1941-05-14

[Stage Direction]
Mr. T. L. CHURCH (Broadview) moved for leave to introduce Bill No. 61, to amend the Judges Act.
He said:	Mr. Speaker, this bill contains
two sections, the first of which has to do with the use of federal judges on royal commissions. The frequency, in recent years, with which judges are drafted for all kinds of such work impairs the efficient administration of justice and causes congestion in the law courts, and as they are largely only factfinding commissions when appointed they duplicate the efficient powers and functions

Questions
of parliament, of the committees thereof, and of the many outside boards of recent innovation in war work, and furthermore they are a costly adjunct to good parliamentary government of the people, by the people and for the people, cause delays and interfere with parliament's right to immediate solution of social and economic problems of urgency to good government, thus a system of "judicial commission government" is slowly being built up in Canada.
The second section adds to the act a provision under which judges are to be bound by the decision of the court of final appeal, in respect to any question of law competent for such judges to decide, and shall take notice and be bound by the then last decision or judgment of the judicial committee of the provincial, or other court of final appeal rendered by such court upon or with respect to such application of law. This amendment is to apply to all the provinces of Canada. Federal authority should be paramount and supreme. One of the cardinal principles of the British constitution is that the courts are subservient to the legislature.
The legal maxim or doctrine known as stare decisis is overruled where inconsistent to this amendment and this bill will be law for all Canada, notwithstanding the provisions of any law, statute, usage, custom, or doctrine of law to the contrary. Judges are federal as well as provincial officers, although the provinces have jurisdiction over the constitution of the courts.
Motion agreed to and bill read the first time.

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

[Stage Direction]
ST. PAUL l'eRMITE, QUEBEC
Mr. LACOMBE:: 1.	What amount has been paid to date by the dominion government in connection with the Cherrier plan at St. Paul l'Ermite?
2.	What amount has been contributed to date by the government of the United Kingdom?
3.	What is the total amount advanced to date in connection with the Cherrier plan?


Mr. HOWE:: 1.	$1,617,553.35.
2.	It is required of the dominion government that no information be given regarding United Kingdom government contracts.
3.	Answered by No. 2.


MISSAGUASH RIVER, N.S., BRIDGE
Mr. ROSS (Souris):: 1.	Were tenders called for the construction of a bridge over the Missaguash river, Nova Scotia?
2.	If so, who was the successful tenderer?
3.	What was the amount of the tender?
4.	Who were the other tenderers?
5.	What was the amount of each such tender?


Mr. CARDIN:: 1.	Yes.
2.	(a) Construction of sub-structure, Greenlaw & Estey. (b) Construction of superstructure, Dominion Bridge Co., Ltd.
3.	(a) $26,972; (b) $31,840.65.
4 and 5. (a) Diamond Construction Co., Ltd., S30.202; 01 ts & McNabb, $31,426.50; B. H. Williamson, $31,903; H. H. Latimer and A. D. Morrison, $47,307.50. (b) The Canadian Bridge Co., Ltd., S34,748.64; Hamilton Bridge Co., Ltd., $35,337.60.


BUTTER FOR BRITAIN
Mr. CHURCH:: 1.	How many pounds of butter have been shipped each month to Britain since the war started?
2.	Will consideration be given to sending a large gift consignment of butter to Britain?


Mr. MacKINNON (Edmonton West):: 1.	Exports of butter to the United Kingdom during the months from January to December, 1939, 1940 and 1941.
1939	1940	1941
Month	Pounds Pounds Pounds
January		..
February		900
March		..
April		..	100
May		..
June		..
July		..
August		..
September	..	..	73,700	..October	
71,000	..November	,.	..	39,300	..December	..	..	13,200	..2.	This is a matter of government policy.


FARMERS' CREDITORS ARRANGEMENT ACT-REGINA EMPLOYEES
Mr. DIEFENBAKER:: 1.	How many married women are employed on the staff of the administration office of the Farmers' Creditors Arrangement Act in the city of Regina?
2.	What are their names?
3.	Were they appointed by the civil service commission?
4.	If not, by whom?


Mr. ILSLEY:: 1.	Three.
2.	Mrs. H. McPhaden, Mrs. M. Pearce and Mrs. V. Calhoun.
3.	No.
4.	Registrars appointed under the provisions of the Farmers' Creditors Arrangement Act
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are allowed such disbursements as may be necessary for stenographic and clerical assistance. The persons referred to in question 2 were appointed by the registrar of the Saskatchewan board of review.


MARION BRIDGE, N.S., POST OFFICE
Mr. GILLIS:: 1.	Was the post office at Marion Bridge, district Xo. 3, Cape Breton, Nova Scotia, transferred to district No. 16, Cape Breton?
2.	If so, when and for what reason?
3.	What number of people -were served by the office in district No. 3?
4.	What number of people will be served by the office in district No. 16?
5.	Upon whose recommendation was the transfer made?


Mr. MULOCK:: 1.	Marion Bridge post office was moved a distance of 1/10 of a mile.
2.	(a) On the 4th March, 1941. (b) The retiring postmistress gave up the office, a transfer became necessary and the office was placed in charge of an acting postmaster.
3 and 4. The department has no information of the areas designated as district No. 3 and district No. 16.
5.	Dr. D. J. Hartigan recommended present acting postmaster.


BIRTLE, MAN., POST OFFICE BUILDING
Mr. CASTLEDEN:: 1.	From who was the site of the post office building at Birtle, Manitoba, purchased?
2.	What price was paid for this site?
3.	What was the cost of the construction of the building?
4.	Who were employed as building inspectors on this construction?
5.	What amounts were paid to such inspectors for this work?


Mr. CARDIN:: 

QUESTIONS PASSED AS ORDERS FOR RETURNS

[Stage Direction]
MUNITIONS AND SUPPLY-FUNDY AND MaCMILLAN CONSTRUCTION COMPANIES

Mr. HANSELL:: 1.	Has the government ascertained from the provinces the rate of taxation imposed on admission tickets to motion picture theatres?
2.	If so, what is the present rate in each of the provinces?



MOTION FOR PAPERS


Mr. DIEFENBAKER:: For a copy of all letters, telegrams, petitions, reports and other documents passing between the government of Canada, or any official thereof, and the farmers in township 28, range 20, W. 2nd, in the province of Saskatchewan, or with the rural municipality of Mount Hope No. 279, from October 1, 1940, to date, in connection with the resurvey of said township in order to ascertain whether the farmers living there were entitled to the payment of bonus under the Prairie Farm Assistance Act, together with a copy of all correspondence with regard thereto that has passed between the Minister of Agriculture and the superintendent of prairie farm assistance at Regina, Saskatchewan.


Mr. GARDINER:: It is not in the public interest to give much of the information asked

Private Bills-Procedure
for, and some of it would be simply opinions which have been passed back and forth between officials in the department. Other than that, what can properly be given will be given.



PRIVATE BILLS


[Stage Direction]
On the motion:
That private bills be considered by the house, after routine proceedings, during the sitting of Thursday, the 15th of May instant and that standing order 15 and the resolution of the 17th of February last in relation thereto be suspended.	.
Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, if the house will allow me I should like to amend this motion by substituting Friday the 16th for Thursday the 15th. If that amendment is satisfactory I would move:
That private bills be considered by the house, after routine proceedings, during the sitting of Friday, the 16th of May instant and that standing order 15 and the resolution of the 17tli of February last in relation thereto be suspended.


Hon. R. B. HANSON (Leader of the Opposition):: Mr. Speaker, there is no objection, of course, to the amendment, but if we do pass this motion I am wondering whether we are to have a repetition of what took place here last week. I regret that the Prime Minister was not in his seat at that time; otherwise he would know exactly what I mean. I assume that the object of this motion is to allow promoters of private bills to get their legislation before the house. That is a proper thing at the appropriate stage of the session, but I do suggest to the Prime Minister that if we are to have a repetition of what took place here last week we had better not pass this motion. I further suggest that it would be very much better if we proceeded with public business rather than with some of these private bills. I personally do not see any chance of their getting through, although I am not opposing any one of them; but I deplore more than I can say the situation which was created here last week, arising, as I have no doubt every hon. member knows, out of indirect opposition to one of the bills, which on its merits, it seems to me, should have a chance to go to the railway committee.


William Lyon Mackenzie King: As my hon. friend is aware, it is pretty difficult for me even to suggest that I control the tenor of debate or what may take place in the course of it, but I would agree very strongly with the leader of the opposition (Mr. Hanson)
when he says that public business should not be impeded in any way by a discussion of private bills. The purpose of this motion is to permit all these bills -to go to a committee, and if advantage is taken of that permission to occupy the time of the house at too great length with matters that are not wholly relevant I think it would be proper to adjourn the order and proceed with another. I would hope that what the leader of the opposition has said would be sufficient to guide those who may participate in the debate on private bills.


Mr. T. L. CHURCH (Broadview):: Mr. Speaker, this motion is debatable, and I should like to take one or two minutes to say that formerly, even with a war on, the house was allowed from eight to nine o'clock on Tuesday and Friday evenings to discuss private bills, and also the first three Thursdays of the session after the orders of the day had been disposed of. In my opinion that practice should be restored so that it would not be necessary to have on the order paper a motion such as the Prime Minister has just moved. Nowadays we do not know what business is coming up. We are given no notice of various motions, and they pass unopposed when they should be opposed.
My next point is that there has been a bill on the order paper ever since the war started regarding soldiers' fares and insurance. Surely that should be covered by this motion. There is no reason why, at a time when we are asking for 32,000 more recruits, soldiers' grievances and soldier legislation should not be dealt with promptly.
Members on all sides of the house have asked for free fares, and I moved for leave the other day. I ask the Prime Minister to include these two matters in his motion. The Prime Minister and the government and fifty-six outside boards and commissions have been given all the functions and privileges of the House of Commons itself. The Prime Minister has Pooh-Bah powers to deal with this legislation I have mentioned on behalf of the soldiers, and it is in the public interest that it should be dealt with without further delay.
Motion as amended agreed to.



CANADIAN ARMY


[Stage Direction]
On the orders of the day:
Mr. VICTOR QUELCH (Acadia):: Mr. Speaker, I wish to draw the attention of the Minister of Pensions to a statement that

Defence of Canada Regulations
appeared in the Calgary Herald of May 8. I understand that a copy of this statement has been forwarded to the minister. First of all I shall quote the statement and then ask some questions regarding it.
The heading in large letters says "Soldiers willing to live off government." It goes on:
By Thomas R. Henry-
Science Editor
Richmond, Va., May 8.-Canada's war experience to date gives some validity to Adolf Hitler's charge that the democracies are "jaded and effete."
Such was the confession made before the American Psychiatric Association meeting here, by Dr. J. P. S. Cathcart-


Mr. SPEAKER:: Order. I would ask the hon. member to make as brief as possible his statement of the foundation of the question he proposes to ask.


Victor Quelch: I shall be very brief, Mr. Speaker. I will just complete that sentence: -by Doctor J. P. S. Cathcart, chief psychiatrist of the Department of Pensions and National Health of the Canadian government.
I will just quote the last paragraph:
Another alarming symptom, Doctor Cathcart said, is the number of thefts reported from army camps-so much so that locks for kit-bags are being sold to most recruits.
An alarmingly high percentage of men, he said, have had previous prison records. Most of them -are in the army only with the idea of serving as short a time as possible and then retiring on a pension.
The question I would ask the Minister of Pensions is this. Will the minister assure the house that the government will take steps to ensure that no government employees holding responsible positions make defamatory statements against the army in the future? I ask that the government dissociate itself entirely from this libellous statement made by Doctor Cathcart. How can the government expect the men of the armed forces to have any confidence in a man who will attack the Canadian army by making such public statements outside of Canada?


Hon. IAN MACKENZIE (Minister of Pensions and National Health):: Mr. Speaker, the article in question has been called to my attention. In the first place the officer in question states that the newspaper report is not an accurate report of what he did state on that occasion. In the second place, I have already taken steps to see that such public statements are not made in the future without the approval and permission of the minister of the department.



DEFENCE OF CANADA REGULATIONS


[Stage Direction]
On the orders of the day:
Right Hon. ERNEST LAPOINTE (Minister of Justice) :: Mr. Speaker, in view of statements which have been made in certain speeches delivered outside the house or published in pamphlets, I have been asked to make a statement concerning the following matter.
It has repeatedly been said by certain people that persons have been interned solely because they have been members of a trade union. Some of these charges even went so far as to suggest that the defence of Canada regulations were being used to persecute and intimidate organized labour. These charges are positively untrue and must be categorically denied.
Of the total number of communists interned -the number is ninety-eight-under the provisions of regulation 21, twelve are definitely known to have been active in, and members of, labour unions. It must be pointed out, however, that these people were interned not because of their membership in the trade union, but by reason of the fact that they had been prominently associated with the Communist party and its activities.
The Communist party of Canada, ever since its inception, has attempted to undermine and capture the labour unions of this country. The communists, in conformity with the set policy of the party, do not enter the trade unions for the purpose of improving the working conditions of their members, but mainly for the purpose of turning the economic organizations of the workers into effective instruments of communism. During its twenty years of existence, the Communist party has resorted to various schemes in its attempt to capture the trade union movement. These schemes or intrigues have been bitterly contested by the majority of the workers in the trade unions, with the result that many of the known communists have been expelled from the ranks of organized labour. There are still, however, many communists who have been able to retain their membership in the trade unions and are doing their utmost to implement the policy of the Communist party.
The Communist party, ever since the outbreak of the present war, has been definitely committed to a policy which is calculated to

Income War Tax Act
impede our war effort. By fomenting strikes and discord, it seeks to cripple our defence industry. This policy has been reiterated in a set of directives recently issued by the central executive committee of the party. Those directives are on our files. The following is a quotation from the directives which has direct bearing upon the activities of the communists in trade unions:
The present bureaucracy which controls the trade union movement and which has tied it to the war chariot of the capitalists by cooperating on war boards, accepting the decrees of the ministry of labour, signing "war-time" agreements, and pledging "industrial peace" during the war (P.C. 7440), will oppose fiercely any militancy in the fight against the wrar programme. The trade union bureaucracy has to be fought within the union locals by the militants.
In view of what is known of the activities of the Communist party in labour unions and industries generally, it can hardly be expected that a communist should be given immunity because he happens to be a member of a trade union.



NORTH AFRICAN CAMPAIGN


[Stage Direction]
On the orders of the day:
Mr. G. K. FRASER (Peterborough West):: I should like to ask a question of the Minister of Munitions and Supply with regard to a statement made by the hon. member for Neepawa (Mr. MacKenzie), as reported in Hansard, page 2598:
Canada did a big job in North Africa by providing the transportation equipment for that swift campaign.
The question is this: Did Canada buy these transports and give them free to the British government, or were they paid for by New Zealand, Australia or the British government?


Hon. C. D. HOWE (Minister of Munitions and Supply):: I cannot answer the question
categorically. Various countries order motor vehicles in this country, and the Department of Munitions and Supply does not check the distribution; we simply manufacture them and ship them as ordered. We do know that motor transport was shipped in great volume from Canadian ports direct to Africa, but the ownership of the vehicles shipped we do not know; at least, I do not know.



WAYS AND MEANS

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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income War Tax Act and to provide: -
1. That the rates of tax applicable to persons other than corporations shall be increased to the rates of tax set forth in the following schedules: -
A. Rates of tax applicable to persons other than corporations and joint stock companies.
(Fur paragraph A of the first schedule, see page 2766, May IS.)
Richard Burpee Hanson: Yesterday the Minister of Finance, at the request of the hon. member for Rosetown-Biggar, placed on
Hansard, at page 2771, a table showing the "number of individual taxpayers, the amount of net income on which assessments were approved and taxes assessed during the fiscal year 1939-40; classified as to income class groups and per cent". That, of course, does not take into consideration the budget changes of last session. What I should like to know is this: Has the minister had prepared for the purposes of this resolution a table or classification showing what is expected to be received in the fiscal year ending March 31, 1942, from the present proposed changes? Is the minister able to give us information as to what amount, under the proposed assessment, is to be received, for instance, from those in the income class up to S2.000? We all know that, under the budget as brought down, the tax is at the rate of fifteen per cent on the first SI,000, and there is a graduated scheme increasing as it ascends. I should like to be able to compare the table on page 2771 of Hansard with a table of what it is estimated will be received in the next fiscal year, from the various income class groups. From such a comparison we would gain an understanding of the relative sacrifice which is to be made by each particular class of our citizenship.


Mr. ILSLEY:: That information is not available, at the moment at least. No estimate has been made by income groups. Someone asked me that question yesterday.


Richard Burpee Hanson: I do not recall that it was asked. I would, however, remind the minister that in his budget speech he estimated an increase of so many million dollars from this class of taxation.


James Lorimer Ilsley: Page 2356 of the budget
speech, I think.


Richard Burpee Hanson: He made an estimate of the yield from increases in existing taxes, the estimate from graduated

Income War Tax Act

personal income tax being $75,000,000 for a full year, and, for the remainder of the current fiscal year, 1941-42, $45,000,000. Presumably there was a carefully prepared estimate upon which these figures are based. It seems to me that it would not be very much trouble to go a little further and put those figures in a table comparable with the one which the minister put on Hansard yesterday. It would be quite illuminating.
I think I understand the reasons for the question yesterday. We must be absolutely fair about these matters. I said a year ago that the people in the intermediate income ;ax groups were making a tremendous and a very sudden sacrifice. That is being repeated this year. Those people are not complaining about that. But let us have the facts, and let us show that they are making a real sacrifice-because they are. I must say to the minister, and I believe he will agree with me, that if there had been a tremendous outburst in the country against this, it would not have been unexpected. On the contrary, there has been the most patriotic acquiescence and agreement from that particular class of our citizenship. It is all to their credit that this should be so, but let us give the country the facts and let the country know just how much these people are paying, in the way of increased taxation, in the different categories.


James Lorimer Ilsley: I shall have an estimate
prepared and put it on Hansard.


Richard Burpee Hanson: Yesterday I asked the minister to give some consideration to the question of municipal income taxes in the various provinces. It may be news to some hon. members that in New Brunswick all the municipalities have enjoyed -if that is the proper term to use-the field of income tax as a source of revenue. That goes down even to what I term the rural municipalities, but it is used chiefly in the larger cities. In New Brunswick we have no provincial income tax, and therefore the province has nothing to give up in that field. According to an interview given by the premier .if New Brunswick on his return to Fredericton, che question of the corporation tax is under consideration, and I hope the minister's proposals will be accepted. But before they can agree on the question of income tax, the municipalities will have to be consulted, because in the municipal field there will be a substantial amount of public revenue which will have to be made up from some other source if the provinces ask them to vacate this field. What is the position in relation to New Brunswick and Nova Scotia where there is no income tax? What does the minister propose to do in cases like these? The

province is giving up nothing, but the municipalities are giving up a definite field of taxation. If the minister makes an arrangement with the provinces under either A or B of his alternative proposals, will that be passed on to the municipalities, which are giving up that source of revenue? The minister will agree that his language in his budget speech did not go far enough to make it absolutely clear that that must be passed on. It is left at the option of the provinces.
I agree that the municipalities are the creatures of the provinces and that the provinces are the bodies with which the minister must deal; but I urge upon him to insist that if these municipalities give up that field of taxation, the loss which they sustain shall be made up in any grants that the dominion may make the provinces and that they will not be scalped-is that a good word to use?- by the provinces. It must be passed on to the municipalities and not retained by the provinces. That is the point which I am making. I say this because in previous grants in aid to certain provinces the whole benefit that should have accrued to the municipalities was not passed on to them, and I do not think the dominion government would have made those grants in aid to the extent to which they were made unless it was intended that they were to be passed on to the municipalities. I should like the minister to make it quite definite, in his negotiations with the provincial governments, that under any arrangements between this government and the provinces- and I speak especially with reference to New Brunswick and Nova Scotia-the municipalities will not suffer by reason of their vacating the income tax field.


James Lorimer Ilsley: There is a situation of some difficulty in New Brunswick, particularly by reason of the fact that small units, even school districts I believe, impose income taxation.


Richard Burpee Hanson: They do not go as low as that, do they?


James Lorimer Ilsley: I am not sure about that, but I am told that very small municipal districts of that sort, districts subordinate to the provinces, impose income taxation on very low incomes, in some instances just a few hundred dollars, four or five hundred or less-less than three hundred dollars, my colleague the Minister of Fisheries (Mr. Michaud) says, so far as his province is concerned. The offer to the provinces is conditioned upon the province and the municipalities leaving the income tax field. Whether we shall expect a complete vacating of the field in the case of these extremely low income taxes, whether they should not be regarded as something a little different from income taxes in the sense in

Income War Tax Act
which we mean it, is something that will have to be considered with the provinces. I have discussed this matter with my colleague the Minister of Fisheries and with the Premier of New Brunswick, Mr. McNair. Mr. McNair is concerned about the situation there.


Richard Burpee Hanson: So am I.


James Lorimer Ilsley: He says that his government is being put in this position, that approximately one and a half million dollars in this type of income taxation-


Richard Burpee Hanson: That is, municipal?


James Lorimer Ilsley: Yes, municipal taxation-will be given up by the municipalities in New Brunswick, and a demand will be made upon the provincial government there to compensate for this taxation which is being given up by the people of that province; whereupon the province of New Brunswick, it is assumed -and nothing else has ever been thought of either by Mr. McNair, by my colleague the Minister of Fisheries, or by myself-will have to pass the amount on to the municipalities. I hope I am not making it more difficult for Mr. McNair in stating it here, because I have not his authority to do so, but his concern is that the municipalities will consider that possibly some growth of revenue should be allowed for; and if the amount is fixed in that way by the province, the province will have only so much to pay over to the municipalities and will perhaps be open to attack from some of the municipalities for having frozen their income tax revenue at that figure. I pointed out to Mr. McNair that the freezing of income tax revenue was an essential part of the proposal. It is the amount paid in a certain year that the dominion agrees to pay to the provinces where the province adopts that part of the offer. So far as New Brunswick is concerned, it may be that they would adopt the debt service rather than the other. I do not know yet. Whether it would be more advantageous for them to take it out of the debt service or the amount of taxation less succession duty, I do not know. In any event the situation there has been carefully, although not completely, explored and is under consideration by the officials of my department and also by the government of New Brunswick.


Richard Burpee Hanson: The minister has made a very fair statement. There is no doubt there will be hardship if the situation is "frozen," to use his own word. Take Fredericton. We have had a progressive increase in income taxation in that city for many years, and I understand that this year there is a substantial growth. That tax is designed to collect money from salaried people from whom not another cent would be col-
14873- 178J
lected, except by way of a poll tax. All I am concerned about at the moment is that if they decide to adopt the proposal-and it must be up to the province to adopt whichever alternative they wish to choose-then, municipalities will not suffer. I want the municipalities protected. What will happen in Fredericton, or Saint John or Moncton, which are the three largest municipalities? If they lose their income tax, the burden will be loaded on to real estate, and real estate has every cent of taxation it can bear, especially in Saint John.


Mr. BRUCE:: And other cities.


Richard Burpee Hanson: I am
speaking especially of the local situation there. It is especially difficult in the city of Saint John although not so bad in Fredericton, but all three will suffer. They must have certain revenue to carry on their services, and all three will have to put on additional imposts on real estate. That ought be be avoided, if possible.


Mr. COLDWELL:: I wish to support the leader of the opposition in his suggestion that the minister bring down an estimate of what he expects to get from each classification in the income tax schedule. I agree with the leader of the opposition that there has been no outcry against this income tax and the increase. I believe the people are quite willing to bear the additional burden, on account of the need of the country at this time.
I mentioned yesterday that there was some criticism and some speculation as to the accumulation of wealth which is alleged to be going on in the dominion during the war. I had specific reference to the statements which have been made that more than twenty new millionaires have been created during the war. Incidentally, I have been told since yesterday that the manner in which that is arrived at is by taking the number of people in the high income group of S50.000 a year and over and saying that the additions are all millionaires. Obviously, of course, that cannot be correct in every instance. Perhaps some of the increase in the higher income brackets will be due to some extent to substantial bonuses that have been given to various employees, managers and so on, in industry, and I hope that sort of thing will be carefully checked up by the department, because it may be one means of escape from the excess profits tax.
I know that some of our industries have gone into the field of social welfare work for their employees; that is to be commended. I believe that is something which will be of benefit to the country when peace comes, and I am not criticizing the firms which are
Income War Tax Act

adding to their social benefits to their workers, because, as I say, we may benefit quite largely from that when the war is over. I suggest, however, to the minister that it would be in the public interest that, instead of lumping together the 488 persons who constitute -166 per cent of those who pay income tax and who receive 4-72 per cent of the income, we should classify them, in order that we might know and understand what these incomes are.
If, for example, we take the first group, up to S2,000, we find that there are 124,132 persons, or 42'35 per cent of the taxpayers who had, on an average, some 81,348 of taxable income. On the other hand, with regard to the last group, 483 persons, who had incomes of more than 850,000, we find that their total income was $16,606,971, which would give an average for the 483 individuals-and these are individ^ uals, not corporations-of $97,814 taxable income.


James Lorimer Ilsley: I think the hon. gentleman can make a better case than that.


Major James William Coldwell: I shall be glad to have the minister's help to do it.


James Lorimer Ilsley: He has given $16,606,971 as the total income. That figure is the total taxes. The total income for those 483 persons was $47,244,305.


Major James William Coldwell: Yes; I read the wrong column of figures. But my calculation was on the $47,000,000, which gives an average of about $97,800 per individual.
In my opinion, that gives rise to a good deal of criticism, and I think quite rightly, because it indicates that there must be a considerable concentration of wealth. If the minister could give the committee a table such as the leader of the opposition suggested, showing exactly the amount that would be paid by each of the new groups, we would have a better and fairer picture of the situation than we get by simply lumping these figures together. The minister said yesterday that he did not wish to satisfy idle-he did not use the word "idle"-he did not want to satisfy curiosity as to individual incomes. But in the United States-I am not sure about Great Britain'-the names of the individuals, with the amount of income tax paid, are given. I am not asking for that.


Richard Burpee Hanson: That is only to satisfy idle curiosity.


Major James William Coldwell: No, I do not think so, but I would say that the people of the United States or of Canada have a right to know who are in control of the finances of the country in which they live. The growth of these huge estates and huge incomes is causing a

tremendous amount of discontent, which discontent is, I think, properly based. I would say to the minister that if he listens, as I do occasionally, to the broadcasts which are being made by propagandists from Germany and Italy, he would find that their propaganda is largely directed at the moment to the working people of the democracies, and it is just these inequalities that they are emphasizing. I know perfectly well, as do most other hon. members, that that kind of thing is pure propaganda, that in the country from which it comes, every working class organization has been crushed out, and that if our people listened to that kind of propaganda and followed it, all our working class organizations in Canada would be crushed out. There are, however, many people who do not know that. Consequently, in my view we must pay attention to what may seem to the leader of the opposition and others idle curiosity; but it is not idle curiosity, it is the legitimate desire to know exactly the position in which our country stands in these respects at the present time. Therefore I should like to see a classification of incomes so that we may have that information.


James Lorimer Ilsley: I will consider that suggestion, and consider it seriously. I do not think any classification that I would produce would be so fine that anyone could be identified, but perhaps we can go considerably further than we have without coming to that point. The United States system is to publish the incomes, the salary incomes, above a certain amount. I have read them myself in the New York Times and been very much interested to see the salaries of motion picture directors, officials of General Motors and so on.


Major James William Coldwell: International Nickel.


James Lorimer Ilsley: In this country we follow the English system of not publishing those particulars, and I do not think I should like to depart from it now. The end for which the hon. gentleman argues, namely that people should know how much these men are earning, is pretty doubtful; I do not think such publication would serve any good purpose, and I would not want to make such a change in policy. I understand the hon. gentleman is not asking me to; he is merely asking me to produce a classification a little more in detail than that already produced.


Richard Burpee Hanson: I want
to endorse the stand the minister has taken. When the income tax was first introduced it was distinctly understood that the figures in regard to the income taxes paid, the amount

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of individual incomes and so on, would be kept secret, and we have proceeded on that basis ever since. There are elements in this country which would like to know your income and mine, but that is none of their business. If I obtain my income legitimately I am entitled to have it kept away from the prying eyes of the curious and those who would use that information for improper purposes. I would protest against publicity being given to any figures which would identify the income received or the amount of tax paid by anyone.


Mr. BLACKMORE:: I should like to
express myself as directly opposed to the position taken by the leader of the opposition. I see no good purpose to be served at all by keeping these incomes secret. Why should a man be afraid to let people know his income, if he has earned it legitimately? In little towns and cities all over this country eveiyone knows the salaries of the school teachers and the principals of the schools. Usually at election time the income of the premier of the province or the ministers of tire crown is no secret. Generally speaking these matters are brought out and paraded up and down with altogether indecent publicity. I see no reason why a man making a million dollars a year in this country should object to the fact being made known to all the people; and if he is unable to justify that amount let him be ready to pay a greater income tax.
I would go even further. I quite agree with the stand taken by the hon. member for Parry Sound yesterday; I believe he was the first to express the idea that all incomes of more than $50,000 should be made public, to the extent of making known the names of those in receipt of such incomes. But I see no reason why the amount of money a man receives in the way of regular salary, in return for the service he gives the country, should not be placed in one category, and the amount of money he receives from investments placed in another. We set out to fight this war, according to what was said, on the basis of equality of sacrifice. How can we possibly establish the fact that sacrifice is equal unless these things are made known to the people? And how can they know them unless the details of the incomes of the people of Canada are made known frankly and accurately. I do not find myself at all in sympathy with the leader of the opposition or the minister in this respect. I am in agreement with the leader of the Cooperative Commonwealth Federation and the hon. member for Parry Sound.


Herbert Alexander Bruce: When the committee rose
at six o'clock last evening we were considering the question of exemptions in respect of British children. I had hoped that the minister might alter his views in regard to granting exemptions to the foster parents of these children, but since he has not indicated any intention of doing so I should like to add a few words to that discussion.
I have a letter from the president of the alumni federation of the university of Toronto, in which he says:
Last year a number of children were brought from Great Britain to Canada through private or semi-private arrangements and without cost to the governments of Great Britain or Canada. Under present regulations, income tax exemptions cannot be claimed for these children.
By an arrangement between the University of Toronto and a group of British universities, some 140 children have come to Toronto. Practically all of them are living in the homes of members of the staff or alumni of the University of Toronto. In many cases this hospitality is provided at inconvenience to the family of the hosts. In some eases it involves definite sacrifice, and in every instance more or less expense. It would be a just and generous action on the part of the dominion parliament to grant the usual exemptions for income tax in respect to all guest children living in Canada.
As no financial aid can be sent by the parents of these children in Great Britain to their foster-parents in Canada this exemption for income tax purposes would be of material assistance. In the aggregate, the loss in tax revenue would not be great, as the total number of guest children in Canada is not large.
The saving to the government by the privately sponsored transfer of each guest is many times the tax accruing from each exemption in the income brackets of most of the staff and of the alumni of the university.
I should like also to place on record a letter from the bursar of Trinity college, Toronto.
The present dominion income tax act allows $400 exemption for the full year if during part of the year one maintains a child in Canada "under the cooperative scheme sponsored by the governments of the United Kingdom anil Canada brought from the United Kingdom under a government plan" provided that the total tax you can deduct is $80 under this exemption.
During the year 1940 many members of the staff of the university received into their homes war guests brought to Canada under a scheme arranged between the University of Toronto and Oxford. Under the Ontario government income tax act, exemption was granted for these children, but under the dominion act no exemption was given. In addition to those brought out under the university scheme there are hundreds of children brought out privately, and for whom no exemption is given. The cost of maintaining these children is increasing, and with the greatly increased income tax, the burden is very great. . . .
If this exemption is granted it will be a great help to many who are quite willing and eager to do their part in the war in any way
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they can, but the present plan discriminates against those who have received children privately, in many cases without knowing the parents.
I should like also to mention those children brought out under the Lady Tweedsmuir scheme, numbering some fifty in all. Those children, as with the children sponsored and adopted by the university professors, were placed in charge of the children's aid society of the province, just as were the children brought out under the government sponsored scheme. An Englishman sent to Canada two of his children in charge of a nurse. He thought he would like at the same time to pay the expenses of two children of poor parents who wished them to come to Canada. He did so; the two children of poor parents came to Canada under this private arrangement and were adopted through the children's aid society. The people who took those children find themselves in exactly the same position, so far as discrimination is concerned, as the people who received the children sent out by the man who was able to pay their expenses to this country.
Yesterday the minister stated, as one reason for finding it difficult to accede to this request, that it would open the door to exemptions being claimed by foster-parents generally throughout Canada. The argument, I maintain, is not a good one. This is a war emergency which we hope will not last for more than another year or two. When the war is over this will cease to be a form of taxation. I should think a refusal to grant these exemptions would have another effect, namely, that of discouraging people in this country from acting as foster-parents of children wishing to come to Canada in order to get away from the bombing and other dangers that at present exist in Great Britain. I think it will have a serious effect in this regard, and I do hope the minister will reconsider this matter. The amount involved is not large, and there is a great and rising public demand that this should be done.


Thomas Langton Church: Mr. Chairman, I come from a district which pays a large percentage of this income tax, and I desire to protest against certain features of the schedule and the basis upon which the whole schedule has been prepared. I compliment the minister upon the able commissioner of income tax he has. In fact, the heads of the excise, customs and income tax branches are all very efficient. In these days when parliament is here to-day and gone to-morrow, the back-bone of good government, be it dominion, provincial or municipal, is the permanent staff. They are the people who bear the brunt of the work, they are the people who give us good and

efficient service. If we depended upon them more we would be running a business as efficiently as a department store, and be giving real service. ,
I was the head of a municipal council when the government in 1917 took away the income tax by force, making a duplicate tax for war purposes. A deputation of representatives of the municipalities came to Ottawa to protest against this law of the jungle, because that is all it was. This government took away from the municipalities certain functions and taxation which they had exclusively from the time of confederation. At that time, in 1917, the then Minister of Finance said that this was only temporary, for the duration of the war, and that this tax would be given back after the war. But after the war, it was increased by geometrical progression, two, four, eight and so on, and now we do not know where it is going to end.
I wish to protest against this particular system. Yesterday the minister said that he was desirous of not injuring the provinces. Unfortunately we have a duplicate municipal system in this country, and the result is that we have overgovernment and overtaxation. At the start it was never intended that we should have provincial governments. They were the creation of the fathers of confederation for political and not economic purposes. The result is that we have two local municipal systems, provincial and municipal, one within the other. They do not have this in Great Britain.
What has been the result? One result is a triple income tax in British Columbia- dominion, provincial and municipal. The province of Ontario came along and took away the tax. The federal government, after taking away the income tax, proposed a sales tax and all that kind of thing, but fortunately the senate vetoed it. Sooner or later the municipal institutions will starve. Their fate is in the balance because their powers of taxation are seized. After 1917, the only tax, save a portion of income taxes and other small revenues, which could be imposed by the municipalities was upon real estate. Prior to 1917, they had the exclusive right to impose income tax as well as certain other indirect taxes which enabled them to carry on and maintain their municipal institutions. We have been slow to see how the right to possess private property has been taken away and the people have become proletarian. As I have said before, the right to possess private property was inherent in Canada and was derived from nature and not from man, and the state has no right to abolish it but can only regulate its use.

Income War Tax Act
2S17
During this debate yesterday, copious tears were wept for the poor provinces. These provinces are almost all Liberal in constitution, and some hon. members have been very liberal with their tears. But where do the municipalities come in? The municipalities supply more real public service to the community than do the provinces or the dominion. I have before me the financial statement of the city of Toronto for 1941, and as I look over its budget I find that almost three mills on the dollar of purely federal burdens are included for social services: relief, relief works, technical education, suburban roads, hospitalisation, air plants-purely federal burdens.
What does this gasoline tax mean? The municipalities pave their streets, construct curbs and give police protection; but what does the dominion do? They are simply giving a bonus, a subvention and direct cash subsidy, to the automobile manufacturers and the oil and gasoaline companies to provide a right of way By good roads. We are maintaining roadways at the public expense to parallel our own national railways and take business in this manner away from them. Is it any wonder that the government has to impose such a large income tax upon the class of people we have here? Not half of the budget is for primary war purposes, but secondary home defence.
I have looked into this matter very carefully, and so far as I can see the man with the low income of the first eight classes is .going to have to pay the bulk of this income tax. The former exclusive municipal income tax was only about one-third or one-fourth of the present tax schedule. The municipalities who, prior to 1917, had the exclusive right to this tax, were able to provide health, medical, hospital and other social services; they were able to operate health departments, and all kinds of municipal services, food inspection branches and all that sort of thing. They were able to give the proper municipal services to the people who paid municipal taxes by income tax levies. This heavy burden must now be borne by real estate. With no federal moratorium, with no insurance, the result will be confiscation of real estate and property.
If you examine the budget in relation to *this particular clause of the resolution you will find that half this income tax would do if it were a real war budget. But it is not a real war budget. Only half of it is being used for war. We are maintaining such luxuries as useless embassies, and $4,500,000 has been the total cost to date of the league. Three sessions ago it was proposed to give the provinces the right to impose a sales tax. The provinces and municipalities had several forms of taxation such as a gasoline tax and an income
tax. Now the federal power takes them and doubles these taxes. Then they impose succession duties, another invasion. Then relief assistance by federal power was taken away from the municipalities. This problem has been dumped by Ottawa upon the doorsteps of the municipalities. This sort of thing should not continue, and it was never intended by the fathers of confederation that we should have this dislocation of our whole system of taxation to the grave damage of municipal institutions in Canada.
During the sessions of 1926, 1927, 1928 and 1929, when the late Mr. Robb was Minister of Finance, I introduced a resolution to restore the income tax to the municipalities, in view of the heavy burden which had been placed by the federal government upon that particular form of government. At one session the debate on this resolution continued afternoon and evening for two days, and the then Minister of Finance said that he was sympathetic, that he believed that something should be done along these lines, to relieve real estate and for a municipal realty system. Why does the minister not give the municipalities part of this federal income tax? Why should they not be given some of this revenue to help take care of their social services, such as hospitalization, education, relief and all that kind of thing?
Apparently the minister has hearkened to the hon. gentlemen on my left. I think they are largely to blame for the minister imposing such a heavy income tax upon the people and taking it away from the municipalities which will starve to death. I referred to this the other night. I represent an industrial riding, one of the largest in Canada, and I should like to know where are the large industries which are supposed to be making fortunes out of the war. I cannot find any of them. Some of the industries have been forced to close up because the five per cent allowed them will not pay their taxes. There was a large industry in my riding which had been there for eighty-six years, but it has had to close its doors. At one time it had 961 employees, and it went a long way to help to build up Toronto. For years we have listened to hon. gentlemen pleading about the greed of the agricultural implement industry, and the result has been that this industry has almost been driven out of the country. We must now import from across the line, because the industry was done to death by the lack of protection afforded it.
You have to see the cause and effect of every type of taxation. One effect of this will be untold trouble in this country and disunity. Revenues have been taken away from munici-
Income War Tax Act

palities from Victoria to Halifax through this haphazard, half-baked scheme of seizing the revenues of others.
What is going to be the result? Many industries cannot make any money in war work or for a gain on five per cent. This gesture was to please hon. gentlemen on my left, to whom I had occasion to refer in the debate last Tuesday evening, May 6, on socialism in our day, and a quotation in that debate with regard to its effect on the war in England. The same law should apply to capital and labour but if you take away all the profits, what incentive is left for an employer? You may legislate but you cannot legislate against human nature. Nobody has supported labour more strongly than I have, long before its present organizations came into being. I installed in Toronto the eight-hour day for all services, which was introduced also in the public utilities of the city in the interests of labour; I have supported workmen's compensation and every other piece of legislation for the benefit of labour, and I protest against the government being influenced to attack industry in this way, because after all is said and done the same rule should apply to capital and labour both. They should be treated justly and fairly in war work. Industry is allowed only five per cent profit. Where are these profiteering industries? I think they should be named. I cannot find them. All incentive to capital is going to be taken away. That is what socialism in our time means. I think that the Conservative party-if I am the only one, I shall do it in any event-which has done so much for agriculture and industry and to lighten taxation, should declare where they stand on this particular matter.
These income schedules are not in the public interest. They are not going to help unemployment at all, and they mean a heavier burden for the common people, so much so that many people will not be able to pay the obligations they have contracted, and the municipalities are going to be starved. They will have to close down many of their local necessary services because of these increased tax schedules and the extra load real estate will have to bear. If it was necessary to have this high taxation to carry on the war, these schedules would go through in a minute because the people of this country put the war first, but when they know that fifty per cent of this budget is not for primary war purposes at all there is bound to be complaint. I am surprised that the minister should have increased these schedules in the way he has, and reduced exemptions; there is duplication, and there is nothing given back to the municipalities in the way of bonuses or subsidies or subventions. I know one industry that

has been bonused to the amount of 835.000,000. But where do the municipalities and the industries come in? Are they to have no protection at all and be compelled to seek taxation further on real estate? I say that fifty per cent of this budget is not for war at all. Who ever heard of home defence being for war? If we fail in the primary theatre of war it is all over for us, and we shall have nothing to defend Canada with. Who ever heard of such waste of public money with no real return for the spending? It is because we have this luxury of the party system that we are asked to pay twice as much taxation this year. Look at the luxury of duplicate railway systems and fifty-eight outside boards spending public money. The time has come when the ministry should wield the big stick and tell these dollar-a-year men and some of these outside boards where they get off. Wait until you see the income tax next year! It is going to be double what it is this year.
I used to own quite a little property in Toronto, but I do not now own much because of the heavy tax burden imposed on real estate by Ottawa, through no fault of the municipality. I have paid $5,000 in interest for the loan of $6,000, and $4,000 in interest for the loan of $5,000 on two properties in the outskirts of the city. The government will not do a thing to protect the small holder of property from shark loan companies or ensure a national moratorium.
I say again that nobody will object to paying every dollar that is needed for the war, but when the people of this country know that fifty per cent of this budget is not for the war, they are going to object. From coast to coast they would be behind the government and give it every support if it would only go to work and do something.
I do not know where the municipalities are going to collect their taxes because they have been starved for years by the provinces and Ottawa taking their revenues. They have no money for ordinary work, and are run efficiently, and the whole burden of relief as well as many other federal burdens imposed, is put upon real estate.
So far as I am concerned I will give the government every support if the minister will undertake not to impose some of this taxation and to give consideration to the municipalities which have to provide so many essential services, and restore some of their revenues. I am sure that the minister will be supported by every one in the house if he will do something to relieve the municipalities which are finding it so hard to carry on and save municipal institutions, the pride of our country.
Mr. ISNOR; I would direct the attention of the minister to the form used for income

Income War Tax Act
tax returns, and particularly to clause 11 of this resolution providing that forms T1 and T1 special shall be returnable on March 31 of each year. Hitherto the forms for incorporated companies and business men have been returnable on April 30. I feel that this change of date is going to be a hardship to the smaller business firms and to the larger unincorporated firms. The large trust companies are permitted to make their returns on April 30 as usual, but one whole month of thirty days has been taken away in the case of the smaller firms, and it is necessary that these smaller firms be allowed time to make their returns in an intelligent manner so that they can apportion their payments according to the monthly instalment plan which was inaugurated last year to allow of payments being spread over a period of eight months. Particularly is it a hardship at the present time when there is a scarcity of auditors and accountants, because in nearly every city of any size the staffs of auditing firms have been depleted through experienced men joining various branches of the armed forces, more especially the treasury department of the air force. I draw this to the attention of the minister in the hope that he will reconsider his decision to shorten the period by thirty days within which the returns are to be made, and make the date April 30 as before.
I might add that the T1 special form will not be any hardship to the salaried man to return on March 31, but it will certainly be a hardship for the firms which have to make up their bills receivable and so on and give the other details in order to present a true picture of their affairs.
There is one other thought which I would throw out for consideration. We know the difficulties which all governments, municipal, provincial and federal, have in presenting their reports, not within three or four months after their business year has closed but, in some instances, a full year afterwards, and the reason is given that they are unable to give a complete statement earlier to the auditor general or the provincial treasurer, as the case may be. If that applies with regard to federal and provincial bodies, I think the same leeway should be given to the smaller business firms. I would ask the minister to give this suggestion his favourable consideration.


James Lorimer Ilsley: The hon. gentleman has
raised an important point, and namely, the question whether the date when the income tax is due should be changed. Now it is proposed by a later resolution to change the date from April 30 to March 31. The new date will fit into our proposed system of instalment payments. The system in existence
this year involves payments in eight monthly instalments, and the last instalment will be paid in August. With the rise in these taxes, it is becoming increasingly important that taxpayers pay them in instalments if possible, so that it is proposed to provide, in respect of this year's taxes due next spring, for payment of them in twelve monthly instalments. Anyone paying last year's taxes by instalments will pay the last instalment in August of this year; and, if he wishes to do so, he can begin paying his next year's taxes in September.


Mr. GRAYDON:: How will he know?


Mr. HANSON (York-Sunbuiy):: He cannot know; that is the point.


Gordon Graydon: He would just have to estimate.


James Lorimer Ilsley: That is all provided for. If he pays, in each of the months of September, October, November and December, one-twelfth of the estimated tax based on the income of the preceding year, and then one-eighth of the unpaid balance of the newly estimated tax based on- the income of the calendar year in respect of which the tax is payable, then-


Richard Burpee Hanson: Beginning when?


James Lorimer Ilsley: Beginning in January.


Richard Burpee Hanson: Well, how is he going to know in January?


James Lorimer Ilsley: He will know in January.


Richard Burpee Hanson: He won't know in January.


James Lorimer Ilsley: It is not necessary for him to know precisely. The Income War Tax Act has always provided for an estimate.


Richard Burpee Hanson: Yes, I
agree with that.


James Lorimer Ilsley: And the income tax officials are reasonable about it. For instance, a very large number of people, I think 110,000, started paying by instalments in January of this year.


Richard Burpee Hanson: That is, the end of January.


James Lorimer Ilsley: At the end of January, which is the same date for the estimate under the new system. Those 110,000 people made estimates of the amount of income tax which would be passable on April 30. In a great many cases they were exactly right; in some cases they were not. But that does not make so very much difference; the income tax officials are reasonable in that regard. The estimate meets, in substance, the situation.
If the date were left at April 30, and the instalments started in September, seven instal-
2S20
Income War Tax Act

ments would be payable before the due date, before the taxpayer would have earned the right to defer payment of the balance, interest-free, beyond the due date, and this would not be regarded as fair or equitable to the taxpayer. I must say I do not know that we have improved the situation very much from his point of view by making it March 31. At least it is fair that, if he makes six payments in advance of the due date, that should qualify him for this privilege of paying six more after the due date without being charged any interest. That is the principle underlying the scheme, and that is the reason of the change to March 31.
There is perhaps another reason. Other things being equal, the sooner we get the money the better. It does put a considerable amount of pressure on the accounting profession, and I have had letters of protest from accountants, but I am not at all sure that, if they address themselves to it with the same degree of intensity that a good many people are working in the country, they will not be able to prepare their returns in time to file them on or before March 31.


Mr. ISNOR:: Why the difference between the incorporated and the unincorporated?


Richard Burpee Hanson: I intended to bring up that matter.


James Lorimer Ilsley: Just a minute; the hon. member for Halifax asked a question. I do not know whether I can answer it properly or not. What I have said applies to individuals, not to corporations. I think I shall have to reserve the answer to that question until we reach the appropriate resolution, which is No. 16, the one relating to corporations. I believe the reason for that was just the reason that the hon. gentleman has urged with respect to individuals, that they did want four months; they did think that, there, four months would be required. The great bulk of the work would be in the corporation returns.


Gordon Benjamin Isnor: They have the machinery to do it. That is the only difference.


Richard Burpee Hanson: Of course the minister has not yet made a considered reply to the last interrogatory of the hon. member for Halifax. I had not intended to discuss this matter until we reached resolution No. 11, but since we are apparently considering all these in bulk-which I do not think is the right way to treat them-I should like to advert to this.
There is discrimination between the treatment meted out to individuals and unincorporated firms, and that meted out to corpora-

tions. Corporations pay the great bulk of the taxes. I believe that statement is correct, is it not?


James Lorimer Ilsley: I do not know that it is.


Richard Burpee Hanson: Well, perhaps, under the new scale, I am wrong about that, but before the war the greater portion of the taxation was paid by the corporations; the big amounts came from them. They cannot close their books, assuming they are on a calendar year basis, on the first day of January.- They do not get their books closed until nearly the end of January or perhaps in February. Then they have to call in the accountant to make the final examination and set up the annual statement. This has to go through the directors and from there to the shareholders, and it is not finally approved until it gets the imprimatur of the directors and/or the shareholders. The 30th of April is early enough for a corporation. It may be that the pressure on an unincorporated company or a business firm is not as heavy as it is on a corporation, but I suggest to the minister that there are cogent reasons why unincorporated companies and business firms should not be pressed to file their returns too soon. There is a difference in the volume and the size of the business, but the detail is just as important to them, and much consideration has to be given to it. With respect to people on salaries, people who are not in business, so far as I can see there is no difficulty at all; they can have their income tax returns filed by the 31st of January.
I have been impressed by a brief that was sent me by a chartered accountant in one of our small Canadian cities. He is not a member of a large firm of public accountants, but he is doing business for two or three hundred different taxpayers in his province. This is what he says:
Large numbers of unincorporated concerns employ professional accountants to close their books and prepare financial statements, income and excess profits tax returns, because they feel unable to do so themselves.
Of course they cannot afford to make mistakes. They must employ competent assistants.
This being the case, if the time is shortened to March 31st, it will be impossible for many concerns to secure the services of accountants or auditors-
I would add, competent accountants or auditors, because it is not every man who is competent.
-to close the books and have returns ready for filing within the prescribed time. Corporations will still be given four months from the close of their fiscal year to prepare and file returns and businesses that are not incorporated

Income War Tax Act
should be given equal time. In fact, all businesses, whether incorporated or otherwise, need at least four months to prepare and file returns, especially under war time conditions.
This is the considered opinion of a man who is intimately connected with business and it ought to be given consideration. I cannot really see an intimate connection between their position and the proposals of the Minister of Finance with respect to the monthly payment plan, which of course I think is a good plan. May I digress to suggest to the minister that, instead of limiting taxpayers to the twelve monthly payment plan he is now proposing in these resolutions, he give them the choice of two alternatives-the eight monthly payment plan he has in effect to-day, and the twelve monthly payment plan he is proposing.
I know that it will suit me better personally to pay in eight months than in twelve. I know that, being away from home as much as I am, I could not get my income tax return ready by January 31 or February 28 or March 31. I found it difficult enough to get it ready for April 30, although I did make a fairly accurate estimate earlier. There must be many others in the same position. Will the minister give consideration to allowing the taxpayer a choice between these alternatives of partial payment? That is the first request I have to make.


Gordon Benjamin Isnor: What does the hon. member mean by that?


Richard Burpee Hanson: In these resolutions the minister has suggested a twelve payment plan, if I may call it that, beginning in the last four months of this year and continuing on, without payment of interest. We have in effect now an eight payment plan, which I think is good. There may be a good reason, from the point of view of administration, which has not occurred to me, inasmuch as I am not familiar with the administration, why you cannot have both plans in effect at the same time, but at the moment I cannot conceive what it could be. I am suggesting that the taxpayer be allowed to adopt one or other of these plans. I continue with the *quotation:
It was difficult this year, due to reduced office staffs and/or inexperienced help as a result of war conditions, for many concerns to get their accounts ready in time to file returns on April 30th-
That is true. Most of the young men in the accounting firms have left and joined the colours. Many of them are in the air force where they are doing fine administrative work. They may not be flying but they are doing -excellent work.
-and shortening the period from four to three months in the case of incorporated businesses will add even greater confusion and difficulty in the future, and many business people will be penalized for late filing, due to the impossibility of being able to complete the required returns within the shorter time limit.
The minister says they must put on more steam. I do not think that is necessary. In my opinion, businesses being called upon to pay and pay heavily should be met sympathetically; it should not be made more difficult for them to carry on. A month's delay or the continuation of the present practice will help the taxpayer. I do not think the minister ought to use the expression that people must put on more steam.


James Lorimer Ilsley: I did not say that.


Richard Burpee Hanson: That is the effect of what the minister says, that they will have to work a little harder. I suggest that with depleted staffs it is difficult for them to turn out more work than they are doing and for that reason they should be given more time. The brief continues:
It would not be difficult for individuals with incomes of $5,000 or Jess, who are not engaged in business-
They are in a class by themselves; they are salaried.
-and who now use form T1 "special" to complete and file returns before the end of March, but persons who are carrying on businesses which are not incorporated require the full four months, i.e. from the 1st of January to the 30th April, to do so.
This is written in the interests not of an accounting firm but of business concerns.
The first four months of each year are also extremely busy ones for auditors-
This is one for himself.
-whose staffs have likewise been depleted, and for this and other reasons referred to, it is urged that the time for filing returns of persons engaged in business be not made shorter than has always been the case, namely, April 30th.
He goes on to make this final statement: Income and excess profits tax legislation appears to be prepared with the idea in mind that all business concerns are corporations, whereas this is not actually the ease.
I suggest that the consideration he refers to there is uppermost in the minds of the administration.
Many fairly large concerns throughout Canada are not incorporated and it is important that this fact be not lost sight of in dealing with federal tax legislation.
I commend this brief to the minister. I hope that unincorporated firms and businesses, as distinguished from large corporations and individuals, taxpayers who derive their income from salaries or who have fixed incomes, be given some consideration, and that they be
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allowed to file as of April 30. I do not think I can add more to what I have said, but it would be a matter of justice to do that.


Gordon Benjamin Isnor: Perhaps I should not have brought this matter up. In raising it I thought I was within the terms of the first clause, namely, returns of income war tax. I am quite satisfied if the minister will give the matter consideration and make a statement in connection with it when he reaches that item.


James Lorimer Ilsley: I think there is considerable force in the argument that has been advanced by the hon. member for Halifax and by the leader of the opposition. The leader of the opposition, as I understand, joins in the request that unincorporated businesses be given the same treatment as corporations. That is the position also of the hon. member for Halifax-that April 30 be the date for unincorporated businesses. If we did simply that, at the moment I cannot see any objection to it. I will give it consideration. I think we had better leave it as it is for individuals.


Richard Burpee Hanson: I am not
objecting to that.


James Lorimer Ilsley: I do not think we should provide for alternative schemes. The commissioner of income tax tells me that if a person had the choice of a twelve-payment and an eight-payment scheme, administrative difficulties would arise. If the amounts become too small, a person starting an eight-payment scheme and finding it inconvenient to make iis payments-


Richard Burpee Hanson: I would not let him switch; he would have to choose and stick to it.


James Lorimer Ilsley: I think it had better be just a twelve-payment scheme for the future.


Mr. LACOMBE (Translation):: Mr. Chairman, since the resolutions at present before us relate to taxation and war expenditures, I shall make a few observations upon these subjects. At a time when the government is demanding unprecedented sacrifices from the nation, it is more than ever its duty to keep a close eye upon public accounts and war expenditures. Those who take advantage of the lamentable circumstances created by the conflict deserve no consideration or mercy. They are traitors to their country. The parliamentary committee at present investigating war expenditures should carry on its work in broad daylight and not in secret. The people who are bearing the crushing weight of taxation are entitled to know what is being done with their money. Purchasers of war savings certificates and subscribers to war loans insist 
upon the highest integrity and the strictest economy in administration. Every citizen should be treated with justice and impartiality.
Speaking in this house on the 30th of April last, I protested against the ultra-loyalist demands for conscription for overseas service, much to the displeasure of the out-and-out imperialists. Even though I may not be able to convince them, I deem it my sacred duty once more to condenm conscription. Have British statesmen not frequently stated that England's need is not for soldiers, but for foodstuffs and munitions? Foodstuffs, Canada will be able to supply only so long as her farmers, freed from compulsory military service, are in a position to maintain production. Munitions, Canada will be able to supply only by putting an end to the abusive practices brought to light in armament plants. The public authorities should shun the wretched middlemen and the mercenary solicitors of war contracts. The war industries should be subjected to strict and continued supervision. It is the government's bounden duty to protect the worker against the shameless exploitation of sellers of employment.
Mr. Chairman, in urging the farmer not only to maintain but to intensify the working of the land, I cannot repress my stupefaction at the thought that the government is undertaking to compensate a certain class of farmers for restricting their production. A strange aberration indeed, this application of a principle which is fundamentally wrong and contrary to the teachings of political economy. A country like ours, so richly endowed by Providence, has no right to do violence to its natural resources which are a gift of God. To impede agricultural production by dilapidating the treasury to the benefit of sterility and idleness is a crime against the nation and against nature. A nation guilty of it is doomed to decay and ruin.
I therefore urge upon the government to refrain, even at this late time, from adopting such a backward policy. Let our government rather take a substantial part of the millions appropriated for that ill-advised plan and use it for the benefit of the farmers of eastern Canada. Let them subsidize as formerly agricultural associations and farmers' clubs. Let them give all possible help to cooperative societies and credit unions, by granting them complete tax exemption on their invested capital. Let them encourage by every means in their power the useful activities of occupational groups.
Mr. Chairman, I know people whose farms have been expropriated during the last year or so. They have been compelled to abandon their land and sell their herds to make place

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for armament factories. How is it that they have not yet been paid? At St. Paul l'Ermite, the site of the main plant was expropriated on June 10, 1940, and nineteen farmers have not yet been paid. I dare say that such a situation borders on the scandalous. When it is well known that labourers, craftsmen and truck drivers have handed money to a gang of scoundrels in the hope of securing work, when the people know that some of those rascals have recently been arraigned before our courts of justice; is it not a shame that those worthy farmers, who have lost title to their property, should not have yet been paid? I had therefore every reason to claim, not long ago, that farmers and workmen have been and are still those who suffer most from the exploitation of war profiteers.
Mr. Chairman, world history shows that periodically abundance is followed by scarcity. What will happen, later on, should the land left uncultivated become unfit for raising the wheat necessary to feed the nations of the world? Is there no longer any demand for farm products? Where do the nations obtain their supplies? What has become of Canada's best customers? What about our trade treaties? Those are serious questions and problems that the government must solve.
A few moments ago, I referred to the unfortunate plight of the workmen. Let me point out to the house a serious defect in the Unemployment Insurance Act. In this connection, I have received the following letter from Mr. Alfred Charpentier, president of la Confederation des Travailleurs catholiques du Canada:
La Confederation des Travailleurs catholiques du Canada Inc.
Montreal, May 6, 1941.
Mr. L. Lacombe. M.P.,
Government Buildings,
Ottawa, Ont.
Dear Sir,
Before the present session of parliament comes to a close, allow us to call your attention to an oversight in connection with the Unemployment Insurance Act. While it is not too late, parliament could possibly remedy to it before the act comes into force, which will be soon.
The weekly rates of benefits mentioned on page 43 (third schedule) of the official pamphlet containing this act seem truly out of proportion as between the amounts to be received by a single unemployed and the benefit payable to a married man with a number of children.
Here is an example: A single unemployed of class "6", whose salary amounts to between $20 and $26 a week, will be entitled to $10.20, while a married man in the same class will receive only $12.
This slight difference seems unfair, especially when the large French-Canadian families are taken into account.
This want of proportion between the benefits provided will be a tremendous burden for all the large families of the province of Quebec, when the fathers become unemployed.
Last fall we made representations in this connection to the parliamentary committee, but they have not been taken into account in the final drafting of the act.
We believe it is imperative that the schedule of benefits be fairer and better adapted to the needs of large families.
The Confederation des Travailleurs Catholiques du Canada earnestly request you, dear member, to take, during the present session, the appropriate steps to see that this important oversight in the above-mentioned law, of which we are complaining, be removed.
Otherwise, if this unfair provision remains, it is to be expected that the people of our province will very earnestly voice their discontent.
But we are confident that you will be kind enough to be the first to see that such an occurrence is avoided, by taking the proper steps to assure that French-Canadians, fathers of large families, are equitably treated.
With the assurance of our kindest regards, we remain, dear member,
Yours devotedly,
La Confederation des Travailleurs Catholiques du Canada.
By: Alfred Charpentier,
Chairman.
This letter is self-explanatory. However, I cannot refrain from wishing that the government show absolute fairness towards the Canadian workers who, I believe, will be the greatest sufferers during the post-war economic adjustment. The administration should grant the legitimate requests contained in the letter of the chairman of the Confederation des Travailleurs Catholiques du Canada. In doing so, it will only be equitable, just and loyal towards those who suffer, toil and labour.


Mr. MacNICOL:: Many arguments have
been advanced on behalf of income taxpayers who have taken guest children into their homes. I am not going to add to those arguments, nor am I going to oppose them. No doubt there is a good deal of merit in what has been said, but I should like to say a word or two on behalf of another class of people who I believe should be considered if the minister decides to grant this exemption of S400 in respect of guest children.
In my part of the city of Toronto-Earls-court-a large proportion of the people are English, Welsh, Scotch and Irish who came to this country years ago. The majority of these people are humble, honest, worthy, hard working folk. I am happy to say that I know of many instances in which they have written to relatives in the old land asking them to send out their children or the children of friends. A very small percentage of them pay income tax; neither do they ask for
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exemptions in regard to the children who have come out and many of whom are being cared for by persons with small incomes, perhaps with scarcely enough money to make ends meet. If the minister does grant this $400 exemption to those who pay income tax, and who perhaps pay it with a great deal of difficulty, I believe he will have to consider some adjustment in respect to these humble workingmen, who do not ask anything but who are taking care of war guests from the old country. I think that would be only fair.


Mr. McCANN:: I am disposed to agree
with the leader of the opposition that there should be two schemes of collection, and that the time for making returns should remain as it is at present, up to April 30. With regard to the scheme for paying on a twelve-months basis, beginning in September, a great many men in Canada, particularly professional men -some ten thousand in the medical profession, and I presume an almost equal number in the legal profession-have no way of determining just what will be their income in the last four months of the year. The monthly payments are based upon a calculation of what their income will be; for instance, if they make payments in September, October, November and December they require something upon which to calculate the tax they will be required to pay in order that it may be divided as equally as possible into twelve monthly payments. As I say, members of the medical profession have no accurate way of determining what will be their income in the last four months of the year. With those practising in rural communities, collections are sometimes greater in the fall months than during the summer or winter. I have no doubt that the treasury obtains some benefit by having this money paid four months ahead of time. So, I submit that in all justice those who pay income tax in advance should be given a discount, at the same rate at which interest would be charged if their payments were not made within the regular time.
I should like to add a word with reference to men in my own profession who are allowed to make certain deductions from their incomes when making up their returns. I have no doubt that officials of the treasury have conferred with organized medicine throughout the country, perhaps the Ontario Medical Association or the Canadian Medical Association, and have come to some sort of understanding as to what would be a fair allowance for the operation and maintenance of a car used for professional purposes. Perhaps the majority
fMr. MacNicol.]
of the members of the profession who have expressed opinions in this regard operate their cars in cities. At present a deduction is allowed at the rate of 4J cents per mile per year for a car used entirely for professional purposes. I submit that 41 cents per mile does not come near covering the cost of operating and maintaining a car; and this deduction is in lieu of all other deductions for depreciation, repairs and other incidental expenses. I think the allowance should be more liberal.
I should like to again endorse the view expressed by the leader of the opposition, that there should be two alternative schemes for payment, and that the time for making returns should remain as of April 30.
Mr, STIRLING: There is one matter which I should like to discuss for a moment or two. I am not sure that this is the proper place to mention it, but I do so because of the remarks made by the minister yesterday afternoon with regard to the acceptance in principle by most of the provinces of the suggestion that they should vacate the income tax field for the duration of the war.
The matter in which I am interested has to do with the mineral tax in British Columbia. Perhaps I can do no better than read a paragraph from a letter from the secretary of the Mining Association of British Columbia:
You are perhaps aware that there exists in this province a two per cent mineral tax levied on the gross value of mine production. This is in effect a minimum income tax, and is paid quarterly as an instalment on income tax. The provision is that it is an alternative tax to income tax, whichever is greater being collected. The mineral tax amounts in many instances to 50 per cent or more of the total income tax. Hence unless in some way this mineral tax is taken into consideration in the adjustment between the two governments to afford relief in some measure to the taxpayer, the object of this financial arrangement will be to a great extent defeated. May we then suggest that this mineral tax. or minimum income tax. might be allowed as ill part payment of such dominion income tax as the mining companies may be assessed, with appropriate adjustments between the two governments; or, in the alternative, that in working out the details of this fiscal arrangement, that the British Columbia government also be asked to suspend the mineral tax during the period that the arrangement exists.
The minister says that the question is being explored, but can he inform the committee whether he will look upon that tax as being an alternative income tax and, therefore, one which would come under any arrangement to be made? The minister will readily see that if that tax remains it will be an additional burden instead of being changed from the province to the dominion.

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James Lorimer Ilsley: I should not like to give any assurance in that regard. The difficulty about alternative taxes in British Columbia has been mentioned to me, and all I can say is that I shall keep the hon. gentleman's representations in mind when the matter is being worked out with the British Columbia government. I cannot say anything more than that, because I do not understand the matter thoroughly enough.


Gordon Graydon: Have any suggestions
been received, or perhaps I should call them complaints, with regard to the complex nature of the income tax returns? To a solicitor or an accountant these forms may appear quite simple, although I think there are times when even these professional men find them difficult. I think I represent as intelligent constituents as any hon. member in the house, and I have received a great many complaints from them as to the complexity of these returns. It may not be possible to make them simpler, but it does seem to me that when the average person has to make out his own return it should be as simple as possible. The returns this year have caused many a headache. Perhaps a simpler form could be worked out. I would not make this objection on the floor of the committee except that the matter has been brought to my attention on many occasions. People without special training or experience have been having a good deal of trouble with the returns.


James Lorimer Ilsley: I shall bring the hon. gentleman's representations to the attention of the officials who revise the forms every year. They try to make them as simple as possible, but there is a dislike on the part of the public to forms of any kind, and if there is much to them, complaints are usually received about their complexity. I would not want to prejudge the matter, but I imagine it will not be possible to simplify them very much. I know that much time and work have been expended in trying to make them as simple as possible. There is the dominion and a provincial tax, as well as the various deductions, exceptions and surtaxes, and there must be a line for each one.


Richard Burpee Hanson: On the whole, they have not done badly.


Mr. REID:: Why is it that those in receipt of incomes of 845,000 to $50,000 paid more in 1938-39 than in 1939-40, although in both years the number of taxpayers was the same? In 1939-40, ninety-one individuals in this income class paid 8996,269, whereas in 1938-39 they paid $1,095,111.


James Lorimer Ilsley: There is a play between the
845,000	and $50,000. While the same number of taxpayers in both years is the same, it may be that in the one year, for example, there were more receiving $49,000. They were not paying on the same incomes in the two years, and yet they were still within the bracket of 845,000 to 850,000. For instance, if in one year the whole number had paid tax on incomes of 849,000 the total tax received would be much greater than if in the other year they had all paid on incomes of $46,000.


Mr. JACKMAN:: I think it should be made quite clear that the tabulation placed on Hansard by the minister refers only to the dominion tax and not to any provincial or municipal taxes. In the case of those receiving $50,000 and over the total amount of income was 847,244,305, and the taxes assessed amounted to only $16,606,971, which is only about one-third. As everyone knows, an individual with a net income of $50,000 a year or over has considerably less than half that income available for his own use. I take it that this table refers only to the dominion income tax.


James Lorimer Ilsley: Yes, that is correct.


Harry Rutherford Jackman: Does it include the national defence tax?


James Lorimer Ilsley: The national defence tax was not in effect in the fiscal year 1939-40. It came into effect in July, 1940.


Harry Rutherford Jackman: The figures seem startlingly low as compared with the actual practice. Just before the house rose yesterday afternoon I asked if the government would not be willing to grant an exemption of $400 for every child in the dominion under sixteen years of age, whether residing with its natural parents or being maintained by foster-parents. I do not believe I got an answer to the question. The minister did say that a sister who was looking after a sick sister might claim an allowance on that account. But if a natural child is subject to an exemption, I do not see why any child which is being maintained should not be subject to the same exemption.


James Lorimer Ilsley: My answer, which I think is complete, although I may want to qualify it in some respects, is that the exemption or deduction is not allowed where the matter is one of private charity rather than the discharge of a legal duty.
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Mr. BLACK MORE:: While I do not wish to take issue with the minister too sharply, I am inclined to think that in many cases the assumption of support by foster-parents is a manifestation of a high sense of duty.


James Lorimer Ilsley: It is very praiseworthy.


John Horne Blackmore: If that is so, I should think that there is a degree of merit which certainly deserves some reward.


James Lorimer Ilsley: Where, in heaven or on earth? That is the very point I have been trying to make-that the government never has regarded praiseworthiness of human effort as a qualification for deductions for income tax purposes.


John Horne Blackmore: What is actually happening is that the government is penalizing that sort of behaviour.


James Lorimer Ilsley: Oh, no.


John Horne Blackmore: Surely it costs as much to keep a foster child as to keep a natural child; in many cases it costs more. I have had a little experience both ways. The government is not following a sound policy when it fails to exempt for foster parentage. I would urge upon the minister that what has just been laid down by the member who preceded me is sound. If it costs $400 to keep a child in his natural home, the cost is likely to be very nearly that much in another home. The exemption could, I think, without any great degree of error, be made in the case of the foster child as well as in the case of the natural child.


Mr. ROWE:: I think everyone is disappointed with the minister's answer, but I hope it is not final. I still feel strongly, as I said yesterday, that there is very little difference between exempting contributions for war service funds and exempting the expenses of maintaining a guest child. The minister did not entirely agree with my contention last evening, but I cannot help feeling that to keep a guest child is just as praiseworthy as contributing $500 to a war service fund. Such contributions are not legal obligations; they are praiseworthy contributions to a meritorious cause, and no doubt every member of the house contributes to such funds to the limit he can afford. There was an appeal this spring >by six organizations, including the Salvation Army, the Legion, and the Y.M.C.A. The Salvation Army will surely use some of those funds to take care of war victims and casualties among women and children. I agree with the hon. member for Lethbridge that if a man and his wife with a small income take a child into their home, the actual expenses must run to $250 or $300 or $400,
[Mr. Ilsley.l
and in some districts where the cost of living is high, even more. I do not see why such a service should not be treated, as the equivalent of a straight contribution of $250 or $300 or $400, as the case may be, to a war service fund. Even if the minister does not feel like granting $400 exemption, let him give some recognition at least to what these people are doing by allowing them an exemption in their income tax returns. They are just as much entitled to exemption as I am for making a contribution to some war service fund when I have not been able to have a child come into my home.


James Lorimer Ilsley: You do not get any
deduction.


William Earl Rowe: I would get a deduction.


James Lorimer Ilsley: On what account?


William Earl Rowe: For a contribution to a war service fund.


James Lorimer Ilsley: Hereafter it will be only up to ten per cent, and that includes all other charitable donations.


William Earl Rowe: That is true.


James Lorimer Ilsley: The hon. gentleman would not suggest that we do that in the case of these children.	-


William Earl Rowe: I do not think the contributions, generally speaking, will be any more than ten per cent of one's income.


James Lorimer Ilsley: You must take into account all the other charitable donations after that, which themselves may be more than ten per cent.


William Earl Rowe: The taxpayer is not allowed a deduction for certain charitable contributions.


James Lorimer Ilsley: To charitable organizations, yes.


William Earl Rowe: Even so, a family which was keeping a child would not be using up ten per cent of its income on that account. I still contend that the principle of allowing an exemption for these children is reasonably sound, and I would urge the minister to reconsider his stand.
I should like to hear the minister's view on the suggestion I made yesterday to exempt soldiers and officers on that portion of their income which is received from the army, the navy or the air force. I was glad to find strong approval of that suggestion on the part of members even of the minister's own party, and I feel sure it would have the approval of the whole house if the minister adopted it. We owe some consideration to these men, because

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in the post-war period they will have to reestablish themselves, in many cases, in different lines of business, and I cannot help but feel that they will have just as much difficulty as the soldiers had after the last war. It is true that some of them may go straight back to the positions they left, but if this war lasts a long time-and I think one can reasonably anticipate that these men will be five or ten years older when the war is over-many of them will be getting on to fifty-five and sixty years of age, and they may find it hard to reestablish themselves in civil life. It may reasonably be assumed that it will be difficult, except in the odd case, for them to reestablish themselves. A few may be able to get along even if they do not get a job, but most of them will find it difficult enough to reestablish themselves. It is an unfair type of taxation, and I do not think we have to come to it yet, even though we need money so badly. Those who have other earnings might be charged extra.
Someone will say, "An officer getting 88 or S10 a day receives a lot of money; why should he not pay income tax at a time when we need all the revenue we can get?" That sounds plausible, but we are praying heaven that this war will not go on indefinitely, and when it is over there will be hundreds of capable, well-trained men, improved in many respects because of the services which they will have rendered, but nevertheless not so well equipped to go into their various lines of business pursuits as they were when they enlisted, not so closely in touch with changing conditions in business, and, one may say in all fairness, not quite so attractive to their employers, in spite of the fact that they will feel they owe them consideration, as they did in the last war. It will be remembered that after the last war there were hundreds of ex-service men, excellent types of citizens, who for years were not reestablished and who were looking for help to find employment. I urge upon the minister with all seriousness a favourable consideration of this proposal for exemption. In fact, I personally feel more strongly about it than I do about the exemption from income tax of expenditures on children who are brought to this country. If people know they are not going to be exempted they will probably plan accordingly, and there may be something in what the minister said that, if a family intends to give this service at this time and take care of a child, it is a small matter and one they can afford, or they would not have undertaken it. I believe, however, that an entirely different principle is involved here, and one that should be taken into account. I should like to hear what the minister has to say.


James Lorimer Ilsley: It is not the most agreeable task in the world for a Minister of Finance to have to rise in his place and protect the treasury against appeals such as this. Nevertheless, may I be permitted to put the situation before the committee and appeal to the judgment of hon. members.
We in this country are guided to a very great extent by the example of the United Kingdom. The United Kingdom does not exempt any person from income tax. Every officer-and for that matter, every private, if he is within the income tax brackets-pays income tax just like anybody else. The theory is that the whole nation is at war; that some persons discharge their duties in one way and other persons discharge theirs in another way; that it is impossible and unjust to draw a line between those whose duties are particularly hazardous and those whose duties are less hazardous, and that to attempt to do so would result in border-line cases of discrimination. That may not be the reason; but upon whatever considerations the policy of the United Kingdom is founded, that policy is well settled, namely, that there is no exemption from income tax. Any resident of the United Kingdom, be he in the army or out of the army, be it in war or peace, pays income tax. I suppose it would be argued that if his pay, or his pay and allowances including dependents' allowances, are not high enough to enable him to discharge his functions as a taxpayer, they should be increased sufficiently to enable him to pay his taxes out of that income. That is the opinion of quite a number of people in this country.


William Earl Rowe: Their rate of income tax is higher than ours.


James Lorimer Ilsley: It is higher in the United Kingdom, yes; but I do not know which side of the argument that consideration is on. It might be a reason why they should be exempted, not why they should not be exempted.


William Earl Rowe: Probably I did not make
myself clear. Their requirements in revenue are even greater than ours-their necessities, as it were.


James Lorimer Ilsley: Well, ours are getting pretty great. I would not know whether the United Kingdom are in greater need or not; I presume they are having, particularly, a much greater naval expenditure to meet than we have.
In this country we have attempted, rightly or wrongly, to do a very difficult thing. We have tried to draw a line between those whose military duties takes them into extreme hazard or risk, and those whose duties do not. On one side of the line we intended to put
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officers-non-commissioned officers and men do not come into this controversy at all, for they are all exempt-who are not under any particular risk, any more than other elements in the population are. I do not know whether wre have been successful, but I am doubtful whether public opinion would be in favour of exempting from income tax many officers in this country who are discharging clerical duties.


John Ritchie MacNicol: Or "brass hats".


James Lorimer Ilsley: Well, I was not going to use the term, because I have not any feeling of hostility or anything of that sort towards any particular officer or class of officers.


John Ritchie MacNicol: Neither have I.


James Lorimer Ilsley: So far as I know, they are all doing their duty, just as a great many civilians are doing their duty, just as a great many civil servants are doing their duty, just as a great many self-sacrificing individuals are doing their duty. If we are going to exempt from income tax those classes of the population that are placed in a more unfavourable position as a result of the war, we are going to take in at the present time a lot of farmers-the hon. member will agree with that- and also overworked civil servants, men who, in a great many instances, are labouring to the verge of exhaustion.


William Earl Rowe: What does the minister mean by "take in the farmers"?


James Lorimer Ilsley: I say that we should have to exempt them from taxation. They do not pay income tax because they have not the income.


William Earl Rowe: They are exempt from the income, the minister means.


James Lorimer Ilsley: I am saying that we cannot adopt the principle that the hon. gentleman has laid down. We cannot exempt from taxation people whose positions are worsened because of the war, whose opportunity of employment in future is lessened because of the war. We cannot do that, and no one would ask that we do it. Well, then, on what principle are we going to exempt these officers? We have said that as soon as they go overseas, or as soon as their duties normally take them into the air or on the water, we remove their national defence tax and income tax, but I do not believe we would be justified in going any further.
The difficulty about the situation does not arise from any demand by officers to be released from their obligation to pay income tax. So far as I know, they have not made any such demand. The only objection I have ever heard relates to the injustice of border-line cases, namely, the injustice of one officer being

obliged to pay income tax because he is told to sit in an office year after year, while another officer is sent on the sea, or overseas, and therefore is not obliged to pay income tax. We have to face the fact that there are border-line cases of discrimination. We have given them an enormous amount of thought.
I believe, however, that parliament would be open to much censure and criticism if they removed altogether this income tax obligation from a great number of officers while they are in Canada.


William Earl Rowe: On that point, is there not some way whereby the minister could make the border-line a fair one? I agree with him to this extent, that the officer who takes an administrative or a clerical job in this country during war time is not in a much different position from that of the minister himself; his experience in office work is a little different from service in the field, and probably he would have no more difficulty in securing a job when the war was over than some of the ministers would have when their government is defeated.


John Ritchie MacNicol: That is giving the minister warning.


Mr. GRANT:: They will be getting pensions by that time.


William Earl Rowe: Someone mentions something about pensions. Even if the income tax were so arranged that these men could be given pensions, I realize how difficult the problem would be. Last night I admitted the need of revenue. But the army officer who has to go where the fighting is should not be put in a better position in this respect than the officer who stays in camp and trains men here. The army life of the two is about the same. True, the man here is not subjected to the same dangers, but he is under the same handicaps so far as becoming reestablished is concerned. I do not suggest that every man who happens to be in military service, engaged in the department, should be exempt, but consideration should be given to those who are on active service even though they are not overseas. Many officers are training men in camp here and have been doing so for a year, and they are not sure when they will go overseas. In fact, many of them are dissatisfied that they have not already gone. They are paying income tax, but at the same time they are adding to the handicap to which I have referred and which later on will mean so much more trouble for them in securing jobs. They should not be regarded as in the same class as the man who has a steady office job.
I quite realize that the minister has had some difficulty in working out this matter.

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I think he is to be commended for having gone as far as he has in exempting from income tax those who are on active service, but I urge him to reconsider the question of extending the privilege to those men who are in active army work even though they are not overseas. The government knows now the men who will not be in active service. The officers in Ottawa and at other divisional points are likely to stay in their present positions for the duration of the war, but the men who are training at Camp Borden, in Toronto and in many other places are actually getting ready for war. They will go into battle. If an invasion of this country should be attempted they will fight on the battlefields of Canada. Are they not as much entitled to exemption as the men who are overseas? We have a policy of conscription for the defence of the country, for men to fight in Canada, and we are training a large army. What these men have really been drafted for is the defence of Canada, and, as I say, they will be actively engaged in battle if any invasion of Canada should be attempted. I submit, therefore, they are just as much entitled to exemption as the men overseas. The minister would be well advised to make a mistake in that direction rather than to lean backwards too far. There is nothing more pitiful than the man who has served his country valiantly during the war. having put in the best years of his life in the army, to come back unfitted for civil life, though he may still be admirably fitted for the army.


Mr. GILLIS:: There is apparently a definite discrimination against certain people. The taxpayer is allowed exemption if he is maintaining his own parents or grandparents, but those who have "in-laws" are allowed no exemption. The man wdio is obliged to maintain his mother-in-law should be given some consideration. Why the discrimination?


James Lorimer Ilsley: It is hard to know where to draw the line. A deduction has always been made for parents and grandparents but not for those who are not relations.


Clarence Gillis: A mother-in-law is a relation.


James Lorimer Ilsley: Not a blood relation. Representations have been made from time to time that we should extend the principle of exemption in this, that and the other direction. It may be that we are a little unreceptive to these suggestions because of the inroads upon the revenue which these deductions would mean. This is not a time to bring in a very considerable class, comprising mothers-in-law and so on. There is not much reason why we should stop there; we could bring in aunts and uncles or anyone else whom it
would be praiseworthy to support. If we got into the realm of moral obligation I do not know where we would stop.


Gordon Knapman Fraser: What about daughters of twenty-one years and older who are still going to school? Should they not be exempted?


James Lorimer Ilsley: Is the hon. member suggesting we raise the age limit beyond twenty-one?


Gordon Knapman Fraser: Yes,
if they are dependent on the taxpayer.


James Lorimer Ilsley: That would be distinctly
class legislation. What would the hon. member for Cape Breton South say to that? People who have the money to give their children five, six or seven years in a university should not be allowed a deduction for children of over twenty-one.


Gordon Knapman Fraser: Last year and the year before it was hard for girls to get jobs-and for boys, too-and they went back to school in order to have something to do. Some of them are still going to school and will be out this year.


Richard Burpee Hanson: With
reference to the question of exemptions, if you go back over the files of Hansard from 1917 on, particularly from 1921 on, you will get some interesting side-lights on the whole subject. It would be very nice to give exemptions to everyone, but it cannot be done and the government has to draw the line somewhere. I will say that for the minister's comfort. Everyone can make a case from a particular point of view, but you must have general legislation.


Harry Rutherford Jackman: The chief reasons which the minister advances for being unwilling to grant exemption to refugee children is that if he once lets the bars down, he may be flooded with applications from foster-parents in Canada. He does not know how many foster-children there are in the country, and, as I said before, two wrongs do not make a right.
There is another ground for making a distinction in the case of these evacuees. In the old country they were the subject of income tax exemption in the hands of their parents, probably for a somewhat lower amount than here, but with a higher rate of taxation, so that the saving to the taxpayer would be about the same. They came to this country because of circumstances beyond their control, circumstances under which we should have the greatest sympathy for them, and the people who are taking care of them here, who advanced money on their behalf and who are
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looking after them are not given any consideration whatsoever. Therefore there is a clear distinction between the ordinary fosterchild in this country and the British evacuee; the British evacuee has been the subject of income tax exemption, whereas the fosterchild has not 'been, in recent years, anyway. Therefore that at least is a very good ground.
This matter should have been more carefully gone into by both the minister and his officials. It is over a year since it first came up. About twelve months ago we were all impressed with the necessity of bringing these 3'oung children from the old country to Canada in order that their lives might be saved from the nightly bombing attacks over there. It seemed a very good reason, so good in fact that finally the government gave official endorsation to the scheme and something over a thousand children were brought out under it. Subsequently certain difficulties arose because all the children from England could not be brought over, and it seemed unfair discrimination that just a few should be brought.
Since then, a year has passed; we in this country seem to be under a cloud of complacency, and this subject no longer touches our hearts as it did a year ago. A year ago, hon. members on all sides and from all parties were speaking on behalf of these children in order to get the exemption for their fosterparents in this country.
Not only the saving of lives is made possible by bringing these children to Canada but there is also the saving of ocean tonnage for foodstuffs and other peace-time materials which ordinarily go to the old country. Thus there is left free more space in the few bottoms that are available, in which to send to the old country munitions of war, many of which are brought from this country. I do not know what the food and clothing for five thousand children would amount to in tonnage, but as we know foodstuffs are largely imported and the saving in tonnage would be substantial.
Then again, no money can come from the oarents of these children in Great Britain to help maintain them here, and we know why. There are Canadian dollars in Great Britain, but every possible Canadian or United States dollar there is required to pay for munitions of war and wheat and other supplies sent from this side to Great Britain. Therefore, even in some instances where parents had made provision for children in advance of the war, those funds were sequestrated by the British government to pay for materials of war. Hardships have thus been created which were

to some extent foreseen, but the solution adopted did not prove to be sound owing to the exigencies of war.
I believe that the department, more perhaps the Department of National Revenue than the Department of Finance, has been unduly rigorous in the treatment of donations on behalf of these children. I know of no less, than two boys' schools near Toronto where a-large number of these children are being; temporarily housed and educated. Generous individuals have given money to these schools,, and naturally when they make donations for a cause like this, which they believe is almost a contribution toward the war, they feel it is unjust that they are refused exemption on their income tax for such donations. It may be well known to many hon. members that whole schools, girls' schools and young boys' schools, came out from the old country in the expectation that the parents of the children would be able to send money out. After they landed in Canada it was found that they could get no money. What was to happen? Did a benevolent government take hold and finance them? No. Private individuals came to their succour and are keeping them to-day, but this benevolent government refuses to give them any consideration. I ask hon. members. What is the will of the people of Canada in that, regard? Should not some consideration be given to these people?
Again, those who have taken these children -and I speak chiefly for a group of university professors, largely around the university of Toronto, who, in the early part of the war offered to take children of their opposite numbers in British universities and take care of them for the duration. Perhaps some of them did not estimate as closely as they should have done the costs entailed in this generous offer. I have, however, heard no particular complaint from them; they are all bearing the burden, but I would point out the difference in income owing to the increase in taxation on a professor, who is married, who may be getting $3,000 a year. In 1939 his tax was $36. In 1940 it was $195, or an increase of $159; in 1941 the proposed tax is $400, or an increase of $205, or a total increase of $364 over the two-year period. No matter how well they planned two years ago, with that additional burden of taxation cast on their income it is obviously very difficult to make ends meet. In addition, there has been some increase in the cost of living, making the difficulty still greater.-
When I ask that some relief be given these people by way of income tax exemption, it is not as though the whole burden would be passed on to the Dominion of Canada. We are merely asking that exemption be permitted

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up to $400, which, as the minister stated yesterday, is probably worth to-day, for people in these brackets, S100 or slightly over, but the balance of the money has to come from the hosts in Canada.
In connection with taxation changes we find that the Minister of Finance is reluctant, if not actually stubborn about making any changes suggested in this house. In my brief experience I find hon. members have very little influence in getting changes made in any bill brought down by the government. But in a number of instances I have seen pressure exerted from outside, and measures are then changed, by interests who certainly are not the representatives of the people but who seem to be able to exert substantial and effective pressure upon the government.


Mr. MARTIN:: For instance?


Harry Rutherford Jackman: For instance, in the
unemployment insurance bill, it was impossible ior the committee, no matter what we said, to get the hospital employees exempted; but after the committee had reported to this house, telegrams kept coming in to the Minister of Labour and he saw fit to make a change.
That instance is, however, not so important as the one I shall now mention. We shall shortly be dealing with a change in the resolutions which the minister brought down a few days ago with regard to the withholding tax on interest paid to United States holders of Canadian bonds. That matter has not even been before this committee except as the resolution was presented in the budget address and the budget debate. But over the weekend sufficient pressure was brought to bear by a handful of United States corporations to .get the 15 per cent withholding tax withdrawn; or rather I understand that the minister or his department announced that it was to be withdrawn. I do not know by how many millions of dollars the revenues of the country will be lessened, but I suppose it will be somewhere between five and ten millions.


James Lorimer Ilsley: Is the hon. gentleman opposed
to that withdrawal?


Harry Rutherford Jackman: No, but that is not the point I am dealing with at the moment.


James Lorimer Ilsley: Then is the hon. gentleman in favour of it?


Harry Rutherford Jackman: I am in favour of the withdrawal of that provision.


James Lorimer Ilsley: I suggest that the hon. gentleman should not leave the impression that this government yielded to pressure and did something it should not have done.


Harry Rutherford Jackman: The only impression
would appear to be in the minister's mind, that he did something he should not have [DOT]done. I am only suggesting how things are
carried on; and surely if this government is going to listen to the voice of a group of United States corporations, which seems to have been so effective in this regard, it should pay heed to the silent plea of little children from beleaguered Britain.


James Lorimer Ilsley: I am a little surprised at the hon. gentleman. Usually he is a rather cool-headed type of financial man, but when he gets into this sentimental sort of appeal about the cry of little children I must say that the little children are not crying for this exemption. That cry comes from gentlemen who have undertaken to support them and who are now asking the government to share a part of their burden.


Harry Rutherford Jackman: I quite realize that, and I admit frankly that I probably over-emphasized it. But I have pointed out the sort of people who have taken many of these young children into their homes. Perhaps the minister was not listening when I mentioned the case of a professor, a married man receiving an annual income of $3,000, who in 1939 paid a tax of $36 but who in 1941 will be required to pay a tax of $400. In a household like that every dollar counts; and when they have taken into their homes one or perhaps two children it means an actual reduction in the standard of living, over and above that which will be common to the whole country. It will be extremely hard on these people; and if the minister thinks I am straining the point let me add that it will actually result in lowering the standard of living of some of these guest children, who will share the common standard of the other children of these Canadian foster parents.


James Lorimer Ilsley: Then what does the hon. gentleman think of the problem confronting a married man with an income of $1,500, whom we are taxing now with regard to the national defence tax as well as the income tax? What does he think about people in that category? What does he think about the large number of people in this country who are not income tax payers, who are taking in these children and who are not asking for any consideration? What does he think of the representation made by his colleague, that if we are to do this thing fairly we shall have to work on a subsidy or bonus basis and give so much money to everybody, whether or not they are income tax payers? The hon. gentleman is making a special plea for a special class who want consideration, but what about the poor people who are not going to get consideration unless they are given a bonus by this government? Is he in favour of a bonus to those who have not taken children at all?
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Harry Rutherford Jackman: I think the minister is most unfair, and I am surprised that he should take this attitude. Naturally a person with an income of $1,500, having to meet new obligations in the way of taxation, is in a very difficult position; but I am not going into the general taxation structure of this country. I am only interested in whether or not people who have taken these guest children into their homes have done a worthy, patriotic thing; whether what they did, especially at the time they did it, was looked upon with favour by the whole community. Certainly it was commended by the press of the country, and that is all I am suggesting. Those who have taken these children have assumed a burden in addition to all these other burdens, and they form a special class. All I am asking is that they not be simply put aside, that they be allowed to treat the children they have taken as though they were their own, which they virtually and actually are for the period of the war. I do not think I have made an unreasonable request, nor do I think I should be subjected to any attack based on the general principles of our taxation system.


Mr. WARREN:: I object to the word
"burden" being used in this connection. A short time ago it was my privilege to take a beautiful English boy three years of age from this city to the home of a farmer living in my constituency. Since that time I have gone to see the boy, and I know that farmer would definitely object to having the boy regarded as a burden. He and his wife consider it a pleasure, a privilege and a joy to take care of this splendid English lad who finds himself in need of care at this time. They are not asking for any special exemption; they are not expecting or looking for any reward other than that which they get every day in the pleasure they experience in taking care of the lad. They are giving him a haven; they have lifted a burden from the shoulders of a stranger in a strange land, and they have already received their reward.


Gordon Graydon: We should maintain cool heads in discussing this matter, because I do not think there is anything vicious in the suggestion that has been made. After all, the attorney general of Ontario has taken a position entirely different from that taken by the minister, and in agreement with the suggestion put forward by the hon. member for Rosedale. The minister need not get hot under the collar with regard to the proposal that has been advanced, because the legislature of Ontario, the most populous province in the dominion, has already taken the action that is proposed here. Surely the minister

would not suggest that the government of Ontario is wrong on every point, including this one.


Richard Burpee Hanson: It would seem to me that the trouble arose over the suggestion advanced by the hon. member for Rosedale that the minister is deaf to appeals from members of this house but is very responsive to pressure-that was the word used, I think, though I should prefer to say "very receptive to appeals"-from outside. There is the appearance of truth in this assertion, and the minister ought not to chastise the hon. member for Rosedale for making it. The minister did retreat from a position which he had taken in his budget address. I think he did right, but I would put it on another ground. I never thought he had any legal jurisdiction to tax those people, and if the matter had been contested in the courts he probably would have found that there was not jurisdiction. Now let us cool off a little. This is a fair plea being made on behalf of a certain class. I may not feel strongly about it, but some people do. Let us be considerate and moderate in our judgment of each other; and let us call it six o'clock.
Progress reported.


[Stage Direction]
At six o'clock the house adjourned without question put, pursuant to standing order.
Thursday, May 15, 1941.