that other fishermen may not have the

Special War Revenue Act
same need but because I know more about the condition of the fishermen in the provinces I have mentioned.
I realize that there are difficulties with respect to this question of drawbacks. I know that in days gone by there have been frauds perpetrated on the provincial governments, all of which have this provision. It is very difficult to detect and convict in such cases. I venture to suggest that not one offence in ten is actually detected and the person convicted, but that does not mean that the class as a whole are dishonest. Far from it. There are crooks in every trade, but notwithstanding all that, I ask the minister to give some consideration to the farmers and the fishermen with respect to drawbacks.
I should also like to point out to this committee that with the imposition of this tax we in the maritime provinces are being taxed on gasoline more than any other people in the world. Is it realized generally that in the three maritime provinces we have had a tax of ten cents a gallon on gasoline for several years past?


Mr. GRANT:: 
James Lorimer Ilsley: I think that is right. There are some inequalities in this tax, and it would be pretty hard to apply it all along the line I suppose it could be done; it could be applied to fuel oil, to distillate and so forth, but I doubt whether that would be in accord with the wishes of the house or of the people. Practically speaking, it is- impossible to impose taxes without creating some discrimination. There is only one tax that is without discrimination; that is the income tax. If we could limit ourselves to that form of taxation, we would avoid practically all discrimination, but the moment we go into taxation of this kind, some discrimination is bound to result.


Mr. SOPER:: I think the minister will find that if fuel oil for diesel engines is not taxed, some of the companies now using gasoline will switch to the use of fuel oil in order to meet the competition.


Robert Fair: A few days ago two men were walking down Wellington street, near this building. One of them suddenly stopped and said, "I smell something burning." His companion turned round and replied, "That is Canada speeding up her war effort, with the brake on." If we consider the treatment that has been given agriculture during the last five or six years, or even longer, I think it will be agreed that the brake has been applied so far as agriculture is concerned. This latest imposition, this three-cent tax on gasoline used for farm purposes, will tighten up that brake at least one more notch-and, as somebody says, it smells. I do not disagree with that. Time after time in this house we have pointed out the condition of agriculture. On various occasions the Minister of Agriculture has admitted that we have sold at far less than the cost of production. If we were getting what we are entitled to at the present time, we would be getting $1.35 for our wheat, but we are getting 70 cents. I ask: Is it any wonder that man smelled something burning?
The position of the industrialist was very well stated a few moments ago by the hon
Special War Revenue Act

member for Waterloo South when he said: "What is the use of having a war, if we cannot spend?" That, apparently, is the position of industry to-day, and industry is apparently controlling the government, because if somebody does not spend, another gang cannot make profits. I say that the gang is profiteering at the expense of agriculture.


Karl Kenneth Homuth: What gang?


Robert Fair: The gang of profiteers. Perhaps they are some of your friends, too.


Karl Kenneth Homuth: Who are they?


Robert Fair: I see one of them with his hand on his head, I believe. If the Minister of Finance could go all through Canada-and I am not speaking of western Canada alone, because I do not believe he will have to go far from Ottawa-listen to the cries of undernourished children, and the moaning of some of the mothers of those children, and look into the asylums where the fathers have been driven, because they are not able to get a living for their families, I believe some of the inequalities would be done away with.


An hon. MEMBER:: Social credit.


Robert Fair: I wish that log bump would be quiet once in a while-'bump on a log, I mean.


Thomas Clement (Tommy) Douglas: You were right the first time.


Robert Fair: Some people cannot make a speech, or do anything for their constituents; and they will not let anybody else talk for their constituents. I wish they would keep quiet, and let some of us speak, while those fellows are too busy keeping their chairs warm.
I believe the government realizes full well the condition of agriculture. We are asked to do certain things; we are asked to make equality of sacrifice, and in that way to maintain Canadian unity. I ask the Minister of Finance if he thinks, in all fairness to agriculture, we are getting the deal to which we are entitled, when this three-cent tax is imposed. It may be argued that it is impossible to free agriculture of that tax. It has, however, been pointed out in this debate that two provinces, namely, Saskatchewan and Alberta, have coloured gasoline for agricultural purposes. When gasoline is exempted from taxation in those two provinces, I believe the other provinces might very well adopt the same method, whereby their gasoline for agricultural purposes could easily be identified. There is no argument whatever, so far as that is concerned.
I believe I should put in a word for the fishermen, too. We have heard on different occasions that they are suffering, and I have
fMr. Fair.]
no doubt about that at all. I have never been to the east or west coasts, because I have been too busy trying to pay my way, farming. I have not had the price to make those trips. But we have heard from hon. members representing the fishermen that those fishermen are in a terrible plight.
I was surprised to hear the leader of the opposition speak for them, because I think in the past he and his party should have done something worth while to ease the conditions of those people.


Karl Kenneth Homuth: They did.


Robert Fair: I heard a lawyer from down Halifax way say one time that when he was going through a cemetery he saw a headstone with a single name on it. At the foot of the headstone was the inscription, "Here lies an honest man and a lawyer." He said, "Be jabers, what is the other fellow's name?" He thought there were two buried, whereas there was actually only one.


Richard Burpee Hanson: Give us something new.


William Ross Macdonald: The first time we have ever heard thatl


Robert Fair: I am not going to say much more. I have said before that the government realizes full well , the condition of agriculture. I am asking the Minister of Finance, the Minister of Agriculture and all their colleagues to get together to work out some solution whereby gasoline for farm production will be exempted from the tax.


Thomas Clement (Tommy) Douglas: In so far as this tax on gasoline is a tax on pleasure, I am not opposed to it. I believe that during war time any expenditure for pleasure travel must be taxed, if the government is going to raise money to carry on the war. In so far, however, as this gasoline tax constitutes a tax upon production, a tax upon primary producers, and has the effect of increasing their cost of production-which, in many instances, they are not now receiving-it is most unfair, and I protest against it.
I cannot speak with any authority for the fishermen, but most of us who live on the prairies know the situation with regard to wheat farmers. The situation for the last few years has been this: The decline in the price of wheat has meant that the farmers have been more and more forced into tractor farming. When this government came into power there was a guaranteed minimum price of 87^ cents, basis Fort William. That was dropped to eighty cents, and in 1938 it was dropped to sixty cents. It was raised to seventy cents only because of the protests which came from all over western Canada.

Special War Revenue Act
The Minister of Agriculture made his famous speech in which he spoke of wheat being produced for from thirty cents to forty cents a bushel, having in mind himself the fact that the wheat which could be produced at a figure like that was wheat which was produced on a mechanized farm. For the last two years we have had a price basis of -seventy cents, basis Fort William, and that meant forty-nine or fifty cents to the farmer. The result was that the only man who could possibly produce was the man who went into tractor farming. Then, for the past few years those tractors have been more and more of the high compression variety, using high-grade fuel.
Then came the war. It has not only not given any increase in prices of the products the farmers have to sell, but has meant an increase in their cost of production. The price of farm machinery has gone up. Almost everything the farmer has to buy has risen in price. Under this legislation, the price of his fuel is going to go up. Then, to add just one thing more, the Minister of Agriculture has brought in legislation to provide for a wheat acreage reduction bonus. That, combined with the legislation of the Minister of Trade and Commerce, is going to restrict farmers to the sale of about forty-eight per cent of the wheat they sold last year. They are going to be asked to summer-fallow as much as possible of the land they are taking out of wheat. If that land is going to be summer-fallowed, then in a great many instances it will be summer-fallowed most economically by the tractor farmers. The cost of summer-fallowing will be increased materially by this tax of three cents a gallon.
It is bad enough to say to the farmer. "You will not be able to sell as much wheat as you sold last year." It is bad enough to say, "You must go out and summer-fallow your land in order to get $4 an acre." But it is the last straw on the already shaky camel's back to say, "You are now to increase your cost of summer-fallowing and the general cost of your farming operations by having to pay three cents a gallon as tax on your fuel."
Has any consideration been given by the government to the possibility of giving a rebate on all gasoline purchased by primary producers for the purpose of carrying on farming and fishing operations? The principle is sound. It has been accepted in several provinces. Various techniques have been used, and I am not prepared to argue that one is better than another. That is the government's problem. But it has been worked out in other provinces in various ways, and
they have found it is not impossible to give a rebate to the primary producers for fuel used for all productive purposes. There is no reason why this government cannot do the same thing. It could, if it wished, arrange that farmers should buy their fuel for tractors in bulk quantities. It could be arranged that the fuel would be bought in barrels. Sworn statements could be made, and rebates could be given at the end of the year. Some provinces do that. Other provinces have a specially coloured gasoline. In Saskatchewan the number of convictions has not been high. People have tried to use this coloured gasoline for pleasure purposes, but they have been haled into court and punished. I think in the main the primary producing class realizes that in giving them a rebate on gasoline the government is doing something for them to which they have a right, but if they want to enjoy that privilege they must play the game. The great mass of the people have played the game.
I do not think the government would have any difficulty in working out a technique whereby a rebate could be paid to the farmers and fishermen on the gasoline used in their farming and fishing operations. I cannot think of anything that will do more to kill the morale of the wheat farmer than the announcement, which has been received by him with dismay and astonishment, of the government's legislation and acreage bonus plan. The picture will be completed if we have to go west and tell them that the fuel used in their farming operations will cost them three cents a gallon more than it did last year. Has consideration been given to the payment of a rebate on gasoline used for farming operations? What is the estimated loss of revenue to the treasury if such a rebate were paid? Will the government consider including this in the legislation when it is brought down?


James Lorimer Ilsley: I do not remember ever having given more consideration to any one matter since I have been minister than I have given to this question of a rebate of this gasoline tax. Long weary hours were spent by myself with the officials in trying to devise some system of refunds which would not bring the government of Canada into disrepute with the people. The more the matter was studied, the more the operation of provincial systems of refunds was examined into, the more it became apparent that unless we desired to embark upon a system which would bring about wholesale evasion in all parts of the country, we had better keep away from rebates or refunds.
Special War Revenue Act


Victor Quelch: What about using coloured gas? That would not require a refund.


James Lorimer Ilsley: Oh, yes.


Victor Quelch: A man buys the coloured gas for agricultural purposes, and he does not pay a tax. If that gas is found in his car being used for pleasure purposes, he is prosecuted.


James Lorimer Ilsley: That was all gone into. I talked to representatives of the provinces and to members of the governments of the provinces where the rebate or refund system was in effect. Those provinces consider that their system is better than the coloured gas system. I am told that in one of the provinces where the coloured gas system is in effect, they have from 100 to 200 prosecutions a month and require a large number of inspectors.


Thomas Clement (Tommy) Douglas: Which province is that?


James Lorimer Ilsley: I do not wish to say.


Thomas Clement (Tommy) Douglas: There are only two.


James Lorimer Ilsley: The hon. member can make his choice because I am not going to make any accusation against either of those provinces. It is within the knowledge of everyone, especially the members of the provincial administrations, that it is impossible to operate a system whereby a large amount of tax-free gas as well as a large amount of taxed gas are used by the public without having wholesale evasions. The leader of the opposition frankly admitted that in a speech which he made. Members of this administration who have had experience in provincial administrations have told us that it would never do for the dominion government, so far away from so much of the country as it is, to be trying to check upon the use of tax-free gasoline. The people should be conscientious about these matters, but many of them are not.
If the government of Canada is to maintain its reputation, it must not embark upon such a policy. One of the premiers of the provinces went so far as to say that if the government went into this system of rebates or refunds of the gasoline tax, it would defeat them. Not that that is the supreme consideration, but he meant that it would defeat them because they would deserve to be defeated on account of the abuses which would naturally arise in all parts of the country. We must have some regard for practicability; we must have some regard for the respect which the people of Canada ought to have
TMr. Ilsley.]
and ought to maintain toward the government of this country, and its methods of taxing and administering taxes. It is quite easy to say that this or that should be taxed, but very often the reason why a tax which would be ideal if it could be administered is not imposed is the widespread abuses which would occur.
We gave consideration to imposing a much higher tax upon gasoline and providing refunds, not only for farmers and fishermen but also for tourists. We did not want the tourists who come to this country to be paying this gasoline tax. The people whom we would like to have pay this tax are those who are using gasoline for pleasure purposes. If the tax could be confined to them, I would be disposed to consider a much higher tax. It is in the interests of the country to discourage the heavy importations of crude oil and petroleum products which are refined to be used for pleasure purposes. I am convinced, however, that there is only one way in which this government can administer the gasoline tax in a satisfactory manner, and that is by collecting it from the refineries. Thus we get the tax on all the gasoline, whether it is used for commercial or pleasure purposes, by tourists, by farmers, by fishermen or by any one else. That is why we put on a three cent tax when everyone expected a five cent tax. We felt that we would just have to ask the farming and fishing populations of this country, as well as the tourists who come here, to bear this moderate additional burden.
I knew that there would be a debate like this. I knew that certain members would rise in their places to speak on behalf of the fishermen; I knew that others would want to speak on behalf of the farmers, while perhaps others would be pointing out the injury which might be done to the tourist business. I do not think there is much in that because I understand that the United States government is proposing a tax of 24 cents a gallon. That would be equivalent to our tax of three cents a gallon when the difference between the United States and the Canadian gallon is considered. Much as I should have liked to avoid any tax upon agriculturists or fishermen, or, for that matter, upon the commercial use of gasoline, after giving the matter the most extended consideration I was unable to come to the conclusion that I would be justified in bringing in a measure which would have involved a non-administrable system of rebates or refunds, or taxation only on gasoline of some colour.

Special War Revenue Act


Douglas Gooderham Ross: Has the minister
considered collecting this tax through the provinces which have such a system at the
present time?


James Lorimer Ilsley: I certainly did.


Douglas Gooderham Ross: I am in favour
of a tax on gasoline; in fact, I advocated it once before as one means of raising money. I think this tax will do something to bring about the result desired by the minister, namely, a swing in the use of gasoline from non-essential to essential business. I do not think this tax on gasoline will prove a tremendous hardship to anyone. I know the people in my riding in the city of Toronto will be glad to pay this tax.


An hon. MEMBER:: How many farmers
are there in that riding?


Douglas Gooderham Ross: They were glad
to see me defend it before. I think, however, this tax might have been collected through the provinces. We could have taken advantage of the systems already established, such as the one in Ontario where rebates are allowed to farmers and to certain fishermen. In that way the difficulty might have been eliminated and I do not think the cost of collection would have been much greater.
The gasoline tax is good in another way. The consumption of gasoline, as we all know, is increasing tremendously. We must now conserve United States dollars, and I think the minister might well consider differentiating between gasoline produced from domestic oil and gasoline produced from imported oil. A tax of three cents a gallon, let us say, might be imposed on gasoline produced from domestic oil and four cents a gallon on gasoline produced from imported oil. That might be an incentive to our refineries in Canada to produce more oil at home. In 1940, the consumption of gasoline was 883,300,000 gallons, which should bring in about $25,000,000, or $26,000,000 of revenue a year.
I do not think this tax is going to be a tremendous hardship. After all, every single one of us is in the front line, and we must all be prepared to shoulder a little bit more of the burden.


James Arthur Ross: Has any provincial
government offered to collect this gasoline tax on the consideration that the tax be rebated to agriculturists? Would it not be possible, by cooperation, for the provincial governments to handle the collection of the tax?


James Lorimer Ilsley: We fully considered whether we should adopt the refund system in the provinces. We then would have had a checker-14873-190
board policy, with one set of people getting refunds in one province and a slightly different set of people getting refunds in another province. It would be a vicious principle to introduce into dominion legislation.
The hon. gentleman asked, did any province offer to collect the tax? I would not go so far as to say that any province offered, but a minister in one provincial government did go so far as to ask me if I had considered that. I did consider it, but not favourably.


Richard Burpee Hanson: It having been established with some definiteness that the minister is not disposed to yield to the representations made to him, the position of agriculturists and fishermen having been championed valiantly, I turn to another aspect. What method does the minister propose with respect to the collection of this revenue? I heard him say a moment ago that he intended to have the tax paid by the refineries. What about the importing companies? May I point out to him that all the provinces have arrangements with the distributors whereby they deduct the tax from the retailers, who in turn charge the tax to their customers. That, in my view, is wholly unconstitutional, but that is the method adopted as a matter of convenience. The point has never been raised in the courts. I thought I had in my portfolio a statement of the cost to the various provinces of the collection and remission of this tax by that'method. I know it runs into a good many thousands of dollars, and I warn the minister that he should make better arrangements than some of the provinces have made because some people are getting a substantial compensation-I shall not say rake-off-for the collection and remission of this tax. I am sorry I have not the data under my hand, but I have no doubt it is available to the department. If the minister has the information at hand, it might be revealing to the committee to know just what the figures are. I know that such a statement has been compiled.
Has the minister or the government ever given consideration to the nationalization of the oil business in Canada? That is a big problem, and I do not wish to start a discussion of it to-night except to say that other countries have nationalized universally consumed products, and that the time may come when we shall have to give consideration to that in this country. If it could be done here, it would yield huge Sums of money to the federal treasury without adding one cent to the cost to the consumer. I suppose I am flirting with a tremendously big problem, and

Special War Revenue Act

the government, of course, will not give consideration to it now. I suggest, however, to the minister that it is worthy of consideration if this war lasts long enough.


James Lorimer Ilsley: I do not think I shall deal with the last part of my hon. friend's remarks because, as he says, that is a pretty big problem. As to compensation to the refiners for collecting the tax, that question does not arise because this is a tax upon the refiners. This is not a tax upon the consumer or upon the purchasers from the refiners as it is in the provinces. The provinces can impose only direct taxation, but there is no such constitutional limitation upon the powers of the dominion parliament, and we therefore simply place the tax at the source and pay no compensation to anybody. In that respect the tax is administered like the sales tax.
In the case of importations the tax will be collected from the importer. That is provided for in the resolution.


Mr. JOHNSTON (Bow River):: The minister seems to be a little bit worried over two aspects of this gasoline tax. First, there is the desire to conserve foreign exchange, and he is no doubt on sound ground in bringing this tax forward for that purpose. If, however, it is just a question of conserving foreign exchange, there are other fields which would be much more productive in that respect. I have in mind coal. We could save a tremendous amount of foreign exchange if we were to use a little more Canadian coal, and we might then not need this tax on gasoline.
Second, I can visualize that, before very long, we may be in danger of a shortage of gasoline. Speaking three years ago on this subject of oil and gasoline and the possibility of an invasion of the oil-producing countries of Asia like Iran and Iraq, I suggested, before the war broke out, that one of the most essential things to Canada was the development of the oil fields of Alberta. I pointed out three years ago that in Alberta we had the greatest potential oil fields of the whole British empire, and I urged that every means available be adopted to develop our oil industry. I suggested at that time-and it is not yet too late to draw the matter to the government's attention again-that a pipeline should be built from Alberta to British Columbia. We have large reserves of oil in the northern part of the tar sands, and while production may be expensive, I do not think the cost of refining the oil should be considered in view of the grave danger of the British fleet becoming in dire need of oil. fVr. R. B. Hanson.]
I would go farther than that. If the minister is at all alarmed as to a possible shortage of gasoline, now would be an opportune time to ration it. Such a ' course, I believe, would be much more practicable than to impose a tax, unless, of course, the minister has in mind purely a means of raising revenue, and I take it that that is not his only reason for imposing this tax.
It must be remembered that some industries would be affected more than others by this tax. I believe I am correct in saying that when, a couple of years ago, we placed an eight per cent tax on electricity, an exemption was given in respect of power used for industrial purposes. Is that right?


James Lorimer Ilsley: Yes.


Charles Edward Johnston: If, then, industries were exempted from the tax on electricity in order to keep down their costs of production, what logical reason is there why the agricultural industry and, if you will, the fishing industry, should not be exempted on exactly the same ground? If we are going to establish any sort of equality of sacrifice, it is certainly not a square deal to say to agriculture, as the Minister of Agriculture said not long ago in this chamber, that ninety cents a bushel at Fort William was a fair and reasonable price for wheat, after which the price was reduced to seventy cents, which means an average of about fifty cents to the Alberta and Saskatchewan farmers, and now we are to reduce their returns still further. It seems to me that agriculture will be very much dissatisfied. I know of nothing in the form of a tax which would cause more widespread concern than the imposition of a tax of three cents a gallon on gasoline used for agricultural purposes. I am in agreement with other hon. members, however, that a gasoline tax would be less objectionable if it were not applied to gasoline used for agricultural purposes.
The minister suggests that it would be difficult to administer an exemption of this kind. I believe that that difficulty could be easily overcome if the assistance of the provinces were asked in this regard. The minister mentioned a few moments ago that hundreds of prosecutions were taking place in certain provinces because of the rebate on gasoline for farming purposes. I know of only two provinces, namely, Saskatchewan and Alberta, in which a rebate is in operation. Alberta adopted it only a very short time ago; so the only province in which prosecutions can be taking place is, apparently, Saskatchewan; and in that event I shall let the representatives of Saskatchewan speak for that province, but I am quite convinced

Special War Revenue Act
that in Alberta the system will work out very satisfactorily, much better indeed than the old form of rebate did.


John Ritchie MacNicol: What is the system?


Charles Edward Johnston: A purple gas, royal purple, is used for this purpose in Alberta. There is no possible chance of its being used for commercial purposes.
One hon. member opposite made an excellent suggestion in advocating a tax on diesel fuel. I am not proposing a tax on that fuel when used for agricultural purposes; but I think his point was well made that in some commercial businesses, as well as in agriculture, certain types of engines use diesel fuel, the consequence being that, for instance, the farmer running a large diesel tractor has no gasoline tax to pay, while his neighbour who operates a gasoline engine is taxed on the fuel he uses. It is ridiculous to suggest that their costs of production are equal. Or take the case of the commercial men who are engaged in trucking. One uses a diesel truck and the other a gasoline truck; they are competing in exactly the same field, yet one is taxed and the other is not. To me that does not seem fair, and I do not believe the minister can convince himself that it is. It would be much more satisfactory to adopt the principle of taxing all fuel, allowing a rebate on that portion which is used for agricultural purposes.
Comparing the treatment of industries which are allowed a rebate on their electrical power, with that accorded to the farmers and the fishermen, I do not believe that any sane person can argue that it is either fair or logical or equitable. Here we have an industry which is trying its utmost to live up to the government's expectations. As the Minister of Agriculture says, it is producing at a loss. He says, "We do not expect them to make a profit". Well, they are not asking for a profit. But surely, when they are producing at a loss, we should not add insult to injury by yet further increasing their costs of production. Consider, too, that the purchase of gasoline by farmers is a direct cash outlay. When they go to these big oil companies, such as the Imperial Oil, does anyone suppose that they can get gasoline until fall on credit? They certainly cannot; the very first thing one sees on an agent's door is the notice, "terms strictly cash". Yet the farmer is not permitted even to sell his grain, and under a new order he cannot exchange his wheat for his neighbour's coarse grain or anything else. Where is he going to get money for his summer-fallow?


Karl Kenneth Homuth: From the government.


Charles Edward Johnston: He is not a lawyer; he is a farmer. We are speaking of farmers.


George Ernest Wood: If he is a farmer, why does he not try horses again?


An hon. MEMBER:: Where is the profit in horses?


Thomas Vien: Order.


Charles Edward Johnston: Do we want to go back to the old ox-stage of farming?


Mr. POTTIER:: Horses are much better.


Charles Edward Johnston: When we think of the conditions under which farmers are labouring, and the sacrifices they are making in this war, this tax certainly is not a fair proposition. We are going out on a victory loan campaign. We are going to visit all these farmers. I have a great deal of sympathy with the fellow who goes to the first farmer and says to him, "Listen, brother, the government wants you to give some more in the victory loans", and at the same time the tax collector comes around and takes another three cents on each gallon of gas the farmer uses. I certainly have no desire to go out under conditions like that. Here is a man who is producing now at a loss, who is trying his best to subscribe to the war loans, who is asked to contribute to the salvage campaign, and is doing it all willingly. Yet now the government comes along, and increases, absolutely unnecessarily, the tax on gasoline used for agricultural purposes. It is nothing short of a crime. The government should consider seriously the advisability of amending its legislation so as to rebate to the farmer the tax on gasoline used for agricultural purposes.


George Ernest Wood: I should like to have an opportunity of saying a word to the hon. member who has just spoken.


Thomas Langton Church: The cities and urban
centres will pay four-fifths of this tax, but they seem to have very little voice in this house, since we have to listen to others whom the tax will affect but little. This three cents a gallon tax on gasoline manufactured or produced in Canada or imported will be a heavy burden on the industrial workers of the cities and towns who pay the bulk of this form of taxation in order to go to and from their work. This gasoline tax started in the early days of the motor car. The main municipalities in Ontario went to the Ontario government and said they had to provide pavements, roads, police protection, fire protection, curbs, and protect and locate these
Special War Revenue Act

tanks and take care of them and it cost a lot of money for inspection, so they asked the government to give them taxation powers. The government refused, but when the cities discovered the tax, the province appropriated it. What did the provincial government do? They did just like the dominion. The moment a municipality finds a source of taxation other than real estate, the province grabs it. Then, when the municipalities ask for half of it back, the province refuses, and now the federal power seizes the tax and duplicates it, without giving any service.
It would be better if the minister were not so fond of his own hobby of asking questions himself, because the more questions he asks, the more discussion he promotes in this house as he cross-examines and asks questions and supplies answers. The minister is exercising most unfairly the Pooh-Bah powers he has to-day. It was he who wanted to have the Sirois report adopted. He has taken the thunder and used it unfairly to the injury of municipal institutions. If the dominion is going to impose this form of taxation, the dominion should at least give part of it back to the municipalities, who give the services, roads and gasoline protection. The dominion does not render any services in return, but impounds the tax. In the riding of the hon. member next to me, Cumberland, Nova Scotia, I think the provincial tax is about ten cents, and this addition will make thirteen cents a gallon, a practically prohibitive tax, that cannot be passed on and will cause heavy lack of consumption. In other words, to pay a tax of thirteen cents is about three times what it used to cost to produce and buy gasoline. This system, in this budget, has upset the whole taxation principle; where is it going to end? It simply means that the municipalities will starve because the minister will not give them back any part of the proceeds; he will not do it, and the provinces will not do it. They starve municipal institutions and ruin them. Eighty per cent of this form of taxation is paid by the two central industrial provinces. I ask the minister to consider where this form of taxation is going to land the provinces and the municipalities. It is going to force them into bankruptcy under socialism in our time. That is what they are heading for.
As I said when the minister introduced his budget, many of the resolutions relate to what they do in England and Washington. But in England they have no provinces, and in Washington they have a different system. A tax like this is unjust, unfair and inequitable, sounds the death knell of our system of taxation, will lead to the bankruptcy of the

provinces and municipalities, is in restraint of trade and commerce, and causes disunity, waste and duplication. The result will be that the government will get less money if this continues, with drastic reduction in consumption. Under the minister's Pooh-Bah powers he will be putting a further direct tax not only on real estate but, in time, on the very air that we breathe in this chamber.


Daniel (Dan) McIvor: I should like to ask a
question. Is this tax not most just?


Some hon. MEMBERS:: No.


Daniel (Dan) McIvor: Farmer members were hitting the man with the big farm who raises thousands of bushels of wheat. This tax does not touch the man who works his farm with a team. A man who can afford to buy a tractor has a right to pay the tax and save the man with the team. I do not care whether a man comes from Saskatchewan or anywhere else, if he can buy four or five tractors he can under-sell the man who works his farm with a team. Therefore I say that this tax is fair and just because it is a tax on the man at the top who has the money.


Mr. BLACK (Cumberland):: I join with the leader of the opposition and other hon. members who have made a plea to the minister to rebate this tax to farmers and fishermen. I was in the Nova Scotia legislature when the gasoline tax was first put into effect, and we had some misgivings with respect to the rebate, but wre were able to work it out so that I believe there was not any, or very little, injustice practised by the farmers and fishermen. I do not agree with the minister that there is dishonesty among the great bulk of farmers and fishermen who would receive the rebate of this tax. There is no class of people in Canada more entitled to special consideration than the farmers of eastern Canada. They above all others are the neglected class; they are having great difficulty in carrying on their operations. That applies to the farmers of eastern Canada and to the fishermen on the Atlantic coast, including the lobster fishermen whom the government has had to assist in marketing their catch at a comparatively low price. This additional tax on the lobster fishermen will mean a great burden to them.
It is also a real burden on the farmers in eastern Canada to pay an extra tax on the gasoline used in their motor vehicles. We have in Nova Scotia some 15,000 to 16,000 miles of highway, of which only about 1,000 miles are paved. That leaves about 15,000 miles of mud and earth roads on which the farmer has to operate his car. Very few farmers can carry on their operations to-day

Special War Revenue Act
without a motor car, even though it is a second-hand car and not economical as regards consumption of gasoline. Most of the farms are on these mud, earth and gravel roads. Therefore, from that point of view the farmer is entitled to special consideration.
Again I say that the system we have in effect in Nova Scotia for giving rebates to the farmers has worked veiy well, and in my experience the instances are rare where there has been dishonesty on the part of farmers or fishermen.
Therefore I join with the leader of the opposition and hon. members representing agricultural sections and ask the minister to give further consideration to granting rebate or exemption to the farmers and fishermen in eastern Canada, in view of their dire need.


Thomas Clement (Tommy) Douglas: I do not agree with the case the minister has made for refusing to grant exemption from this tax on gasoline used for farming and fishing operations. What reason has the minister given? Is it that he needs the revenue? He has not said so.


James Lorimer Ilsley: Well, I do.


Thomas Clement (Tommy) Douglas: Nor has the minister said he cannot find that revenue in some other way. In fact, the minister has agreed in principle that, if possible, this tax should not be placed on people who are using gasoline in production. The minister says he examined that aspect of the matter, and that, if possible, that would have been provided for.
Last year, in the first war budget, when an exemption was given to industrial concerns using electricity, the minister recognized that the principle of taxing production, and consequently increasing the cost of production, was unsound, and that it was better to examine the advisability of giving exemptions wherever it was possible to do so. The minister's only reason, then, for refusing to exempt from this tax gasoline used in farming and fishing operations is the administrative difficulties. The minister's statement is a reflection upon a great section of the people of Canada as well as upon the provinces. He tells us that there would be wholesale evasions of this tax, that there would be, on a large scale, abuse of the exemption. He says further that all the provinces which are trying to carry on a system of rebates warned him that this was the last thing to be done, and that one of the provinces using coloured gasoline had something like two hundred cases of evasion a month. The only province that has been using coloured gasoline for any length of
time, so far as I know, is Saskatchewan, and certainly the information which comes to me from policemen and others in judicial capacities would not lead me to believe that figure to be correct.
The minister's statement is a reflection on the provinces. If they are finding widespread abuses of this exemption, why do they continue it? If they are finding that people are using, for pleasure purposes, gasoline allegedly bought for farming and fishing operations, they should discontinue that exemption, but they have not done so. Not a single province has withdrawn that exemption, and so it would not appear that this argument is borne out by the practice in the various provinces.
But, the minister says, the federal government is further removed, and it would be much more difficult to administer this exemption. That is a point to be considered, but there is no reason why it could not be operated in conjunction with the provinces. The refineries could sell taxable gasoline, and tax-free gasoline which would be especially coloured. The federal government could easily arrange with the provincial governments, through their provincial police or the mounted police, that any person picked up and found using tax-free gasoline in his automobile would be charged, not only by the provincial government but also by the federal government, with evasion of the tax. The two governments could cooperate in bringing charges against any person who evaded the tax, and any person abusing the privilege would be charged with violating not only the provincial statute but the federal statute as well.
I know the minister will say, "Oh, it is easy for opposition members to rise in their places and tell me how this can be done," but I say to the minister that this is the most amazing thing I have ever heard. Here we have a minister of the crown saying that the principle is sound; that the producers have a right to be exempted from this tax, but that they must pay the tax because he considers the administrative difficulties to be insurmountable. That is an unsound principle; I believe it is a lame excuse. I do not think the farming population will take it very kindly if they have a tax placed upon them which the minister cannot justify except by the fact that some of them may cheat.


Mr. NEILL:: I am well aware that no words of mine will affect the passing of this resolution; that is, that they will have no direct effect, but it may be proper that someone from British Columbia should voice the feelings of the fishermen and farmers of that province. I do not, of course, intend any
Special War Revenue Act

reflection on the other members from British Columbia, some of whom are attending committees that are sitting at the moment.
I would point out to the minister that for days we have been sitting here passing taxes on luxuries, and that we have yet to pass taxes on playing cards, wines, cigarette papers and so forth. This is not a tax on a luxury; it is a tax on a working tool, part of the machinery of the farmer and fisherman. The comment has been made that any exemption would be difficult to enforce, but so far as my knowledge goes, we have had no particular trouble in that regard in British Columbia. At one time I was agent for an oil company. The gasoline we sold farmers and fishermen was a pretty pink in colour, like a lady's blouse. If a man was caught driving a car that had pink gasoline in its tank, he had to pay a heavy fine. His tank would hold only about ten gallons of gasoline. The man who bootlegged the gasoline to him would have to make something out of it, so the man would not save more than twenty-five cents at the most, while his fine would amount to perhaps $10. Therefore it would not pay him to go into that business, nor would it pay the farmer or fisherman to go into the bootlegging of gasoline, and consequently we did not have very much trouble so far as I can recall.
I would point out that the fishermen have to use gasoline in order to carry on their business. A fishing boat must travel at a very slow speed, and anyone who drives a car knows that if it is driven at either a very high or a very low speed it uses a great deal of gasoline. These fishing boats, which have to be kept moving at a very slow speed, are costly to operate because of their high gasoline consumption. If a farmer ploughs all day, he can at least look over his field at the end of the day and see the result of his labours. The fisherman, however, can work all night and burn his gasoline, and in the morning have perhaps only one miserable fish. I have seen a fisherman come in with one fish, and even the fish itself looked sort of ashamed. One of the first parables in the Bible tells of divine providence taking compassion on men who had been fishing all night and caught, nothing. In those days, however, they lost only their labour. To-day the fisherman loses his labour and, in addition, the cash he has paid for gasoline, which is quite considerable.
I know one thing that will happen on the west coast as a result of this increased tax. Smuggling will be given a tremendous impetus, and perhaps I personally might suggest it to some of my fishermen friends out there. All they have to do is to send a boat over to Seattle to get gasoline and then meet the boat on the high seas, outside the three mile

limit, where the gasoline can be transferred to the fishing boats. If a fisherman comes in with three or four gallons in his tank, who is going to proceed against him for that? Certainly there will be a temptation to do that sort of thing. The other day, in connection with the tax on beer or malt or something similar, the minister said it would lead to the operation of illicit stills, and the same principle will apply in this instance.
The fisherman has a hard time of it. The leader of the opposition has spoken about conditions on the east coast, and the situation in the west is similar. The fisherman needs all the aid he can obtain. During the last ten days I have heard a number of these items discussed. I have seen members rise in their places and wax vociferous over the injustice or hardship that would be imposed by the particular item to which they objected, but not one of them appeared to have the intestinal fortitude to put it to a vote. I suppose to-night at least two dozen hon. members have spoken against this tax. I wonder how many of them would vote against it? They need not be afraid. It will not /.efeat the government; it will not be a vote of want of confidence, and the vote will not be recorded. Why not rise in your place and show what you think about it? It will not make any difference to the tax; it will still be imposed; but at least it may impress upon the government the fact that a great many people object to this tax, and that might be all to the good when these matters are being considered next session. I invite those who oppose the tax to show their courage. As the French say, "Oh! j'ai du courage"; have the courage of your convictions and vote against this tax.


Paul Joseph James Martin: It is difficult not to agree with much of what has been said by the hon. gentleman who has just spoken. We should, however, not forget the task of the Minister of Finance, particularly at this time. Many of the hon. members who have opposed this tax also have opposed several of the other proposals that have been put forward by the minister. Obviously, if we are to carry on the war, money must be found. Oppressive as some of these taxes are, they will simply have to be met. While I do not oppose the imposition of the three-cent tax during war time by this parliament, there are certain avenues of extenuation which have not yet been explored.
The justification for the tax is that the money is needed. It is a severe tax, not simply because of the three cents we are imposing, but because the combined taxes of the federal and provincial governments make

Special War Revenue Act
the burden an oppressive one. I believe in Ontario the tax is eight cents. It is imposed by a government which asserted that it was imposed for one purpose, and one purpose alone, namely, the maintenance and the development of highways.


An hon. MEMBER:: Did they live up to that?


Paul Joseph James Martin: No; they did not. That does not apply only to the present government in Ontario. It applies to its predecessor.


Karl Kenneth Homuth: Why did you have to go back to that?


John Ritchie MacNicol: You might have left that out.


Paul Joseph James Martin: If the hon. member will try to maintain a level of discussion, with which he is not too much accustomed, I think we shall get along very well.


An hon. MEMBER:: Politics.


Paul Joseph James Martin: At the present time at least one province has been able fortunately to show a surplus in its financial position. That province, like others at the present time, is not now engaged in further highway developments, and is keeping highway maintenance costs at a minimum. Highways are not being improved. True, gravel highways are being cared for, but the upkeep of highways in general is being kept at a minimum.
It seems to me that, having that in mind, eleven cents a gallon is a very severe tax.


Richard Burpee Hanson: What
about thirteen cents?


Paul Joseph James Martin: Yes; in the hon. member's province it is thirteen cents. I believe such a tax is oppressive, not only on the farmers, but also on those who have to go to factories, and on others generally. A tax of eleven cents on a gallon of gasoline which sells for thirty-three cents, twenty-six cents or eighteen cents is nothing short of being oppressive.
I do not see how we can escape the imposition of the three-cent tax. The minister has made a proposal with regard to personal income tax and corporation tax. He has proposed to the provincial governments that if they vacate these two fields he will provide compensation. Obviously the analogy in this case is not complete, because the vacating of the gasoline tax field by the provinces could not provoke an offer corresponding with that which waS made in the case of personal income tax and corporation tax. But it does seem to me-and possibly the minister can give us some enlightenment on the point

that some
arrangement could be made with the provinces with regard to this particular matter. Some compensation might be arranged. It could not be a complete compensation, having in mind the disparity between the tax in the province and the proposed tax of three cents in the dominion.
The minister has heard expressions from all sides of the house as to the severity of the tax on those engaged in agriculture. He might have heard expressions quite easily from other groups on behalf of other people engaged in other occupations. Would it not be advisable, in view of the fact that the invasion by the dominion of the field of taxation now occupied by the provinces has been kept at a minimum, including only the corporation tax, succession duties and income tax-


John Ritchie MacNicol: And picture shows.


Paul Joseph James Martin: That, I suggest, is another matter. It does seem to me, however, that, having in mind the fact that we have invaded the provincial field, and having in mind their assurance of their desire to assist us at this time of crisis, the minister might well make some proposal to the provinces whereby they could vacate this field entirely, or, if not entirely, to an extent which would make the tax less burdensome than it now is.


George Ernest Wood: The discussion has widened out to the land again to-night, and I should like to take issue with some of the observations which have been made by the hon. member for Weyburn, and also the hon. member for Bow River. I appreciate very much the kindliness of those members who are always endeavouring to look after the interests of the farmers. Being a farmer myself, I feel rather humiliated by the fact that when legislation comes up in this chamber they are always depicting the farmer as some sort of mendicant, who is always wanting charity.


Thomas Clement (Tommy) Douglas: Is this charity?


Victor Quelch: He is wanting equality.


George Ernest Wood: I do not interrupt other hon.
members. When I want my soul fed up with fresh celestial fare, I like to go to church on Sundays and listen to the minister. But when I get it six days in the week-well, that is just a little bit too much.


Thomas Clement (Tommy) Douglas: It might have some effect.


George Ernest Wood: I can appreciate a good
sermon, and it has a good effect; but some of them, I might say are not very effective.


Thomas Miller Bell: That is quite obvious.
Special War Revenue Act


George Ernest Wood: I do not wish to hurt the
feelings of hon. members, but the thing which impresses me is that very often those people who are loud in the interests of agriculture are those who do not have a foot of ground. Their shoes have never been soiled. It seems to me characteristic of some people-and I notice it so much in this chamber-to talk on matters about which they know so little.


Victor Quelch: Such as the hon. member
for Fort William.


George Ernest Wood: If hon. members cannot suggest something better, in place of this tax, to raise the revenue for this countiy, they would be wise to take the suggestion of the hon. member for Fraser Valley and tax speeches. If that were done, I believe hon. members in the group opposite would not have anything left by way of sessional indemnity.
Mr. MaoNICOL:	Would the hon. member speak a little louder? He is doing fine.


George Ernest Wood: I do not know whether I
should take that as a compliment, or not. Is it because the hon. member cannot hear me that he thinks I am doing fine?
The hon. member for Weyburn made the statement that the difficulty with agriculture in the west is it has reached the stage where it has been forced into mechanized tractor farming. My viewpoint is that it has been the tractors which have created the difficulty and hardship in the west.


Thomas Clement (Tommy) Douglas: Does the hon. member live in the west?


George Ernest Wood: I am still led to the belief, in spite of the fact that I may be called old-fashioned, and that it may be said that I am still in the ox-cart days, that if many farmers had not invested so much money in mechanized farming, and had kept to the horses-and I am not saying that there is not a proper place for tractors

they would not have had some of the difficulties with which they are confronted to-day. As the hon. member for Comox-Alberni has said, very often they would have only the loss of labour. When a crop failure occurs you are faced with large expenses which you otherwise would not have had if you had kept to a smaller field of activity.
Hon. members of the Social Credit group and the Cooperative Commonwealth Federation are always condemning industry for being greedy, but I think some of the people they are championing are wanting too much. The trouble is the man who overexpanded, who went out to make a fortune and got licked in the process. The average farmer who did 
not buy a tractor until he had the money to pay for it has not suffered so much. Last year there was an increase of about forty per cent in purchases of agricultural implements in Canada. I do not think all the farmers who bought tractors were absolutely foolish. They would not have bought tractors if they had not some reason for so doing, and they must have expected to have to pay for their gasoline and any tax that might be placed upon gasoline.
I think the average farmer wants to pay his share of the taxes. He has in his veins much of that old pioneering blood which came out from the old country many years ago. He considers it is a privilege to make a contribution to society by the payment of taxes. I have not had one letter of protest from my constituency in connection with these taxes. Hon. members opposite claim they have, but I do not know why they should have, more than I.
The hon. member for Bow River (Mr. Johnston) wanted to know how the farmers would be able to purchase these war bonds that are going to be put out for sale shortly. Perhaps the committee will bear with me while I draw attention to something that occurred twenty-five years ago at the time of the victory loan campaign. The population of one of the smallest townships in Brant is made up almost exclusively of farmers. At that time there was not one tractor in the township, and yet that township made the largest per capita subscription to the victory loan campaign in 1918. That was because they did not have gasoline bills to pay.


An hon. MEMBER:: Three dollar wheat.


George Ernest Wood: But wheat was just as high in every other part of Canada. That is the township in which I live, in which I was born, and in which my father and my grandfather pioneered. Hon. members across the way have the habit of digging up sordid things in this country. Apparently the hon. member for North Battleford (Mrs. Nielsen) quickly became afflicted with the disease because of her close association with them. In doing this, I do not think they offer a very good example of good citizenship. They bring all these things out of the gutter with all their filth, degredation and squalour and hold them up to society as an example of Canadian citizenship. I do not think they are doing this country the service they should be doing as hon. members. I have in my hand a resume of the progress which has been made since the

Special War Revenue Act
first of the century under the so-called profit system, which my hon. friends opposite claim has broken down because of the many abuses.


Victor Quelch: Does it show the debts?


George Ernest Wood: I have a list of the debts, and I should like to show what we have purchased with some of those debts. This shows what has taken place in the United States, but it is also characteristic of Canada, although to a smaller degree. At the beginning of the century the United States had 8,000 automobiles; to-day they have 25,000,000. At the beginning of the century they had 1,000,000 telephones; to-day they have 20,400,000.


Mr. JAQUES:: Twenty million unemployed.


George Ernest Wood: In 1900 there were 4,400,000 security holders; in 1941 there are 16,000,000. In 1900 there were 16,000,000 savings accounts; to-day there are 46,000,000. In 1920 there were only 1.000 radio sets; in 1941 there are 43,000,000. That shows the rate at which we have been travelling. Hon. members will ask what this has to do with the gasoline tax. Perhaps my argument is not relevant, but I think it is time someone drew attention to the weaknesses of the arguments of hon. members opposite. I do not speak very often, and I think it is time that these members should be told to analyse themselves. I sometimes wonder whether they are proud of themselves as Canadian citizens when they read their own speeches. After all, we have accomplished a great deal by our present system; but when they endeavour to bring out the inferior things of life and set them up as examples of Canadian citizenship, they are doing a disservice to Canada.
I believe I am a fairly representative farmer of the Dominion of Canada, and I think I can interpret the opinion of the average farmer. He wants to do his part; he does not ask for sympathy. He wants to share and share alike with the burden that has to be borne; he does not want to feel that he is any less important than any other class of our people. The average farmer has more of the old pioneering blood in his veins than any other class. Unfortunately, especially in the western provinces, there are some who have not been long enough in this country to become acclimatized to some of the rigours of life. They are ready to squeal and complain when faced with difficulty, and they try to offer their views to those of us who have a background of 150 years in Canada.


Mr. PICARD:: Perhaps I should take the advice of the speaker who just preceded me. I am not a farmer; I have never worked the
soil, but I have been adopted by a constituency which is ninety-eight per cent rural. Therefore I think it is my duty to voice their sentiments. The hon. member for Brant (Mr. Wood) is quite fortunate in not having received any complaints. My constituency does not contain any great farms like those in western Canada, but I have received letters from some farmers complaining that this new tax will foe a burden, although only a small one. I understand the difficulties facing the minister in connection with the granting of rebates to farmers, and I sympathize with his position. However, the sympathy which I feel for him is more than balanced by the sympathy I have for the farmers in my constituency. The lot of the farmer, in both western and eastern Canada, was far from satisfactory during the years of the depression, when the position of all our population was not so good. What do we see to-day? Because of the industrial boom due to the war effort, our labouring classes are having their positions bettered day by day. Unfortunately we cannot say the same for the farmer. Any new tax that affects the farmer is not for the good of the country, nor is it conducive to sound economy. Therefore I wish to register my deep regret that the minister could not work out some plan which would have relieved the farmers of this new burden.


Heber Harold Hatfield: Why should the people of the maritime provinces have to pay two or three cents more a gallon for their gasoline than the people in the other provinces? There must be discrimination. I know this is a provincial matter, but the minister should take it up with the provinces with a view to having a level price for gasoline in all the provinces. We pay a tax of ten cents a gallon in New Brunswick, while in most of the other provinces the tax is seven cents. In Ontario it is eight cents. With this federal tax we shall be paying a tax of thirteen cents a gallon in New Brunswick. Will the provincial governments have to pay this tax on gasoline used in road work?


James Lorimer Ilsley: It is not intended that the provincial governments shall be taxed. That will be covered in the bill. My hon. friend asked, why should the maritime provinces pay a higher gasoline tax than other provinces? It would be impossible for us to graduate our tax to accord with the taxes in the different provinces. The hon. gentleman will realize that we could not do that.


Heber Harold Hatfield: Has the minister ever
tried to get the maritime provinces to level up their provincial tax?
Special War Revenue Act


Karl Kenneth Homuth: If the bill is going to
provide for exemption for the provinces from this tax and for the tax being collected at the refineries, certainly we are setting up some machinery which will provide for exemptions under this legislation, and if we are going to provide for exemptions for particular bodies, why should we not do the same thing for the farmers?


James Lorimer Ilsley: As to setting up machinery, the matter is easily arranged.


Mr. BOUCHER:: I had not intended to speak again on exemption for farmers from the payment of this tax on gasoline, but I feel I must say a word in view of the objections which the Minister of Finance has stated to granting any rebate to the farmer. He has spoken of the frauds that are perpetrated in connection with rebates. I must be in a very fortunate position in that respect, because in the two ridings bordering on Ottawa I had the honour of being magistrate for five years, and during all that time there were only two prosecutions for tax evasions. There are, of course, abuses in connection with all legislation, but they must be considered in connection with the amount of revenue to be derived from the taxing legislation. The minister would not say that there should be no legislation restricting the sale of alcohol because of an occasional bootlegger.
We have heard a great deal said in this house this session about the sad plight of agriculture. It has been pointed out that thirtydive per cent of our population are getting only eleven per cent of the national income. Time and again it has been stated in this house that the farmer is not only a war casualty but also an economic casualty. We have had measures to bonus agricultural products, such as wheat, cheese and bacon. We have heard pleas in this house with regard to the scarcity of farm labour and the high cost of production for the farmer. Power implements are of great assistance to the farmer when labour is as scarce as it is at the present time. The hon. member for Fort William said that he had not much sympathy for the farmer who was not prepared to go back to the horse-and-buggy days and drive a team, but has he ever paid much attention to the class of people who are staying on the farm to-day? It is the older people who are staying on the farm. The younger people are gravitating to the cities to go into war industries or into the army, and that makes farm labour scarce. I believe it is our bounden duty to assist the farmer to get his work done with as little hand labour as possible. We are doing much to help him in other fields, and is this not another way in which 
we could help him even though there should be a small percentage of evasions of the tax?


Mr. GRAHAM:: I am sure that no member of this committee could have listened to the Minister of Finance giving the reasons which finally induced the government to impose this tax without feeling the sincerity of the words he uttered. I suggest to the hon. member for Weybum that he does our western people a disservice in misinterpreting the reasons which the minister gave to the committee and doubting his sincerity. It tends to block rather than to assist the work of this committee to suggest that the minister means more than he intended to mean in the statement be made with regard to the difficulties which have presented themselves and will in all likelihood continue to present themselves in the matter of exemptions from a tax such as this. The hon. member for Weyburn, coming as I do from Saskatchewan, knows that in the early stages of exemption from the gasoline tax certain men attempted to evade the tax. As has been pointed out, there have been a number of prosecutions, and I have no doubt that the provincial authorities will soon achieve a general application of the law without infractions and without the necessity of prosecutions such as the minister has mentioned. I for one realize fully the difficulties which the minister has pointed out. He has attempted to weigh the difficulties of granting exemption to the classes referred to, particularly farmers and fishermen, against the difficulties of not granting any exemptions and of having to extract this particular tax from those two vocations.
At the expense of irritating an hon. member with whom I seldom disagree, the hon. member for Brant, and also the hon. member for Fort William, I may say that I am quite in disagreement with their suggestion that we can turn back the hands of the clock and that our farmers can go back to the horse-and-buggy days of farming with any degree of success. That is an impossibility and one which we should not encourage because it is against the true interests of agriculture. Agriculture is no different from any other industry in this respect, that if those engaged in that industry are to enjoy a reasonable degree of prosperity in comparison with the rest of Canadians they must adopt efficient and progressive means of lowering their costs of production. We have heard on more than one occasion that there should be parity of prices as between agricultural products and the commodities the farmer buys. We can never accomplish that by pouring out bonuses to the farmer. There is only one true way in

Special War Revenue Act
which we can accomplish it. To pour bonuses out of the public treasury only means that in turn they must be collected by way of taxation from other classes, and we all know that in the present set-up the primary producer, having regard to his particular position in our economic whole, simply has no capacity to pass those taxes on. The rest of us, the professional classes, and the manufacturer and even labour to-day, have the opportunity of passing those taxes on to somebody else. But the farmer is at the bottom of the heap, and he finds it impossible to pass this or any other tax on to anybody else. If the question is studied fairly, it will be found that parity can never be achieved by pouring moneys out of the dominion treasury. I suggest that the true economy to be recognized, under the necessity with which the farmer and other primary producers are faced, is to attempt to apply the method of reducing, so far as possible, the cost of the commodities which they must purchase.
This particular tax, of course, is a direct tax upon every consumer of gasoline. I do not know why the minister exempted certain grades of distillate. He mentioned that the reason was that no tax is wholly equitable, the most equitable, I think he said, is the income tax. I believe, however, he will agree with me that one could not reasonably impose upon people with gray hair an income tax in a greater amount than on people who happened to have brown hair.


Karl Kenneth Homuth: Or no hair at all.


Roy Theodore Graham: Or no hair at all; if that were the situation, I would claim exemption. But I point out with all respect and deference to the minister that that is exactly what is being done in the case of this particular tax. In Canada, not only in the west but in the east, there has been a marked turning to tractor farming. This is not only a western question; as hon. members well know, in Ontario the use of tractors on the land is increasing rapidly. The hon. member for Carleton has pointed that out. In western Canada the younger farmer is studying his calling from a slightly different angle than that of his father. He proceeds on the basis of extreme efficiency and low cost of production, and the use of the tractor is enabling the young man in western Canada to continue in the vocation which he believes he can master on an economic basis, producing at a price which will enable him to sell in the world's market. We have all through Canada the same trend, and nothing that we can say will stop it.
Therefore, while realizing the difficulties with which the minister has contended in trying to make this tax fair, and realizing how difficult it is for the government or for this committee to suggest concrete ways of helping agriculture, I suggest that the exemption of agriculturists, and indeed, fishermen, from this particular tax would be a concrete way of helping these classes of producers. I do not believe that since I have come to this house I have ever heard a voice raised in an attempt to argue that agriculture is not in an unfair position in comparison with the other economic sections of our community. The difficulty has been to devise suitable ways of helping the agriculturist, and here, at least, is one. Even though the farmer uses his car occasionally for pleasure, there is probably no individual who owns a car who uses it less for that purpose and more on business than the farmer, because his present plight will not permit him to take any long jaunts for his own recreation. Even though a few who should pay the tax might escape it, I suggest to the minister that the lesser of two evils is to devise ways and means of implementing the principle of exemption of farmers and fishermen.


Agar Rodney Adamson: When this tax was imposed, the price of gasoline in certain parts of Ontario, and certainly in metropolitan Toronto, jumped five cents. Can the minister give us any explanation?


James Lorimer Ilsley: I have no information about that.


Agar Rodney Adamson: The companies were giving a rebate of two cents, but when the tax was imposed they stopped giving that rebate, and the price jumped five cents.


James Lorimer Ilsley: I have no information about that.


Mr. WRIGHT:: I should like to compliment the leader of the opposition upon his suggestion that the whole oil industry should be nationalized. It seems that the influence of the group on his left is beginning to have some effect upon the leader of the opposition.


Richard Burpee Hanson: I was just flirting with the idea.


Percy Ellis Wright: It has been said that this three cent tax is only small, but it is a fifteen per cent increase in the cost of the fuel, and the price of the engine which is burning that fuel has gone up to the producer twenty per cent since the war started. Therefore the tax really amounts to something, especially in view of the farmers' income at this time. The
Special War Revenue Act

minister raised the exemption in respect of the defence tax from $600 to $660. I believe everybody in the house complimented him upon that action, and many desired that the exemption should be raised to $750. The average farm income in Saskatchewan for the past four years has been away below $600. That is proved by the appendix to the Sirois report. Yet we are imposing additional taxation on these people who have less than $600 a year, a sum which includes the value of the products used by the farmers from their own farms. This is unfair. In another aspect, also, it is unfair, because most of the large farmers and the insurance companies or corporations that own big tracts of land in the west are using diesel tractors, and are thus able to produce more cheaply than the ordinary small farmer who operates with a gasoline engine.
To my mind our entire agricultural policy at this time is a mistaken one. We are raising the cost of producing agricultural products, and so are creating a shortage of these products. Sooner or later, and it will not be very long in Canada, this shortage will occur. Already we have had to reduce the consumption of pork for domestic use, and so far as dairy produce is concerned, I believe we shall have a shortage within another year. Every time you add to the cost of production you increase the tendency to lessen production. The government would be well-advised to reconsider this tax. Their chief argument has been the difficulty in administering exemptions. But in view of the fact that the provinces are rebating the gasoline tax under much the same circumstances, I do not see why the dominion government cannot do the same. They might at least give the system a trial for a year. As time goes on, Great Britain will require more and more food products. It is our duty to produce these, and I hope the government's attitude towards agriculture will not be such as will make it impossible for us to supply Britain with the products she will need during the next two or three years.


Paul Joseph James Martin: I have pointed out that in my judgment this tax is fair, but the total tax, federal and provincial, is oppressive, and a good case has been made out for that.
I have suggested to the minister a course which may or may not have merit. Having in mind that he has made or offered to make an arrangement with the provinces in respect of two other invasions of tax fields, I should like very much to have his comments with regard to my proposals.


Richard Burpee Hanson: I would echo what the hon. gentleman has said, 
especially in respect of the provinces down by the sea. Thirteen cents a gallon is oppressive. An arrangement might be made by negotiation to iron that out, and I think the minister ought to take the lead. He cannot do it to-night, but he can do it in course of time. Let us be put on the same level. Personally I do not object to the three cent tax; it is another contribution to the war, but let us get this matter on an equitable basis.


James Lorimer Ilsley: I do not know how to do that. I have listened to the suggestion of the hon. member for Essex East, that we pay the provinces to get out of the field-


Paul Joseph James Martin: Give them some compensation, if necessary.


James Lorimer Ilsley: Well, three cents a gallon means $25,000,000; we would have to pay the provinces that $25,000,000, which would leave us just where we were before.


Percy Chapman Black: Only to some provinces.


James Lorimer Ilsley: To give anything less would not mean much.


Douglas Gooderham Ross: The hon. member for Essex East suggested that the gasoline tax was originally imposed in Ontario for the purpose of building roads; he also said that road building in Ontario had stopped or practically stopped, and that the cost of maintenance of roads is now down to a minimum. If that is true, what is happening to the eight cents a gallon which is being collected by the province at this time? I think we would be well advised, as members of this house, to urge on the provincial governments that they do something to cut down their own expenses and, therefore, reduce the necessity for the gasoline tax that they collect at the present time.


Heber Harold Hatfield: I would point out that it is unfair that government officials driving round in government cars should be exempt from this tax and that farmers should not be. In New Brunswick we have the lowest farm income of any province, and we have a thirteen cent gasoline tax.


Douglas Gooderham Ross: I should like to ask the minister a question. He did not answer me in connection with the question of collection of the tax. The provinces now have the machinery for its collection. It is proposed that the federal government shall collect this tax, with all the ramifications involved. Why was it decided that the tax should be col-

Special War Revenue Act
lected from the refinery and not through the agencies of the various provinces who now have the machinery?


James Lorimer Ilsley: We have the machinery also. The sales tax organization is in existence; the excise division of the Department of National Revenue is-I was going to say a perfect organization-an efficient organization.


Douglas Gooderham Ross: But how are you going to find out how much gasoline each province uses? For example, a road inspector for Ontario is going along in his car; he stops at a gasoline station and gets so many gallons. Here is a tractor on the road; it gets so much gasoline. Here are various other provincial vehicles, motorcycles; all these are going to be free from the gasoline tax. How are you going to find out what those exemptions will be?


James Lorimer Ilsley: Section 105 of the Special War Revenue Act states:	'
A refund of the amount of taxes paid (under certain parts) may be granted to a manufacturer, producer, wholesaler, jobber or other dealer on goods sold to His Majesty in the right of the government of any province of Canada, if the said goods are purchased by His Majesty for any purpose other than purposes of resale or of any railway, commission, board or public utility which is operated by or under the authority of the legislature or the lieutenant governor in council of the province.
The point is, refunds of sales tax are made to manufacturers now upon production of evidence that the sale was made to his majesty in the right of a province.


Richard Burpee Hanson: What is proposed to be done to check the use of provincial government gasoline, because it is a fact that it is not all used exclusively in connection with the business of the government as such? There is a tremendous amount which is used in flying round the country that is not business.


James Lorimer Ilsley: Very small.


Richard Burpee Hanson: Well,	it
is substantial, and the government will hear about that if it does not take some steps to check t'he use by the provincial governments, and especially by their officials. Every provincial government has an army of cars; everyone has a car, just as everyone in the federal service has a car. If I understand the situation correctly, that evil, if I may call it that, of providing motor cars for all government officials from the Atlantic to the Pacific has grown substantially in the last five or six years. There are too many cars provided by governments for their officials.
Nobody walks to-day. This is particularly true in the militia. Let me tell the minister something. Just opposite my home is a military hospital. There are never less than ten cars on the street in front of my home or in the yard of the hospital, and I have never yet seen anyone walk to that hospital except a buck private. I suggest that when the minister has this provision put through, as he seems bound to do, the excise division should set up some check on the provincial government's consumption of gasoline. Perhaps he will not lose as much revenue as I think he is losing to-day.


James Lorimer Ilsley: They check that now.


Arthur Graeme Slaght: Why does the minister
propose to exempt provincial governments and their employees?


Richard Burpee Hanson: What
contribution do they make to the war?


Arthur Graeme Slaght: There is no equitable principle behind such an exemption. One province may have a small army of such public servants, and their ratio of expenditure for gasoline may be entirely out of keeping with that of another province, and just to that extent by exempting it we are going to be grossly unfair. Why not let them pay their shot, take care of it themselves just as fishermen, farmers and all other drivers of cars do?


Richard Burpee Hanson: Quite
right.


John Ritchie MacNicol: And the brass-hats too.


James Lorimer Ilsley: I can consider that, but it
would mean the introduction of a new principle; we would have protests from every province. I do not know of a single instance where the federal government steps into a province and lays a tax on the province which will be paid out of the taxes that it imposes on its people. It would be introducing a new principle.


Richard Burpee Hanson: Let the
minister sleep on it.


Karl Kenneth Homuth: The minister said that the tax is going to be collected from the refineries.


An hon. MEMBER:: Eleven o'clock.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
St. Lawrence Waterway
Wednesday, May 21, 1941.