1948-06-23

Mr. A. E. ROBINSON (Bruce):: Mr. Speaker, to you and to all hon. members of the House of Commons I wish to say that on your desks has been placed an invitation from the mayor of Kincardine to attend our centennial celebration. This occasion is part of a two weeks' homecoming to Bruce county, which I have the honour to represent. I can assure hon. members that any who are able to attend will be made welcome and have a very enjoyable time.


Mr. THOMAS REID (New Westminster):: On a question of privilege, Mr. Speaker, may I say that the invitation refers to "Scotchmen's day." They are not Scotchmen but Scotsmen.



TELEGRAPHS AND TELEPHONES


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, I desire to table order in council P.C. 2526, of June 8, 1948, passed under the Public Service Rearrangement and Transfer of Duties Act, transferring the control and supervision of the government telegraph and telephone service (except the telephone exchange service for government offices at Ottawa) to the Minister of Transport; also transferring the powers, duties and functions of the Minister of Public Works under the Telegraphs Act to the Minister of Transport.

On the orders of the day:


Mr. J. T. RICHARD (Ottawa East):: With reference to the announcement that telephone services are to be transferred to the Department of Transport, I would ask the Minister of Transport whether any arrangements have been made to transfer employees of public works now attached to this service to the Department of Transport, and whether there have been any negotiations with the Bell Telephone Company of Canada whereby this company would take over the service now performed by the employees of public works.


Hon. LIONEL CHEVRIER (Minister of Transport):: With reference to the second part of the hon. gentleman's question, I am not aware of any negotiations with Bell Telephone, but if there are any I shall advise him. With reference to the first part of the question, I shall inquire of the officers of the department and advise him as soon as possible.



VETER ANS AFFAIRS

[Stage Direction]
Eighth and final report of the special committee on veterans affairs.-Mr. Mutch.

[Stage Direction]
CONCURRENCE IN REPORT OF JOINT COMMITTEE [DOT]
Right Hon. C. D. HOWE (Minister of Trade and Commerce) moved:: That the report of the joint committee on the library of parliament, presented on June 11, 1948, be concurred in.


[Stage Direction]
Motion agreed to.

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

Mr. HATFIELD:: 1.	Did the federal government make agreements with the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Prince Edward Island?
2.	If so, in what way or ways did the agreement with British Columbia differ from those of the other six provinces?
3.	In what way or ways did the agreement with Alberta differ from those of the other six provinces?
4.	In what way or -ways did the agreement with Saskatchewan differ from those of the other six provinces?
5.	In what way or ways did the agreement with Manitoba differ from those of the other six provinces?
6.	In what way or ways did the agreement with New Brunswick differ from those of the other six provinces?
7.	In what way or -ways did the agreement with Nova Scotia differ from those of the other six provinces?
8.	In what way did the agreement with Prince Edward Island differ from those of the other six provinces?


Mr. BELZILE:: 1.	Yes.
2 to 8. The general terms of the agreements signed by the seven provinces are the same,
Questions

except that different provinces selected different options for determining the amount of the guaranteed minimum annual payment.
The option selected by New Brunswick, Manitoba, Alberta and British Columbia provides that this guaranteed minimum annual amount shall be the sum of:
(a)	$12.75 in respect of each person in the population of the province in 1942; plus
(b)	Fifty per cent of the provincial income and corporation tax revenue for the year ended nearest December 31, 1940; plus
(c)	statutory subsidies payable in 1947.
The guaranteed minimum annual amount
in the case of each province under the above option is as follows:
New Brunswick	 $ 8,773,420
Manitoba	 13,540,038
Alberta	 14,227,882
British Columbia	 18,120,124
The option selected by Nova Scotia and Saskatchewan provides that the guaranteed minimum annual amount shall be the sum of:
(a)	S15 per capita in respect of each person in the population of the province in 1942; plus
(b)	statutory subsidies payable in 1947.
The guaranteed minimum annual amount in
the case of each province under the above option is as follows:
Nova Scotia	 $10,870,140
Saskatchewan	 15,291,490
The option selected by Prince Edward Island provides that the guaranteed minimum annual amount shall be $2,100,000, made irp as follows:
(a)	$15 per capita in respect of each person in the population of the province in 1942; plus
(b)	statutory subsidies payable in 1947; plus
(c)	an additional amount of $93,068.
In the case of Prince Edward Island, Nova Scotia and New Brunswick, the wartime tax agreement terminated before the commencement of the agreements under the tax rental agreements act and special provision was made in the agreements signed with these three provinces to provide for payments to cover this transitional period. These payments are a proportion of the guaranteed minimum annual amount less the same proportion of the statutory subsidies and less adjustments to take account of the succession duties collected by the provinces in the transitional period
The appendices to the agreements which list the particular taxes to be suspended or retained by the provinces differ for each province in order to deal appropriately with the various provincial taxing acts.


AGREEMENTS WITH PROVINCES-DECISION OP NOVA SCOTIA SUPREME COURT
Mr. ISNOR:: Will the decision given on June 12 by the Supreme Court of Nova Scotia respecting dominion-provincial powers, not being exchangeable, and specifically concerning labour and taxation matters, affect the dominion-provincial financial agreement signed by both parties last year?


Mr. BELZILE:: No.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. LENNARD:: 1.	What wras the contract price for Sunny-brook military hospital, Toronto?
2.	What has been the total cost to date?
3.	What is the estimated final cost?



SOLDIER SETTLEMENT AND VETERANS LAND ACT

Mr. WINKLER:: 1.	Have there been cases under the soldier settlement board where the veteran has given up for any reason, amd later came under the Veterans' Land Act?
2.	If so, were there applications which were refused, and what were the reasons for refusal?



FLOOD CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. G. A. CRUICK8HANK (Fraser Valley): I should like to direct a question to the Prime Minister arising out of a report in the Vancouver Sun of yesterday, that the federal government will grant no assistance in the restoration of the farms in the flooded-out areas. When will the Prime Minister be in a position to make a statement in regard to financial relief to the flooded-out victims of British Columbia?
William Lyon Mackenzie King: I may tell my hon. friend that I have been in communication with the premier of British Columbia, and the premier of British Columbia has also been in touch with both members of the commission which has been looking into flood matters. A statement is being prepared which will be approved by both the premier of British Columbia and myself, and when it is ready it will be given to the house.


Mr. E. D. FULTON (Kamloops):: May I aslc the Prime Minister whether any decision has yet been reached with regard to federal assistance for flood damage compensation in

Inquiries oj the Ministry
areas outside the lower Fraser valley in British Columbia? If not, at what stage are the negotiations at the moment?


William Lyon Mackenzie King: I do not think I am in a position to give my horn, friend any information in addition to that which I have just given the hon. member for Fraser Valley.


Edmund Davie Fulton: May I point out that my question had to do with compensation for areas outside the Fraser valley, a matter which is exercising those who come from that area. The hon. member for Fraser Valley asked about compensation in the area from which he comes.


William Lyon Mackenzie King: There are continuing communications between the two governments, and1 there is every desire on the part of each to arrive at an arrangement satisfactory to both. These communications take a little time, and when an official statement can be made it will be given to the house.



OKANAGAN LAKE-REPORT OF COMMISSION OF 1943

[Stage Direction]
On the orders of the day:
Mr. 0. L. JONES (Yale): Mr. Speaker, may I direct a question to the Secretary of State for External Affairs. Can the minister say whether action will be taken soon to implement the report having to do with the water level of Okanagan lake?
Right Hon. L. S. ST. LAURENT (Secretary of State for External Affairs): There seems to be some ambiguity as to what report the hon. member is referring to. I got has notice this morning and had inquiries made. It is possibly a report made by a board of British Columbia engineers to the Department of Public Works in 1946. In any event, with the information indicated in the question, and a reference the hon. member gave me to what he said in the House of Commons on June 21, inquiries are being made to obtain for him as much information as can be made available.
Hon. ALPHONSE FOURNIER (Minister of Public Works):: I may supplement the ansiver just given by the Secretary of State for External Affairs. In 1943 a commission was set up by the government of British Columbia and the Canadian government appointing three engineers from Ottawa and three from that province to report on remedial works to be made on lake Okanagan. The report was brought down in 1946. Since then the Canadian government and the province have been considering action to implement the report, and we hope to have action taken during the coming year.



POSTAL SERVICE


[Stage Direction]
On the orders of the day:
Mr. GEORGE BLACK (Yukon):: I
addressed a question to the Postmaster General on June 16, pursuant to the announcement that on the first of July air mail rates would be reduced from seven cents to four cents. I asked him whether that applied to mail in and out of Yukon. To that question he replied:	"It does when we are sending
our mail by air." May I ask what he means by that statement, "sending our mail by air"? Does he mean simply post office mail, or general public mail?


Hon. ERNEST BERTRAND (Postmaster General):: When I made that announcement I made it with reference to Trans-Canada Air Lines. I said that as regards the feeder lines, we would work on them immediately, as soon as we established the first one. I would like to verify the position before giving an answer. I will discuss the matter with my officials and reply tomorrow.


George Black: One other question. I understand that when a letter with a four cent stamp on it is mailed at a post office for delivery by air mail, it is left to the discretion of the post office officials whether that letter goes via air mail or not. If that is the policy, does the minister approve of it?


Ernest Bertrand: All letters put into letter boxes, or deposited in the post office, and carrying a four cent stamp, will go by air mail whenever we gain time in delivery. Take, for example, a letter mailed in Montreal on Saturday for delivery in Toronto cannot be delivered before Monday. It is not necessary to send that letter by air, but if someone wishes to put seven cents on it to make sure, we deliver the letter on Saturday night to the post office there, but it may not be delivered to the consignee before Monday unless it bears a stamp for special delivery.



QUESTION AS TO RATIFICATION OF INTERNATIONAL AGREEMENT

[Stage Direction]
On the orders of the day:
Mr. C. C. MILLER (Portage la Prairie):: I wish to direct a question to the Minister of Trade and Commerce. Can he tell the house when notification of ratification of the international wheat agreement will be made to Washington and when the agreement will go into effect?
Inquiries oj the Ministry


Clarence Decatur Howe: The government of the United States is the recipient of ratifications of the agreement, and the agreement is left open for ratification until the first of July, 1948. What action will be taken at that time is a matter for the committee in charge of the agreement to decide. If the agreement has a satisfactory number of ratifications by July 1, it will go into effect on August 1. If not, the position will be examined by the committee in charge and a decision made.



CANNED AND PROCESSED FISH


[Stage Direction]
On the orders of the day:
Mr. W. CHESTER S. McLURE (Queens): On June 21 I directed two questions to the Minister of Fisheries. I would like to have an answer as soon as possible.
Hon. R. W. MAYHEW (Minister of Fisheries) :: The questions asked by the 'hon. member for Queens have been noted, and when the estimates of the department are before the committee today, as we hope, answers will be given.



EMBARGO ON SHIPMENTS TO THE UNITED STATES

[Stage Direction]
On the orders of the day:
Hon. W. EARL ROWE (Dufferin-Simcoe):: In the absence of the Minister of Agriculture 1 would like to ask the parliamentary assistant a question about the embargo on beef going into the United States, in view of the fact that there have been disturbances in the market by rumours which evidently have come from the department for several weeks as to the lifting of the embargo. This has had a consequent effect on consumer prices, and I would ask the parliamentary assistant-


Mr. SPEAKER:: Order. I would ask the hon. member to put his question briefly.


William Earl Rowe: I was coming to the question, Mr. Speaker. In view of the fact that the hon. gentleman has already stated that the government-


An hon. MEMBER:: Order.


William Earl Rowe: I am not asking you, my hon. friend. May I ask the parliamentary assistant to state to the house and the country whether the government intends to lift the embargo for a certain period. I ask this so that the rumours, which are having a serious effect on the market in Canada, may be disposed of.


Mr. ROBERT McCUBBIN (Parliamentary Assistant to the Minister of Agriculture):: I may tell the hon. gentleman that negotiations are going forward with reference to the lifting of the embargo, but when it will take place I am not in a position to say.


Mr. GRAYDON:: It is going to be lifted, though?



COARSE GRAINS


[Stage Direction]
On the orders of the day:
Mr. E. G. McCULLOUGH (Assiniboia):: May I ask the Minister of Trade and Commerce a question. Seeing that we are near the end of the session and that there is extreme interest in the west in the handling of coarse grains, will the minister tell the house whether further consideration is being given the question of bringing coarse grains under the Canadian wheat board? Will he also say something in regard to Bill No. 135, to amend the wheat board act?


Clarence Decatur Howe: The conditions under which Bill No. 135 would be made operative were stated at the time the bill was introduced. One of the conditions was that there would be complementary legislation by the three western provinces. At the moment there is complementary legislation by one of the provinces, but not by the other two; and unless we have complementary legislation in all three, it will not be possible to put the bill into effect.


Edward George McCullough: I understand that Saskatchewan has already passed the necessary complementary legislation. Are negotiations taking place between the other two provinces and the federal government?


Clarence Decatur Howe: A meeting was held in Ottawa last week with the representatives of all three provinces, and the provinces are well aware of the requirements.


Mr. KNOWLES:: Is the government?



REFERENCE TO DISCUSSION IN COMMITTEE OF THE WHOLE ON JUNE 22

[Stage Direction]
On the orders of the day:
Mr. JOHN T. HACKETT (Stanstead): I wish to ask the parliamentary assistant to the Minister of Agriculture if he is quite certain of the accuracy of the statement he made last evening, that the quantity of butter in storage on May 1, 1948, is practically the equivalent of the amount in storage a year before.

Department oj National Defence Act
Robert McCubbin: I did not say that last night. I said there was a difference. I said that the amount of butter in storage now was less than it was a year ago, but I still think that we shall have enough for next winter.


William Earl Rowe: Is it the same this morning as
it was last night? That is the question.



WAR VETERANS ALLOWANCES


[Stage Direction]
Mr. L. A. MUTCH (Parliamentary Assistant to the Minister of Veterans Affairs) moved the second reading of and concurrence in amendments made by the senate to Bill No. 196, to amend the War Veterans' Allowance Act, 1946.
Motion agreed to; amendments read the second time and concurred in.


[Stage Direction]
Mr. HUGUES LAPOINTE (Parliamentary Assistant to the Minister of National Defence) moved the second reading of Bill No. 394, to amend the Department of National Defence Act.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Golding in the chair.
On section 1-Moneys to cease to belong to Canada.
Mr. PEARKES:: I understand that the purpose of this bill is to enable certain moneys, which were made available by the members of the various officers training corps throughout the country to promote the efficiency of their corps, to be released from the consolidated revenue fund and to be placed in the hands of trustees so that they may be used for their original purposes.
Before and during the war it had been the custom for officers, non-commissioned officers and men of the officers training corps to assign pay received from the Department of National Defence for various purposes, such as the building of drill halls and armouries, and so forth. That practice was wholly commendable, and the moneys had been set aside for that specific purpose. Apparently these moneys have recently been placed in the consolidated revenue fund, and the intention of this amendment is to provide that they shall be made available for the original purpose. With that
I heartily agree. But yesterday I asked the parliamentary assistant to the Minister of National Defence whether moneys derived from canteen sources were placed in these funds which it is -now proposed to release from the consolidated revenue fund. The parliamentary assistant informed me then that there were no such moneys derived from canteens, but he advised me during the day that this statement was not correct; that a small percentage, some three per cent, of the total moneys was derived from canteens which were run by these officers training corps.
I am' afraid that presents this bill in rather a different light. The committee will no doubt recall that only last year we had a committee on army canteen funds. Those funds were placed1 in an army benevolent fund which was to be administered under the chairmanship of the late Major-General Browne for the benefit of the men of the army who returned from the war and who were eligible to receive portions of this fund for the purpose for which it was created. I wonder whether the portion of these moneys which was derived from the canteen funds should not be placed in the army benevolent fund as were the funds which were derived from other canteens of units of the non-permanent militia, as they were called in the pre-war days.
There was a great deal of feeling at one time that the non-permanent units would like to administer and use for the benefit of the men who passed through them, or for promotion of the efficiency of their particular units, the funds accumulated in the canteens which they had operated. For instance, the highland1 units were anxious to obtain kilts; other units perhaps thought it would be a good thing to obtain instruments for regimental bands, or to promote the efficiency of their reserve army unit at the conclusion of the war. I am not sure that we are right in assigning to these purposes the money which came from canteens w'hen we have denied to the units of the nonpermanent militia or reserve army the right to utilize their canteen funds for their own particular purposes.


Mr. LAPOINTE:: As the hon. member for Nanaimo pointed out, yesterday in the course of the explanation I gave at the resolution stage I answered a question of the hon. gentleman as to whether any of the funds affected by this legislation were canteen funds. My reply was in the negative. Later I was informed that a small percentage was canteen funds. However, I wish to point out that the benevolent fund to which my hon. friend has just referred, which was created last year by an act of this parliament, affected only canteen funds of the active force, and that no canteen funds
5698	COMMONS
Department of National Defence Act
of reserve force units were placed in the benevolent fund. The canteen funds of the C.O.T.C. were those of a strictly reserve unit which, under the act creating the benevolent fund, would not be included.
I might add that the action now being taken by the department is the expressed wish of all the C.O.T.C. units which existed during the war, numbering some twenty-eight. Since the end of the war they have repeatedly pressed the department for the release of these funds from the consolidated revenue fund, to be used for their original purposes. In some instances the amounts are considerable. In some cases the entire amount was collected through voluntary assigned pay on the part of the members of the corps, and substantial subscriptions by private individuals and bodies for memorial purposes, or for building accommodation strictly for the use of that particular contingent. The department has taken the view that considering the circumstances which existed in connection with a C.O.T.C. unit, which are quite different from those of the ordinary reserve units, the funds should be remitted in trust to the units concerned, to be used for the purposes for which they were originally collected. For instance, in one particular case all the members going through the particular C.O.T.C. unit-and I understand some 8.000 went through during the war-assigned their pay, both headquarters and camp pay, for the purpose of building a memorial to the C.O.T.C. of the particular university. I believe the wish of those men, who could have drawn their pay and then subscribed it to a particular fund with the same result, should now be acceded to.


Mr. COCKERAM:: Can the parliamentary assistant tell us the total amount of money involved, with a breakdown by corps?


Hugues Lapointe: The total is $317,895.38. The breakdown would be lengthy. If the committee is willing, I might simply place it on Hansard.


Mr. LENNARD:: Put it on Hansard.


Hugues Lapointe: I should like to give a short explanation for the purposes of the record. In some cases the funds include an unexpended portion of government allowances to these contingents for purposes of administration and organization. These were kept in the same accounts as the regimental funds. When the decision was reached to release the funds, a board of officers was convened in every case to determine the unexpended portion of government allowances, if any, and where such exist they are being deducted from the amount returnable to the C.O.T.C. Those funds will be retained in the consolidated revenue fund.


The CHAIRMAN:: Has the parliamentary assistant unanimous consent to have the statement appear on Hansard?


Some hon. MEMBERS:: Agreed.


Mr. MacINNIS:: This is departmental
material?


Hugues Lapointe: Yes.
(The statement appears on following page.)


Frank Exton Lennard: I presume the governor in council will appoint as trustees in each instance responsible local people interested in the local university, who will receive the money?


Hugues Lapointe: That is correct. In some cases the trustees already have been chosen and a trust fund created.


Mr. GILLIS:: I just want to get the record straight. The hon. member for Nanaimo would lead one to believe that this might involve the regular army, navy and air force units. That is not so?


Hugues Lapointe: That is not so?


Clarence Gillis: There is a special act dealing with those bodies?


Hugues Lapointe: That is correct.


Alan Cockeram: The parliamentary
assistant stated that these amounts include certain unexpended portions of grants made in the past to these C.O.T.C. units, and it strikes me there is no reason why that money should not be given back to them. Nothing was done in connection with the reserve army to recover any money unexpended at the end of the war, and I believe the C.O.T.C. units need encouragement and money. If through economy and good management they were able to save some money, I see no reason why it should be paid back to the government. They should be allowed to retain all the money for the benefit of the unit.


Hugues Lapointe: The only answer I can give the hon. gentleman is that under the Consolidated Revenue and Audit Act these are considered public moneys. The difference is that the sums we are now trying to release consist in large part of pay and allowances and subscriptions by individuals, not by the government. Just what is the method of accounting with respect to the unexpended portion of governmental grants is something I could not say. I dare say that if they are

Department oj National Defence Act
still in the funds of the C.O.T.C. that may be taken into consideration when the annual grant is made, but I do not think we can deal with governmental allowances through this bill. I suggest that the hon. gentleman
bring up the question when we discuss the estimates, and at that time a thorough explanation may be given.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.
Analysis of Surplus Funds of C.O.T.C. Contingents as at September 30, 1947
Unexpended Maximum
Type of	Total	Govt Alices. Determined by	Amount ForContingent	Fund	Surplus	Bds of Officer	AdjustmentQueen's university 	$ . 60,980.12	$ Nil	$ 60,980.12University of Manitoba 	. 36,647.16	2,075.67	36,647.16McMaster university 	. 10,633.96	8,558.29University of B.C	. 649.13	Nil	649.13Regt funds 	. 16,194.59	306.97	15,887.62University of Saskatchewan 	tt a	. 14,924.15	Nil	14.921.15Mount St. Louis 	. 4,565.18	4,565.1*8Osgoode Hall 	« «	. 5.900.00	Nil	5.900.00Jean de Brebeuf 	a a	. 1,152.34	1,152.34St. Joseph's university 	tt tt	. 104.40	101.49Bishop's college 	. 3,354.08	Nil	3.354.08University of Toronto 	. 1.323.58	1,323.58Regt funds 	. 44.480.85	2,768.70	41,712.15University of Ottawa	tt tt	. 8.179.30	955.71	7.2123.59Offrs* mess 	. 271.14	Nil	271.14Sgts' Mess 	. 53.54	Nil	58.54Ontario Agricultural college 	. 2,729.30	Nil	2,729.30University of Western Ontario	. 17.11	Nil	17.11University of Montreal 	Regt funds 	. 1,475.77 . 6,560.01	Nil	1,475.77 6,589.01Regt funds 	. 12,816.85	787.50	12,029.35Laval university 	. 2,261.14	120.71	2.140.43Dalhousie and King's college 	. 1,462.81	798.05	664.76Nova Scotia technical college 	. 657.50	667.50St. Dunstan's university 	. 111.47	111.47St. Francis Xavier university	. 50.77	971.59	56.77Mount Allison university 	. 971.59	NilSt. Thomas university 	. 360.95	360'. 95	University of N.B	. 991.31	869.81	121.50University of Alberta 	. 4,679.75	Nil	4,679.75St. Mary's college 	. 664.9$	664.98Acadia university 	. 851.72	926.30	851.72Loyola university	. 5,680.58	4,754.28Offrs' mess ....	. 286.94	Nil	286.94McGill university 	. 73,618.74	562.50	73,056.24Band fund ....	. 393.31	Nil	393.31Off and cadets .	. 3,286.14	Nil	3.286.14Offrs' mess ....	. 29.49	Nil	29.49329,399.84	11,504.46*	317,895.38
Note-. (*) Where no amount is shown or the word "nil" does not appear, the amount of unexpended government allowances is not presently available.


[Stage Direction]
Hon. DOUGLAS ABBOTT (Minister of Finance) moved that the house go into committee to consider Bill No. 338, respecting income taxes.
Motion agreed to and the house went into committee, Mr. Macdonald (Brantford City) in the chair.
Sections 1 to 5 inclusive agreed to.
On section 6-Dividends, annuities, etc.
Mr. MACDONNELL (Muskoka-Ontario):: Mr. Chairman, I should like to refer to paragraph (j), about which I believe the minister has received representations. It reads:
Amounts received by the taxpayer in the year that were dependent upon use of or production from property whether or not they were instalments of the sale price of the property, but instalments of the sale price of agricultural land shall not be included by virtue of this paragraph.
Income Tax Act

I know the hon. member for Calgary West wishes to speak to this paragraph. It has been brought to my attention that under this paragraph royalties on oil wells are being taxed not as capital but as income. Let me point out that the so-called royalties are in effect the capital of the person receiving them. Why is this form of capital singled out for the treatment indicated in the paragraph? It seems to me that the taxing authorities have a feeling that this is a sort of bonanza or windfall which may come to a person concerned, and therefore in a rough fashion this is a process of taking a slice of the receipts. I suggest that that is an inadequate reason for departing from ordinary taxation procedure. It may be in the minds of the government that people are getting huge windfalls and that therefore they should not be greatly concerned about the tax.


Mr. ABBOTT:: I am not quite clear as to the facts the hon. member may have in mind, but I am informed that there is no change in the law respecting the taxation of royalties. Oil royalties as such are and always have been subject to tax, with the appropriate deductions for depletion.
This section is not designed to tax oil royalties as such. It is really intended to effect a transaction which is an exchange of rights for royalties which are income. I am told there is no change in the substantive law. The pertinent section in the law, as my hon. friend probably knows, is section 3 (1) (f), which defines, as being included in income-
Rents, royalties, annuities or other like periodical receipts which depend upon production or use of any real or persona] property notwithstanding that the same are payable on account of the use or sale of any such property.
I have been assured by the law officers of the Department of Justice that there is no change in the substantive law.


James MacKerras Macdonnell: I did not intend to suggest there was a change contemplated at the present time. My understanding is that the change was made earlier. Originally an attempt was made to tax oil as revenue, and this was ruled out. There was a case which tested that procedure, with which the minister is no doubt familiar. In that case the privy council held that the sale of oil was the realization of a capital asset and therefore was not subject to taxation. I understand that thereafter the legislation was altered. I presume the wording is the same as that which we have now.
The point I raise now is the principle involved. Surely the minister will agree that in substance this is a taxation of capital. This oil which comes out of the ground is a wasting

asset. Why should we tax this capital any more than any other kind? How can it be suggested that this is anything other than capital which the owner of the land is receiving?


Mr. SMITH (Calgary West):: I should like to say only a word on the same subject. I do not know whether the committee is clear as to the exact meaning of a royalty. Perhaps I might put it this way. We will say that a man owns a quarter-section of land and the oil underneath it. This question is of particular interest to the Leduc area because it is one of the oldest settled areas in Alberta. When the government of Canada granted land titles, the grants included the rights to mines and minerals-and oil has been held to be a mineral. A man owns the oil just as much as someone in Ottawa may own a building; there is no difference in principle. Oil may be found in a neighbourhood, following which an oil company will come along and buy the oil under the land. But the company will buy only, we will say, seven-eighths of it. In this instance I am speaking only for the small group of farmers who own the oil rights under their land. The oil company will make a development, with the farmer still owning one-eighth.
Let us assume that across the river in Hull I have some huge tanks containing 100,000 barrels of oil. It may be that I have no sale for it in Hull, or that it commands a better sale in Ottawa. I move my 100,000 barrels of oil to Ottawa so that I can sell it here. Obviously no tax would be involved. Exactly the same reasoning applies to oil under the ground. Instead of moving the oil horizontally, as in the illustration I have given, I move vertically the oil which is under the ground. That is the only difference in principle, legally or otherwise, that can possibly be attached to this question of royalties.
It is said that certain allowances are made. I know that; and I have no objection to them. But this is a tax on capital, and it is nothing else. You do not need to worry about the companies who develop the oil. That is their business, and so they pay taxes.
I am not speaking for them at all. I am speaking for the individual farmer who owns this land and has oil as part of his land.
Let us assume that down here a few years ago I bought a thousand shares of Consolidated. That is an imaginary purchase, of course, because I never had enough money to buy a thousand shares of Consolidated. Then suppose that after holding those shares for some time I sell them at present prices. I have made a capital gain. I owned some oil,

Incovie Tax Act
it increased greatly in value, and I sold it. I have done nothing more than make a capital gain. Remember I am not in the oil business; I am a farmer and I am still farming the surface of my land.
Let me give another illustration-and this actually happened. The owner of a quarter-section of land is permitted under government regulations to drill four wells. In the case I have in mind the farmer, or his solicitor when he sold seven-eighths to the oil company very foolishly put in a clause providing that the company must develop those wells consecutively and without delay. He has four wells operating on that property. The four wells bring in daily a lot of oil. They are limited to 175 barrels a day-to take a round figure we will say 200 barrels. That farmer has, then, 800 barrels a day coming in. That will sell for approximately S3 a barrel, or $2,400. One-eighth of that is S300, and according to the present ruling he would pay income tax on the total $300. A mile away, we will say, is another man who has sold his land. They get cash, of course, as much as $200,000 for a quarter section. He has made his sale, but his sale agreement does not contain this quick development clause, and so the company drills one well on his property and then goes and looks after its business elsewhere. The result is that that man pays this year only on the product of that one well, whereas his neighbour is paying taxes on the four producing wells. The man who had the quick-drilling clause in his agreement is in a bracket away beyond the chap a mile away *who has only one well producing. The law works an extreme injustice as between those two persons. I want to make this plain: I am talking of actual cases. I know of cases which parallel the illustrations I am giving.
I would like very much to have someone tell me, first of all, why this capital gain is taxable, and next, whether something cannot be done to level off as between the two farmers about whom I have been speaking.


Douglas Charles Abbott: I have followed my hon. friend closely. It is a technical subject, and I have not, of course, his knowledge of the practical operations, and certainly not of the way in which these contracts are drawn. But this is a question of policy. The hon. member for Muskoka-Ontario, I appreciated later, was speaking not of the drafting of the act but of the policy. I am told that this has been the policy since 1934, and all I can say now is that I will study the question that has been raised by the hon. member for Calgary West, and see what, if anything, can be done. It 5849-362
would be a matter that would have to be taken care of as a budgetary item and not by revision through this bill.


Arthur Leroy Smith: I suppose I must be content with what the minister has said, but he will remember what happened in the Spooner case, which went to the privy council. The privy council held that this was a capital asset, and then the government for reasons best known to itself passed a statute which said it is not a capital asset. That, in laymen's language, is what happened. The main point I have in mind is this, apart altogether from the individuals who will be called upon to pay these tremendous taxes. This policy is a departure from the over-all principle of our taxation, because we in Canada have not yet seen fit, as they have to some extent in the United States, to tax capital gains, and why we should pick out these poor farmers-they were poor; they are not now-and tax their capital gains while we do not tax the capital gains of well-off people who bu3r stocks and shares, is something I cannot understand. The farmer who has been working on his farm for perhaps thirty or forty years has his capital gains taxed. That may be a matter of government policy. If it is, it is a kind of government policy which someone should be prepared to justify.


Douglas Charles Abbott: I will certainly look into it. The change was made when Mr. Bennett was prime minister. Perhaps he knew more about oil than I do. At any rate I will look into it.


Arthur Leroy Smith: May I answer the remark that the change was made when Mr. Bennett was prime minister? It was made by the same officials in your department who were there when Mr. Bennett was there.


Douglas Charles Abbott: I do not think any officials made Mr. Bennett's decisions for him, did they?


Arthur Leroy Smith: It is possible for anyone, including Mr. Bennett, to make a mistake.


Douglas Charles Abbott: I know it is a favourite sport to blame things on officials. I find people all too prone to blame their own shortcomings on officials.


Mr. HACKETT:: There is a kindred question which I think might be considered by the minister when he is considering the matters raised by the hon. members for Calgary West and Muskoka-Ontario. I refer to the allowance made for depletion. Twenty per cent is allowed on dividends from Canadian wells, and only ten per cent on dividends from wells situated elsewhere, principally in the United States.
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The argument has been advanced that governments can supervise more effectively the accountancy and methods of operation of Canadian companies than they can of United States companies. With the treaty arrangements which exist between the United States and this country, that is not altogther a satisfactory answer. Moreover, the same principle does not apply to mines. The department allow certain depletion with regard to mines in Canada, and if my information be correct they allow the same depletion with regard to mines outside of Canada, particularly in the United States. As the act is being revised, it would seem well to endeavour to introduce more uniformity and equity into its terms.


James MacKerras Macdonnell: I am sure the minister realized that I was pinch-hitting for the hon. member for Calgary West. I do not need to tell him that. I do want to add this one thing. This taxation is in essence a kind of punitive taxation. It appears to be the result of the feeling that here is somebody who has something of which he may be despoiled, and we can do it. When the minister is thinking this over I suggest very earnestly that it is not a good basis of taxation. If capital gain should be taxed, for which there is an argument, all right, tax it; but I think it is undesirable to pick out one and leave the others alone.


[Stage Direction]
Section agreed to.
Section 7 agreed to.
On section 8-Appropriation of property to shareholders.
The DEPUTY CHAIRMAN:: The committee made an amendment to section 8, subsection 2. The amendment is, "shall be deemed to have been received by the shareholder as a dividend for the year."


[Stage Direction]
Section agreed to.
On section 9

Winding-up.
Mr. JACKMAN:: Subsection 3 says that in the case of reorganization or readjustment of the capital stock the new shares shall be taxable in the hands of the shareholder to the extent that any unearned surplus is used to make up the capitalization or the new stated value of the shares. I think that is a fair enough provision so far as it affects Canadian companies, where the earned surplus would ordinarily be taxable when paid out. But it causes a considerable amount of embarrassment and confusion to Canadian shareholders of the United States corporations which subdivide their shares and allocate a part of their United States earned surplus, which would in

no case be taxable by our own government when they issue the new subdivided shares. For that reason I feel that there should be some limitation in subsection 3 so that a Canadian shareholder in the position I have outlined would know what his taxation status was, and that the best thing for him to do would be to dispose of his United States shares and thereby lose opportunities to benefit himself and the whole Canadian economy.
If the United States company is subdividing its shares it is not very likely to consider the distribution of more than all its earned surplus. On the other hand, it will likely be distributing its current earnings, and the shareholder here would not benefit from the earned surplus that is not to be distributed. The company is obviously in a profitable condition if it is subdividing its shares. I do not think the government would lose any revenue, but on the other hand it would simplify the holding of United States shares by Canadians and allow them to stay in a situation which had proven profitable, and which would continue to prove profitable, and thereby make greater income in their hands available to the taxing authorities.


Douglas Charles Abbott: Perhaps I may say a word in reference to what the hon. member for Rose-dale said. I am aware of the problem that he has put forward. It is a complex one, and there are serious administrative difficulties. Among other things it must be shown that there is undistributed income in the hands of the United States company which renders the Canadian shareholder liable to taxes on the reorganization. I am told that in some cases the financial structure is so complex that it has been far from clear that there was any tax liability. We are aware of the problem. We have not been able to devise any limitation which can be put in here which would be sufficiently general to make it administratively possible to handle' the section.


Harry Rutherford Jackman: Why is it not possible simply to limit this section to subdivision of shares on the part of the Canadian company?


Douglas Charles Abbott: We would lose taxes on something which is properly income and which we should get. That is the difficulty there.


[Stage Direction]
Section agreed to.
Section 10 agreed to.
On section 11-Capital cost of property.
William Henry Golding: There is an amendment to paragraph (b) of subsection 1 of section 11. The amendment reads:
Such amount as an allowance in respect of an oil or gas well, mine or timber limit, if any, as is allowed to the taxpayer by regulation.

Income Tax Act


Mr. FRASER:: The minister no doubt has had a letter from the professional engineers asking whether their expenses could be deducted from their income tax.


Douglas Charles Abbott: Yes. I have not only had a letter but I have had a delegation from the professional engineers. This question as to what is deductible from wages and salaries has been before the committee a great many times. If the engineer is engaged on a fee basis and has a gross income, he of course deducts his expenses; but the representation to which my hon. friend referred related to engineers who are employed on a salary by corporations and others. As the committee knows, there are no deductions from salaries for expenses. That has to apply to engineers the same as it does to others, but I have had the representations to which the hon. member referred. It really should come under section 5, although it may be brought up here.


William Henry Golding: There is a further amendment to section 11. The amendment refers to subsection 2 on page 9 of the bill. As amended it will read1 as follows:
There may be deducted in computing the income of a shareholder from shares in a corporation whose income is from the operation of an oil or gas well, or mine, such amount, if any, as is allowed by regulation.
Then, subsection 3 will read:
Where a deduction is allowed under paragraph (b) of section 1 in respect of oil or gas well, mine or timber limited operated by a lessee, the lessor and lessee may agree as to what portion of the allowance each may deduct and, in the event that they cannot agree, the minister may fix the portions.


Edmund Davie Fulton: I -want to put forward briefly a point which was raised with respect to paragraph (g) of subsection 1 of section 11, having to do with deductions from income for contributions to superannuation funds. Since this matter was raised in the committee I have had a number of further representations to the effect that while this deduction is applied to those who contribute to approved superannuation or pension funds, no provision is made for those who arrange their own retirement by way of insurance premiums or annuity policies, and that fact works a grave hardship. The suggestion made, that the minister take this into consideration and revise it if possible at the next budget, seems to have met with a degree of favourable approval in the committee. I would ask the minister to. repeat the assurance, if he can, and say whether in the meantime he has given further thought to the matter.


Douglas Charles Abbott: I have not been able to give further thought to this particular question, but I did assure the members of the banking and
commerce committee that these sections relating to deductions for pension schemes and the like would be thoroughly reviewed before the presentation of the next budget.


Gordon Graydon: May I raise one other question? I have had letters from persons employed in an industry in central Ontario seeking information as to why the government is charging income tax on cost of living bonuses. Apparently these cost of living bonuses fluctuate in certain plants. If the cost of living goes down, the bonus disappears, but when the cost of living goes up, a compensating factor is provided by the additional amount. I am not an expert on income tax, and I think that remark applies to many hon. members in this house. Perhaps it is because we have not had enough income to become really experienced in it. In any event, can the minister enlighten me, as one of the inexperienced laymen so far as this subject is concerned, just what this all means, and what the possibilities are of giving these people the relief for which they are asking?


Douglas Charles Abbott: I am not familiar with the exact form which this cost of living bonus takes, but I suppose it is an increase in salaries or wages depending upon the increase in the cost of living index. It is true it is expected that it will take care of the increased cost of living, but that applies to other wage increases, whether tied to the cost of living index or not, and the general principle of the income tax law, as hon. members know, is that income is taxed. After all, broadly speaking, one's whole income is intended to enable one to meet the cost of living. For that reason no consideration has ever been given to establishing a tax exemption on earnings. As to expenses, these are deducted from gross income as allowed under the law before arriving at net income.. I do not think it would be possible, and certainly it would not be consistent with the income tax structure, to permit this form of wage or salary increase to be exempt from income tax. That is the principle on which the law has proceeded.


Mr. McMASTER:: There are several questions I wish to ask and perhaps the minister can answer them all at the same time.
I would like to know whether the regulations when they are made will be published, and also why parliament should not be asked to approve of such regulations.
I would like to know why the sum of $900 has been fixed as the maximum for contributions to pension funds, whether or not a larger percentage should be allowed, perhaps to the man in the lower brackets, and to what extent
Income Tax Act

it will help him as against loss to the public as a whole of its revenue.
I come now to clause (j), which refers to the amount allowed to the taxpayer who is separated from his wife. I think the converse applies when the wife separates from her husband. I would like to know whether or not this puts the taxpayer who is separated from his wife in a preferred position in the matter of income tax. As I understand it, most of us are allowed S750 as exemption on account of having a wife, which is not always sufficient to meet what we actually spend for her; yet if a man is separated from his wife he is allowed an expenditure of perhaps $2,000 or $3,000 if his payments amount to that much. The maximum should be $750. I will admit that the wife is taxed also, but as to those in the lower income tax brackets, the wife might have little other income and she would be in a preferred position.
Then we come to subsection 5(a), the capital cost of property. Again I would like to know what the capital cost of property is. How is it arrived at? I believe that in some -cases property when transferred, having been depreciated once, starts once again on the 'long road of depreciation for the new owner. I would like to know how the department intends to arrive at the capital cost.


Douglas Charles Abbott: First as to the question of regulations, my hon, friend was not in the [DOT]committee when I explained that in the revision we have tried to eliminate as many *of the ministerial discretions as possible. I expressed the view that perhaps we had eliminated too many, and we may have to put some back, because most of them were put in to enable the rigorous provisions of the act to be relaxed. In any event, that will be demonstrated by the process of trial and error. The principle followed, where it is obviously necessary to leave some measure of flexibility in the act, and it is not possible to spell out every single case, is to provide that they may be covered by regulation to be adopted by the governor in council in the form of order in council, to be published. I would expect that these regulations would form a volume which would be available to all taxpayers, and to lawyers and accountants for the purpose of enabling them to inform themselves and to advise their clients.
The regulations under this act have not yet been prepared. They are being worked on, but the act is not to come into force until the first of January next, and well before that time we expect to have the regulations adopted. I would hope that well in advance of the first of January they will be published

so that they can be subject to examination and criticism by those interested. That is the reason for the regulations.
I do not recall why $900 was selected as the amount which may be deducted from earnings as contribution to an approved pension plan. It represents $75 a month, and six per cent interest on $15,000. But one has to take a figure somewhere, and that figure was selected some time ago. There is no change in the law here.
As regards the question of alimony, it is some little time since I piloted this resolution through the house, and since I have never been personally interested, the relevant considerations have escaped me at the moment. I think it is fair, however. It was introduced first for one year and representations were made that it was too rigorous and an amendment was made in the following year to make it permanent. That is my recollection.


Harry Rutherford Jackman: There was nothing left after the two taxes were imposed. It created a hardship which was impossible.


Douglas Charles Abbott: I think the hon. member is right. The change was made after the other tax was imposed. The last question asked by the hon. member was: What is capital cost of the property, in subsection 5? I am informed that it is what the taxpayer paid for it.


Mr. McKAY:: In regard to subsection 8 of section 11, which has to do with expenses of transport employees, a good many railway workers, the running trades in particular, complain that the amount allowed for deduction from income tax on account of expenses while working away from home is inadequate. They point out that the cost of living has gone up substantially in hotels and rooming houses, and of course the cost of meals has increased 4-0 per cent. I think the general consensus amongst these workers is that there should be an increase of at least 33J per cent in this exemption.


Douglas Charles Abbott: There is no requirement for any increase. They are allowed their actual expenses for board and room while away from home. It may be that some of the brotherhoods have an arrangement with the Department of National Revenue under which a standard rate is taken; I do not know. But that is an administrative matter. A member of the running trades is entitled to claim his actual out-of-pocket expenses for board and room. Of course they must be reasonable. I do not suppose he would be allowed to take a suite at the Chateau Laurier-I am saying that in a joking way, of course. But the law

Income Tax Act

enables him to claim his actual expenses for board and room when away from home.
I think this section is giving reasonable satisfaction to the trades, and it is being extended to other transport workers.


Mr. JAENICKE:: Is this changed?


Douglas Charles Abbott: It is not changed. There was a budget item extending the operation of this clause. There is no change in this bill.


John Thomas Hackett: I asked the minister when the bill was before the house if he would give certain detailed information as to the tax imposed by the state of New York, as to the number of states in the union which bad higher income taxes than New York and the number which had lower income taxes. It seems to me that this may be an opportune moment for him to give that information.


Douglas Charles Abbott: I have that information, Mr. Chairman, but I left it in my office. I thought I had it among my papers here. I can send for it and have it in a few minutes.


John Thomas Hackett: If the minister will get it and bring it forward at some conveniently early moment, I shall be satisfied.


Alan Cockeram: As to the question brought up by the hon. member for Kamloops, allowance for insurance payments, may I ask if such an allowance is not made under the British income tax act? People over there are allowed a deduction for insurance premiums, are they not?


Douglas Charles Abbott: I think I was told there was some deduction. I am not quite sure. I would have to verify that. I am going to look into the whole situation, anyway.


Mr. CASE:: The minister made a statement with respect to the running trades on the railroads. He said jokingly that he did not suppose they would be permitted to have a suite at the Chateau Laurier, but the fact remains that if they have a suite at the Chateau Laurier and can prove that they spent their money living in that place, they are entitled to that exemption. They submit their bills to prove they actually paid the money out. Is that right?


Douglas Charles Abbott: No. They would not be able to do that, because under section 12, subsection 2, no one is entitled to deduct, in computing income, anything except in respect of an outlay or expense which was reasonable in the circumstances. I do not think it would be considered reasonable that, let us say, a conductor or an engineer who in the course of his duties had to stay overnight in Ottawa should take a suite at the Chateau Laurier. Perhaps
I should not have used that example; I said it jokingly. It is quite clear that that would not be allowed. It must be a reasonable expense.


Wilfrid Garfield Case: That is all right. What I wanted to get at was this. If he can submit bona fide vouchers that he has paid out a certain amount of money, and it is a reasonable expense- we will use that word-he is entitled to that exemption?


Douglas Charles Abbott: That is quite correct.


Mr. SKEY:: I was not in the committee at the beginning, but can the minister tell me if his attention has been called to the fact that in the preamble the word "may" in the second line might be changed to "shall"?


Douglas Charles Abbott: Which section is my hon. friend referring to?


Lawrence Wilton Skey: Section 11, subsection 1. The tax foundation have criticized this preamble in that it does not say "shall".


Douglas Charles Abbott: I am told by the assistant deputy minister that "may" is the correct word. It is permissive. It does not require him to give a reduction unless he wishes to do so.


Lawrence Wilton Skey: The point is that the taxpayer should be protected by a stronger clause, and they have suggested "shall be entitled to deduct."


Douglas Charles Abbott: That is what "may" means. It is the old argument of the lawyers as to the correct use of "may" and "shall". I think it is all right, Mr. Chairman. It has been this way for a long time.


Mr. FLEMING:: I have just come in from another committee. With regard to section 11, may I ask if the amendments which were made in the banking and commerce committee have been incorporated in the bill?


Douglas Charles Abbott: All the amendments have been incorporated in the bill which was before the committee.


[Stage Direction]
Section agreed to.
On section 12-Deductions not allowed in computing income.
Lawrence Wilton Skey: Section 12 has been criticized' on the ground that it-
. . . excludes many ordinary and proper business expenses resulting in a necessary exercise of administrative discretion going beyond the law and causing uncertainty for the taxpayer.
Has the minister's attention been called to that criticism?
.5706
Income Tax Act


Douglas Charles Abbott: I am not aware of that criticism. This section-with others, of course 

has been the subject of representations from all sorts of representative groups such as boards of trade, the tax foundation, the chartered accountants association, the Canadian Bar Association, and others. There is, if anything, a relaxation of the present wording by this section. It has always, however, been the law in some form.


Lawrence Wilton Skey: The tax foundation have
recommended that the wording be changed to something of this type:
No deduction shall be permitted in respect of any item of any item of expenditure or of charge except so far as it is attributable to and incurred for the purposes of the business.
That is the wording proposed by the British codification committee, 1936. They felt that would be an improvement to this section and would protect the businessman to a considerable extent.


Douglas Charles Abbott: I am sure consideration was given to it. This language represents what we finally decided was the most desirable.


Alan Cockeram: There has been some criticism by business with regard to this bill. I have here a letter from the board of trade of the city of Toronto which reads in part:
Also it is regretted that those charged with the duty of preparing Bill No. 338 have so largely disregarded the many uniformly supported recommendations put forward by this board and other professional and business organizations with a view to bringing income for tax purposes more into conformity with actual income under modern business practice.
A request was made that these organizations be allowed to appear before the committee, but evidently it was not desired that that should be done. I think these business organizations still feel that they have been pushed aside. They were asked for recommendations in the first place, then they were pushed aside and not much attention was paid to the recommendations they made.


Douglas Charles Abbott: 
Douglas Charles Abbott: I am interested in that statement, if I may say so, because most of the ministerial discretions have been removed, and I have had representations from individuals and organizations such as the Canadian Bar Association, the chartered accountants association and others, expressing considerable doubt as to whether we had not taken out too manj'- discretions.


Some hon. MEMBERS:: Oh, oh.


Douglas Charles Abbott: I know this matter of discretions has been made quite a point, but I have taken out nearly all the discretions. I seldom venture to prophesy, but I am going to do so now. I prophesy that I. or whoever is Minister of Finance in future, will be urged by groups of taxpaj'ers to restore some of these discretions, and that before very long. I ask hon. members to remember that prophecy.


Mr. TIMMINS:: I think we should
keep the record clear in respect to this bill and what happened when it was before the committee. The minister will correct me if I am wrong, but my understanding of the progress of the bill in committee is that no personal representations were permitted by any group in Canada. In other words no group appeared before us and made oral representations. I think the minister will consider I am fair in saying the attitude he took was that this was purely a matter of codifying the bill, in a sense-making a few little amendments; that on the whole it was in the nature of a codification and that having regard to the length of time we had to deal with the bill, representations would not be acceptable. Further than that, whatever briefs did come in-and there were a number-came to the members of the house

Income Tax Act
and to the minister, and were considered not by the committee but by the minister's advisers.


Douglas Charles Abbott: And by the minister.


Harold Aberdeen Watson Timmins: And by the minister 'himself. I want to keep the record straight in this matter, if I can, by saying that we had only about three sittings, four at the most, of the committee, and that we dealt only w'ith matters of which we as members of the committee had knowledge, either from the briefs we had received from, various associations and groups concerned with this bill or from our personal experience. As a matter of fact we dealt with this matter in the course of about a week, and I think the public should know that we did not deal with it in committee as we have dealt with a number of other bills, when people were allowed to come forward and make oral representations in an endeavour to convince members of the committee or the minister or his deputies that some changes should be made.


Frank Exton Lennard: Just for budget consideration I should like to put forward a suggestion which has been put forward many times before; that is, that the most serious fault in connection with stimulating business, providing employment and all the desirable things from the standpoint of our national economy, is the double taxation of corporations. In that regard I should like to ask one question. Is double taxation of incorporated companies and their shareholders in force in England?


Douglas Charles Abbott: I am told it is now, that they have a tax on business profits in England as such. I understand that the condition which prevailed previously, whereby the taxpayer could take credit for the normal tax which had been deducted from his dividend by the corporation before he received it, still prevails, but that there is a business tax on the corporation itself.


Frank Exton Lennard: The taxation on business profits in England was just above a certain level, was it not?


Douglas Charles Abbott: I am told it was on all profits. I am not personally familiar with the matter.


Frank Exton Lennard: There is no basic level taxation in England?


Douglas Charles Abbott: There is no exemption; there is no standard profit. It is just a business profits tax.


Clarence Gillis: What has taxation in England to do with this bill, may I ask? Why does
the hon. member insist on having the minister explain whether there is a business tax on profits in England?


Frank Exton Lennard: That is my business. That was my question.


Clarence Gillis: You are merely talking for propaganda.


Frank Exton Lennard: No propaganda about it all.


Clarence Gillis: If the hon. member wants to raise that question and take up the time of the committee with it, we are quite prepared to tell him all about it; but I do not think it has anything to do with this bill.


Douglas Charles Abbott: I agree, Mr. Chairman; I do not think it has. Before I forget I should like to reply to the hon. member for Stan-stead, and give him the information I promised to get about state income taxes in the United States, for which he asked at an earlier stage of the discussion.
My information is that the state taxes are almost nominal and might have been left out of the calculations I gave in the budget speech without affecting the substance of the argument. Tor example, taking a married man with two children in New York state as a typical example, at $5,000 this taxpayer would pay $16. At $7,500 he would pay about $65, and at $10,000 he would pay about $132. Needless to say, these amounts are only small fractions of the taxes payable t-o the federal government in the United States at those levels, and they make very little difference in a comparison of the total income taxes in the two countries.
The calculations which have been made by the officials of my department show thirty-one states which levy personal income tax. Of those states at least twenty impose higher taxes than	New	York state. In	six	of theremaining	states the taxes are	somewhatlower, while in the other four we have not sufficient information to lead to any conclusion. On the basis of population distribution I am informed that about sixty per cent of Americans live in states having income tax; about ten per cent of the total population lives in New York state, and about twrnnty-seven per	cent	in states having	an	incometax higher	than	New York state.	I	have a
long table here containing a great many figures which I have not studied very carefully, but which I should be glad to make available to my hon. friend if he would care to have it. I do not know that we need place it on Hansard.
5"0S

Income Tax Act


John Thomas Hackett: I should be very glad to have it tabled.


Douglas Charles Abbott: Very well.


Mr. HLYNKA:: I do not know whether this is the proper section on which to bring up this question, but a few days ago I asked the minister about farmers who had sold their land to oil companies on a royalty basis, and who are being taxed very heavily. Would the minister care to comment on that point, and say what is the position of those who sold on a royalty basis instead of for a lump sum?


Douglas Charles Abbott: I think that would come under the previous section. I know the representations my hon. friend made to me. This would represent quite a substantial policy change. As I remember it, the hon. gentleman was suggesting a basic exemption, which I could not undertake to make in a revision of this kind. That would have to be considered as a budgetary item and brought down in that *way, as I have stated in connection with similar questions of policy; it would have to be subject to debate in the house. However, I am aware of the hon. gentleman's representations, and I think I have correctly stated their general nature.


Edmund Davie Fulton: Under section 12(1) (b) the effect is to say that no deduction shall be made in respect of an outlay, loss or replacement of capital, or allowance in respect of depreciation except as expressly permitted by this part. Could the minister direct my attention to the provision with respect to depreciation under this part? I can find depletion, but neither here nor in committee have I seen what provision is made for depreciation.


Douglas Charles Abbott: It would be in virtue of regulations made under 11(1) (a).


Edmund Davie Fulton: That covers the reference in the marginal note to capital costs.


Douglas Charles Abbott: That is what depreciation applies to-and obsolescence. It is a charge to enable one to get back his capital.


Edmund Davie Fulton: I thought from the marginal note it was intended to cover the outlay of capital for the acquisition of property.


Douglas Charles Abbott: No; broadly speaking, depreciation of course is taken against-


Edmund Davie Fulton: I know what depreciation is.


Douglas Charles Abbott: It is taken against the capital cost to the taxpayer. Therefore while the marginal note may not have been completely descriptive, charges of that kind relate to capital cost items.


Edmund Davie Fulton: In these regulations has consideration been given to the question of allowing depreciation of any type on a basic herd?


Douglas Charles Abbott: I am told that the so-called basic herd policy has been discussed with the associations, and that regulations are being worked out. It is a complicated procedure. Whether there is such a thing as a basic herd is the first question. I suppose there is; it is a colloquial description. The method by which the owner of a herd of cattle should be taxed is the extent to which he receives income. It is an administrative problem to work out what he is entitled to charge as a deduction for that which in respect of a manufacturing operation would be classified as depletion or depreciation. I am told that is being worked out.
The law as it stands is completely flexible to enable the basic herd principle to be recognized in any way that may be found legal. I suppose a provision would have to be made by regulation, and I am told that it has been pretty well worked out.


Edmund Davie Fulton: I realize the difficulty of working out the depreciation of a herd of cattle. But from my reading of the draft regulation I am afraid nothing has been done along those lines, and it appears that no allowance for capital loss may be allowed. I thought if that was carried into effect and if no allowance for capital loss were permitted, the basic herd would not in effect be recognized as a capital asset. I hope that either an allowance for capital loss will be made or some means will be found of allowing depreciation in a basic herd, which in effect is recognized as a capital asset.


Douglas Charles Abbott: A senior official of the Department of National Revenue has been following the hon. member closely, and I am sure his remarks will be carefully considered in completing the drafting of the regulations.


[Stage Direction]
Section agreed to.
On section 13 -Chief source of income.
William Ross Macdonald: This section was
amended by the committee to read as follows:
(1)	The income of a person for a taxation year shall be deemed to be not less than his income for the year from his chief source of income.
(2)	The minister may determine which source of income or sources of income combined is the taxpayer's chief source of income for the purposes of this section.


Douglas Charles Abbott: I pointed out to the committee on banking and commerce that we had had several representations from representative groups that this was a place where min-

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isterial discretion ought to be put back. I said I had a completely open mind on the subject, and if the committee wished to put it back I would be delighted to do so. The committee seemed to feel that it was an appropriate place to restore the provision, and it has been thus restored. I still have an open mind in the matter.


Wilfrid Garfield Case: The act is fairly technical, and at times I find it difficult of interpretation. Perhaps in the present instance I am somewhat confused in my thinking, and I should be pleased to have an explanation from the minister.


Douglas Charles Abbott: A good many people have different sources of income. For instance one member the other day who, in addition to being a member of parliament, is also a successful farmer, asked if he could charge the losses on his farm against his indemnity as a member of parliament. The rule is that if an individual has a secondary source of income -or to be more specific, if my principal occupation is that of a cabinet minister but I operate a farm on the side, I cannot charge my farm expenses, in the event of my making a loss on my farming operations, against my salary as a cabinet minister. Secondary income can be charged only with the expenses incurred in connection with the earning of that secondary income.
Sometimes it is difficult to determine a man's principal occupation for taxation purposes, as against his secondary occupation. It was for that reason that it was felt by many that the only way to resolve the question was to place the discretion in the hands of the minister, in the interests of the taxpayer. That has been done, and I believe I have given the explanation for it.


Stanley Howard Knowles: What will the minister's decision be in his own case?


Douglas Charles Abbott: I have no farm.


Stanley Howard Knowles: But you are a lawyer.


Douglas Charles Abbott: I cannot practise law, either.


Mr. WHITE (Middlesex East):: The point I would make is that in a year in which a farmer who happens to be a member of parliament, or is in some other business, makes a loss on his farming operations, those farming operations are a secondary source of income. He would always be losing.


Harold Aberdeen Watson Timmins: What will be the
mechanics of determining the chief source of income? Will that discretion foe passed on to a deputy who might be acting in the taxation division at Toronto, or must all these cases come directly to the minister? Is there an appeal from the minister's decision?


Douglas Charles Abbott: If the taxpayer is not satisfied with the determination given in Toronto, he may appeal to the minister. He will say: You are wrong; you have classified me as a financial man whereas in fact I am a farmer; my farming hobby is operating at a a loss but I wish to be classified as a farmer. That is the question which the deputy in the first instance must consider, and which must finally be analysed by the minister. There is ao appeal from the minister's decision. The exercise of a discretion is in fact the exercise of a discretion.


Harold Aberdeen Watson Timmins: There can be no appeal from it?


Douglas Charles Abbott: No, not if it be exercised
reasonably.


John Thomas Hackett: Perhaps the minister
would wish to add that this is a discretionary power which cannot be exercised arbitrarily.


Douglas Charles Abbott: Quite.


John Thomas Hackett: The minister would not attempt to say he has arrived at the decision that a certain gentleman is a farmer because he does not like the colour of his hair. I believe the courts have decided that the discretion must be a judicial discretion and one based upon reason. It may not rest on pure whim.


Douglas Charles Abbott: That is quite correct.


Calvert Charlton Miller: Would the converse of the minister's example be true? If it were possible-and it could be-for a taxpayer to suffer a loss on his primary source of income, could he charge it up to the profit on his secondary income?


Douglas Charles Abbott: Yes.


[Stage Direction]
Section agreed to.
At one o'clock the committee took recess.
The committee resumed at three o'clock.
On section 14-Method for computing income.
Mr. BROWN:: Mr. Chairman, I rise to a question of privilege. The Toronto Globe and Mail in a news item on page 15 of today's issue, Wednesday, June 23, comments on a report which I presented to the house yesterday as chairman of the committee on the Indian Act. The portion of this news report to which I object deals with the use of intoxicants on Indian reserves, and reads:
Evidently heeding these arguments, the committee recommended friendship with orthodox and reformed churches within the Russian sphere of influence.
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The Indian Act committee did not deal with thait matter and had no intention of dealing with it, and it should not be credited in a newspaper with having made a recommendation in regard to it. There was obviously no intention on the part of the Ottawa correspondent of the Globe and Mail-


William Henry Golding: Order. I must point out to the hon. member that it is not in order to raise a question of privilege while the house is in committee of the whole.


Donald Ferguson Brown: Perhaps I might be permitted to finish this paragraph.


Mr. IRVINE:: Can we not give unanimous consent and have it over with?


Douglas Charles Abbott: Granted.


Donald Ferguson Brown: There was obviously no intention on the part of the Ottawa correspondent of the Globe and Mail to inject a matter of delicate international implications into an otherwise very fair report of the work of out committee, but there was evidently a slip-up in the newspaper's composing room, because the words I have quoted and to which I Object are misplaced from another news item on the same page.


William Henry Golding: We are on clause 14.


[Stage Direction]
Section agreed to.
Sections 15 to 20 inclusive agreed to.
On section 21-Husband and wife.
James MacKerras Macdonnell: I want to raise one point for the minister's consideration. I take it that it is fair to say that clause 21 in a sense disregards entirely t'he conception of the English law with regard to the position of a wife holding property and so on. I do not know whether the minister is at all affected by the conception of the law of the province in which he lives, under which the relations between husband and wife in this regard are very different. I remember when I first went to live in Quebec it seemed a good idea that a husband could not give a present to his wife, but I discovered later that that was not as alluring as it seemed to be.
Considered and careful recommendations have been made on this question by the Canadian Tax Foundation. The minister is familiar with them and I do not need to labour the point. But I do ask him this question: Why is it that none of the recommendations from this reputable source have been given effect to? I think the minister will agree that the recommendations of the Canadian Tax Foundation recognize the full legal status of

women, even when married, and at the same time their recommendations would prevent anything in the nature of fraud or colourable transactions.


Douglas Charles Abbott: I will have a look at their recommendations again. For the moment they have gone out of my head. The principle of this section is very simple. There is nothing to prevent husband and wife from making transfers one to the other if they care to do so, and if it is legal to do so in the jurisdiction in which they live, but these transfers are not permitted to affect the relative income tax liability of the consorts. That is the purpose of the section. It does not seem to me that there is anything objectionable in its terms. Subsection 2 relates to one of the consorts being employed by the other. That is a principle which has been in the law for a long time.


James MacKerras Macdonnell: I should like to put on the record one of the recommendations of the Canadian Tax Foundation with respect to clause 21. I will first read the clause as it stands:
Where a person has, on or after the first day of August, 1947, transferred property, either directly or indirectly, by means of a trust or by any other means whatsoever, to his spouse, or to a person who has since become his spouse, the income for a taxation year from the property or from property substituted therefor shall be deemed to be income of the transferor and not of the transferee.
Their recommendation is to insert after the word "spouse", where it first occurs, the words "and not for a consideration reasonably corresponding to the fair value of the property so transferred". As the section reads in the bill, a husband is not allowed to enter into a transaction of any kind with his wife, even though she has her own property, and the purpose of the amendment proposed by the Canadian Tax Foundation is to head off any colourable or fictitious transaction. In other words, what this organization recommends is that it should be possible for ordinary business transactions to take place between husband and wife, provided it is clear that they are proper business transactions and not a frame-up.


Douglas Charles Abbott: If my hon. friend will look at the brief he will see that it says a little further on:
The recommendations are self-explanatory. It was realized that the administrative problem is formidable, but agreed that the taxpayer should be adequately protected in bona fide situations.
Where do we stop? A good many transfers are made for love and affection, and that is a



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[Stage Direction]
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valid consideration and would reasonably correspond to the fair value of the property transferred.
James MacKerras Macdonnell: It might easily not.


Douglas Charles Abbott: I would not want to say that. So far as husband and wife are concerned, where a close relationship exists between them, it is not unreasonable that transfers between them should not affect the tax position of the transferor. That is the view which the law has taken for a good many years, and I would be most reluctant to make a change in policy of that kind.


John Thomas Hackett: It seems to me that this is a far-reaching section. I should like the committee to listen to the few lines which are found in subsection 1, which read as follows:
Where a person has, on or after the first day of August, 1917, transferred property, either directly or indirectly, by means of a trust or by any other means whatsoever, to his spouse, or to a person who has since become his spouse, the income for a taxation year from the property or from property substituted therefor shall be deemed to be income of the transferor and not of the transferee.
Is there some other subsection which mitigates the absoluteness, of that rule?


Douglas Charles Abbott: Not that I am aware of.


John Thomas Hackett: Let us take this case, and it is not one which wall make any heav37 demand upon the imagination. A young man becomes engaged to a young woman and they enter into a marriage contract. That is a very ordinary transaction in the jurisdiction with which the Minister of Finance is familiar. By the terms of that document the young man confers upon the spouse a benefit of $50,000. If he has the money he can give it to her at that time, and I understand that under this section the revenue from it wall be taxable revenue in the hands of the husband for ever. Or, being penniless at the time, he may, having made this gift, pay it at a future time.
I cannot speak for the law in other provinces, but that is one of the few exceptions which the law of the province of Quebec makes as regards benefits between spouses. That young man may make a gift of future property to his spouse-to-be, and if fortune smile upon him he may make this payment in the future. When the undertaking is implemented, the property transferred becomes the absolute property of the spouse. Unless there be in the act some provision which I have not yet discovered- and I understood from the minister that there was nothing to mitigate the harshness of the section I have read-it will no longer be possible for a future husband, or a person who is about to become a husband, to make a transfer of property in favour of his future wife which will free him from the obligation of paying income tax on any revenue that may be derived from the capital transferred.


Douglas Charles Abbott: I do not know that there is much comment I can make, other than that this is a provision which has been in the law for a great many years. My hon. friend has said that I am familiar with the provisions, which relate to the jurisdiction from which we both come, that gifts are made in contemplation of marriage. Whether it prevails in other jurisdictions, I do not know'. I have no doubt it does, but perhaps not to the same extent as it does in Quebec. The law provides that as between the two consorts these gifts shall not affect the income tax position of the person who makes the gift, and that for income tax purposes, and income tax purposes only, the revenues of the property transferred, or to be transferred, will be considered as the income of the transferor. One could argue, I suppose, that that provision should be changed, and that is what my hon. friend is doing; but I must again say it seems to me that if that short of change were to be made it is one which should be a budgetary provision and made as a distinct departure from the existing law7.


Mr. GREEN:: Subsection 2 of section 21 deals with the case of a spouse who is an employee of the husband or wife, as the case may be. It provides that the remuneration or salary paid to that employee cannot be deducted from the income tax of the business. The Canadian Tax Foundation suggested that there be added to the end of the subsection these words:
But this subsection shall not apply cvhere the employee spouse is a bona fide employee, is paid at the prevailing wage rates and actively fills a position necessary in the business.
The suggested amendment does seem to be reasonable. Would it not be possible to have it added to subsection 2?


Douglas Charles Abbott: That recommendation was carefully and extensively considered. I think it will be apparent to hon. members that it imposes a difficult test for the tax administration to determine, as the tax foundation said in their submission. They realized that 'it imposed extremely difficult administrative problems.
Again, this is a rule which has been in the law for a great many years. Whether it goes back to the origin of the law in 1917 or 191S I cannot say offhand, but it has been
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the rule. The recommendation was considered, but it was felt that it would be administratively impossible to enforce without the risk of grave abuses.


Howard Charles Green: The government would get the tax anyway, would it not? It would get the tax from the spouse who happened to be an employee, if it did not get it from the business.


Douglas Charles Abbott: But at a very different rate. The obvious thing is that it would be an easy way for the husband and wife to divide their income and thereby get into the lower bracket.


John Thomas Hackett: I had not quite finished.
I beg to differ from the minister when he states that subsection 1 of section 21 has been in the act from its inception or for a long time. The bill indicates that subsection 1 of section 21 replaces subsection 2 of section 32. Subsection 2 of section 32 is in these terms:
Where a husband transfers property to his wife, or vice versa, the husband or the wife, as the case may be, shall nevertheless be liable to be taxed on the income derived from such property or from properties substituted therefor as if such transfer had not been made.
I am going to point out some of the differences between the bill and the old law. In the first place, the old law is not retroactive. This subsection enables the tax collector to go back some thirty-one years and compel an individual who had transferred property to a person who later became his wife to pay income tax on benefits which his wife had legally and properly received and possibly paid income tax on for thirty odd years. With great deference I submit that the enactment of such legislation is nothing less than tyrannous and is something heretofore entirely unknown to this legislative body.
In the second place, I point out that the law as it stood did not apply to contracts between persons who were about to become man and wife. Any contract entered into which favoured the founding of a home and the protection of the family has always had the approval of the legislature. But here we find that even persons entering into the bonds of matrimony may not, as regards taxation and income tax, make any arrangements with regard to the future. That is to say, it is no longer possible for one of the contracting parties before marriage, and in aniticipation of the burdens and uncertainties of marriage, to make any provision for the future of the other, and to that extent I do not hesitate to say that this law is against the welfare of the family. It is anti-social and amazing in its harshness.
IMr. Abbott.]
Furthermore, I would point out to the minister that when lie spoke of this act on April 29, 1947, as reported at page 2557 of Hansard, he said that the new act was merely a recodification and would contain no new law. That is the substance and significance of his words. He said:
I am endeavouring to make this a relatively simple budget and I am not, therefore, proposing any other substantial changes at this time in the income tax, although I shall later mention some minor amendments. We have been busy during the past year upon the rewriting of our basic income tax law in an effort to improve its arrangement, to make it clearer and simpler, and to remove ambiguities and anomalies. Hon. members will, I think, be particularly pleased with the extent to which it will be less dependent upon the exercise of ministerial discretions-
And so forth. If that undertaking meant anything it meant that there would be no substantial or radical changes in the act. This is a radical, far-reaching change, a change that goes to the very foundation of the home, and I am going to move, seconded by the hon. member for Muskoka-Ontario (Mr. Macdon-nell), that section 21 (1) be struck from the bill and replaced by the section in the act as it now stands, 32 (2).
Before I sit down I would like to say a word to my colleagues from the province of Quebec. I ask them whether they are aware, whether they fully realize, that this is an invasion upon a right which they have cherished and for which they have stood and will stand, I believe, despite these unconsidered and antisocial amendments.
If there is one place in Canada where the integrity of the family has withstood the onslaught of modern phases and fancies it is in the province of Quebec, and I shall be astonished if the members from that province, having considered the full meaning and purport of this bill, will give their support to it when it is a direct undermining influence upon that greatest of institutions, the home.


Douglas Charles Abbott: I have been greatly impressed and moved by the appeal which the hon. member for Stanstead has made as to the sanctity of the home. I say to him that I am just as jealous of the traditions and1 the laws of the province of Quebec as he is, but I say to him also that this is not making any changes in the laws of the province of Quebec. It is essential that a person who makes a marriage contract, whether in the province of Quebec or anywhere else, shall not, by transferring from wife to husband or from husband to wife, get income tax advantage which another taxpayer cannot get.
That is all that this section does, and it is not aimed particularly at Quebec or any other

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province. It is intended to provide that these interconjugal transfers, if I may so describe them, will not affect the income tax position of consorts. That is all this section is intended to do. It is intended to ensure that the man who is smart enough to make a contract whereby he reserves to himself the right to transfer to his wife $25,000, $50,000 or $100,000, which he has not today, but when he gets it, shall not get income tax advantage by making that contract. That is all the section is intended to do. It is not attacking the sanctity of the home or the laws of the province of Quebec. It is not attacking anything. It is intended to ensure that every taxpayer shall pay his fair share of taxes. I do not think I can make it any clearer.


John Thomas Hackett: The section seems to assume that a person has transferred property to his spouse, or to a person who has since become his spouse. Taking the case which I cited to the minister, let us suppose that a young man, anticipating matrimony, transferred to a person who later became his spouse $10,000, that transfer having taken place after the first day of August 1917. The transfer was made before marriage, as a condition of marriage. I interpret the section to mean that the revenue from this $10,000 must be computed as the revenue of the husband.


Douglas Charles Abbott: For income tax purposes.


John Thomas Hackett: Yes, from 1917.


Douglas Charles Abbott: Not from 1917.


John Thomas Hackett: From the time of marriage. Let me make this clear. At any time since [DOT]the firet of August 1917-


Douglas Charles Abbott: The tax is not retroactive.


John Thomas Hackett: A young man enters into a marriage contract with a young woman and transfers to her, before marriage, the sum of $10,000, and the marriage takes place. I [DOT]take it that the income on that $10,000 must be considered as the income of the husband and not of the wife, and that is the ground of my objection.	.


Douglas Charles Abbott: That would be correct, from [DOT]the time of marriage.


John Thomas Hackett: From the time of marriage, and I say that is a departure. That was not the law; it is something new, and it is something to which I invite the attention of my friends, if not my party associates, from the province of Quebec.


William Henry Golding: When an
amendment of this kind is proposed, I think the first question the chairman should consider is whether it would change the income tax in such a way as to affect the balance of ways and means. If in any way it would affect that balance, it would have to be ruled out of order. Before making a ruling on that point I should like to have the opinion of the minister or some others, because in a matter of this kind the Chair should have some guidance.


Douglas Charles Abbott: I must confess I had not thought of it. I was thinking of the question on its merits, Mr. Chairman. Unquestionably it affects the balance of ways and means, because this is a section which will either render an item of income taxable or exempt it from income tax. From that point of view I suppose it is an amendment which could be moved only by a member of the government.
I have argued the amendment with my hon. friend on its merits, which I think perhaps was desirable. But on a strict interpretation,
I believe the amendment is out of order if it is moved by some one other than a member of the government,


John Thomas Hackett: I wish to speak to the point of order. I had a citation from Beau-chesne-unfortunately I am unable to put my finger on at the moment-to the effect that an amendment could be offered even to a money bill where, as this amendment does, it would result in a reduction in taxation.


Edmund Davie Fulton: Citation 502.


John Thomas Hackett: I am told by the hon. member for Kamloops that it is citation 502. I remember it quite well, because it was read against me the other day, in part only. I asked that the rest of it be read, but I did not get very far.


Edmund Davie Fulton: Citations 497 and 502.


John Thomas Hackett: Citation 502, Beauchesner third edition, reads as follows:
A private member may move that certain specified taxes be readjusted and that the scope-of tax exemptions be enlarged.
Citation 497 appears to be against what I am moving, in the first part, and that was all that was read the other day. It is in the following terms:
No member other than a minister of the crown may introduce a bill for the reduction of duties. The government must take full responsibility for the taxation levied to provide the revenue. But the house enjoys complete freedom to make every representation possible to the government with regard to the manner in which the ministers discharge this responsibility. This duty the members may perform by moving amendments to reduce the taxes proposed by the administration.
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On that basis, if this amendment entails a reduction in taxation, I submit, with great deference, that it is in order.


William Henry Golding: I think hon. members may be confused in their ideas as to what is a money bill and what is a budget item. A budget item provides the revenue to take care of the expenditure in the financial arrangements for the year.


John Thomas Hackett: Will the chairman be kind enough to allow me to say one word more before he makes a ruling?


William Henry Golding: Yes.


John Thomas Hackett: I was just going to say that if this is not a proper amendment, then I fear that the committee is losing a great deal of time. If it is not competent to the committee to deal with the taxes that are to be levied under this bill-and after all, the whole purpose of the bill is to provide a means for raising taxes-then it would reduce almost to an absurdity the submission of the bill to the .committee.
lhe DEPUTA CHAIRMAN: In answer to [DOT]tlie hon. member may I say that as far as the Chair is concerned we are trying to get the situation clear. I understood there were no changes in this bill with regard to the levying >of taxes.


John Thomas Hackett: There are.


William Ross Macdonald: I understood that it was a recoding of the bill, without changing any item of taxation that had already been approved in the budget. I may be wrong, but it is on that basis that I am now' considering the point. If the hon. member will turn to citations 555 and 556 of Beauchesne, second edition, he will find they read as follows:
555.	No increase can be considered either of an existing, or of a new or temporary tax for the service of the year, except on the initiative of a minister acting on behalf of the crown.
556.	The house can make amendments which dimmish the amount or reduction of taxation, or postpone the diay when the reduction takes place, although the amendments may increase to that extent the charges proposed to be levied upon the people.
So long as an existing tax is not increased, any modification of the proposed reduction mac be introduced in the committee on the bill, and is i egarded as a question, not for increasing the charge upon the people but for determining to what extent such charge shall be reduced.


Stanley Howard Knowles: May I offer a suggestion?


William Henry Golding: Just a
minute, please. Citation 552-


Stanley Howard Knowles: That is the one.


William Henry Golding: reads as follows:
Though it is the function of the committee of w aj s and means to impose rather than to repeal taxes, examples of the repeal of taxation effected in this committee are to be found upon the journals. Proposals for the variation or modification of taxation can therefore be made m the committee; but these proposals must be grafted upon the financial scheme submitted by the government, and must not affect the balance of ways and means voted for the service of the year. Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government, as, for instance, a proposal to substitute probate and legacy duty on real property as an alternative tor an inhabited house duty, the necessity of new taxation, to that extent, being already declared on behalf of the crown.
The point I wish to make is that it is not in order for the committee to upset the balance of ways and means.


Edmund Davie Fulton: May I make an observation on that point?


William Ross Macdonald: If this amendment would do that, as I am assured by the minister it probably would, then I would have to rule it out of order.


Edmund Davie Fulton: Surely we should bear in mind the fact that this bill, in the minister's own w'ords, is only a codification of tax procedure. It is provided in the bill itself that it shall not come into effect until January 1, 1919. Therefore if we amend the bill to provide some difference in procedure for the collection of taxes, which difference will not become effective until January 1, 1949, surely it cannot be held that this w'ill upset the balance of ways and means for the year. This is not a money bill or a ways and means resolution in the ordinarily accepted sense of those terms.


Douglas Charles Abbott: It. covers three months of the current fiscal year.


Edmund Davie Fulton: The taxes are imposed on the income of the calendar year; therefore I do not think a change which would become effective only on January 1, 1949, would upset in any way the balance of ways and means for this year.


Stanley Howard Knowles: When I was trying to catch your eye previously, Mr. Chairman, I was anxious to draw your attention to citation 552 in Beauchesne. second edition, which you have just read. It seems to me that the terms of that citation not only apply to this particular situation but call to mind at least two precedents in this very session of parliament.
The specific terms of that citation, as I see them, are to the effect- that in committee it is

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in order to move an alternative tax. In other words a member can move to strike out a tax provided he offers an alternative of equivalent amount. The first precedent of which I remind the committee is the proposal made by the hon. member for St. John-Albert on June 2, 1918, having to do with interest rates on arrears of taxation. In that case no alternative was offered, and it was ruled out of order. On the other hand early this session, when we were on Bill No. 3, I remember moving an amendment to strike out certain taxes which were repugnant to us and in their place to reimpose the excess profits tax; and that was allowed as a proper amendment. It seems to me we are getting that practice cleared up, and it is becoming understood that you cannot just strike out a tax. That is out of order. But if you propose an alternative, as I did on at least one occasion, it is in order.


James MacKerras Macdonnell: May I add one word on the point raised by the hon. member for Kamloops, with which I should think the minister would agree? This is a codification.


Douglas Charles Abbott: I have never used that word.


James MacKerras Macdonnell: Or something to that effect. Then surely what the hon. member for Kamloops has said is true, that since the bill comes into effect only at the beginning of next year, and since the year for estimating the income tax is the calendar year, there will be no effect on the situation until the minister comes in with his budget next year, when he will still be able to take any action he wishes.


William Henry Golding: I am glad to have this expression of opinion by hon. members, but I am afraid I shall still have to rule this out of order.


Harry Rutherford Jackman: I do not think the question of procedure need have arisen at all, because the minister has not pointed out that this would necessarily increase or decrease the taxation the government would collect. It is quite possible that the wife might be in the same bracket as the husband, or vice versa. Therefore I do not see that the amendment would necessarily interfere with the collection of taxation or the balance of ways and means, and for that reason I think it is in order.


William Henry Golding: It has been ruled out of order. Shall the section carry?


Harry Rutherford Jackman: May I ask how this situation would be determined under the section as it now stands? Suppose a father gives his daughter $10,000. Subsequently she marries
and purchases a house. Later she sells the house to her husband and invests the proceeds in securities which produce income. Is that income taxable in the wife's bracket or in the husband's bracket?


Douglas Charles Abbott: That is an interesting case.
I do not know that it has ever arisen, and perhaps I should not give an opinion. The Secretary of State for External Affairs and I were discussing it. In that case I should think the wife's income would include the interest on the securities, and of course the house would belong to the husband. In most jurisdictions there is no prohibition against a contract of sale between a husband and wife. There is a prohibition in the province of Quebec, from which the hon. member for Stanstead and I come, so that that transaction could not be entered into in Quebec. In other provinces, I understand, such a contract is permissible, and under those circumstances I would think the wife would report income on the securities and the husband of course would own the house.


Mr. FERGUSON:: That is just your opinion.


Douglas Charles Abbott: It is free, too; I make no charge for it.


Julian Harcourt Ferguson: That is all right. We have had many free opinions from over there which did not amount to very much. When this becomes law, however, your opinion will not count for much, because the law will be determined by the income tax authorities or by the courts. This is a drastic law. The amendment you are putting through will have far-reaching effects, and it cannot be just treated in this way, by saying this is a new case. This amendment will have an effect in cases such as those cited by the hon. member for Rose-dale, as well as others. It is an important change, and I think it should be gone into a little more thoroughly.


Douglas Charles Abbott: In the case cited by the hon. member for Rosedale there is no change at all in the law. That has been the law for years. The case mentioned by the hon. member, of the husband who purchases the property from his wife and the wife who puts the money into securities, has been subject to the application of this or the corresponding section for years.


John Thomas Hackett: I must take exception to the minister's statement that there is no change in the law.


Douglas Charles Abbott: I said with respect to the case cited by the hon. member for Rosedale.


[Stage Direction]
Section agreed to.
Income Tax Act
[Stage Direction]
On section 22-Transfers to minors.
William Henry Golding: There is an amendment to this section. The word "and" at the end of paragraph (a) of subsection 1 is deleted, together with paragraph (b) of the same subsection.


Harry Rutherford Jackman: Is section 22 the same as we passed it in committee?


Douglas Charles Abbott: Yes; this incorporates the amendments made in committee.
Section as amended agreed to.
Sections 23 and 24 agreed to.
On section 25-Married status.


Stanley Howard Knowles: I realize that the minister has said a good many times today that all we are doing in this bill is a consolidating and administrative job. He has told us repeatedly that the government does not wish to make any changes in policy-


Douglas Charles Abbott: Any major changes, I said. Mr. KNOWLES: -at this time. On the other hand I noted that this morning the minister, with the broad smile he can display on occasion, told us he had an open mind.


Douglas Charles Abbott: He always has that.


Stanley Howard Knowles: That is fine; I am glad to know that still holds. It seems to me this is one section in connection with which we should get the benefit of that open mind. This is the section which, amongst other things, sets the exemption levels at $750 for a single person and SI,500 for a married person. Since those figures were fixed in a previous year, and even since the minister earlier this year told us he did not wish to raise those levels, there have been still further increases in the cost of living. In addition there have been certain ructions amongst the members supporting the government. We do not know exactly what has happened-


Douglas Charles Abbott: Except that nothing has happened.


Stanley Howard Knowles: Quite so; that is the tragedy. We are sure of one thing, and that is the letter the hon. member for Springfield (Mr. Sinnott) wrote the Prime Minister. It is before us in definite terms; and a very good letter it was.


Douglas Charles Abbott: Excellent. He wrote one to me, too.


Stanley Howard Knowles: And your reply to the hon. member has been given publicity too.


Douglas Charles Abbott: Delighted to hear it.


Stanley Howard Knowles: And you made no charge for that, either. Yesterday the Prime Minister assured us that all was peace and harmony in the cabinet. He took what I thought was an unnecessary crack at his fellow members of the press gallery regarding certain reports which had appeared in the papers recently. But it all adds up to this, that even hon. members opposite, and even the government, who claim to be on such peaceful and harmonious terms, know that the people of Canada are not satisfied with the inaction of the present government in relation to the problem that is hitting the people of Canada hardest at the present time; I refer to the increased cost of living.


Douglas Charles Abbott: The election is almost over in Saskatchewan.


Stanley Howard Knowles: Well, here is one place where the Minister of Finance, with that open mind of his, could make a change which would be acceptable by those in his own party, who are interested and which would mean something to the people at large. It is hard to know what figure to suggest now, because the cost of living keeps going up. But surely this exemption level ought not to be lower than $1,200 for a single person and $2,000 or perhaps $2,400 for a married person.
If I did not know it from the discussion which took place a few moments ago, then I would know from the rules of the house that any attempt on the part of a private member to move an amendment to change these figures would be ruled out of order. After all, to raise the exemption level would change the amount of income available to the government. I might, of course, propose as an alternative a reimposition of the excess profits tax, but that might be difficult to win in this house. I do suggest however that we ought not to ride over this section too quickly. It is not improper for the committee to take a bit of time to discuss the matter. It would not be out of the way for members from all groups on this side of the house, and those on the government side, to let the government know that a change in these exemption levels is highly desirable. It does not meet the whole of the problem; something has to be done about the cost of living. But it would be a help if the exemption levels were brought up to some figure consonant with what it costs to maintain a decent standard of living at the present time.
I hope the minister will not stand on ceremony; I hope he will not insist that no major change can be made at the present time. He

Income Tax Act
has the authority. He has often told us that he was not engaged in any popularity contest so far as his taxation measures are concerned. Here is a chance to regain some of the popularity he has lo^t by making a worthwhile step at this closing period of the session. I hope the minister will give serious consideration to the question of raising the exemption levels.


Douglas Charles Abbott: I do not suppose I need to urge hon. members on all sides of the house to make speeches asking for increases in exemption levels. I am quite sure everyone would be pleased if it were possible to do so. I should be pleased myself. But in the course of the budget debate and at other times I have had occasion to give the reasons why I do not think that very important policy move can be made this year. The exemption levels in Canada, as I have had occasion to reiterate on a number of occasions, are already higher -much higher-than they are in the United Kingdom, and the United States. I hope at some time it may be possible to increase them, but I also hope that all members who are in sympathy with that very desirable objective will not feel called upon to urge it now. I am sure all hon. members are as much interested in that as is the hon. member for Winnipeg North Centre.


Clarence Gillis: I shall not raise any argument which will disturb the balance of ways and means. I do believe, however, that there are administrative details in the act which could be cleared up. I have had correspondence with the department on two or three matters which seem to be sore spots.
The hon. member for Winnipeg North Centre made a general statement on the subject with which we all agree. I do not think, however, from the minister's statement that there will be any change.
There are two or three points I would bring to the minister's attention. First of all, $300 a year for purposes of income tax are added to the salaries of sleeping car porters, on the basis of the assumption that they receive that amount of money per year in tips. Whether they get that much or not, they are taxed on an extra $300. They may make it on some sections of road, but there are other sections where sleeping-car porters do not take in $300 in tips. I believe that is a wrong principle. First it encourages the railway company to pay low wages. Furthermore, it is not fair to sleeping-car porters who may not receive that much in tips.


Douglas Charles Abbott: A porter may keep a record and put in his actual receipts.


Clarence Gillis: Even so, I think it is unfair. If a porter does a good job which requires his working longer hours, shining shoes and all that kind of thing, a passenger who wishes to give him a dollar or two should be permitted to do so without making it necessary for him to declare it as income. If it is desired to tax that extra amount, then the railway companies should be told to pay larger salaries so that the government could get it back in the regular way. This would be an administrative change.
My next point has to do with the exemption for a boy or a girl in university until he or she reaches the age of twenty-one. After that age is passed the student is no longer considered as a dependent for income tax purposes. The period ought to be extended until the student graduates. In may instances parents are having great difficulty in putting young people through university. Perhaps a student will reach the age of twenty-one before his last year at school. That is the most expensive year, and that is the time when the student is cut off as a dependent, with the hardship which stems from that situation.
I suggest that the regulations be changed so that the age be placed beyond twenty-one years, and that it apply until graduation. If the provision is necessary in early years of university training, it continues to be necessary until the day of graduation.
I wish to discuss also the matter of exemption for wives and husbands both of whom are employed. Rather than make a speech on the subject I shall read a paragraph from a letter I have received, which I would ask the minister to consider carefully. We hear a good deal of talk about the sanctity of the home. I believe the present arrangement respecting husbands and wives who have taxable incomes is creating a complication in the minds of people, one which leads them to think that it is much better to pick up a girl, live with her and not marry her. because in that way one can save money. On this matter of the sanctity of the home, it surprises me, when there are so many gentlemen of the cloth in the chamber, that they have not been waving their arms about the matter for a long time.
The letter states in part:
A single man and woman both earning in excess of $750 each, living together, unwedded, with one child or dependent, can receive an exemption of $2,250. Here is how: he files an income tax form, for himself and child which gives him married status with an exemption of $1,500; woman files one for herself for an exemption of $750. But the married man whose Wife earns $750 files a form for himself and child, single status $850, wife's form $750, total
Income Tax Act

$1,600. I verified the above exemptions at our district income tax office. They could not give an explanation, but said that according to income tax form T-l Special, that was how it stood. And moreover the unwedded couple are allowed exemptions for a housekeeper, yet the married couple are not, even though it is an absolute necessity if both are to work. Now in view of the above facts anyone can see that the married man is not getting a single man's status. He is paying $129 more in income tax than the single man; if he wants single status man and wife have to live apart. He will then save $129 and the government will not receive a cent more from her.
That is how the exemptions work out. I think it is due to an oversight. I suggest that the minister set one of his experts to work and at least even this thing up, because as things stand it is completely wrong. I have discussed it with some of the district officials and they cannot account for it. I suggest that the minister take it into consideration and do something about it.


Douglas Charles Abbott: I shall be glad to look into it.
Mr. HAZEN; May I refer the minister to section 130 of the act which reads:
Section nine B, subsection two of section twenty-five-
I can find no section 9B, subsection 2 of section 25.


Douglas Charles Abbott: There is a comma after 9B, Nine B is a section of the Income War Tax Act, not this act. It relates to the nonresident income tax deduction.


Mr. BLACK (Cumberland):: I should like to support the hon. member for Cape Breton South in his protest against what I believe to be an injustice in regard to income tax imposed on porters and men of that class. I brought this up last year and was supported by the hon. member for Cape Breton South. The tips which these men receive are gifts of the residue of moneys which the taxpayer, after he pays his taxes, hands out to porters and people who give him personal service. I was surprised when the complaint was first made to me that these gifts were arbitrarily taxed in Nova Scotia, for instance, while no such tax was imposed in central Canada. I am told there is a double injustice, because in central Canada, in Quebec, an exemption is made for expenses which is not allowed to porters in Nova Scotia. These porters are being compelled to pay an arbitrary amount upon gifts they receive as a courtesy in carrying out their duties, and I support the request that an adjustment should be made to protect our porters and others similarly engaged.


Douglas Charles Abbott: I am familiar with these representations. They have been made to myself and the Minister of National Revenue by maritime members, particularly the senior hon. member for Halifax, who has written and spoken to me about it. As I mentioned in answer to the hon. member for Cape Breton South, it is open to porters and others to keep a record of their gratuity receipts, and if they amount to less than the arbitrary amount, they can report the lesser amount as being the actual amount received.


Eric Bowness McKay: Will their statements be accepted?


Douglas Charles Abbott: Yes.


Anthony Hlynka: Last year I brought up the question of taxing as single persons married men whose families happen to be in Europe. I have received many letters on this subject, particularly this year, in which these workers complain that they are being taxed as single men. One man in Winnipeg, an ordinary labourer, wrote me that he was bringing nine members of his family to Canada from displaced persons camps. Yet he is taxed as a single man. Can they not be granted married status for income tax purposes? It seems to me unfair that these married men should have to pay income tax as single men, in spite of the fact that they have to send parcels and assistance of one kind and another to their families in displaced persons camps. Cannot something be done about that?


Douglas Charles Abbott: As a result of an amendment last year or the year before, married men in that position are given married status if they can show that they are in fact supporting their dependents abroad. I understand that the income tax branch takes a broad view of what evidence may be accepted in support of their statements, evidence given through a consul, evidence of remittances and that sort of thing. I think the thing can be and is being worked out administratively in a satisfactory way, but if my hon. friend has any special cases in mind I am sure that my colleague the Minister of National Revenue will be very glad to look into them.


Anthony Hlynka: I have in my office at the present time no fewer than twenty-five cases of men who have received notice that they will have to come through with their income tax for 1946 and 1947, and in some cases 1945. I shall be glad to give the details to the Minister of National Revenue.


Mr. ARCHIBALD:: I should like to repeat the plea I made last year for exemption from tax of hospitalization expenses of people living

Income Tax Act
in small towns in remote parts of the country, for example, at Massefct on the Queen Charlotte islands. Anyone there requiring hospitalization has to go to Prince Rupert or Vancouver, and in my opinion they should be granted exemption for their transportation expenses to the hospital. After they have been hospitalized for a certain time in Prince Rupert or Vancouver, they may be moved to another room when they have reached the convalescent stage, and that means further expense. It has got to the point where people with families cannot afford to live in small towns, especially in frontier areas. I made these representations last year, and I again bring them to the attention of the minister in the hope that something will be done.


Douglas Charles Abbott: It is a difficult problem, and we are still considering it.


Mr. FAIR:: Following up what the hon. member for Skeena has just said, a couple of days ago I received a letter which is selfexplanatory. It reads:
Some weeks back I suggested to you the financial hardship imposed on those whose physical condition necessitated obtaining medical attention in the cities when these services were unobtainable in rural areas, by the income tax board failing to allow exemptions for board, railroad fare and hospitalization.
He goes on to say that, because of limited equipment in the local hospitals, many patients are sent to Edmonton for hospitalization. Many districts in the different provinces are similarly situated. They have small hospitals, but serious cases have to be sent to the larger centres for treatement. I trust that the minister will give sympathetic consideration to the complaint of this correspondent and allow such expenses, so that they will be able to send their sick ones to hospital.


Frank Exton Lennard: If a married couple in Quebec has no marriage contract, would they be entitled to claim that half of the husband's earnings belonged to himself and the other half to his spouse?


Douglas Charles Abbott: No.


Frank Exton Lennard: I wanted to know if that were the case.


Douglas Charles Abbott: No, it is not the case.


Mr. LOCKHART:: What is the minister's defence of S100 exemption for a child, plus $5 family allowance? How can that take care of a child in these days?


Harry Rutherford Jackman: It would not buy the shoes.


Douglas Charles Abbott: No one has ever held that a child should be entirely supported out of tax money. Everything is relative. We give $1,500 marital exemption and $100 for each child. In the case of a wealthy taxpayer, it is worth $50 or more to him. In the case of a taxpayer in the low brackets, it may be worth only $10 or $15 as a tax exemption. The $100 applies to children of family allowance age. The chances are that the average family allowance is about $7 or $8 a month, so that there is $96 direct payment in family allowances, and the tax value of $100, depending upon the taxpayer's bracket. I am not going to make any defence of it. That was the figure which was established. I think, in all the circumstances, it is a fair figure. One could control the tax revenues either in tax rates or in amounts of exemption, or by half a dozen other ways.


[Stage Direction]
Section agreed to.
On section 26-Charitable gifts.
Gordon Benjamin Isnor: I am speaking on behalf of the hon. member for Brandon who was called out of the house. He asked me to make inquiry about the interpretation of paragraph (b) of section 26, which has to do with medical expenses. The particular question which he asked me to place before the minister is this, whether medical supplies' as supplied by a druggist could be included in the interpretation of medical expenses. The hon. member read a distressing letter to me, and in the circumstances he felt that the taxpayer was fully justified in asking that the bills from the druggist be included in the interpretation of medical expenses.


Douglas Charles Abbott: That is a question which, as the senior hon. member for Halifax will recall, has come before the house on previous occasions. It was raised in committee the other day. The ruling is that druggist bills are not deductible as such. If drugs and medical supplies are supplied by the doctor or by the hospital they are recognized as medical expenses. The administrative difficulty of checking the thousands of drugstores throughout the country to prevent evasion, drugstores that deal in a lot of things besides drugs, would be stupendous. It is felt that it would be really too difficult to check the bona fides of claims for supplies of drugs. When the drugs are included in the doctor's bill, or in the hospital bill, they are accepted as part of the recognized medical expenses.


Frank Exton Lennard: That means that if a doctor prescribes and a druggist fills the prescription and the patient pays the druggist, he is not allowed the exemption.
Income Tax Act


Douglas Charles Abbott: That is correct.


Gordon Knapman Fraser: When we were in committee on this section I believe the minister promised that the Minister of National Revenue would issue a directive in regard to exemption for donations to memorial halls, rinks and so forth that are non-profit making.


Douglas Charles Abbott: I am told that that has not been finalized yet, if I may use a rather objectionable word, but they are still working on it. I expect that it will be available very soon.


Gordon Knapman Fraser: I hope the minister will hurry it along, because a number of these projects are now under way. I feel quite sure that they would get a little more money if the directive were issued.


Douglas Charles Abbott: I am sure that any individual project could take it up with the minister and get a ruling on the individual case, on the facts of the case. What is contemplated in the directive to which I am referring is a general circular which would go out to all offices, giving them guidance on the general principles of these cases.


Gordon Knapman Fraser: I know that at Lakefield and Peterborough we have had letters sent to Mr. Scully for some few months, but no reply has yet come through.


Douglas Charles Abbott: We shall try to hurry him up.


Frank Exton Lennard: I hope that the minister makes it definite, if for no other reason than that I get appeals from a great many people, and always somewhere in the appeal it is said that if I donate anything it will be exempt from income tax. I donate and, when the year-end comes and I put it in my income tax deductions, the old income tax branch tells me that I am wrong.


Douglas Charles Abbott: On that point may I say my own experience has been that none of these charitable organizations represents to prospective subscribers that such a donation will be exempt from income tax unless they have obtained assurance that it will be. In doubtful cases I think they get rulings. Perhaps my hon. friend's experience has been less fortunate than mine.


Wilfrid Garfield Case: 'In the main our experience at home has been this. They have made sure that they had the necessary sanction for exemption.
This clause seems to go quite a way toward assisting those who require medical attention. I think at the present time most people are prepared to admit that chiropractic and osteopathic treatment have their place in correct-

ing one's ills, and so forth. I do not see anything in this clause to provide that payments made to that profession on account of one's health may be deducted as medical expenses. Is there any reason why that should not be included?


Douglas Charles Abbott: The language of the act is medical practitioners. I do not know what stand the Department of National Revenue has taken administratively as to whether chiropractors are recognized as coming within that description or not.


Mr. GRANT:: They do not.


Douglas Charles Abbott: My hon. friend says they do not.


Wilfrid Garfield Case: I wonder why. I am not offering an amendment. I suggest that consideration be given to that, because I know of people- as a matter of fact I have had a little experience myself-who have found that profession more helpful to them than the medical practitioners in certain circumstances. They should be able to obtain the benefit of the deductions for those expenses as they would be for expenses to a medical practitioner.


Douglas Charles Abbott: It is a matter of interpretation of the phrase "medical practitioner". I understand that the Department of National Revenue has not included chiropractors in that interpretation. Of course it would be open to the courts to take a different view if the matter were brought before them.


Lawrence Wilton Skey: May I return to a discussion of the medical side of it? It has come to my attention that sufferers from diabetes, who must necessarily have insulin injections, are not able to make any deduction from their income tax for the constant expense of insulin which they must buy, either through their doctor or from the druggist. In chronic illnesses such as these, it seems to me that the government should give some consideration to people who must necessarily make a continuing expenditure of that kind.


Douglas Charles Abbott: 1 shall look into that, because I can see that it would be a special type of case.


Harry Rutherford Jackman: After the committee hearings, did the minister give any consideration to making the four per cent of the taxpayer's income read four per cent of the taxpayer's income after taxation? It makes quite a difference. I noticed, further on, that there is a limitation of $1,000 in any case; therefore I do not think it would ever injure the treasury. It would foe a factor and it would be merciful in certain cases, particularly in view of the fact

Income Tax Act
that the person with the large gross income does pay in doctor's fees, particularly for operations,'a substantial part of the cost of the public wards, and so forth.


Douglas Charles Abbott: I did give consideration to that. My hon. friend raised it in committee.
I must say I do not feel that we should make that distinction. I may be wrong; but in any event I came to that conclusion. Of course it would be obviously advantageous to the man with the larger gross income.


Harry Rutherford Jackman: Advantageous to everybody.


Douglas Charles Abbott: Yes.


Mr. SINNOTT:: Suppose a man goes to Rochester for an operation which costs him 82,000. Is there any provision to take care of that cost?


Douglas Charles Abbott: Yes. He can claim 82,000 as a deduction from his income to the extent to which it is in excess of four per cent of his income. Four per cent is regarded as the average, and anything in excess of that can be claimed as a deduction. It used to be five per cent and was reduced to four per cent. It was originally five per cent, the extra one per cent being allowed to cover such things as drugs.


Frank Exton Lennard: Mr. Chairman, may I suggest that hon. members who wish to speak address the Chair, and speak in a voice loud enough for the rest of us to hear them. Members sitting near the minister mumble and we do not know what they are saying.


William Ross Macdonald: That is a good idea. As Chairman I wish to bring one point to the attention of the committee. This discussion has been general, and while it was taking place I looked up the resolution on which the bill was based. The resolution was passed on June 4, on which date the Minister of Finance moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to revise and consolidate the law respecting the levying of income tax and the administration thereof.
The committee is bound by the terms of the resolution, and hon. members will notice that the only power is to revise and consolidate the law. It occurred to me, therefore, that it would be beyond the power of the committee to make any substantial change in the law. I do not think it would be permissible to have another discussion at this time on the fiscal policy of the government. That discussion took place when the budget resolutions were before the house and the committee. Shall the section carry?


[Stage Direction]
Section agreed to.
On section 27-Dividends received by a corporation.
Percy Chapman Black: This clause deals with "business losses", (26) (d). When I was home recently a case was brought to my attention of a business having been closed and put up for sale by the sheriff. The proceeds were about to be distributed, and seven days before the distribution was to take place the income tax branch notified the sheriff that there was an account owing for income tax two years previously, and instructed him not to make the distribution. These are the facts as they came to me. In Nova Scotia and in other provinces, workmens liens are given priority; and in this case, if the income tax branch has its way, no payment would be made to the workmen from the proceeds of the sheriff's sale because the income tax branch claims the full amount. That would be a great injustice to these workmen. They worked for some months prior to the projected sale, and they would be denied pay for their labour. If the minister cannot answrer the question now, I would ask him to do -what he has promised to do in other cases, namely, to look into the matter to see whether there is not an injustice as far as these workmen are concerned, and that he give instructions to the department in Halifax, so that the men get their priority for wages, as should be their right.


Douglas Charles Abbott: I shall be glad to look into the situation. It relates to the Halifax office?


Percy Chapman Black: Yes.


[Stage Direction]
Section agreed to.
Sections 28 to 44 inclusive agreed to.
On section 45-Farmers.
William Ross Macdonald: There is an amendment in the second line of the clause, which will now read:
Every individual whose chief source of income is farming or fishing . . .


Frank Exton Lennard: Is any effort being made to simplify the form for farmers' income tax returns?


Douglas Charles Abbott: I am assured that the officials are working day and night on it.


Frank Exton Lennard: It does not come under the minister's jurisdiction?
Income Tax Act


Douglas Charles Abbott: It is under National
Revenue, but one of the senior officers in front of me assures me that they are working at it.


Robert Fair: I suggest that the officials could save themselves a good deal of time by greatly simplifying the forms, instead of putting so much work on them.


Douglas Charles Abbott: That is what they are trying to do.


Robert Fair: I hope they eliminate three-quarters of the questions. This section provides that on or before December 31 in each taxation year the taxpayer shall pay two-thirds of the tax as estimated by him at the rates for the year on his estimated taxable income for the year, or on his taxable income for the immediately preceding year. Is that something new?


Douglas Charles Abbott: No. It has been the law. The only amendment is to extend it to fishermen as well as to farmers. The general treatment is the same. In contradistinction to most taxpayers, farmers do not have to make quarterly payments. They can wait until the year is over before paying the estimated amount of the tax, and the final payment is due on April 30 following.


Robert Fair: Has consideration been given to deducting from the farmer's income tax the amount he does not get for his produce, to which he is entitled?


Douglas Charles Abbott: I do not think that is a matter which has been given consideration recently.


Robert Fair: It is about time it was considered.


Gordon Graydon: Many of us come in daily contact with farmers, and one of the difficulties is that those who are making the laws governing farmers do not know enough about agriculture to make those laws really applicable to people living on the land. The farmers throughout the dominion are always ready to obey the law. There are no more law-abiding people in the country. They want to do the right thing. At the same time, they have a perfect right to ask that they shall not be put into unnecessary straight-jackets by people who may not know anything about agriculture. That is the attitude which most farmers take toward many government regulations.
The^ government has gone into business extensively, in agriculture and other things, and it becomes more important than ever that the officials of the department, or 
those who are making these laws, should receive practical suggestions from bona fide farmers themselves. It is about time that the farmers themselves rvere allowed to make some suggestions as to how matters can best be worked out so far as their own business is concerned. It is not enough to go to a farmer who is a big operator. It is not always best to take advice entirely from someone who is not in the lower brackets of agriculture. The great bulk of the farming community is composed of people who are operating in small units. The department should seek advice of some of the smaller unit farmers in Canada, in order to see how this thing can best be worked out- to the advantage of all.
These farmers come to members from time to time with many suggestions. The government departments are too far removed from the ordinary dirt farmers with regard to income tax forms and income tax levies. When a farmer, who has hardly enough time to do his ordinary work, is asked to go into big business almost and have his income tax return filled out in the same way as they are filled out by people who have bookkeepers, accountants and all that sort of thing, it is something that does not- work with him. He needs something far simpler than that, or else he may have to go out of business. He cannot afford to carry a huge bookkeeping organization on the farm. He has enough trouble now to make ends meet without being faced with that necessity.
There must be a way out of this. I do not wish to be unnecessarily critical, but I should like to see if this government and parliament cannot get down to some kind of basis whereby the farmer will be able to find out what he is required to pay without going through all this terrible period of misery, one could almost call it, that those engaged in agriculture all over Canada must go through before they put in their income tax returns. I shall make a suggestion to the minister. This government spends a great deal of money on other things which are not nearly as important as this is.
I think it would be a good thing for the minister to cut out some of this red tape and to bring here, at the expense of the government, a few dozen good small-unit farmers and get their advice with regard to what they think should be done in this matter. Having done that, the government should follow their advice, instead of that of some of these high-ranking officials who perhaps never saw a farm.


Douglas Charles Abbott: I am glad my hon. friend brought this matter up, because the Department of Finance is not nearly as devoid as some may think of officials who have some interest and background in practical farming.

Income Tax Act
The assistant deputy minister of finance who sits in front of me here today, and who is in charge of taxation, was born and brought up on a farm. His brother still runs it; and it was his father's farm. The assistant deputy minister of justice, who sits in front of me today, was born and brought up in a little village in Saskatchewan. The brother of the deputy minister of finance still runs the family farm in Glengarry county, not far from here. Even the Minister of Finance himself was brought up in a small town, and lived' on a farm from the time he was five years of age until he was thirteen. He learned to milk a cow; and, while it is true that he has not been in constant contact with the farming community, I can assure members of the committee that he knows something about the problems of the small farmer.


James MacKerras Macdonnell: There was no income tax then.


Douglas Charles Abbott: I just mention that to show that the department is not staffed by people who have not had some practical experience on the farm.


Gordon Graydon: May I follow that point up with the minister? I am terribly serious about this matter.


Douglas Charles Abbott: So am I.


Gordon Graydon: I am not making a light suggestion to the minister, because every person representing an agricultural section of Canada is faced with this important problem. It is also important from the general point of view of our citizenry at large that the income tax form be reduced to some simple terms so that there will be satisfaction as between agriculture and the government which is collecting the taxes. While the minister and all his deputies may have been brought up on farms, so was I; and when I go back to the farm now, I find that there have been a great many improvements and a great many changes in agriculture. More than that, as somebody pointed out a little while ago, in those days-in my day and in the minister's-we had to master a great many other practical things on the farm, but we certainly did not have to spend as much time as the average farmer now must in making out the infernal income tax forms that only a Philadelphia lawyer could possibly understand. I ask the minister why he does not accept my suggestion, bring some dirt farmers here and get their views.


Gordon Benjamin Isnor: How about a few fishermen?


Gordon Graydon: The expenditure for that purpose, I would say, would be the best bit
of expenditure the government has made. It is important that the good will of agriculture be obtained with respect to the income tax just the same as it is important that the good will of other sections of the population should be obtained. Do not be unreasonable about the matter. The farmers want^ to do the fair thing, but they want to do it in a way which is practical for them and for the government as well. I make that serious suggestion.


Douglas Charles Abbott: I know my hon. friend is serious. He will recall that two or three v ears ago when the question of farmers' income tax returns first became a serious matter, the^ tax branch consulted the Department of Agriculture, called the farm organizations in, and discussed the matter at length. The net result was that a six-page form was produced, instead of a four-page one.


Gordon Graydon: You did not have one of the people I am now suggesting.


Douglas Charles Abbott: I am not suggesting this in a joking way. It is in the interests, not only of the farmers but of all the taxpayers, to have the forms as simple as possible. At the same time, the reasons that any income tax form is complex is in order to make the tax equitable. The simplest thing in the world is to make a flat percentage tax and say to the people that they will pay that tax, with no deductions for anything. But when you include deductions for depreciation, for medical expenses, for this and for that, then of necessity you get into a complicated form. That is what creates the difficulty. I am in complete agreement with my hon. friend that, whether it relates to the farmer, to the wage earner or anybody else, efforts should be made to have the forms just as simple as they can possibly be made.


Mr. QUELCH:: I cannot believe that the officials who were responsible for drafting section 45 (a) can have had any experience whatsoever in grain farming. That section gives two alternatives, and they are both bad. Let me read the section:
(a) on or before December 31 in each taxation year, two-thirds of the tax as estimated by him at the rates for the year on his estimated taxable income for the year or on his taxable income for the immediately preceding year.
Let us take the first one of those. He should estimate what his income will be and pay two-thirds by December 31. I think the minister more than anybody else will appreciate the difficulty farmers are having today in filling out their income tax forms. They
Income Tax Act

are having plenty of difficulty in filling them out by April 30. Before a farmer can possibly estimate what his income will be, he will have to fill out that form. Therefore you are asking him to fill out that form-he does not have to mail it, but he must fill it out in order to find out what his income will be- in order that he may pay two-thirds of it by the end of December. I suggest that will be a difficult thing, because he will find it hard enough to have these forms completed by April 30. Then the section gives the following alternative:
... or on his taxable income for the immediately preceding year . . .
That is, of course, absolute and utter nonsense. How can anybody suggest that the income of a farmer last year is a guide to what his income may be this year? If he is a grain farmer, for instance, last year he may have threshed forty bushels to the acre, which would give him a good income. This year he may be hailed out. and have no income at all. How could the department possibly suggest that a return for last year will be any guide whatever as to his income this year? The returns vary from year to year. They vary from five per cent-


Douglas Charles Abbott: That same thing applies with regard to other occupations. In other occupations an estimate has to be made at the end of the first quarter.


Victor Quelch: Yes. But the minister will admit that the farming industry is a difficult one. Especially is that true with regard to .grain farming, because practically the whole return conies in, in the fall of the year. I will frankly admit that I have never sent in two-thirds at the end of the year. I did not even know that I was supposed to do that; and I doubt if one per cent of the farmers today realize that they are supposed to send in two-thirds of the amount of their tax at the end of the year. I have never been notified. I have regularly sent in my income tax in April.
I have never received a letter from the taxation blanch telling me I should have sent in t\\o-thirds of the tax by the end of December. Why? Nor have I been charged interest, or at least I have never been notified that interest was being charged. Is it actually the law today that the farmer should sent in two-thirds of his tax by the end of December? If so, how many farmers are doing so? What is the penalty for not doing so? And if there is no penalty, why should the farmer do it? Ceitainly I think that point needs clarification.
I do not know of a single farmer who sends m two-thirds of his tax by the end of 
December. They wait until April, and they do not feel very happy about sending it in even then.
So I suggest that the minister could very well wipe out that provision as far as farmers are concerned. I do not believe more than a very small fraction of the farmers are complying with it, and I think the minister will agree that they are finding it hard enough to have their income taxes paid by April. Why put in a clause which can do nothing more than irritate the farmers? You are just going out of your way to put in a little section to get them mad, just as you did when you put out that net worth statement. You got them so mad that you finally had to withdraw it. Do not wait until they get mad about this. The only reason they are not mad about it is that they do not know it is there. If you start trying to force the farmers to send in two-thirds of their tax by the end of December you will meet with just about the same kind of reception as you got when you sent out that net worth statement. So I suggest that it would be far better to withdraw this section and tell the farmers to have their income tax returns in by the end of April.


Douglas Charles Abbott: This section has been in the act since 1943, I do not want to irritate the farmers any more than anyone else, but I do not think the farmer is entitled to any extraordinary or special treatment.


An hon. MEMBER:: But he gets it.


Douglas Charles Abbott: He gets it in many cases. The average taxpayer has to pay his tax by instalments. At the beginning of the year he has to estimate what his income will be, and he has to pay one-quarter of the tax at the end of the first three months, another quarter at the end of six months, another quarter at the end of nine months, and the balance by December 31. The farmer gets special consideration here. He does not have to pay any of his tax until the end of the calendar year, and then he has an option. He can estimate his tax on his estimated income and pay three-quarters of it, or he can take his last year's income and pay the tax on three-quarters of that, paying the balance by April oO. I think that is fair. We are deducting from the salary and wage earner day after day, month after month as he goes along. We require instalment payments by those who receive income from interest and dividends. We make lawyers and other professional men who are on a fee basis pay in quarterly instalments, and I think this is fair for the farmer.
I do not believe the farmers of this country want special privileges.

Income Tax Act


Victor Quelch: They want some sense shown in these matters.


Douglas Charles Abbott: I think I am right in that; I believe I am.


Victor Quelch: There is all the difference in the world. You talk about someone in a secondary industry paying on a quarterly basis. The grain farmer does not get any return until the fall. If he had to make a quarterly return he would show certain expenses without any returns, and at the end of the half year he would show the same thing. His returns do not come in until the fall of the year.


Douglas Charles Abbott: I do not know much about grain farming, but how many farmers in western Canada or elsewhere have not sold their crop by December 31?


Victor Quelch: There would be very few farmers who had not sold their wheat by December 31.


Douglas Charles Abbott: And that is the first time the farmer has to make any payment.


Victor Quelch: But why ask him to make any payment then? Why not let it go until April?


Douglas Charles Abbott: Because other people have started making their payments at the first of the year.


Victor Quelch: Let the minister answer this question, then. How many farmers are sending in two-thirds of their income tax by the end of the year?


Douglas Charles Abbott: I could not say; that is not my department. I can say that the law is, and has been for five years, that the farmer should send in two-thirds of his tax at the end of the calendar year.


Victor Quelch: And they are not doing it, because they do not know the provision is there. Apparently the income tax branch have not notified them.


Douglas Charles Abbott: Other income taxpayers
know what the law is. I do not know why the farmer should not know about it. Special booklets are sent out explaining the law, and I believe the farmers are learning quickly.


Victor Quelch: Does the booklet in connection with farm income tell them they must pay two-thirds of their tax by the end of the year?


Douglas Charles Abbott: Of course it does.


Victor Quelch: But my point is that the farmers do not know about it. Perhaps they
should, but they do not, and they are not sending in that percentage. The thing I cannot understand is why the income tax branch have not notified the farmers, when they receive their tax returns in April, that they should have sent in a certain percentage of the tax by the end of December. They are not doing so. I have never paid anything in December, and I did not know I had to. Nor have I ever received any notice from the income tax branch.


Douglas Charles Abbott: The only explanation I can give is that, of course, there has been a tremendous increase in the number of returns. Until the assessors get at the returns and see what has been the record of payment, they do not appreciate or realize that an instalment payment has not been made. I think that situation will correct itself pretty soon, as the taxpayers realize their obligations. The only point I am making is that, if anything, this is a rule which works in favour of the farmer and fisherman as against other types of enterprise.


Victor Quelch: I do not think it does, because they are not comparable.


Mr. CHARLTON:: I want to support wholeheartedly what has been said by the previous speaker. If the minister had been on a farm in the last few years when income tax forms had to be made out; if he had to keep the books which are necessary in order to make out those forms, I think he would be more willing to listen to our complaints in this regard. I have made out income tax forms for several years, and I never knew we were supposed to send in two-thirds of our tax by the end of December. I, in common with the last speaker, never received any notice. The farmer is the greatest gambler in this country. At the first of the year, when he plants his seed, he never knows whether he will get a crop, nor does he know what he will be paid for it. To ask him to make a payment in six months-


Douglas Charles Abbott: Twelve months; he can wait until the end of the year.


John Alpheus Charlton: And in many cases at the end of the year he has not sold the crop.


Douglas Charles Abbott: Then it goes into the next year, anyway, if he is on a cash basis. I do not know whether members of the committee appreciate it, but this is a part of the pay-as-you-go tax plan put into operation in 1943, when those earning salaries and wages were compelled to have a portion of those salaries and wages taken out each week or month,
Income Tax Act

depending upon the pay period, as a tax payment. In the case of investors and businessmen, payment was to be on a quarterly basis. In the case of farmers and fishermen, they pay two-thirds at the end of the year, and then they have another three months in which to pay the balance. I do not know; perhaps my ideas of what is fair are all wrong, but it seems to me that is eminently fair and reasonable. Certainly if you contrast the farmer with the wage earner, the worker in the city, it is more than fair. The farmers may not know about it, but I cannot see that it is unfair.
Mr. QUEtLOH: But the wage earner gets his wage every week or every month. The grain farmer gets his returns at the end of the year, and he does not get any money until then. To say he should pay money each month would be utter nonsense.


Mr. JAQUES:: I should like to support the remarks of the previous speakers with respect to this clause. I can assure the minister I have had a number of letters from farmer constituents of mine; and while no one likes to pay taxes, these letters express far greater objection to the nature of the form they have to fill out than to the tax itself. It is perfectly true that it has created a great- deal of ill-feeling. We want to avoid ill-feeling where we can; but I can assure the minister that this feeling is widespread among farmers in the west, including those in my own riding. As I say, I have had many letters dealing with this matter.


Harry Oliver White: As other hon. members have said, I believe farmers who are eligible for taxation are prepared to pay it. But they are hesitant because, if they make returns, some smart mathematician who does not know anything about farming may trip them up. A farmer, who may have made out his return with the very best of intentions, will find himself in difficulty.
Another thing which bothers him is that it may be four or five years before he obtains a clearance for his return. No business, except the taxation branch, can be carried on in that way. I can see no reason in the world why returns should not be cleared in the calendar year in which they are filed; not four or five years later, at a time when a man cannot remember where he stood.
This government has socialism beat a mile. It is a partner in every enterprise that wins, but it is not a partner in the enterprise that loses. If a socialist government were to take office it would have to participate in the losses as well as in the gains. Farmers complain that in the years when they have good

crops they are penalized, and they wonder why they should continue to produce. I think this form should be simplified.


Douglas Charles Abbott: Hon. members will appreciate that most of the discussion would be more appropriate on the estimates of the Minister of National Revenue, because this matter concerns him primarily. It is not the concern of the Minister of Finance. While I do not wish to curtail discussion, it is not my personal responsibility to look after those matters, and I should think that hon. members might discuss them under the estimates of the Department of National Revenue.


John Alpheus Charlton: This makes it necessary for the farmer to make out his income tax before December 30?


Douglas Charles Abbott: It does not.


John Alpheus Charlton: To estimate two-thirds of his tax, he could not possibly do so without doing that. In effect it is asking him to make out two sets of forms in the same year [DOT]-and one is bad enough. I would add, further, that I subscribe to wThat was said earlier with respect to having a farm background for inspectors. I would urge that any inspectors going out to farmers-


Douglas Charles Abbott: The hon. member knows, of course, that this does not come within my department.


John Alpheus Charlton: I realize that; but it has been mentioned before and I should like to have my views on record. Inspectors going out to interview farmers should, by all means, have a farm background.


Mr. CASTLEDEN:: While it is not the responsibility of the Minister of Finance to collect the tax, it is the responsibility of the minister and' his department to see that taxes are assessed on a realistic basis. What has been said emphasizes the fact that income tax laws are not realistic when applied to farming. I would refer the minister to what happened in 1942 and 1943. In those years the government regulations prohibited farmers from delivering their grain. They were put on a quota basis, and were allowed to deliver five bushels per authorized acre. The remainder of the grain was held on the farms. In those years the farmer suffered a loss on the operation of his business, so far as cash income was concerned. Then in 1944 he was told to deliver all he could. The quota was opened up, and immediately the farmer was placed in the income tax brackets, through the income he had received in that one year.
I believe one would find a good 'deal of protest throughout the countiy, because the laws applying to farm incomes do not consider

Income Tax Act
the peculiar nature of the occupation of farming as a business, as differentiated from other types of business, or even from the man who earns his income as an employee.


Douglas Charles Abbott: They are allowed the five-year average.


George Hugh Castleden: Yes. I know the average is allowed. I think it will be found that at the present time many farmers are asking that the law be altered, so that they may make some kind of payment on their income tax when they deliver grain or other produce. It might be arranged so that, when the extent of their exemption is reached, a certain proportion might be taken from the receipts from their deliveries over and above that amount.
We can deal with the collection of income tax when we are discussing the estimates of the Department of National Revenue, but I do protest that the legislation respecting farm incomes is entirely out of line with the whole business of farming; and the farming community resents very much the present set-up.


[Stage Direction]
Section agreed to.
On section 46-Other individuals.
Harold Aberdeen Watson Timmins: I should like to make a protest with regard to this section. Under the section it appears that every individual, with the exception of those to whom section 44 (2) and section 45 apply, must pay their income tax in four equal quarterly instalments on March 31, June 30, September 30 and December 31. If one does not pay the tax of those dates, interest is charged for the remainder of the year.
During the war the practice of requiring quarterly payments of income tax grew up. As I remember it, the arrangement was a voluntary one. It was with some considerable shock, therefore, that I learned the other day in committee that now the quarterly payment of the tax is compulsory, as is shown on the form which was shown to me by the Minister of National Revenue.
The hon. member who has just taken his seat was right when he said that the collection of the tax must be realistic. Speaking personally, I find it difficult to estimate the tax each quarter as I go along. I, for one, would like to be in a position to look at a little bit of money as I accumulate it before I have to pay it out. I believe the people of the country generally do not know that if they do not pay their tax payments at these quarterly instalment periods they must pay interest on that money at a rate of five or six per cent.


Douglas Charles Abbott: It has been four per cent in the past.


Harold Aberdeen Watson Timmins: The people should understand and should be told.


Douglas Charles Abbott: It is four per cent until January 1, 1949.


Harold Aberdeen Watson Timmins: I do not think this a realistic procedure. People in this country are having a real struggle to pay income tax and to pay it almost before they get the money in their hands.


Douglas Charles Abbott: That happens to every salary and wage earner.


Harold Aberdeen Watson Timmins: The salary and wage
earners know what they are getting from day to day. Other people, including small merchants, people in business and those in the professions have a hard time to find out exactly what they get every three months. It seems to me that this is too harsh.


Douglas Charles Abbott: I am familiar with tire problem. When I wras paying income tax from the practice of law I had the same difficulty the hon. member has described in estimating what my income would be over the year. Nevertheless I made my quarterly payments.


Mr. BLACKMORE:: Mr. Chairman, from the way the minister has expressed himself I would suggest, with all deference, that the minister is probably a little too optimistic in his views about farmers. I was raised on a farm and have experienced the ups and downs of farming. I know there is a tremendous amount of uncertainty in all matters relating to farming, and in that respect the farmer is in an entirely different position. Consequently, in the matter of paying taxes he should be given the utmost consideration.
There are farmers with good land who have found just the right way to farm it and who, therefore get a good income every year, but other farmers three or four miles away who do not happen to have the same kind of land or perhaps do not work it the right way, or through no fault of their own, through hail or frost and other vicissitudes, get little or no income at all.
Take the area I live in. The farmers in some parts could not get on their land this year until after the 1st of June. Naturally they are in great uncertainty. No one can tell what thej' will be able to make. That is just one illustration. There is drought, disease, wind, insects and all that kind of thing entering into a farmer's life besides adverse prices and markets. Do not let the idea get abroad that farmers ought to be treated on the same basis as other producers in the country. The farmer's lot is, at the
Income Tax Act

very best, a very hard and precarious one; that goes for the vast percentage, from seventy-five to eighty per cent, of the farmers throughout this land, and it is usually that seventy-five to eighty per cent who are the ones who are worried almost to death in making out income tax forms and struggling to clear themselves from a lot of official interference. It is these people about whom I am greatly concerned, not the few fortunate ones who are able to get along.
I say once more, let us be as considerate of our farmers as we possibly can be. A discussion took place in the house the other day as to why we had fallen down in butter production. One of the main reasons is the income tax structure. The farmer milks his cows at night after a long day's work, and again in the morning before a long day's work, and all of it is done in his overtime. To take the income which that man happens to make, perhaps a few hundred dollars, from the milking he does, and to add that to his income and increase his income tax accordingly, is just pure mismanagement of the nation's affairs. If we cannot talk that fact into the government, it will be knocked into the government by a deficiency in production, and by that time it will be too late, because the means will be out of the farmers' hands to produce such commodities as milk, butter, eggs, beef and pork. It is my settled opinion, after talking with a great number of farmers in my constituency and in other parts, that this uncertainty about production which is worrying us so much today is largely the result of the income tax regulations.


John Sylvester Aloysius Sinnott: I wish to thank the minister for the background that he has been good enough to give us today with respect to his officials. However, a lot of the trouble we are running into over the income tax forms is not the result of the officials in front of him but is due to a man named Brown, from Winnipeg, who was a former banker.
The income tax is complicated to the last degree, but the hon. member for Lethbridge has given a very good illustration of how it works out in practice. If the minister would go around my constituency with me and talk to the farmers he would find not dozens but hundreds of them who would tell him that the situation pointed out by the hon. member for Lethbridge is a true picture of the actual conditions.
The-farmer is in a class by himself. He is not looking for special privileges. He keeps a few cows as a sideline and has to be up milking them at six o'clock in the morning before he goes out into the fields, and then

milk them again at night after his day's work in the field. On many farms the children help with the milking. If something is not done to relieve the income tax burden on the farmers, production wall be curtailed a lot more yet. We must be realistic and try to find the cause for decreased farm production. It is largely because of the income tax. Provision must be made to encourage production by giving the farmer and his children the same opportunity that other people have. The man who lives in a city and has five or six boys under sixteen very often has one of his boys peddling papers; another will be running errands for some store, and all of them have an opportunity of making a good many dollars on the side, which is never counted as part of the family income. But the farmer and his family are considered as one unit, and the father pays the penalty in increased taxation. Some change must be made in the income tax if the farmers are to be encouraged to produce more farm products.


[Stage Direction]
Section agreed to.
Sections 47 and 48 agreed to.
On section 49-Payments on behalf of others.
Calvert Charlton Miller: Subsection 2 requires the trustee to obtain a certificate from the minister before distributing any property under his control. Can the minister tell us what, if anything, is being done to expedite the issuing of these certificates? Until the certificate is issued, the final -administration of an estate is held up, and there is need of a better system to speed up the issuance of certificates, particularly when one is paying a premium to a bonding company.


Douglas Charles Abbott: I know the problem, for I used to encounter it myself. I know it sometimes took a long time to get a clearance certificate before one could distribute the assets. I am told by the official in front of me that every effort is made to get the certificates out as quickly as possible. But first, of course, the returns have to be assessed. We are trying to improve the system all the time.


[Stage Direction]
Section agreed to.
Section 50 stands.
Sections 51 to 56 inclusive agreed to.
On section 57-Exemptions.
Mr. BRADSHAW:: May I call the minister's attention to paragraph (h), dealing with mutual insurance corporations. In 1946 a tax was imposed on mutual fire insurance companies, the tax being thirty per cent of their

Income Tax Act
earned surplus for the year. I consider that this clause works against the smaller companies. You have to build up your surplus according to the Ontario insurance act. We have to build up a surplus of eighty cents per $100 of insurance in force in order to guarantee our operations. The small mutual fire insurance company is in a field by itself. It does not go into commercial risks. It is only a farmers' mutual. Section 67 of the bill provides that a company may refund out of the yearly increase any surplus to its policyholders. On the face of it, this section would appear to give the farm mutuals the choice either of paying the income tax out of the yearly increase in surplus or of refunding the yearly surplus to their policyholders. On the other hand, the Insurance Act prohibits this. In fairness to the smaller companies, I should like to move an amendment.


Douglas Charles Abbott: Will my hon. friend permit me to interrupt him? I am veiy familiar with the point he is making, because he has come to me with a delegation and has put it before me. The point he is making relates to section 67. This section gives complete exemption to certain ty'pes of corporations. Section 67 allows deductions from gross income on patronage dividends or refunds, or whatever it may be. Perhaps I am anticipating the amendment which my hon. friend proposes to make, but I know what he wants. He wants mutual insurance companies to be allowed to create reserves up to a certain limit, without having to pay taxes on the amount so placed in the reserve.


Albert James Bradshaw: With all deference to the minister I think subsection 1 (h) should be amended and made a separate clause. It should read as follows:
A mutual insurance corporation in which the excess of assets over liabilities at the end of the taxation year in dollars per thousand dollars of net insurance in foi'ce at the same date is less than the amount set out in the following table:
When total net amount at
risk exceeds	
When total net amount at
risk exceeds	
When total net amount at
risk exceeds	
When total net amount at
risk exceeds	
When total net amount at
risk exceeds	
When total net amount at risk is less than

5.000.	000- 8.00
2.000.	000- 10.00 1,000,000- 20.00 1,000,000- 30.00
In excess of $25,000,000 risk, the company can have excess assets of $6 per $1,000 of net insurance in force without being liable to tax. Over that amount, the company would be liable for 30 per cent tax. I am not opposed
to the insurance company paying taxes, but it has to build up its reserves in order to guarantee its survival.


Douglas Charles Abbott: As I said, I am familiar with the point which my hon. friend is raising. I think I should say at the outset that his amendment is out of order. It increases the exemption clause of mutual insurance companies, and as such can be proposed only by a minister of the crown.
What the hon. member is suggesting is that in the case of mutual insurance companies they should be entitled to create reserves out of tax-free income up to the point required either by the bylaws or by the provincial legislation under which they are organized. That question has been carefully considered by myself and by my officials. I have not felt that that special exemption could be extended to these companies. I assure my hon. friend and the committee thalt I am thoroughly familiar with the problem. As to the specific amendment, I think I would have to take the stand that it is out of order because it is proposed by a private member.


Calvert Charlton Miller: In support of the case that has been proposed by the hon. member, may I make a request of the minister? Unless the amendment, or some such amendment, is accepted 'by the minister, the section does discriminate against these smaller companies which must of necessity', to comply with the Ontario insurance act, refuse to pay out their earnings until they have resources to satisfy that act. In other words, a small company or a large company which already has sufficient reserves on hand can pay out to its policyholders the amounts that it has on hand and escape tax; but the others, the smaller companies which have not created those reserves, are of necessity bound to retain it in their hands, and must not pay it out. Therefore they are being deprived of the right of escaping from the payment of these taxes, and instead of keeping enough to build up these reserves they have to keep an extra 30 per cent to build up an equivalent reserve. I would make this request to the minister in support of what the hon. member said a moment ago. I would ask the minister to keep this subsection in mind until after the dinner recess, provided that we do not get finished, and then give it a little further thought to see if it cannot be amended.


Douglas Charles Abbott: I have always an open mind on these matters. Let me say at once that this is a section to which I have given a great deal of thought. The problem is exactly that of the co-operatives, which have asked that reserves be established out of tax-free income
Income Tax Act

up to the standard required either by provincial co-operative legislation or otherwise. I must say that, after the extensive consideration which I have given to this problem relating to the mutual insurance companies, I could riot accept the amendment. I dcf not like to appear dogmatic, and I would not if it were not for the fact that I received these representations and if I had not considered them thoroughly. Perhaps it is not necessary for me to give all the reasons. It is am important question of policy, so that if any change were made I would make it as a budgetary change. As I see things now, I cannot grant the concession.


William Henry Golding: Order. It is perfectly in order for hon. members to bring this matter to the attention of the minister and ask for an amendment, or that consideration be given to it, but the amendment would be out of order on two grounds: first, as the minister has pointed out, it would affect the balance of ways and means. Second, I think hon. members should keep in mind the wording of the resolution which preceded the introduction of the bill, which read as follows:
Mr. Abbott moved that the house go into committee of the whole at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to revise and consolidate the laws respecting the levying of income tax and administration thereof.
That does not make any provision for changing existing taxes.
I think hon. members are right in taking advantage of the opportunity to bring the matter to the attention of the minister, and ask that he give it consideration. I shall have to rule the amendment out of order.


Albert James Bradshaw: I bow to your ruling, Mr. Chairman. As president of an insurance company, I know this will be a hardship on the smaller companies. We do not know what our risk will be. Sometimes it may be 86.000; sometimes it may be $20,000. In my own company we have $5,000,000 of risk. We are running on twenty cents a hundred, and have our surplus of $40,000 in values. Suppose we make two cents a hundred, $2 on $100. On the $10,000 of our surplus every year we have that income. We may have a loss of $6,000. Say we have a surplus of $2,000. We pay $600 on the $2,000; but we may have a loss of $10,000 or $20,000, we do not know. It is not a corporation. I claim that a mutual fire insurance company is not a corporation, not a profit-making corporation.


Harry Oliver White: May I say a word in support of what the hon. member for Perth and the hon. member for Portage la

Prairie have said? It seems to me that the net result of this taxation will be that some of the mutual fire insurance companies of the country will be taxed out of existence. Mutual insurance companies are in this peculiar position. With increasing values of farm stock and buildings, a considerable amount of increase in insurance has been placed on these farms. Should there be decreases in values in the future with losses occurring, they will be put in a serious situation. I am afraid it will put some of the smaller companies out of business.


James MacKerras Macdonnell: The minister himself raised the question of co-operatives, but is he not in this legislation assisting them to build up reserves, by means which I need not mention in detail, and is that not substantially what this mutual company is asking for? I would hope, notwithstanding the fact that the minister says he has considered it, that he might consider it again.


Douglas Charles Abbott: The provisions of this act extend to mutual insurance companies. Section 67 extends to mutual insurance companies and to any corporation. The only thing the section does is to exempt completely from income tax certain types of mutual insurance companies. There is no change in the law. It is the same law that has been in existence for two or three years. Section 67 may indirectly help mutual insurance companies along with other mutual corporations, but there is no change at all, and the essence of what is desired is to create reserves out of tax-free income. If that can be done under section 67, well and good. I do not know that it can, but that is the only section under which it can be done. As a general rule, that is not the principle followed in the taxation law.


[Stage Direction]
Section agreed to.
On section 58-Trusts or estates.
James MacKerras Macdonnell: I wish to point out something to the minister, and here I appeal not only to his open mind but to his open heart. It is connected with universities. I have no doubt he is familiar with the point I wish to raise. I refer to subsection 4 of this section. This, I think, is a change in the act working to the disadvantage of universities. I would remind the minister that universities are having greater and greater difficulty in collecting funds, and greater and greater difficulty by reason of added expenses. As I understand the situation there is now being introduced a change whereby income which is not payable during the year to a beneficiary is taxable, whereas in the past income could be accumulated for the benefit

Income Tax Act
of universities and not be taxed during the year, provided that it was being accumulated for a charitable purpose.


Douglas Charles Abbott: I am not clear as to the facts my hon. friend has in mind, but there is no change in the law from what it has been for several years. The arrangement is different; the words may be transposed; but there is no change in the law; and the effect of the law, since the Burns case, which was referred to in the committee, is that one cannot accumulate moneys in a charitable trust and pay them over at a later date to charity. The money must be paid year by year as the revenues are earned, in order to benefit by the exemption. There is no change as a result of this bill.


James MacKerras Macdonnell: I am perplexed, because the statement I have here is that the bill abandons the use of the term "for the benefit of unascertained persons" and substitutes language which seems wider, namely, income ... as was payable in the year to a beneficiary. My understanding, and I thought I had confirmed it, is that this does so change the law as to work a hardship on universities and other charities.


Douglas Charles Abbott: It is difficult to argue legal interpretation in committee, but I am assured by the assistant deputy minister of justice that there is no change in the law. The old section provided that income accumulated in trust for the benefit of unascertained persons or persons with a contingent interest shall be taxable in the hands of the trustee. I can assure my hon. friend that there is no change in the law with respect to the income of trustees.


James MacKerras Macdonnell: Suppose income is being accumulated for the purpose of a university; the use of the phrase 'unascertained persons" would not, I take it, include universities.


Douglas Charles Abbott: That is right.


James MacKerras Macdonnell: But now it says, "income . . as was payable in the year to a beneficiary."


Douglas Charles Abbott: What section is my hon. friend referring to?


James MacKerras Macdonnell: I am referring to section 58 subsection 4.


Douglas Charles Abbott: Would my hon. friend mind stating the point again?


James MacKerras Macdonnell: Does the minister agree that the use of the term, which is in the old act, "for the benefit of unascertained persons" would not include
a university or a charity for which the money
was being accumulated? As I understand the law, it was only when it was for the benefit of unascertained persons that a tax was payable 'on it year by year in the hands of trustees as it was accumulated, whereas now the wording is broader and it is taxable unless it is payable in the year to a beneficiary.


Douglas Charles Abbott: The relevant section under 11, which is the old section, was 11 (2), which taxed income accumulating in trust for the benefit of unascertained persons or persons with contingent income, which was taxable in the hands of the trustees.


James MacKerras Macdonnell: May I stop the minister there and ask whether he thinks that, under that, income in trust, accumulated for the eventual benefit of a charity, would be taxable?


Douglas Charles Abbott: I was going on to say that subsection 4 of the old section provided that income received by an estate or trust and capitalized shall be taxable in the hands of the executors or trustees, or other like persons, acting in a fiduciary capacity. Those two sections have been combined in the new law, but there is no change in the law.


[Stage Direction]
Section agreed to.
Sections 59 to 108 inclusive agreed to.
On section 109-Garnishment.
Mr. BARRETT:: I understand that the onus is put on the employer to pay taxes which the employee may be owing, even though those taxes accrued while the employee was working for another man. Is that correct?


Douglas Charles Abbott: I am informed that, as is the case in other similar circumstances, where a man has incurred a tax liability for the previous year and then goes to work for a new employer, a garnishee for his past indebtedness may be placed in the hands of the new employer. That can happen to any person who is indebted for past due obligations. The man for whom he is working at the present time can have a garnishee order put in his hands and the salary attached.
Mr, LOCKHART: Then he will quit.
iMr. BARRETT: The garnishee would more or less be a court order. This matter was drawn to my attention by a farmer in my own constituency. In perfectly good faith he engaged the services of a man this spring. The other day he received a letter from the income tax branch saying that this man was in default in the amount of $300 or $400 and that the employer-the farmer who employed him-would be held liable if he paid this man any part of his wages. The income tax branch
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did not say what percentage of the man's wages the farmer wuis to hold back, or whether he was supposed to pay the whole thing. The effect would be that if he refuses to pay this man any part of the wages that he engaged to pay him, the man will just quit and go somewhere else. It seems to me that the onus ought to be put on the man himself in some way, so that he understands the position in which his employer is put.


Douglas Charles Abbott: I shall have to discuss that matter with the officials, but I am not familiar with the practice there. The enabling provision here is the usual enabling provision which has been in the act for some time. It may be that the practice in handling these matters could be improved, so that both the employer and the emplojree whose wages have been seized could be more promptly and accurately advised as to just what their respective liabilities were. I shall be glad to take that up with the departmental officials and see if that can be accomplished.


Calvert Charlton Miller: As the minister knows, most garnishees apply just to what is in at the time of the service of the writ of garnishment, but this is a future attachment. Is any provision made whereby a man working for wages would have anything at all to live on, or is the whole thing taken?


Douglas Charles Abbott: I understand that in most provinces-and I know it is the case in my own-only a certain portion of the man's wages or salary can be attached. That rule would apply to income tax liability the same as to any other. I do not know what the practice is in my hon. friend's jurisdiction.


Calvert Charlton Miller: The section does not say that. It says that the employer must pay over all his earnings. That is in subsection 3 of section 109. That seems to be pretty tough on the man's wife and family.


Douglas Charles Abbott: In the section provision is made.


Calvert Charlton Miller: The department may
stipulate the amount.


Douglas Charles Abbott: That is right, I am told that the reason for doing that is that it is only in the province of Quebec that a fixed amount is stipulated beyond which the employee's salary cannot be garnisheed.


Calvert Charlton Miller: What is the practice?


Douglas Charles Abbott: This gives to the minister the right to extend the same sort of treatment that is obligatory by law in some jurisdictions.


Calvert Charlton Miller: What I am trying to get at is this. , What is the practice?


Douglas Charles Abbott: The practice is to take only a relatively small portion.


Theobald Butler Barrett: As I understand the
situation from this man who was speaking to me, no stipulation at all wras made in the letter. No amount or no portion of the man's wages was mentioned.


Douglas Charles Abbott: If my hon. friend will give us the particulars of the case, we shall have it looked into at once.


Mr. HARRIS (Danforth):: Where an
employer discovers that one of his employees has not discharged his responsibility with regard to income tax payment, is it not possible to avoid the necessity of going through the form of garnishment and attachment? Is it not possible for the department to notify the employer that he must pay to the receiver general any moneys payable to the individual concerned? In this particular case the individual has pay for three weeks' holidays owing to him, which is almost sufficient to discharge his obligation of $200 or $300 with regard to unpaid income taxes during the year. Could the department not demand of the employer that any moneys held to the credit of the employee be used to discharge his obligation? What I am trying to get at is this. In order to avoid the necessity of going through garnishment and attachment, could that not be done?


Douglas Charles Abbott: The so-called garnishment is effected by a letter from the minister. I am told that in practice it is usually worked out by voluntary arrangements; the employer, the employee and the department agree that an amount which is reasonable be paid over each week or each month, as the case may be, in satisfaction of this liability.


Joseph Henry Harris: When it so happens that there is sufficient money to discharge the obligation, and when the employee is now out of the employment of the employer and the employer has that money which is due to the employee for holiday pay, is it not possible for the department to collect the whole of the debt?


Douglas Charles Abbott: I should think, under those circumstances, it should collect the whole thing.


William Alexander McMaster: What is the practice with regard to people who go to work transitorily, work maybe for a week in Canada and then leave the country? I refer to somebody coming in here, making perhaps $2,000 or $3,000 in a week's work and then leaving the country. In the United States I believe means are available for collecting income tax at the time.

Income Tax Act


Douglas Charles Abbott: That would depend upon the circumstances. Under section 44, subsection 1, there would be a deduction of 15 per cent by the employer, or the person in Canada paying the wages, fees or commissions, which would be remitted to the receiver general. That would be on the assumption that the employee was a nonresident.


William Alexander McMaster: I thought that was only with regard to dividends, interest and royalties.


Douglas Charles Abbott: If my hon. friend will look at section 44, subsection 1, he will find that it reads in this way:
Every person paying salary or wages or other remuneration to an officer or employee, a superannuation or pension benefit, a retiring allowance, an annuity payment, director's fee or fees, commissions or other amounts for services . . . shall deduce or withhold therefrom such amount as may be prescribed . . .
It is now 15 per cent.


Harry Rutherford Jackman: If the taxpayer finds that he must employ outside help in order to keep his books, is he allowed to deduct the money he pays for that purpose as an expense from his income? The reason I ask the question is this. While technically the money is not spent in earning the income, the man would not be free to devote himself to earning income, likely at a much higher rate, if he had to keep track of his own accounts so that he would be able to fill out his income tax return at the proper time. I should like the minister to answer whether or not he is allowed to deduct those expenses as a legitimate item.


Douglas Charles Abbott: It would depend. If he is in 'business, he is entitled to deduct his bookkeeping expenses, the same as any other expenses. If he was purely an investor; if he simply holds stocks and bonds, I do not think he is entitled to the cost of keeping a record of his investment receipts.


Harry Rutherford Jackman: It seems absurd that he is not allowed to do so, because if he has to keep a double-entry system himself, as he must if he is to keep accurate books, he will have to devote much of his time to that type of work; whereas he is much better employed, from the standpoint of the treasury as well as himself, if he sticks to his own knitting and lets somebody else do that piece of work which is perhaps not directly attributable, as I pointed out in my explanation, to bringing in the income.
I hope the minister will give consideration to that point, because, a great many people find they cannot look after their own books.
They do not know how to do double-entry bookkeeping, to begin with, so that if they are to know where they stand, particularly in relation to the revenue department, they must employ outsiders to keep their books for them. Surely that is a legitimate expense which they should be allowed. Otherwise a man must take his own time to do the work and cannot earn as much; so he would not be in as high a bracket for the purposes of the income tax branch as would be the case otherwise.


Douglas Charles Abbott: I have no doubt there would be cases in which that would be appropriate. It is a little hard to give an opinion on a hypothetical set of facts. Each case would have to be dealt with on its own merits.


George Hugh Castleden: In regard to indebtedness for income tax, where a taxpayer may be indebted to the government, or the government may think he is indebted, a number of taxpayers have complained that there seems to be no cut-off date. Recently a farmer drew to my attention the fact that he had been asked to send in a return for 1940. All his receipts had been burned. He had no income tax to pay that year and he made no return. Now he can make no statement of his expenses and practically no statement as to his income. Is there any cut-off date at all in the act, beyond which the government does not collect income tax? Surely, if a man is not assessed within eight years it should be assumed that be is not to be taxed.


Douglas Charles Abbott: No date is fixed for the filing of a return. A date is fixed after which the return which has been filed may not be reassessed.


George Hugh Castleden: But there is no date beyond which a person may not be asked to file a return?


Douglas Charles Abbott: No. Theoretically one who has not filed returns could be asked to go back as far as 1917, when the act came into force.


George Hugh Castleden: If there were such a cut-off date it would do away with a great deal of difficulty on the part of those who find themselves asked by the officials of the department to send in returns after eight or nine years. Surely some date should be placed in the act, which would relieve a person of the worry of such a thing after a long period of time, particularly in areas where it is practically understood that the average person had no income tax to pay, and where he had been informed by the papers and even by statements of government officials that if he were not taxable he did not have to send in a return.
Income Tax Act


Douglas Charles Abbott: This is not in my department, of course, but I am told that in practice the department does not ask for returns for previous years unless it has strong reason to suspect that a tax return should have been filed.


George Hugh Castleden: I would still suggest that a date be put in.


[Stage Direction]
Section agreed to.
On section 110-Seizure of chattels.
John Horne Blackmore: Has this been in the act previously?


Douglas Charles Abbott: Yes. There is nothing new in this clause at all.


Victor Quelch: Does the minister not think a ten-day limit is rather short? It is all right in districts where a person is close to the post office, or where there are good roads. As the minister is aware, however, there are many areas, especially in western Canada, where at times it is almost impossible to traverse the roads to reach the post office. I know in my part of the country there are times when we do not get our mail for two weeks, or sometimes three. As a result, people may find that the government will be seizing their chattels. That is true of ordinary mail. It is even more true of registered mail. Your neighbour may bring out your regular mail in the ordinary course, but he would not be able to bring out a registered letter, which would have to wait until you went for it. Could the period not be extended, say to three weeks? In the latter part of the winter, especially, roads are often blocked for two or three weeks, and they are often impassable during the first month of spring. This year, for example, many roads and bridges were washed out. A man might easily be three weeks getting his mail, and he would not have any knowledge that a notice of this kind had been sent.


Douglas Charles Abbott: I am told that this is rarely if ever applied. It is a protective section put in to enable the tax department, if they have some reason to think a taxpayer may be disposing of his chattels with a view to avoiding payment of tax, to allow a short delay within which he must pay, and then attach the chattels. But I am told by the officials before me that it is rarely if ever used.


[Stage Direction]
Section agreed to.
Sections 111 to 118 inclusive agreed to.
On section 119-Offences.
William Ross Macdonald: An amendment was made by the committee to this section. Shall I read the amendment?


George Hugh Castleden: We would like to have it, please.
The	CHAIRMAN:	The section was
amended in committee to add the following as subsection 3:
(3) Where a person has been convicted under this section of failing to comply with the provisions of this act or a regulation, he is not liable to pay a penalty imposed under section 51, section 122, or section 117 for the same failure unless he was assessed for that penalty or that penalty was demanded from him before the information or complaint giving rise to the conviction was laid or made.
Section as amended agreed to.
Sections 120 to 124 inclusive agreed to.
On section 125-Artificial transactions.


Howard Charles Green: Will the minister give some explanation of this section? I believe the suggestion has been made by the Canadian Tax Foundation-


Douglas Charles Abbott: I think that is the next section.


Howard Charles Green: I know they are complaining of both sections 125 and 126. Apparently the suggestion has been made that already there are sufficient checks in other sections of the act to prevent the evasion which is supposed to be covered by section 125.


Douglas Charles Abbott: Subsection 3 was put in as a result of representations made by the tax foundation and others.


Howard Charles Green: Under subsection 3 the onus is on the taxpayer, is it?


Douglas Charles Abbott: That is correct.


Howard Charles Green: The taxpayer would have to show that the transaction-


Douglas Charles Abbott: Was bona fide; but presumably he would have no difficulty in doing so.


[Stage Direction]
Section agreed to.
On section 126-Tax avoidance.
Douglas Charles Abbott: An amendment was made to this clause in committee, and I promised to give consideration to a further amendment before the bill was considered by the committee of the whole. The amendment made by the banking and commerce committee inserted the word "main" in the second line of the section, so that it will read:
Where the treasury board has decided that one of the main purposes for a transaction or transactions effected before the coming into force of this act was avoidance or reduction of taxes . . .
In committee I suggested that I might be prepared further to amend this section by

Income Tax Act
putting the word "improper" before "avoidance or reduction", so that it would read, "was improper avoidance or reduction of taxes". 1 am prepared to ask one of my colleagues to move such an amendment. In order to give effect to the amendment, however, I would add a further subsection as subsection 6, which would read:
An avoidance or reduction of tax may be regarded as improper for the purposes of this section although it is not illegal.
The reason for the amendment is that the word "improper" might be interpreted as meaning "illegal". The evil which this section seeks to correct is that by legal but rather devious means an avoidance or reduction of tax may be accomplished which should not be accomplished. In its present form the section has been in the act since, I think, 1943. It came in, in wartime. It was in the act in another form before that, and in its present form it came in, in 1943. I am prepared, according to the undertaking I gave, to ask one of my colleagues to move this further amendment.


John Thomas Hackett: I am going to say just a few words about this section, because it seems to. me that it goes much farther than even the rapacity of the tax gatherer can justify. The language is simple, it makes a crime of seeking a reduction in one's income tax. We discussed this matter at some length in the banking and commerce committee. I assume that the law will be fairly interpreted and that it will be appliedi, as we believe all our laws are, with justice and with the utmost care. But why it should be suggested that a person who seeks, under the law, a reduction in his income tax is a person concerning whom a direction may be made, is a little difficult to understand.
The wording of 126 (1) is:
Where the treasury board has decided that one of the-
And the minister has suggested an amendment.
*-purposes for a transaction or transactions effected before or after the coming into force of this act was avoidance or reduction of taxes


Mr. GIBSON (Hamilton West):: The word "improper" was added.


John Thomas Hackett: Yes.

improper avoidance or reduction of taxes that might otherwise have become payable under this act . . .
And so on. He suggests that the word "improper" be defined; and "improper", as I understand the amendment, is not to be interpreted as "illegal". The transaction may be 5849-364J
legal and still be improper. I suggest that this is not only putting the court in a difficult situation but admitting the inability of parliament to enact effective legislation. It places in the hands of treasury board the power to write a direction whenever it wishes; because the only condition of such a direction is that the taxpayer shall seek a reduction in taxes which treasury board may call improper, but which is not illegal.
I regret very much to see legislation go on the statute books which gives to officialdom the right to penalize where there is no illegality; and that is the position which the committee is now being asked to assume. It is more or less fashionable these days to abuse officials and refer to them as bureaucrats. Be that as it may, this section is an evidence of a desire to have one's way, despite the law. It is a statement by parliament that officialdom shall reign, whatever the law says. That, Mr. Chairman, is a further encroachment upon fundamental liberties and civil rights which the House of Commons should resent.
We have gone through a number of sections hastily this afternoon, more hastily than wisdom would dictate. But when we are blandly asked to enact legislation which, regardless of its meaning, says, "Somebody is going to have the right to penalize you and to issue a document which, when it goes before the tribunal which revises these matters, may not be revised"-because the appeal board has no right to revise a direction-then I say we are going too far.
I move, therefore, seconded by the hon. member for Kamloops:
That section 126 in the bill be deleted and that section 32A in the old act be substituted therefor.


Douglas Charles Abbott: We are repeating what took place in the committee on banking and commerce. I must congratulate the hon. member for Stanstead. He is in his best oratorical form this afternoon and has just made a most impressive presentation of the evils of this section.


Harry Rutherford Jackman: It deserves it.


Douglas Charles Abbott: Those of us who were in the house in 1943, however, will recall equally clearly the speech made by the then minister of finance, in which he pointed out the evils of tax evasion, and the advantage which was being taken of loopholes in the law which it had been impossible to foresee, and which necessitated the introduction of this section.
I shall not attempt to repeat the arguments put forward at that time or those which I offered the other day in the committee on banking and commerce. But I wish to say
Income Tax Act

this, that the resourcefulness of those who wish to avoid or to reduce their taxation liability is practically unlimited. One tries as best one can to keep plugging up the loopholes in the income tax legislation; but it is not quite possible to keep up with the resourcefulness of individuals such as I have described.
I have agreed to the insertion of the word "improper", which is the only change from the existing section 32A. In effect the section as it now appears in the bill-


John Thomas Hackett: Plus the limitation of the word "improper".


Douglas Charles Abbott: If my hon. friend wishes me to withdraw my amendment I shall withdraw it. The section would then be in exactly the same terms as section 32A. The amendment has been proposed because I wish to meet the views held by members of the committee that the section does authorize broad powers. But the purpose the section is intended to achieve is an important one. In these days when we are taxing the wages and salaries of people with small incomes I think we should have every necessary weapon to prevent avoidance or the reduction of taxation by the more well-to-do taxpayers. That is the reason for this section.
I am quite prepared to have my colleague propose the amendment I have suggested; but if the committee does not want that, we shall go back to the wording of section 32A.


John Thomas Hackett: I ask you to call it six o'clock, Mr. Chairman.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


William Ross Macdonald: We are dealing with clause 126.


John Thomas Hackett: Mr. Chairman, when the house rose at six o'clock I was about to discuss this section a little more in detail. My hon. friend, the Minister of Finance, has found that I have injected a little enthusiasm into my utterances. I can tell him that there are some things which do arouse me. When I see what seems to me to be a challenge to law and to order and to the very basis of our system of government, the British system, a system evolved by the British, a system which we helped to develop; when I see what I consider not only a challenge but a violation of the supremacy of law, I do become disturbed.
My hon. friend has suggested an amendment to the income tax bill which will subject the taxpayer to the direst penalties, although he

may not have broken the law. To achieve that purpose, the minister has worded the law in such a way that any person who seeks a reduction in the tax-


Douglas Charles Abbott: An improper reduction.


John Thomas Hackett: My hon. friend says, "an improper reduction". Let it be said that he has inserted a clause defining "improper" in a way that makes it clear that "improper" does not mean "illegal". "Impropriety" as used in the amendment does not mean "illegality", whatever else it may mean. The result is that we have a law which, 'although not broken, may subject a person who has acted within it to a fine and to the payment of taxes that are not exigible under the law.
That is a matter which arouses a great deal of trepidation in anyone who is attached to and appreciates the real significance of what we have been pleased to call the rule of law. This section is a direct attack upon the rule of law; it is a violation of it. It says that if an individual, in the view of the treasury board, has sought a reduction of 'taxes-
And hon. MEMBER: An avoidance.


John Thomas Hackett: No, not avoidance only; a person who seeks avoidance or a person who does not seek avoidance but who seeks a reduction improperly is liable to the sanctions of the section. But "improperly" does not mean "illegally". So it means that a person who seeks a reduction legally may be prosecuted.
This means that we are reverting to the Star Chamber method. It means that the taxpayer of this country who happens to be out of favour with the authorities who man the treasury board may be made a criminal without breaking the law, may be punished and fined a large amount although not without the law. I say to this committee that this is a most serious departure from everything that we have believed existed in this country, of everything about which we have boasted in this country.
We all sit here very quietly. Most of us are anxious to get away. We have been here since last December. We are weary; we are anxious; we are overburdened; but here we are, most of us unaware of the, I was going to say, irretrievable step that we are taking. Most of us appear to be completely apathetic. Do we realize that we are putting back into the hands of an element entirely beyond the control of parliament, rights, privileges and prerogatives which were wrested from uncontrolled authority centuries ago?
Liberty is something that cannot be toyed with. We have not had it very long in this

Income Tax Act
country, and we have seen it seriously violated in the last few years, so much so that a great deal of the time of this house, the time of this committee and the time of the united nations has been spent in discussing human rights and elemental freedoms. Yet, without apparent interest and with complete apathy, this house is writing into our taxing law an iniquitous invasion of private rights and of human freedoms.


Douglas Charles Abbott: This section has been in the law since 1943, and the proposed amendment I would think makes the section less objectionable from my hon. friend's point of view.
Mr. HACIvETT: My hon. friend was very patient with me. I wish he would not say that this section has been in the law since 1943, because that is a complete inaccuracy.


Douglas Charles Abbott: All right. The section which is proposed in this bill is somewhat less objectionable. I would think, from my hon. friend's point of view than the section which has been in the law since 1943. The section which has been in the law since 1943, section 32A, provides:
Where the treasury board is of the opinion that the main purpose for which any transaction or transactions was or were effected . . . was the avoidance or reduction of liability to tax, it may, if it thinks fit, direct that such adjustment . . .
The proposed section in the bill is:
Where the treasury board has decided that one of the main purposes for a transaction or transactions effected before or after the coming into force of this act was . . .
And I am suggesting "improper avoidance of a tax." That has been in the law since 1943 in a form which I think is somewhat more rigorous than the form I am suggesting here. It was put into the law because of a fact which we discovered. There were these elaborate schemes for tax avoidance which were difficult, if not impossible, to spell out in the law itself. I think there har e been only three or four cases in which this section has been availed of, but I remember one case very well where, by a combination of three or four companies set up in Nassau and Panama, and one or two other places, a Canadian resident was able to avoid legally the payment of some $2 million tax. This section was availed of to bring that taxpayer before the treasury board to show cause why he should not pay these taxes. It was not taken any further; the taxes were paid. It was legal; but on any basis of justice, fairness, or whatever adjective one wants to use, that Canadian resident should not have been able to avoid payment of that $2 million of taxes.
I have asserted this before; I assert it again, and my predecessor has done the same thing, that no person, by using the loopholes which the law may offer, should be able to avoid the payment of his just share of the responsibilities for carrying the burden and the costs of carrying on the business of the country.
One may say, if it is legal, if it complies with the formal requirements of the law, then he should be able to do so. Well, perhaps so; but in the light of experience, it was found that a section of this kind was essential if practices of the kind which I have indicated were to be prevented.
There is an appeal from the findings of the treasury board in this matter to the Exchequer Court of Canada. The exchequer court can hear any evidence it sees fit to hear, can review the findings of treasury board and can come to the conclusion that one of the main purposes of the transactions involved was not the avoidance or reduction of taxation. So far as I am personally concerned, I think it is a section which should stay in the law, and I am proposing it for that reason.
As I have said, a corresponding section, one perhaps somewhat less rigorous from the lawyer's point, of view, has been in the law for five years. I will ask one of my colleagues to move the amendment which I have suggested, and I say, Mr. Chairman, that is as far as I am prepared to go in connection with the section.


James MacKerras Macdonnell: I should like to add a word or two on this subject. The minister has made a clever
speech-


Douglas Charles Abbott: An honest speech.


James MacKerras Macdonnell: -putting forward a view of this principle which it is awfully easy to accept. I believe that I dislike as much as anybody people who resort to clever devices within the law to escape income tax. I believe that we should have the best and ablest people in the service of the government to defeat these things. On the other hand, to say that, it seems to me, is a whole world different from saying you are going to give to certain people a power above the law. That seems to me to lead us into a situation to which there is no end. I said the other night in committee, and I repeat, that if we could be sure that we would have a man like the Minister of Finance always administering a law such as this I would have very little fear of it. But many people in Canada know, as I know, that there has been, in this country a government inspired by vindictiveness almost beyond belief in taxing,

Income Tax Act
so that decent people went in fear of, one [DOT]might say their lives, because an extreme law was used in a vindictive way.
There is no exaggeration in what the hon. member for Stanstead has said, that once people are given power above the law, one does not know where it stops. The case which the minister gave, of course one hates; but we are setting one case of that kind against the unlimited number of other cases which might be affected in the circumstances in which it has been set up.
Let us look at another thing. The minister says that this was set up in 1943. He says it has been used four times since then.


Douglas Charles Abbott: Do not hold me to the number. I know of four cases.


James MacKerras Macdonnell: That is what the official said the other night. I remember that, beca'use I was so struck with it that this had happened so seldom. Incidentally,. I think that is a great tribute to the honesty of the taxpayer.


Douglas Charles Abbott: Or the effectiveness of the section.


James MacKerras Macdonnell: Let us go back to what we are actually doing. It has been said much better than I can say it by a learned judge administering the law that you cannot begin to say what is the spirit of the law. You are either within the law, or you are without the law. Once you leave that, it seems to me that you are exactly out on the uncharted sea which the hon..member for Stanstead has told us about.
Before I take my seat I want to say just one thing. To me, as to the hon. member for Stanstead, it is disturbing to a degree, first of all to find the. minister, for whom we all have great respect, taking this so lightly; to have other people in the house whose hearts I respect though not always their heads, taking the view that, just because you will occasionally have a sharp and, to my mind, am unworthy kind of man, who tries to sail close to the wind, and who will get an advantage in spite of all the able officials that we shall have, get an advantage which will be very shortlived because the law will be very quick in overtaking him, for that reason we are to maintain this section which was put in as a war measure; and we are to go on doing this in the name of fairness. We are to do this tiling which takes us back to the powers the hon. member has referred to, and which I think were summarized in the old days by saying that the law depended on the length of the chancellor's foot. In other words, the law was not known; it was made by the feel-

ings of the man who administered it. When you have good men doing that it is bad enough; 'but when you have bad men doing it, as you may have one day, then there is no limit to the evil.


Edmund Davie Fulton: As the hon. member who has the honour of seconding the amendment moved by the hon. member for Stanstead, I wish to say a few words on this section. First, it seems to me, from what the minister has said just now and before the dinner recess, that his position with respect to this section, and to the amendment which he has moved, is based on the principle that legislation should be drafted on the basis that there are a few fraudulent people in the country who will take advantage of every loophole. That is a proposition of fact, the belief in the existence of those few fraudulent people, which may or may not be true. But my first quarrel with the principle and with the practical application of this section is that that is a false proposition on which to base legislation, because I think our law should not be made for people such as that. Our law must be made to benefit the honest majority.


Douglas Charles Abbott: This section does not affect the honest majority.


Edmund Davie Fulton: This section does affect the honest majority in spite of what the minister says, because it is applied to the honest majority just as much as it is applied to the fraudulent few, if there be those fraudulent few who seek to take advantage of the law. That is an inherent weakness in much of the law we find in the country today, and I believe, as strongly as I can believe anything, that our income tax law especially, which applies to every person in the land, must be so designed as to meet the case of the average taxpayer who dislikes paying taxes. That is a healthy sign, for it would be unfortunate for the country if we reached the point where people liked paying taxes.


Douglas Charles Abbott: That is a long way off.


Edmund Davie Fulton: Our law must be designed *to meet the case of the average taxpayer, who is not fraudulent, and must not be so designed, on a general basis, that in order to catch the occasional few we put ourselves in the position of doing injustice to the honest majority. But that is the position in which this section puts us because, as the hon. member for Stanstead pointed out, it places the treasury board and the enforcing officials beyond the ordinary law. It puts them in the position of making the law, and it is not this House of Commons that makes the law.

Income Tax Act
The house makes the law and the treasury board says, it does not matter what the law is; it does not matter whether you have followed the law, whether you have done even those things which the minister himself, in the banking and commerce committee, said were perfectly legal; because you have done them, we say you have done them for an improper purpose and we hold you liable.
Because I believe that is a false principle on which to proceed; because I am of the opinion that if there be loopholes that can be taken advantage of i't is better to go on plugging the loophole until eventually we arrive at something that is as near perfection as we can achieve, instead of leaving the loopholes wide open and leaving it 'to the discretion of -the treasury board to plug those loopholes as it sees fit-because I so believe, I have pleasure in seconding the amendment and shall vote for it when it is put to the vote.


Frank Eric Jaenicke: I cannot agree with what has been said by the hon. member for Stan-stead and the hon. member for Kamloops. In fact I suggest 'to the minister that he drop the amendment and leave the language as it is, because in my opinion "improper avoidance" implies proper avoidance, and I cannot imagine that there could be a proper avoidance brought about by some .taxpayer purposely scheming to avoid taxation. And that is all this section means. I think it is proper and necessary. What about the millions of other taxpayers who make their returns properly and withoW scheming ito avoid or even cause a reduction in their taxation?


Edmund Davie Fulton: They are as much subject to this as anyone else.


Frank Eric Jaenicke: I agree with the minister that no honest taxpayer need fear the section. I think we should pass the bill as it is.


William Ross Macdonald: The committee is considering section 126, and I have an amendment that the clause be amended by substituting certain words. The hon. member for Stan-stead has also moved an amendment, and in order to keep the procedure straight-


John Thomas Hackett: An amendment to the amendment.


Harold Aberdeen Watson Timmins: Perhaps you would read the amendment, Mr. Chairman.


John Thomas Hackett: If you will permit me, Mr. Chairman, my amendment is there. The minister said he was going to get one of his colleagues to move his amendment, but it has not yet been moved.


Douglas Charles Abbott: That is correct. I had assumed that when I had completed my explanatory remarks the amendment would be moved, and technically my hon. friend is quite correct. My amendment has not been moved, and in the circumstances I will not move it for the time being.


William Ross Macdonald: When the minister spoke this afternoon he said that one of his colleagues would move the amendment, and I wrote Mr. Fournier's name at the top of it. However, the minister says the amendment has not been formally moved. I understand that there is an amendment moved by the hon. member for Stanstead to the effect that clause 126 be deleted and that section 132A of the former act-


John Thomas Hackett: It is 32A (1).


William Ross Macdonald: -be inserted in its
place. All those in favour of the amendment will please say "yea."


George Hugh Castleden: In regard to this
amendment, it seems to me that one appeal this evening was made on the ground that this was contrary to some of the principles of British law. As a layman, I would say that one of the basic principles of British law, as I understand it from my study of history and of government, is that it shall give justice to all and that it will prevent, if possible, the avoidance of what is intended by the law. Section 126 as it stands is a measure on the part of the government to prevent evasion and to give justice. If there is any weakness, my hon. friends to the right seem to think it is by reason of the fact that the treasury board is given certain powers to direct. Under section 5 of this bill, the exchequer court is available to everyone. That being so, I do not see what basis there is for the charge that this is Star Chamber legislation.


William Ross Macdonald: Shall the amendment carry?


Some hon. MEMBERS:: Carried.


Some hon. MEMBERS:: No.


William Ross Macdonald: In my opinion the nays have it.


Mr. CASSELMAN:: On division.
Amendment (Mr. Hackett) negatived on division.


Douglas Charles Abbott: I indicated that I would ask to have an amendment moved, and no doubt the Minister of Public Works will be glad to move the amendment you have in your hand, Mr. Chairman.
Income Tax Act


William Ross Macdonald: It is moved by Mr. Fournier (Hull) that clause 126 be amended:
1.	By substituting the expression "improper avoidance or reduction of taxes" for the expression "avoidance or reduction of taxes" in the fourth line of subsection 1 thereof.
2.	By substituting the expression "improper avoidance or reduction of taxes" for the expression "the avoidance or reduction of tax" in the third line of paragraph (b) of subsection 5 thereof.
3.	By adding the following subsection thereto:
(6) An avoidance or reduction of tax may be
regarded as improper for the purpose of this section although it is not illegal.
Shall the amendment carry?


Edmund Davie Fulton: On division.
Amendment agreed to on division.
Section as amended agreed to.
Sections 127 to 130 inclusive agreed to.
On section 131-Application of this act.


William Ross Macdonald: I may point out that section 131 was amended by the committee by adding in the last line after the word "are" and before the word "applicable" the words "unless otherwise specifically provided".


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
William Ross Macdonald: Section 50.
On section 50-General.


Edmund Davie Fulton: I appreciate very much the generosity of the committee in allowing this clause to stand this afternoon while I had to be in another committee meeting. I shall try to keep my remarks within short compass. The effect of section 50 is to increase the rate of interest for the penalty for late payment of taxes from four to six per cent in one case and from six to seven per cent in the other.


Douglas Charles Abbott: In committee it was amended to seven per cent. That remains unchanged.


Edmund Davie Fulton: It was six to eight per cent. It was amended in the banking and commerce committee and it is six to seven per cent.


Douglas Charles Abbott: Yes. I agreed to that amendment.


Edmund Davie Fulton: We have this position, then. If a taxpayer completes his assessment, sends it in with a cheque in full for the amount of the tax which he has assessed, some months later the department, having reviewed his assessment, may send him out a notice of the revised assessment and notify him that he has underpaid the tax as the department has assessed

it; and then he is liable to pay interest at six per cent for the period in which the tax has been underpaid.


Douglas Charles Abbott: With a limit of twenty months.


Edmund Davie Fulton: With a limit of twenty months maximum interest penalty. The maximum of twenty months applies to the time the department has been in arrears. If his assessment is not received for more than twenty months-


Douglas Charles Abbott: After twenty months interest ceases to run.


Edmund Davie Fulton: -interest ceases to run after that time. But the point is that even though it may be the fault of the department, owing to its inability to make the revised assessment in time, the taxpayer still has to pay interest. The interest is raised now to six per cent, whereas before it was four per cent. I should point out that this amendment has not been in the law right along, but is the result of a budget resolution introduced this year and an amendment to the income tax act passed this year.


Douglas Charles Abbott: It was there for years until two years ago.


Edmund Davie Fulton: If the minister will allow me to complete my statement I will cover the point he has in mind. As a result of the budget resolution and the amendment to the income tax act passed this year, the rate was raised from four to six per cent in one case and from six to eight per cent in the other, the eight per cent rate having been reduced to seven per cent in the banking and commerce committee. When this resolution was discussed in the house, the hon. member for St. John-Albert, seconded by myself, introduced an amendment to reduce the interest penalty to the old rate, namely, four and six per cent respectively.


Douglas Charles Abbott: It was four per cent and seven per cent. I know my hon. friend wants to be accurate. It was never lower than seven per cent for arrears after notice of assessment.


Edmund Davie Fulton: The amendment to which I refer was ruled out of order at the time it was introduced in the debate on the budget resolution, on the ground that it would upset the balance of ways and means. I propose to move the same amendment at this time, on the following grounds.
First, the extra penalty involved in this increase in the interest rate affects the taxpayer even though he is not himself at fault,

Income Tax Act
even though he has made an honest assessment and paid his assessment in full, and even though the fault is that of the department in its inability-and I use that word advisedly- to get out the revised assessment in time. That is the first ground, that even if the taxpayer is not at fault, he will now pay interest at six per cent as a penalty.
In the second place, I do so on the ground that the minister himself has said, as reported at page 4067 of Hansard, that the interest charge of six per cent is frankly in the nature of a penalty. In other words, there is nothing here designed to increase the amount of taxes collected. The interest rate of six per cent is frankly in the nature of a penalty. Because we think, as we thought at the time when we first introduced the amendment, the taxpayer should not be penalized for the default of the department, I suggest that the interest rate should be reduced to the old rate of four per cent.
With respect to the possibility of this upsetting the balance of ways and means, Mr. Chairman, I think we can confidently say that, in introducing this amendment at this time in this manner, we are not liable to be criticized on that ground, because the bill now before the committee is a codification of income tax procedure. The bill will not become operative until January 1, 1949, and therefore it will not upset the balance of ways and means.


Douglas Charles Abbott: It will affect this fiscal year, which does not end until the end of March.


Edmund Davie Fulton: Therefore it cannot possibly affect the balance of ways and means for this year because, may I point out, taxes are collected on the basis of the income of the calendar year.


Douglas Charles Abbott: An instalment is due on March 31.


Edmund Davie Fulton: It is based on the income of people to the end of the calendar year. So this change could not possibly upset the balance of ways and means. In that connection I would point out that, in the minister's own words, it is merely a penalty. He cannot be said, surely, to have predicated his balance of ways and means on the slim chance of collecting a two per cent extra penalty. It is not a tax provision: it is only a penalty provision. So I think the amendment is in order at this time on those grounds, and is well justified on the basis that taxpayers should not be penalized, because the department itself may have occasioned the delay in making the 5849-365
revised assessment. I therefore move, seconded by the hon. member for St. John-Albert:
That section 50, subsection 1, be further amended by changing the figures "6 per cent" and "7 per cent" where they occur in lines eighteen and twenty-three thereof to read "4 per cent" and "6 per cent" respectively.
I might point out that I am using the figure "7 per cent" there because the minister indicated that was the correct one.


Douglas Charles Abbott: This is the same amendment, of course, which was ruled out of order when this bill was before the house; and I do not intend to repeat the arguments which I made then as to why it is out of order. I frankly find it difficult to see why people are so much exercised about the difference between four per cent and six per cent interest to people who do not pay their taxes in full. It was six per cent for many years until a couple of years ago.


Edmund Davie Fulton: It never should have been.


Douglas Charles Abbott: Perhaps. But after having reduced that rate to four per cent, we found that advantage was being taken of it by a good many people in this country who felt that this was a nice, cheap way of getting an unsecured loan from the government at four per cent per annum. Not only do they do that by filing their tax returns, showing a certain amount of tax payable and then not paying the full amount of tax, knowing the assessment department will not be able to assess the return for a year or two; but a great many people, who are not quite so scrupulous as the ones to whom I have just referred, will charge in a great many expenses which they know or have reason to believe will probably be disallowed when the department gets around to assessing the return. But of course that will be eighteen months or a couple of years from now, and in the meantime they will have had the use of the money at four per cent. This provision is put in to prevent abuses of that kind; and, so far as I am concerned, I shall insist that it stay in the law.


Edmund Davie Fulton: I can tell the minister why some people are exercised because of this sort of thing. It is because they have seen an injustice done to perfectly honest taxpayers who have made what they regarded as an honest assessment. Their revised assessment has not been received for two or three years after they turned it in; and they were then charged interest when, through no fault of their own, they are in arrears on the payment of their taxes. That is why people get exercised, because they see perfectly honest taxpayers subjected to an interest penalty because
Income Tax Act

the department itself is in arrears in making the revised assessment.


Douglas Charles Abbott: Let them make their tax returns out correctly.


Edmund Davie Fulton: As was pointed out by the minister in the argument he put forward, if there are people who assess themselves at one sum, and then send in a cheque for a smaller sum, thus taking advantage of the situation which he outlined, there can be no objection to charging them the full interest rate. But in the case of the great average mass of taxpayers-probably 1,999,000 out of 2,000,000 taxpayers-who make their assessments honestly and who pay in full, I suggest that it is unfair to penalize them because there may be some who take advantage of a loophole in the tax law. I am not so concerned about the wealthy man-


Some hon. MEMBERS:: Oh, oh.


Edmund Davie Fulton: -who takes advantage of the law and who may be penalized or may be charged the full interest rate. Let the minister bring in an amendment to deal with him. But I am concerned about the man who tries to be honest, and who is simply set against government in all forms because he finds himself unjustly treated by the department against which he has no recourse. Hon. members across the way may say, "Oh, oh", if they like. Of course one cannot go fully into the motives which cause one to move amendments or to make suggestions, but I say that is what I have in mind in moving this amendment. I do not think it is a matter to be shrugged off; nor is it a matter, I suppose, about which one should get heated, especially when one finds in one's own experience, as I am sure all hon. members have found-because no hon. member is unique in this or any other respect-that honest taxpayers are penalized through no fault of their own. So I think we should try to draw up such amendments as will prevent these hardships being inflicted upon them.


John Thomas Hackett: There is one aspect of this situation I should like to draw to the attention of the minister. When six per cent was the rate previously it was the normal rate, which applied almost universally. Today the interest rate is much lower. One can borrow for three and three and a half per cent-


Douglas Charles Abbott: Not on unsecured loans.


John Thomas Hackett: -and four per cent, with reasonable security.


Douglas Charles Abbott: Not on unsecured loans.


John Thomas Hackett: I hope the taxpayer is not considered as other than good security. After all, the taxpayer is the security of Canada, and it is that aspect of the situation I am asking the minister to consider. Really the rates of six and seven per cent today are equivalent to ten and twelve per cent at the time these penalties were originally imposed. They become penalties, in fact.


Douglas Charles Abbott: Anyone can avoid the payment of these rates by preparing a proper income tax return and paying the amount of the tax due. I am just as solicitous as anyone else for the average taxpayer; but the taxpayer I am particularly solicitous about is the one who honestly makes up his return, accurately computes his tax, and pays it when due; and that taxpayer does not pay any interest.


John Thomas Hackett: Then why does not the minister provide a category for these nefarious people, who apparently must be numerous, or he would not be passing legislation to fit, them? Why does he not prepare a class which will include them? Why should the ninety-nine innocent people suffer because of the one who is not as careful as he might be in paying his tax?


Douglas Charles Abbott: My hon. friend is a very good lawyer, but if he could draw up a clause


John Thomas Hackett: I am v'illing to help.


Douglas Charles Abbott: -which would accurately describe a taxpayer who claims an expense which is subsequently disallowed, and prove that this claim was made intentionally, he is better than I think he is.


John Thomas Hackett: But that is the basis of the hon. gentleman's argument, that there are people who are doing this intentionally, in order that they may benefit improperly and dishonestly through it. I say, let us deal with them; but why treat the ordinary individual who makes up his return, sends in what he believes he owes and then wakes up perhaps twenty months later-it cannot be longer than that, because the interest does not run beyond that period-to find that he owes the government a substantial sum? I suggest to the minister that good business warrants some segregation, some selection between those who pay readily and willingly all they believe they owe, and those who fall into the category the minister has described.


Angus MacInnis: As far I know, Mr. Chairman. you did not rule on the point of order. Before you do so I should like to say I do not

Income Tax Act
think the minister's point is well taken. If this is a deterrent; if fewer people will pay the interest, you are likely to collect more taxes with the six per cent and four per cent than with the six per cent and eight per cent. So I do not think the minister has made a case at all. If this is to be a deterrent to people underpaying their taxes I think he is away out, so I believe you might very well rule the amendment in order.
I think the hon. member for Kamloops and the hon. member for Stanstead have made a fairly good case here. The principle the minister is adopting is that he is going to punish a man who has done something without premeditation, if that is the word, or without intent, in the same way that he is going to punish a man who did the same thing with intent. Surely that is a bad principle. While there is nothing I hate more than a chiseler I do not think you should punish the person who has made a mistake in the same way as you punish the person who has defrauded with intent. That is exactly what is being done in this case.
While I am speaking on this subject, though it may not have anything to do with the particular section, I believe the income tax branch is extremely negligent in returning moneys that have been overpaid. I do not want to raise a personal question, but I made an overpayment on my 1942 tax, and I did not get it back until 1948, after considerable correspondence. I received no interest.


Douglas Charles Abbott: You will from now on.


Angus MacInnis: As far as the department was concerned, very likely I would never have got it back. I do not know how they keep their records, but I do say that in this instance you are penalizing the person who inadvertently underpays his income tax in the same way as you are penalizing a person who has done so writh intent.


Clarence Gillis: I have to agree with my leader in this instance. When this clause was discussed in the house before the bill went to committee I pointed out to the minister that there were instances of hardship in the application of interest, where taxes were wrongly computed. The person who suffers most under this section is, in my opinion, the industrial worker, ninety per cent of whose tax is supposed to be collected at the source. He keeps no record himself; but, through broken time and time lost through sickness, the records of the company are at fault in many cases. At the end of April, when he comes to file his return, he is not really in a position to figure his tax. So he makes a guess at it, an honest guess. That
return may lie in the income tax office for fifteen months, and at the end of that time he may get a bill for $75, $100 or $200 which he had no idea he owed; not a large amount, mind you, for the class of people my hon. friends to the right are thinking about-


Gordon Knapman Fraser: That is very unfair.


Clarence Gillis: -but a lot of money for the fellow who is making only $1,200 or $1,500 a year and paying his tax. It is absolutely unfair to collect interest in a case of that kind, and I believe the collection of this interest might very well be dropped. Very reluctantly I agree with hon. gentlemen to the right on that. I believe section 126, which we just passed-and I hope the minister has not weakened it by accepting the amendment-is a kitchen-sink clause which might very well take care of the category some of my hon. friends are trying to protect.


James MacKerras Macdonnell: Why assume that? I think you had better take that back.


Mr. MacNICOL:: Be a sport and take it back.


Clarence Gillis: I never take anything back, and I do not say anything I do not mean.


William Ross Macdonald: Order.


Clarence Gillis: My hon. friend is a good lawyer. Any time he is retained either to defend or to prosecute, the first thing he gropes for is a motive. I am suggesting, Mr. Chairman, that in prosecuting this particular section the motive is profit. I think my assumption is fairly reasonable.


Gordon Knapman Fraser: Your assumption is only a C.C.F. assumption, and it is not worth anything.


Clarence Gillis: That is scarcely the view taken by people who elected members to the House of Commons and the legislature. Some people do not agree with you.


Gordon Knapman Fraser: If you use that kind of method to get them in, I do not doubt you can get them in under false pretenses.


Clarence Gillis: It is not false pretenses. People are smartening up; they are getting wise to you.
I have pointed out that the case of a serviceman who had enlisted in 1942 with an income w'hich placed him in the income tax brackets. He went overseas ' and returned in 1945. He was billed interest for the years he was actually overseas in the services. The income tax officials had no alternative, front
5744
Income Tax Act

a legal standpoint, to collecting. But one can imagine 'the state of mind a man would be in when he was constantly being dunned for interest on the unpaid portion of his 1942 'tax.
The rate of interest should be dropped. I know, as the minister has said, that all the details cannot be written into legislation. I hope that when the regulations are being prepared some provision will be made whereby the departmental officials will have the necessary latitude to make adjustments where there are extenuating circumstances such as I have outlined.


Douglas Charles Abbott: I suggest that the amendment is out of order.


William Ross Macdonald: This question was
raised when the budget resolutions were before the committee, and at that time the motion to reduce was ruled out of order. While the minister has said there is a penalty here, there is no reference to a penalty in the section. It seems to me that if a person does not pay his tax by a certain date or in a certain time, then he has to pay an amount which is increased by the amount of interest.
Section 50 refers to taxes which will be received. The amendment is to reduce the tax. Therefore it would reduce the revenue and would be a burden upon the treasury. It is not competent for a member to make such a motion, and I therefore rule it out of order.


Edmund Davie Fulton: Mr. Chairman, I am not allowed to debate your ruling, but, with respect, I must say that I cannot accept this as being comparable with a budget resolution, or that it would upset the balance of ways and means. I would ask you, sir, to reconsider your ruling. If not, I must respectfully appeal against it.


Arza Clair Casselman: The hon. member has appealed the ruling.
++NAYS
Messrs:


William Ross Macdonald: I understand that, yes.
Mr. SPEAKER resumed the chair, and the chairman of the committee .made the following report:
I have ruled that the motion to change the figures six per cent and seven per cent as an addition to a tax where the taxpayer's income is less than the amount payable should be reduced to four per cent and six per cent, is out of order as it is creating a burden on the treasury.
The hon. member for Kamloops (Mr. Fulton) has appealed.

Archibald
Ashby
Aylesworth
Barrett
Black (Cumberland)
Blaekmore
Blair
Bracken
Caouette
Case
Casselman
Castleden
Charlton
Coekeram
Coyle
Dorion
Fair
F erguson
Fleming
Fraser
Fulton
Gillis
Gray don
Green
Hackett
Harkness
Harris (Danforth)
Hazen
Herridge
Hlynka
Irvine
Jackman

Income Tax Act
Taenicke
Jones
Knight
Knowles
Kuhl
Leonard
Lockhart
MeCuaig
Macdonnell (Muskoka-Ontario)
McGregor
Maclnnis
McKay
MeLure
MeMaster
MacNicol
Matthews (Kootenay East)
Men ary Merritt Miller
Moore
Pearkes
Queleh
Ross (St. Paul's)
Rowe
Skey
Smith (Calgary West) Stewart (Winnipeg North)
Stokes
Thatcher
Timmins
Tustin
White (Hastings-Peterhorough) White (Middlesex East)
Williams Wylie Young-68.


Mr. CHURCH:: I was paired with the hon. member for Temiseouata (Mr. Pouliot). Had I voted. I would have voted against the chairman's ruling.


Gordon Benjamin Isnor: I was paired with the hon. member for Colchester-Hants (Mr. Stanfield). Had I voted, I would have voted to sustain
the ruling.


Mr. CLEAVER:: I was paired with the hon. member for Bow River (Mr. Johnston). Had I voted, I would have voted to sustain the ruling.


Mr. EMMERSON:: I was paired with the hon. member for Royal (Mr. Brooks). Had I voted, I would have voted to sustain the ruling.


Mr. GARIEPY:: I was paired with the hon. member for Vietoria-Carleton (Mr. Hatfield). Had I voted, I would have voted to sustain the ruling.


Mr. LAPALME:: I was paired with the hon. member for Argenteuil (Mr. Heon). Had I voted, I would have voted to sustain the ruling.
(Translation):


Mr. BONNIER:: Mr. Speaker, I was paired with the hon. member for Bruce (Mr. Robinson). Had I voted, I would have voted to sustain the chairman's ruling.


Mr. RAYMOND (Wright):: Mr. Speaker, I was paired with the hon. member for Beauharnois-Laprairie (Mr. Raymond). Had I voted1, I wiould have voted to sustain the chairman's ruling.
(Text):
And the house having resumed in committee. The CHAIRMAN: Shall section 50 carry? Section agreed to.
Bill reported.


James Horace King: When shall the bill be read the third time?


Some hon. MEMBERS:: Now.


Some hon. MEMBERS:: Next sitting.


Douglas Charles Abbott: Of course it requires unanimous consent to have the bill read the third time at this sitting, but I would' ask the house whether it would consider doing that. The bill will be going to the other place, and I presume it will receive some consideration there. I put that before the house. If it does not wish to give the bill third reading I will ' not press it.


James Horace King: Next sitting.



PARLIAMENTARY RESTAURANT

[Stage Direction]
Mr. SPEAKER laid on the table of the house a report from the civil service commission relating to the permanent appointment of Mr. William Jennings as manager of the joint parliamentary restaurant.

[Stage Direction]
A message from His Excellency the Governor General transmitting supplementary estimates for the financial year ending March 31, 1949, was presented1 by Hon. Douglas Abbott (Minister of Finance), read by Mr. Speaker to the house, and referred to the committee of supply.

[Stage Direction]
Hon. DOUGLAS ABBOTT (Minister of Finance) moved that the house go into committee of supply.
Harold Aberdeen Watson Timmins: Mr. Speaker, may I bring to the attention of the house a matter which I consider of major national importance? I hold in my hand an invoice in respect of a keg of four-inch nails bought in the city of Toronto at the price of $16.75.


Some hon. MEMBERS:: Oh, oh.


Harold Aberdeen Watson Timmins: This may be a matter of laughter to some members, but I think the Minister of Reconstruction and Supply will thank me for bringing it to his attention and he will probably act on the information which I intend1 to submit to the house. Actually a keg of four-inch nails costs $5.85 if it could be bought, but this particular keg cost $16.75, which represents an increase of about 300 per cent. Not only have I the invoice, but I have here the keg of nails.
The minister has told us on previous occasions that sometimes these nails come across the border from the United States and that he has no control over the price that may be
Nails

obtained for American nails. That is so, but this keg of nails, which is in the lobby and can be produced, bears the stamp of the Dominion Steel and Coal Corporation, Sydney, Nova Scotia, and Montreal. Evidently, therefore, this keg of nails was produced in Canada and was on the market to be sold in the ordinary course of events.
On May 10 last at page 3774 of Hansard I asked a question of the minister of reconstruction regarding this matter. On that occasion I said:
Builders in Toronto are in a desperate position in regard to nails. Representations have been made to the minister's department to see what can be done to cut through whatever obstacles are holding up production. Apparently at the present time the wire is not available, and I understand that the minister has control of the disposition of wire materials to various firms.
I will not read the rest of it. The minister at the time replied, quite properly:
I have asked our people to give all the preference they dare to give to nails, and we are going to take a bite out of wire products. There will be complaints about that, but you cannot distribute more than there is in toto. We are in process of diverting wire from other uses into nails. We are not going to make any barbed wrire for a few months. I hope hon. members who have been worrying about nails will not start worrying about other products, because that is the only way to get more nails.
In fairness to the minister, it must be said that he did follow the matter up, and on June 1 the steel controller issued a directive or order of his department under that date. Without going into any details, I may say he did direct the ^teel producers to increase production on nails, and as a matter of fact a great many more nails have been produced. The minister will agree with me that those nails were for house builders. That was why he urged the increased production of nails. The fact is, however, that the nails are not going to home builders, and it is my purpose to try to satisfy the house and the minister that something must be done about the matter.
I was in touch with the steel controller, and he told me frankly thalt the bottleneck in respect of getting nails to home builders was that down to the level of the wholesaler distribution was fair and equitable, but when it got away from the wholesaler there was trouble and he was trying to do what he could to find ways and means of setting a pattern for getting nails into the hands of the builders themselves.
What brought this whole thing about was an advertisement which appeared in a paper in Portage la Prairie about two or three weeks ago. There was an advertisement of 10,000

kegs of steel nails which were available, all sizes. The advertisement read:
Nails-steel-10,000 kegs available of all sizes. Write for price list. Sherman's box 1005, postal station "C", Toronto, Can.
After having received that particular clipping, I had an investigation made by some members of the National House Builders' Association of Toronto. The result was that they purchased this keg of nails for $16.75. But not only did we find that advertisement in the Toronto paper; we found these others. Plere is one:
Nails! Nails! Nails!
Nails, common, steel, 2} inch, 3 inch, 4 inch, $14.50 per keg. 3534 Duiulas St. W., MU. 4815, open daily 8 to 8.
That was followed by another advertisement:
Nails
$16.75 per keg, common steel lj inch, 2 inch, 21 inch, 3 inch, 4 inch and 6 inch. Finishing nails slightly higher. LA. 2823, 1275 Queen St. W.
That, Mr. Speaker, is right in my own district of Parkdale. Nails are being sold at $16.75 a keg. That was followed by another advertisement:
Nails, steel, common, finishing, 624 Bloor St. W. LL. 3200.
That is also in the city of Toronto. As a matter of fact, this leakage with respect to the distribution of nails to home builders is not just an isolated case. Here was another advertisement which mentions 10,000 kegs of nails.
A friend of mine who was making the investigation said he saw in the garage where he bought his nails, 100 or 200 kegs of nails which were available for sale. There is certainly a hole in the administration with respect to the distribution of these nails. It is quite apparent that among our citizens there is a good deal of chiseling going on. There are a great many small-town chiselers who are running up the cost of building in this country.


An hon. MEMBER:: Big town.


Harold Aberdeen Watson Timmins: All right; big town, if you like. There are a great many small chiseling people who are doing these things. I am saying to the minister that something ought to be done and ought to be done right away. I am quite prepared to hand these advertisements to the minister. He ought to have an investigation made tomorrow because, just as soon as this gets in the press, these people will be closing up shop. But the nails are there in Toronto, and if these people are guilty of chiseling on the people who want to build homes, then we should act at once. As

Nails
I understand it, in the wartime prices and trade board order there is a section which says that if you sell above what is fair and reasonable, you are committing a crime. Certainly 300 per cent is not fair and reasonable. AVe all know that. I am bringing this to the attention of the minister. I am not criticizing him and I am not criticizing his department.
I know the steel controller has been trying to find some machinery by means of which to have these nails distributed properly. But some place along the line the system has broken down. Some place along the line there are those who are taking advantage of the Canadian people, and I ask the minister to give the matter immediate attention.


Clarence Decatur Howe: I can say to my hon. friend, Mr. Speaker, and I think he agrees, that no other feature of steel control has received the attention that the distribution of nails has received. I am certain that Canadian manufacturers are selling at fair and reasonable prices. I believe they are selling to reliable distributors, and I think to that extent we have found no flaw in the system. From the distributors down, some nails perhaps get into the wrong hands, although I think the distributors are most conscientious in attempting to distribute the nails to reliable or bona fide users.
I have said before that nails are brought in from the United States and sold here. In the United States nails cost nearly twice as much as they do in Canada, which is a tribute to the fact that we have kept our steel production in order from a price viewpoint. These nails are brought in and distributed at a profit. I said that I saw no particular harm in that. If anyone is so desperate or so pressed for nails that, rather than wait for nails at the Canadian price of about $5.80 a keg, he must pay $16.50; and if they are not Canadians nails; if they are nails in addition to the Canadian product-


Harold Aberdeen Watson Timmins: If the house would like me to bring in the keg, I will do so; and it does not say they are United States nails.


Clarence Decatur Howe: No. The hon. member
undoubtedly has a keg of nails that was manufactured in Canada, handed down through our distribution system, diverted into the wrong hands and is being resold at an exorbitant profit. If we could learn the history of that transaction we would, of course, prosecute. But I think the remarkable thing is that, of all the nails distributed, it is one keg that we are talking about.


Harold Aberdeen Watson Timmins: If the minister will pardon me for interrupting, this firm that sold these nails advertised that they had 10,000 kegs of them.


Clarence Decatur Howe: AVe will make an investigation; and if there are 10,000 kegs of Canadian nails, I can assure my hon. friend a prosecution will foe launched tomorrow.
The hon. member made one other statement that I think I should correct. He said the additional nails we are making out of wire that was formerly put into fencing wire and barbed wire are not going inlto housing. I can assure him definitely that those nails are going into housing, because they are being distributed to house builders through government agencies. Those nails definitely do go into housing. The former pattern has not been changed for the former production, but the government has commandeered excess production and is taking its own methods to make sure that it all goes inlto house building.



ARTICLE IN VANCOUVER &quot;SUN&quot;

Norman Jaques: I hold in my hand, Mr. Speaker, a cutting from the Vancouver Sun of June 21, it being a statement by Dillon O'Leary, dated Ottawa, June 21, and headed: "Maelnnis calls Jaques liar, no reprimand". This is a misstatement and is a reflection on the chairman of the committee, on the hon. member for Vancouver East (Mr. Maelnnis) and on myself. The hon. member for Vancouver East did say that-a statement I made in the house, that the
C.C.F. supported Zionism, was a lie; but that is quite a different thing from calling me a liar.
I also hold in my hand a cutting from the Canadian Jewish Chronicle of May 21, 1948, headed "Israel rally at Montreal supports Zionist policies and its armed forces. Messages of greetings and support were received from individuals and organizations including the provincial executive of the C.C.F. party". In the light of this evidence, will Mr. O'Leary correct his misstaitement?



SHIPMENT OP CEDAR POLES TO THE UNITED STATES

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Mr. H. AV. HERRjIDGE (Kootenay West): Before we go into supply, Mr. Speaker, I wish to bring to the attention of the minister a situation in my riding. As many hon. members know, in my riding are produced some of the finest cedar poles in the world. There is a Large stand of cedar poles in the Columbia river basin. In taking out these poles, many hundreds of small operators find their living. This year, owing to late snow in the mountains
Shipment oj Cedar Poles
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and an extremely late spring, poor roads and finally the floods, the operations of many of these operators have -been seriously delayed and curtailed.
At the present time they are required to ship one carload of poles to the Canadian market for every two cars shipped to the United States market. That regulation works a hardship on the small operators, because they cannot carry a large stock of various sizes, and the Canadian market absorbs only a certain type of poles. I know what I am talking about, because I have sold poles myself. The United States market absorbs a wide -range of these poles. As a result of these regulations and these conditions, large numbers of off-size poles have aooumulalted in the yards of the small operators. They cannot -market these poles in Canada, but they could be marketed in the United States to great advantage. In addition, prices in the United- States are somewhat higher than in Canada.
Therefore I bring this situation to the attention of the minister and urge that, under the circumstances I have outlined and in view of the short season, some consideration be given to allowing these pole operators to ship a larger quantity of poles to the United States than is permitted at the present time.
Motion agreed to and the house went into committee, Mr. Golding in the chair.

[Stage Direction]
Lands and development services branch-[DOT] N-ational parks services-
206.	National parks and historic sites services, $7,372,878.	.
Mr. ROSS (St. Paul's):: I have just one comment to make on this item-


Hon. J. A. MacKINNON (Minister of Mines and Resources):: While the hon. member is considering his comment, with his permission this may be a -good opportunity for me to answer some questions that were asked just before we rose last evening, shortly after eleven o'clock.
The hon. member for Brant asked whether the department, through its historic sites service, had made a grant to the Bell homestead at Brantford, to the Mohawk church, or the birthplace of Pauline Johnson. I am told that no grant has been made in any of these cases; but I understand that the members of the Indian band residing on the reserve on which Pauline Johnson was born have been contemplating from time to time the erection of some kind of memorial. The department is naturally interested in this proposal and welcomes the initiative being taken by the band.

The hon. member for Kamloops inquired as to the reason for the delay in tabling the annual report of the Department of Mines and Resources for the year ended March 31, 1947. This matter has been checked, and I find that final proof of the report was sent to the king's printer several weeks ago. Its production has been delayed by the heavy load of sessional publications with which the king's printer has had to contend. It is the hope of the department that the next annual report will be prepared at such an early date that there will be no doubt as to its being available to members of parliament while the house is still in session. I should add that the report of this department, containing as it does a summary of a great deal of scientific material, is necessarily a slow and difficult document to produce.
The hon. member for Danforth and the hon. member for Calgary West questioned me about the well which had run out of control in the Leduc sector of the Edmonton field'. It was indicated by one hon. member that this well had been brought under control. Unfortunately, on checking this matter, I found that we had received airmail advice yesterday to the effect that the well is still pouring out from ten to fifteen thousand barrels a day. Steps have been taken to pump some six thousand barrels of this oil back into the ground in a safe area, but as yet the situation is by no means satisfactory. Production in the field, apart from this one well, is almost at a standstill.
The hon. member for York South asked for figures relating to the number of departmental employees this year as compared with a year ago in the mines, forests and scientific services branch, or in the legal survey division; I was not altogether clear as to which was desired. However I am able to give the hon. member the following information, which I trust will meet his wishes. The legal survey and map service at May 31, 1947, had a total personnel of 140. The legal surveys unit and map compilation and reproduction unit, which together correspond with the organization mentioned above, on May 31, 1948, had 150 employees. In other words, there was an increase of ten persons during the year.
If the hon. member was inquiring about the branch as a whole I think I can best answer in this way. A year ago there were three branches of the department, with a total membership of 3,538. Today those three branches have been consolidated into two, with a total membership of 3,960. Thus there has been an increase between May 31, 1947, and May 31, 1948, of 422 persons in this area of departmental activity.

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The hon. member for Kootenay West asked about the membership of the geographic board of Canada. The present members are:
F. H. Peters, chief, surveys and mapping bureau.
K.	G. Chipman, chief topographical engineer.
It. J. Fraser, dominion hydrographer.
Lt-Col. C. H. Smith, officer commanding,
army survey establishment.
J. G. Wright, Northwest territories administration.
Norman Fee, dominion archives.
A.	MacFarlane, Post Office Department.
Doctor Trevor Lloyd, geographical bureau.
L.	B. Skinner, secretary.
The provincial members are:
Prince Edward Island-Hon. Walter Jones, premier.
Nova Scotia-Doctor Allan E. Cameron, president, Nova Scotia technical college.
New Brunswick-J. C. B. Pugh, department of lands and mines.
Ontario-F. W. Beatty, surveyor-general, department of lands and forests.
Manitoba-J. C. Beresford, director of surveys.
Saskatchewan-A. J. Bercskin, controller of surveys.
Alberta-H. P. Brownlee, department of trade and industry.
British Columbia-W. G. H. Firth, chief geographer, department of lands.
Several hon. members asked for a breakdown of expenditures in connection with the national paries. I should be glad to read all these items if necessary, but if I could get-the permission of the committee I might have them appear in Hansard.


Some hon. MEMBERS:: Agreed.


William Henry Golding: Has the
minister permission to have these figures appear in Hansard?


Some hon. MEMBERS:: Agreed.


James Angus MacKinnon: The breakdown is as follows:
As requested, the estimates for national parks and historic sites services have been broken down under main headings which may be defined as follows:
A.	Management and Clerical, including salaries, maintenance of administration buildings, office expenses.
B.	Public Services, including telephones, water system, sewers, streets and sidewalks, roads and bridges, fire departments, health and sanitation, townsite improvements, campgrounds, gateways and information offices, and maintenance airports.
C.	Stores and Equipment, including operation garage and repair shops, warehouses and stores, and purchase of mechanical equipment.
D.	Recreation Services, including live animal exhibits, fish culture, museums and caves, sports activities, and operation bath-houses.
E.	Forest and Game, including warden service, cabins, forest communication, trails, fire fighting contingencies, care and disposal of wild animals.
The figures for each park are as follows: Cape Breton Highlands National Park
A.	Management and clerical	$ 42,43-6B.	Public	services	
602,362C.	Stores	and equipment	
27,400D.	Recreation	
11,650E.	Forest	and game	
54,982Total	
$738,830
Prince Edward Island National Park
A.	Management and clerical	
$ 12,179B.	Public	services	
91,000C.	Stores	and equipment	
4,010D.	Recreation	
13,975E.	Forest	and game	
4,936Total	
$127,000
New Rrunswick National Park
A.	Management and clerical	
$ 70,800B.	Public services	
187,560C.	Stores and	equipment	
67,860D.	Recreation	
145,000E.	Forest and	game	
28,780Total	
$500,000
Georgian Bay Islands National Park
A.	Management and clerical	
$	5,281B.	Public services	
4,725~C. Stores and	equipment	
360D.	Recreation	
3,376E.	Forest and	game	
2,259Total	
$ 16,000
Point Pelee National Park
A.	Management and clerical	
$ 19,629B.	Public services	
87,371C.	Stores and equipment	
1,800E. Forest and game	
1,000Total	
$109,800
St. Lawrence Islands National Park
A.	Management and clerical	
$ 3,077B.	Public	services	
2,410C.	Stores	and equipment	
3,600D.	Recreation	
9,200E.	Forest	and game	
1,123Total	
$ 19,410
Banff National Park
A.	Management and clerical	$ 44,844B.	Public	services	
391,159C.	Stores	and	equipment	
88,203D.	Recreation	
63,240E.	Forest	and	game	
169,204Total	
$756,650
Elk Island National Park
A.	Management and clerical	$ 13,593B.	Public	services	
24.471C.	Stores	and	equipment	
61.850D.	Recreation	
14,950E.	Forest	and	game	
53,886Total	
$168,750
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Glacier National Park
A.	Management and clerical		$	470
B. Public services	 1,500
C. Stores and equipment	 2,950
E. Forest and game	 20,580
Total	 $ 25,500
Jasper National Park
A.	Management and clerical	$	46,390B.	Public	services	
1,918,257C.	Stores	and	equipment	
103,382P. Recreation	
173,355E. Forest	and	game	
67,136Total	
$2,308,520
Kootenay National Park
A.	Management and olerical	$ 11,448B.	Public services	
621,645C.	Stores and equipment	
19,409P. Recreation	
9,718E. Forest and game	
25,280Total	
$687,500
Mount Revelstoke National Park
A.	Management and clerical	$ 3,140B.	Public	services	
15,000C.	Stores	and	equipment	
2,550D.	Recreation.	
2,500E.	Forest	and	game	
14,310Total	
$ 37,500
Prince Albert National Park
A.	Management and clerical	$ 23,401B.	Public	services	
227,290C.	Stores	and	equipment	
59,190D.	Recreation	
38,837E.	Forest	and	game	
40,582Total	
$389,300
Riding Mountain National Park
A.	Management and clerical	$ 46,775B.	Public	service	
300,617C.	Stores	and	equipment	
41,340D.	Recreation	
55,471E.	Forest	and	game	
43,297Total	
$487,500
Waterton Lakes National Park
A.	Management and clerical	$ 42,216B.	Public services	
282,681C.	Stores and	equipment	
31,376D.	Recreation	
22,729E.	Forest and	game	
37,748Total	
$416,750
Yoho National Park
A.	Management and clerical	$ 17,718B.	Public	services	
123,900C.	Stores	and	equipment	
33,267E. Forest	and	game	
31,615Total	
$206,500
Historic Sites
A. Management and clerical		$156,760
C.	Stores and equipment	 10,740
Total	 $167,500

Head Office
A. Management	and clerical....	$206,018
P. Recreation	 3,850
Total	 $209,868
Ihe main increases in the vote for national parks and historic sites services might be summarized as follows:
1. Jasper National Park Reconstruction and preparation for hard-surfacing of Jasper-
Edmonton highway, 32 miles..	$ 1,039,000
Improvements to Banff-Jasperhighway	 357,170
Improvements to Maiigne lake
road	 50,000
Improvements to Edith Cavell
road	 50,000
Improvements to Miette Hot
Springs road	 55,000
Development of recreational area in Jasper, including work on swimming pool, tennis courts, bowling green, playing field,
children's playground	 150,000
Improvements to Jasper water supply	 60,000
2.	Waterton Lakes National Park Reconstruction and revision Akimina road, 10-87 miles	 200,000
3.	Kootenay National Park Reconstruction and preparation
for hard-surfacing Banff-Windermere road	 500,000
4.	Prince Albert National Park Revision and preparation for
hard-surfacing Waskesiu highway, 28-7 miles	 150,000
5.	Riding Mountain National Park Reconstruction and preparation
for hard-surfacing main highway through park	 200,000
6.	Prince Edward Island
National Rairk
Reconstruction of road, Rustico to New London	 84,500
7.	Cape Breton Highlands
National Park
Revision and reconstruction of Cabot trail from North Ingo-nish to Neil Harbour, la/pp.
11 miles	 429,730
Construction 1-37 miles of Cabot
trail near Presqu'ile	 59,800
Reconstruction of bridges	 55,000
8.	New Brunswick National Park
Improvement of roads, construction of public buildings and recreational facilities and administration	  500,000
9.	Point Pelee National Park Paving 5-87 miles of main park
road	 67,600
There are many miscellaneous items for all parks designed to overcome arrears in maintenance or to extend necessary public services

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Mines and Resources
but as these are reflected in the general breakdown which I have given ait the opening of my remarks it will be unnecessary for me to enumerate these miscellaneous items although some of them are quite substantial.


Douglas Gooderham Ross: I have only one comment to make on this item. I have not seen the details of the expenditures, but I note an increase of $4,951,000, and I imagine the figures the minister has tabled will show what properties are to be bought and what construction is to go on. I should like to know if there is any immediate necessity for this work to be done. It struck me that this was a large increase in expenditure on the acquisition of land and the construction of buildings and works, from $602,000 last year to $4,894,000 this year. >If there is a good deal of construction to be done in this connection it seems to me that this work could be postponed for some considerable time. We may need work of this kind if we should run into some sort of unemployment, and this work could be done then. Unless there is some particular reason why this expenditure should be made now, I dio not think we have any right to vote the money to carry it on. If the minister can give some reason why it should go on now rather than some time later, that would be different; but at the moment it seems like work which could be proceeded with if we should have to deal with an unemployment situation.


James Angus MacKinnon: I quite understand the reasons that have prompted the hon. member to make these comments; but the projects to which he refers are projects which are being considered by my colleague the Minister of Reconstruction and Supply. They are called shelf projects, which have been given consideration and have been placed to one side, but which may be proceeded with at a later date. There is no money provided in these items for the purchase of land.


Alan Cockeram: Why is that put in?


James Angus MacKinnon: That is a heading which is used in the department. There have been purchases of land in the past, and there will be in the future. But at the present time in this item there is no amount for the purchase of land and, may I say, very little for the construction of buildings. To a great extent these items are for the construction of highways in the parks which fell into disrepair during the war years when practically no money was spent on park development.
The necessity for proceeding with this work has been well known to the government. It has been urged on us from all sides in Canada
as an encouragement to United States tourists to come to our parks and spend their dollars on vacations here. I am sure, when the hon. member sees the items in Hansard, he will approve them.


Douglas Gooderham Ross: My point in rising was to get the details, so that the committee itself could judge as to the necessity for proceeding with the work at the present time. I am not criticizing having this work done to attract tourists.


Thomas Langton Church: For some years past I have been calling the attention of the government to this item. The report the minister gave was a very good one, as far as it went. However I would call his attention to the situation which prevails in the chief tax producing provinces of the dominion,
I am not objecting to these historic parks and sites in other provinces; far from it. I believe in a policy of national parks and historic sites. But I find that Ontario has been overlooked for many years. For example, we have no large national park in the whole province. We have small islands near lake Ontario in the St. Lawrence river, one up at Pelee island, and parks of that kind.
But we must consider what a great investment these national parks can be. Let us have in mind the Rideau lakes district. The Rideau canal was constructed by the British government after the war of 1812 as a backdoor to lake Ontario, and was paid for by the British taxpayers. A magnificent chain of rivers, lakes and streams connects with the canal system. Many people see it while they drive along in their automobiles. That canal system could be linked up with the great chain of lakes and with the inland waterways. In the Trent district we have the Murray canal, and a canal system reaching right up the Severn into the Muskoka district. Then, it is possible to link up the lake Simcoe district, the Muskoka district, the Parry Sound district and that around Georgian bay with the district at the head of lake Ontario. Parks in those areas should be connected. They would be crown property, held eitheT in the right of the province or in the right of the Minister of Public Works for the dominion.
These parks should be linked up into a great chain of public parks so as to attract tourist revenue, not only in the summer months, but also in the winter when winter sports in those park areas wouildi be possible.
I believe Ontario has been overlooked. I have in mind old Fort Henry, in the Kingston area. It is, no doubt, an historic site. At the time the minister visited the coliseum during
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the time of the magnificent international trade fair within recent weeks, he probably knows that opposite the place where the fair was held is a fort which wras taken by the Americans in the war of 1812-14. There is no reason why some money should not be spent on that fort, and something done along the lines of what has been done at Fort Henry.
I suggest that during the parliamentary recess the minister might consider what is said to him by a deputation which has been appointed by the city council in Toronto to interview him. One must remember that the city has spent about $26,000,000 in grounds, buildings and permanent exhibits in connection with the Canadian National exhibition.
As one of the main contributors in the matter of taxation, Ontario should receive further consideration, because that province has been overlooked. One might mention the historic site and battlefields of the war of 1812-14 which are to be found in the Niagara district. The Ontario government has taken care of some of them. But there are many other points connected with the first and second great wars which should have recognition. I have in mind places where our troops were trained. The government should have a policy of seeking out, in every military district of the country, the sites where the soldiers were trained before they went overseas.


James Angus MacKinnon: I do not wish to delay the passage of my estimates, but I think it is only right to make brief comment on what the hon. member has said. In Ontario the dominion has only three small parks, namely at Point Pelee, Georgian bay islands and the St. Lawrence islands. The parks which are operated by the dominion government have been presented to the dominion by the various provinces. If the province of Ontario wishes to do the same, namely, to acquire land for national park purposes and present it to the dominion government, I have no doubt the government would sympathetically consider taking it over and developing it.


Mr. BREITHAUPT:: I should like to refer briefly to the Georgian bay park, particularly Beausoleil island national park camp, which is devoted to a great deal of beneficial youth work. In my view it should be developed further. The former minister said he would visit there, but unfortunately he was taken ill and it was not possible for him to do so. I should like to know what plan the department has for extending Beausoleil national park in Georgian bay?


James Angus MacKinnon: I do not think there are any other plans for extending this park at the present time. As a matter of fact, I

expect to be in the neighbourhood this summer to attend the Bruce old boys reunion and I may have an opportunity to look into the situation while I am there.


Frank Exton Lennard: I should like to couple my name with that of the hon. member for Waterloo North in connection with Beausoleil national park, owing to the fact that there is a sea cadet centre there. The sea cadet movement is using every available centre for the training of boys, and I feel that this was one reason the hon. member for Waterloo North raised the matter.


Gordon Knapman Fraser: I should like to support the hon. member for Wentworth, because boys from the Lakefield preparatory school go there, and the park could be greatly improved.


Alan Cockeram: I would point out that these figures are about $900,000 short. There should be more figures in here.


James Angus MacKinnon: I think the figures which I placed on Hansard with the permission of the committee are in great detail and will show the total amounts.


Percy Chapman Black: I do not want to delay the minister's estimates. I am pleased to see him in this portfolio. Along with other members, I regret that his predecessor (Mr. Glen) has had to give up the portfolio because of illness.
I should like to know what appropriation has been made for the extension of the museum at Fort Beausejour, located at the boundary between Nova Scotia and New Brunswick. This museum was built about 1932; it has been extended, but it is now overcrowded with relics of the past, thanks to the work of Doctor J. C. Webster, C.M.G., who has given many years of invaluable work to our national parks and historic sites.
I want to commend the minister and the department for what they have been able to do in the development of our parks and museums and what this means to our tourists.
I have a letter here referring to this, and I should like to quote just a sentence or two as follows:
I often wonder what kind of a tourist business we would have in the maritimes if our places of historic interest were non-existent. How many Americans would travel through Maine and New Hampshire with their varied scenery to view the maritimes, with the same kind of forests, lakes and rivers?


James Angus MacKinnon: A wing is being added to the museum this year, and an amount of $40,000 has been provided.


Percy Chapman Black: What steps have been taken to preserve the French dry

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dock in the vicinity of Fort Beausejour. I understand that here again Doctor Webster has been making material personal contributions toward the acquisition of land, in order that this most historic work of its kind in North and South America may be preserved for 'the benefit of our country.
Mr. MacIvINNON: Since the gentleman's name has been mentioned, I should like to take this opportunity to <pay a tribute to the work of Doctor Webster, chairman of 'the historic sites and monuments board. The work done across Canada is of great value in keeping alive in a most practical way our Canadian history and providing attractions to tourists.


George Randolph Pearkes: A total of $4,894,000 odd is listed under the head of acquisition of lands, repairs and construction of buildings, et cetera. I know the minister has said that there is to be no acquisition of land, that all this money is to be spent on the construction of roads, buildings, et cetera-I think I am quoting the minister correctly-in order to encourage tourists to come to our national parks.


James Angus MacKinnon: That is one reason only.


George Randolph Pearkes: To construct buildings to encourage tourists to come there.


James Angus MacKinnon: If the hon. member will allow me, I said that no money was being there is to be no acquisition of land, that very little was to be used for the construction of buildings; that it was mainly for the improvement of roads in our parks for the encouragement of tourists and the pleasure and enjoyment of our own people.


George Randolph Pearkes: I did not suggest that there was any money to be spent for the acquiring of lands, but improvements are to be made within our national parks to attract tourists and for our own people.
I should like to jump ahead a few items and come to the one dealing with Indian agencies. The details show a similar item, but the amount is only $533,725. That is the amount which is to be expended on homes, on roads and for the general improvement of these agencies; yet we are going to spend $4,800,000 on our national parks in order to attract tourists.
I think we should do something to improve the habitations of Canadian Indians. Later on, I intend to refer to some glaring instances in my own constituency where the houses in which these wards of the government are expected to exist are absolutely intolerable.
I suggest seriously to tthe minister that he transfer $2,000,000 from this item and apply it to the item covering the acquisition of land and the construction of buildings, works and structures for our own Indians.


Mr. McLURE:: A few days ago when the Minister of Trade and Commerce was dealing with a little matter of roads I brought to his attention a situation in our park. In this case the ownership is in dispute as between the federal and the local authorities, and the result is that the road is not repaired. This road leads to our national park and also to the golf course, and it is simply a mud hole. The Minister of Trade and Commerce stated here in the house that he knew of the situation and would take it up with the Minister of Mines and Resources. I assure the minister that he will have this matter repeated to him by the Minister of Trade and Commerce.
Mr. BLACIvMORE:	Does the minister
happen to have a list of historic sites which have been set aside in Alberta south of Calgary within the last ten years?


James Angus MacKinnon: We have not the
information in that form, but it can be obtained for the hon. member.
Mr. BLACIvMORE: There is a historic site called "Writing on Stone", which is close to Milk River and Coutts. The last time I went by there I gained the impression that this site would repay some care. Apparently it comes down from a time rather long ago in the history of our Indians. If the stories about it could be obtained and written on a plaque or stone, and the area fenced in, instead of being allowed to be trampled down by cattle, I think it would pay dividends.


James Angus MacKinnon: I shall draw that matter to the attention of the historic monuments board.


John Horne Blackmore: It is important also, because it is not far from the splendid Coutts-Lethbridge highway, probably the finest highway Alberta has thus far been able to build, a main highway for tourists from the United States.


George Randolph Pearkes: In addition to the
$4,894,210 for the acquisition of land and the construction of buildings, works and structures, there is another item of $719,963 for repairs and upkeep of buildings, works and structures. Since I understood the minister to say the $4,000,000 odd was devoted to the upkeep of buildings, what is the $700,000 for?
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James Angus MacKinnon: That is for the maintenance work required in all the national parks.


George Randolph Pearkes: What is the difference between that and the other item which preceded it, which wTas for the same purpose?


James Angus MacKinnon: The other has to do vith new construction. This is for the min-tenance of existing works.


[Stage Direction]
Item agreed to.
Lands and development services branch- Dominion wildlife service
[Stage Direction]
208. Wildlife resources conservation and developments, including administration of the Migratory Birds Convention Act, $181,360.
John Ritchie MacNicol: I am afraid that this is one branch of the minister's department which needs a bit of checking over. This is the branch which looks after predatory animals. Recently I was in Essex county and paid a visit to Point Pelee. There I was interviewed by quite a number of residents, who called to my attention the destruction in the park, which could be much more beautiful than it is if it were properly taken care of. In fact it is the only national park in western Ontario. I commend the park to the minister's attention. It should be beautified; but, above all, the first thing that should be done is to kill the predatory animals in the park. All the farmers around about are complaining about the department encouraging the maintenance of the predatory animals such as wolves, red foxes and coyotes, which are destroying the pheasants and other so-called wild but harmless animals. The Leamington Post and News of June 17 had this to say:
People who do not believe in the control of predatory beasts are invited to visit Point Pelee national park adjacent to Leamington, Ontario. Here exists at the present time, one of the best possible demonstrations of what happens when animals that prey upon other animal life are not killed.
In every one of the nine provinces of Canada, it is the policy of the provincial government to foster an increase in the number of deer within its borders. They are wanted for food for humanity. Most of the provinces, therefore encourage the slaughter of wolves and coyotes by paying a bounty of several dollars for each one killed, while several counties in Ontario pay a bounty also on red foxes.
In the federal parks within these provinces, the dominion government, under the management of the federal fish and game department, protects all predators, and any man would be prosecuted for shooting a coyote, wolf, or red fox inside such a federal park.
A few years ago pheasants were so plentiful around this Leamington national park that citizens took motion pictures of them from their cars as they motored through the park. Then

coyotes and red foxes came in and, under the policy of the dominion government, were given the protection referred to. Farmers living within the boundaries of the park were even notified to keep their dogs chained up-which certainly did not make sense to them while coyotes were being permitted to run at large without molestation.
I have had quite a number of letters from that beautiful county, no more beautiful county in Canada, and I am going to ask the minister to take this under his control. I say to him that if anyone in his department is protecting wolves and coyotes in this park, I would ask him to tell him to take a walk somewhere else. He should not be in the department helping to maintain the national parks.


Douglas Gooderham Ross: I wish to say a few words in connection with one species of wildlife, namely ducks and geese, because one might put these two birds together. There is an article in Rod <fc Gun, which is taken from Field and Stream and which is headed: "Can our duck shooting be saved?" This magazine says, "Ares, but the remedy must be drastic." Duck shooting is a great sport, but the duck population of this country is going down and down. We have had limits on the number of ducks that a man is allowed to take in a day, and the number he can have in his possession and so on. We have associations such as "Ducks Unlimited". I wish there were; I wish we had ten Ducks Unlimited, so that the duck population might be increased. There are a lot of factors that enter into the matter. There are 400,000 more hunters than there used to be, and it is easier to get to the duck-shooting grounds. There are two or three solutions of the problem; but, as I say, drastic measures must be taken, or there will not be any ducks. The article goes on to say:
Protection came too late for only one, the Eskimo curlew. It took twenty to twenty-five years for our gulls, terns, shore birds, herons, egrets, ibises and cormorants to become common once more. During the same period the abolition of spring shooting of ducks produced tangible results in five years.
The article goes on to say:
So great is the vigour and fertility of our waterfowl that I honestly believe a five-year closed season would quadruple their numbers.
There is no doubt about it, if we had a closed season. I do not know that it is possible to have it. There is no doubt that the future of our waterfowl shooting depends upon the ability to secure the necessary knowledge and to finance the techniques which have been worked out, and of hunters to exercise enough selfrestraint; but I do not think sufficiently drastic action has been taken.

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I wonder whether there is sufficient co-operation by the people of the United States. It is no use our breeding ducks here in our north country and then having them slaughtered in the south. I know that there is co-operation between the two countries. I do not know that there is co-operation between the various states. For instance, they will have a closed season in one flight lane and the shooters all go over to the other lane. That is not having a closed season. For the benefit of this country I wish, if it might be possible, that we could arrange with the United States to have a closed season for, say two years, on the shooting of ducks in both the United States and Canada. That would make a tremendous difference.
Ducks increase in geometrical proportion. They come back very quickly, but unless we take drastic action there will be no duckshooting for anyone. These birds can be preserved. The Jack Miner foundation is doing its best in its small way. It, gets $5,000 a year, but grain has gone up and it would be a good idea to give it a little more money. This is one of the most important things in our country, because we must preserve our wild life, and particularly our wild bird life. It is a great asset to, the country; but, as I say, unless w'e do something drastic, we shall find ourselves without any ducks in a short time.
I commend to the minister this article in the magazine Rod & Gun. It appears in the last number, the June issue. The minister comes from a duck-shooting country and perhaps he has been out many times. I, too, used to be fond of shooting. It is a fine sport and I want to see it saved for the young people of Canada; but, unless we take the necessary steps, there will be no ducks left in the country.


James Angus MacKinnon: About three weeks ago at the instance of the Department of Mines and Resources a conference was held in Ottawa to which wildlife officials of all provinces were invited. I believe that representatives from all the provinces attended as well as representatives from wildlife organizations in the United States, the object being to work out methods of co-operation looking toward the preservation of wild life.


Mr. HAZEN:: Did that convention produce results? Did anything come of it? Was it decided to take action in the way of shortening the shooting season for migratory birds or providing a closed season?


James Angus MacKinnon: I am informed that substantial agreement on seasons to be recommended resulted from that conference.


John Horne Blackmore: I desire to associate myself with the remarks of the hon. member
for St. Paul's. I congratulate the minister on the forward-looking policy of the department in inviting the provincial people to a conference, and I trust that the dominion government will go forward in the role of leader. The preservation of game is a strictly provincial matter, just as is the preservation of our forests, but the provinces will be able to do far better under dominion leadership and with dominion financial support. The importance of our wild life can hardly be over-emphasized.


Douglas King Hazen: I read in a newspaper not very long ago that the department was considering the establishment of a bird sanctuary or game refuge in the vicinity of James bay. I hope that some action of that kind is being contemplated. Does the government propose to establish, or to consider the question of establishing, a sanctuary there? It is important that we have more sanctuaries of this kind than exist at the present time.


James Angus MacKinnon: We have established sanctuaries at James bay, and arrangements are being made for the establishment of others. The wildlife conference held early in June of this year, to which I have referred, will meet annually.


Douglas Gooderham Ross: Mr. Chairman, I wish to make a correction in what I said just now.


William Henry Golding: Order. It is not in order for an hon. member to read from a magazine dealing with the question before the committee.


Douglas Gooderham Ross: I made a mistake. The article I quoted from was from Field and Stream, but it is in the magazine Rod & Gun.


[Stage Direction]
Item agreed to.
Indian affairs branch-
213. Branch administration, $110,187.
George Hugh Castleden: In the matter of
Indian affairs, probably one's first words should be words of commendation to the former minister on the progress made on this important question of Canadian Indians, and I hope that the present minister will get a picture of the responsibility and the opportunity which exists in regard to emancipating these unfortunate people who are within our gates and who find themselves the wards of this government.
May I express appreciation of what has been done within the last three years and since a committee was set up to deal with the revision of the Indian Act? That committee has done valuable work, and its findings have revealed shocking conditions among the
130,000	human beings who live within the
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borders of the country. My complaint is that, in spite of what has been done, it is too little, too late and much too slow.
The condition among the Indians calls for immediate redress. We can no longer stall or wait. The matter demands action from this government. It requires the revision of the act and drastic action within the department, on the part of those responsible for the administration of Indian affairs.
The majority of these people at the present time live under conditions of poverty, want, disease and ignorance. There are a few bright spots where conditions are better, such as Caughnawaga, the Six Nations reserve, some in Alberta and a few on the western coast of British Columbia where the Indians are engaged in fishing. Some of them are doing very well. We must not forget that these people are human beings, and under the present set-up they have no control over their own destiny, no say in their own government, no say about their own affairs. They have limited approach toward justice; they are not able to pay for legal advice. The conditions among many of these people, particularly in the backward areas, are such that the reserves on which they are compelled to live are not sufficiently well supplied with natural resources to provide them with a decent standard of living. In many cases they lack the necessary assistance to make a start in providing for themselves.
Years of protest and complaint have finally brought about the setting up of a committee of this house, which has revealed a shocking state; and it is time, now that we know enough about the matter, to do something about rectifying some of the basic wrongs. We find from the records that 18,000 Indian children are receiving some kind of education, either in residential or in day schools, but the shocking condition is revealed that 12,000 Indian children are receiving no training whatever. After sixty years of administration in this country, to have these facts facing us is a revelation as to how serious the situation is and how completely the Indians have failed to accept responsibility in this regard.
The whole hope of the future of the Indians must he in our ability to train them adequately. I am pleased that something is being done, that there are some signs of improvement, and that the government is already spending some larger sum in education. There are signs of progress. As I said before, I am pleased at the amount of money which is being spent by the Department of Health and Welfare to make a survey of the situation with regard to health among our Indians, with a

view to doing something about remedying the condition of these people. I think the evidence given before the committee would show that these Indians have the capacity to become fine citizens-they are fine people; they have excellent qualities-if they are only given an opportunity. I think the evidence will reveal that the Canadian Indian is a sick man. Until we remedy the economic position, health conditions and conditions of training among them, we cannot hope to solve this problem.
The fact of the matter is that the actual training of the Indians does not suit them for the bind of life they must live. Many of them go to residential schools, learn how to live under modern conditions, return to their reserves after they have reached the age of sixteen and find that they do not like to go back to their terrible housing and living conditions on the reserve. However, they find themselves unable to take their position in the modern white man's way of life, and they seem to become lost between two worlds. They sink down into a hopeless condition, and few of them really make a success or show any of the signs of progress which we would hope for.
There is another thing which reveals something which I think is basically wrong with our treatment of these people. For instance, there has recently been considerable discussion about the matter of granting the franchise to Canadian Indians. One of the big troubles with regard to this matter has been that the Indians themselves are not taken into the confidence of those who are administering their affairs. They only hear that a report has been tabled in this house stating that it is the intention of a committee or a group of people to recommend to the house that the franchise be granted. The Indian wants to know what that entails. Does it mean that they are to become citizens of Canada? Does it mean that they are to lose any of the rights or privileges which they have enjoyed under the treaties? If it means that they are to lose their treaty rights, the Indians themselves do not want to have much to do with it. A great many of them are suspicious of those who administer their affairs, because they have not been taken properly into the confidence of those people. The Indians should have been brought into consultation with those who administer their affairs, told of these suggestions and been allowed to know exactly what the Canadian people intended to do.


Donald Ferguson Brown: Will the hon. member permit a question?


George Hugh Castleden: Yes.

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Donald Ferguson Brown: My hon. friend is a member of this committee. He has brought this subject up.


George Hugh Castleden: What is the hon. member's question?


William Henry Golding: Order.


Donald Ferguson Brown: I am coming to my question.


George Hugh Castleden: It is a speech.


Donald Ferguson Brown: The hon. member has brought this question up. Will he now tell us the means and methods whereby he would have the Indians represented on the Indian affairs committee? He has not done so in the last two years.


Arza Clair Casselman: Oh, let us get on.


George Hugh Castleden: As I believe the hon. member, who is chairman of that committee, knows very well, the Indians appeared before this committee and representations were brought before the committee. There are Indian organizations across this country in each of the provinces, in each of the divisions ){ Canada; and they hold annual conventions. There is an organization of Indians across the whole of Canada which could quite quickly, with a little bit of assistance, choose those who could speak for them. It would be quite possible to have representatives from the Indian groups across Canada sit in with this committee, with watching briefs, to talk over the matter and give the Indian viewpoint. I think I mooted that procedure at the early meetings of the committee, but the committee voted my recommendation down.
It is most important that, if we are to suggest any such thing, the Indians should be given every assurance that the granting of any franchise would in no way interfere with any of t'heir rights. It is quite evident also that the Indians are suspicious of this, and some of them have already stated that they do not want to have anything to do with it. As a matter of fact, they do not know what it entails and are naturally suspicious; and such a thing would vitally affect them.
The matter of treaties and of the rights and privileges under treaties requires immediate remedy. The recommendations of the committee that were recently tabled in this house should be adopted by this house and implemented by the department, particularly with regard 'to the setting up of a claims commission. The matter of hundreds of treaties, under which the various Indians in various groups across Canada are now living, requires adjustment. In my own province of Saskatchewan it has been revealed that
the original reserves set aside for the Indians occupy considerable territory in different parts of that province. Since those reserves were set aside, it is a matter of fact that some 400,000 acres have been taken away from them and have been either sold to white people ox used in other ways. Those reserves are, in reality, the property of the Indians. They were set aside in order that the Indians might make a livelihood upon them. If we would look over the terms of the original treaties, we would find that it was certainly the intent of those treaties that the Indian should be properly cared for, that he should be properly trained, and that the great white mother or queen, who was ruling this country at that time, would see that the Indian was properly recompensed and properly cared for as a result of this surrender of these vast territories.
The Indian resents the position of inferiority in which he is placed. The Indian is a noble being. It has been revealed that under proper conditions he has remarkable capacity, a fine intellect and certainly excellent qualities of character. I do not think he has been improved by his contact with the white man in every instance. I suggest that a change is needed in the attitude of the white Canadian people toward these our red brothers. I believe that ultimately we shall have to take these people into our confidence, treat them as equals and give them an opportunity to share in the making of their own destiny.


Mr. YOUNG:: As a member from a Vancouver constituency where the condition of the Indians in our area is particularly pressing, I should like to add my voice in support of the remarks made by my colleague. I should like to draw to the minister's attention the remarks made earlier in this debate or on this report by the hon. member for Nanaimo.
In the Vancouver newspapers last winter appeared a great number of letters, which were written by citizens, about the conditions of the Indians in British Columbia and about the conditions in the Indian schools. It appears that in these schools the boys and girls are completely segregated and are not permitted to speak to one another at all in the classrooms during the school day. They eat separately and are treated in an entirely different way from children of the same age of our own race. This type of old-fashioned regimentation in schools is producing in the Indian mind a psychology at variance with the general outlook of the average white child, and they are growing up with peculiarities which set them apart from the rest of

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the population to a greater extent than would be caused by any matter of pigmentation or racial background.
At the University of British Columbia, where I was recently a student, Indian students are as brilliant and capable as any others. During the last term a representative of the native brethren came to address the student body. He spoke clearly, in an educated manner, and presented the case for the Indians. From the floor of that meeting the question was raised as to whether the Indians desired the franchise; that is the very point which was brought up by the hon. member who spoke previously this evening. The reply of the Indian who was addressing the meeting was that they wanted the franchise, but if it were to cost them privileges and treaty rights, then something would have to be added to the franchise to make it worthwhile from their point of view.
I should like to ask the minister if he is aware of the situation with respect to Indian girls from the Capilano reserve in North Vancouver, who come to the city and go along that street we call the skid road, otherwise known as Cordova street. There they are taken into hotel rooms by various people and debauched; and many are found in these rooms with liquor in their possession. According to newspaper reports, hardly a day goes by that some man is not prosecuted for this type of crime. No doubt the minister has this information; and I hope and trust that everything possible will be done to remedy that condition, by one method or another. Every effort is made locally to keep down crimes of this kind; and, since these people are wards of the government and a federal responsibility, every co-operation should be given by this department.
I should like to ask whether there has been any suggestion that this country should follow the example set by New Zealand, where Liberal and Conservative governments have made possible direct representation of the aborigines in the parliament of the country, so that their conditions may be made known, their requests met and their needs fulfilled. It was suggested by one hon. member that some method might be found whereby Indian organizations could send representatives to meet with a parliamentary committee, and I would strongly urge that such a policy be adopted in future, if at all possible.
Some time ago I was ruled out of order when I sought to take up with the minister the matter of the payments now being made by the department to Indians over the age of seventy. I refer particularly to a recent increase of S8 a month, in addition to the $5 which originally was presented to these

Indians in the form of necessities by the Indian agent. I would appeal to the minister and the department to do whatever can be done to bring this amount more in line with the needs of the people receiving it. I feel that it is a deep disgrace to our country that this situation has been permitted to continue for so long. I do not suggest that it is done deliberately. I cannot believe that; but I believe we as a nation have been guilty of neglect. Whether neglect is as great a crime as deliberate intention, in this particular case the crime is almost as great; and in the interests of the country at large, the whole attitude of the department and of the federal government should be changed and a more humanitarian ideal pursued in the treatment of our native peoples.
I want to make one last reference to the schools in which the majority of the Indian boys and girls in my province are educated at the present time. It has been suggested that the teachers employed in schools which are under private charitable auspices are not up to the standard, and in fact are definitely below the standard, of the teachers in the ordinary public schools, and that this is partly due to the fact that the organizations employing them pay smaller salaries, on the average, than they could obtain in the ordinary schools. If this is the case, as we have reason to believe it is; if it is the policy to employ the cheapest teachers, who perhaps are not able to fill ordinary posts in the public schools, and give them to the Indians, there is every reason to suppose that the Indian children will not develop to the point where they can be regarded as normal Canadian citizens.	Such a policy is
extremely detrimental to the development of the Indian from his present position to one of responsibility as a fellow citizen.


John Horne Blackmore: Our Indian policy in Canada is far short of what it should be. While the committee on the Indian Act has been at work for three years, I seriously fear that the net result of all our efforts will be exceedingly disappointing, not only to the Indians but to Canadians at large. I do not wish to be unduly critical; I intend to be constructive. The minister should set out on a definite, progressive policy with regard to our Indians, and should not be afraid to spend money. It seems to me that up to the present time our whole policy with regard to Indians has been to see how niggardly we could treat them, how small a sum of money we could spend on them. That is not the way to make a great people.
I am going to suggest several things, though I do not wish to delay the committee unduly.

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In the first place, I believe a revolving fund of around 150,000,000 should be established from which, under the direction and with the advice of Indian councils and government agencies, Indians would be able to borrow to establish themselves in farming or whatever activity they might desire to follow. This is a serious disability on the reservation in my constituency. Young people coming along have no means at all of obtaining cattle, for example, with which to start cattle raising, or to do anything else they want to do.
Another revolving fund ought to be established to enable less fortunate Indians to build moderately priced homes. And much care should be given, may I advise the minister, to the provision of an adequate water supply for our Indians. On the reservation I have the honour to represent, some Indians have, to haul water in barrels on a wagon for fifteen miles every other day in order to have a water supply at all. How in the world can they compete successfully if they have handicaps of that kind? That sort of thing must be overcome. I have been striving for some time to bring about some arrangement under which Indians might drill wells, but the department always seems to want the Indians to get the money from their own band funds. In many cases their band funds are almost negligible. I draw the minister's attention to this matter of a water supply definitely, because Indians suffer from unsuitable water just as much as white people would.
There should be a fund for providing scholarships for young Indians to enable them to attend colleges, universities and technical schools. Those scholarships should be real scholarships which would enable the young Indian people to go to school and enable them to hold their heads up among their fellows, and to participate in every way, just as our white young folks do.
We should examine into the possibility of establishing one or more Indian institutes or universities in which Indian history, Indian legends, Indian religions, Indian culture and Indian skills, arts, crafts and languages could be accumulated, learned and rendered available to young people, so that they could go there for a year or two and learn how their people lived in the past.
This matter has been neglected far too long. Many of the splendid Indian skills of fifty years ago have been almost entirely lost; I have in mind the tanning of skins, making of moccasins and the other crafts with which they were familiar. We should consider that the Indians have a great contribution to make to this country. They are a great race with a great past, and a great future. They are a
people with splendid characteristics. Indians are in no way inferior to white people, and in many respects they are superior to us. We should recognize that fact immediately, and govern their treatment with that in mind.
There should be a fund to help the Indians organize. We have just recently had a convention meeting of Indians here in Ottawa. Practically every Indian who bad anything to do with coming to the convention is financially hurt. They were not able to get the money with which to come here. There was no fund available. There should be a fund provided by the dominion government to help the Indians to organize provincially and on a dominion-wide basis. We must recognize that the Indians must learn to govern themselves in an Indian fashion.
Then, the matter of taxation of Indians is a disgrace to this country. Generally speaking, Indians have a very small chance to make good from an economic standpoint. I make that statement, judging by the Indians in my own province. When a particular Indian happens to get ahead a (bit he cannot return to the reserve with his money without the government coming in and taxing that money. I say that is an absolute disgrace to the country. It is disgraceful that Indians should be taxed on money they earn off the reserves. Surely, if we ourselves neglect the welfare of the Indian reserves to such a great extent we should let the Indians who go off the reserves and earn some money take it back and spend it in those reserves.
We should insist on a greater degree of Indian self-government. Every Indian effort to establish self-government throughout the country which would bring them in co-operation with the dominion government ought to be encouraged. I could tell stories of the last year which would reflect no great credit on the dominion government in respect of the way in which they have treated the Indian efforts to attempt self-government. Perhaps Indians have acted in a way which was just a little bit different from the way in which we think they should have acted. But when the Indians try to help themselves we should help them, not interfere with them.
The Indian claims commission suggested by the hon. member for Yorkton is a good suggestion. In the days of long ago the Indians had many privileges. They had the privilege of hunting, of fishing, of berrying, of logging and of grazing off the reserves, and to do those things freely on the reserves. When the treaties were entered into they were signed with the idea that the Indians would continue to have those privileges indefinitely.
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Away back around 1875 no one ever dreamed that the area, for instance, south of the city of Calgary would be settled. It was assumed that the Indians would be able to take timber and to take the things they wished off the country. Now look where they are. They are confined to little pieces of territory. They have lost all their hunting, fishing, berrying and logging privileges. Where they used to make money from these activities, they cannot do so any more. There is hardly any other way for them to make money.
We simply must face this matter squarely and give it some more definite attention. Treaties were signed with the Indians, and those treaties should be recognized and observed by the dominion government. If they are not, then we shall build up a situation which will be dangerous for the future. We simply cannot go on disregarding these people as we have done in the past, because the day will come when they will become a problem and we shall not be very happy about it when they do.
For instance, in the matter of old age pensions, no one should have considered leaving the Indians out of the old age pensions scheme. Just imagine!-the people who are the least able to make their way have to be deprived of old age pensions, while those pensions are provided for the white population. We should have gone about the matter in exactly the opposite way. The Indians should have been the first to receive old age pensions. It is harder for an Indian to make money than for a white person. They should be receiving the old age pension at sixty years of age instead of at seventy.


James Angus MacKinnon: Will the hon. member permit me-


John Horne Blackmore: I shall have finished in a moment or two.


James Angus MacKinnon: Thank you.


John Horne Blackmore: We should give the Indians old age pensions right away and, as I say, at the age of sixty instead of at seventy. It should be done at once. They need it, and they need it badly in order to be able to nourish themselves.
Blind pensions should be just as generous for the Indians as for the white population. Other benefits should be just as generous. Family allowances should be more generous for Indians than for whites. We are giving them the same. But the ordinary Indian has nowhere near the facilities for making a living for his children that the white person has. I lived right alongside a reserve for fifty-six years, and for fifty of those years I was aware of the
TMr. Blackmore.]
way in which the Indians lived on their reserve. I have known that since I was eight years of age. I know the conditions under which they lived; and they were not good. The Indians should have had far more benefits.
I earnestly urge that the minister be not restricted in any way in any cheese-paring economy practices such as have been afflicting the committee on Indian affairs all the way through its deliberations. Let the minister consider the Indian Act, and make the report of the committee his point of beginning. I make these observations, knowing he will be sympathetic. He will have my complete support in any forward policy he may wish to introduce with respect to our Indian population.


James Angus MacKinnon: I am not a member of the Indian affairs committee, but I am informed by the chairman of that committee, as by the officials of my department who have sat on the committee, that practically all the points raised by the hon. member for Yorkton, the hon. member for Vancouver Centre and the hon. member for Lethbridge have been dealt with in the committee on Indian affairs and that a favourable report along the lines of the arguments offered by those hon. members is incorporated in the report which has been tabled in and adopted by the house.


George Hugh Castleden: When was it adopted?


John Horne Blackmore: It has never been adopted.


George Hugh Castleden: It has not yet been moved.


James Angus MacKinnon: It has been tabled, and I am informed its adoption will be moved tomorrow.	.


Arza Clair Casselman: It is on today's Votes and Proceedings.


James Angus MacKinnon: Mr. Chairman, there are only half a dozen more items in this department, and I should appreciate it if we would disregard the clock and, with the unanimous consent of the house, proceed.


Some hon. MEMBERS:: Agreed.


John Alpheus Charlton: I wish to refer to a matter with respect to the Indians in Brant county. I have here a resolution from the Brant county council, which has to do with the Six Nations reserve in that county. It has to do with justice on that reserve.


William Henry Golding: Perhaps the hon. member could place it on Hansard if he does not wish to read it.


Some hon. MEMBERS:: Agreed.

Supply-Mines and Resources


John Alpheus Charlton: Well, I wish to make a few brief remarks.


Alphonse Fournier: Well, either say it or put it on Hansard.


John Alpheus Charlton: This resolution is fairly self-explanatory. It is simply asking that an amount of money be granted by the dominion government to defray the cost of administering justice in connection with the Six Nations reserve.


William Henry Golding: It is not the practice to permit resolutions to be placed on Hansard unless the committee is willing to give consent.


An hon. MEMBER:: No.


John Alpheus Charlton: I will go ahead and read it.


William Henry Golding: It is 'bad practice and, unless unanimous consent is given, such a resolution should not be placed on Hansard.


John Alpheus Charlton: It reads:
At the June session of the Brant county council, the following resolution was duly passed and is submitted herewith for your sympathetic consideration.
"Since the organization of the county of Brant, nearly one hundred years ago, it has had to pay for the administration of justice on an Indian reserve within its county. The county receives no taxes from this reserve, and as the Indian population here is 5,500 and the county's 24,800, it can be understood the administration of justice costs for Indian offenders is considerable, although they are law-abiding generally, but like other nationals they have many law breakers.
The province of Ontario pays for Indian offences on the same basis as for other indictable crown cases, but the Dominion of Canada, which is the guardian and trustee for moneys for these people, does not contribute any money for the maintenance of our courts, although representations have been made to various dominion governments over a period of eighty years, and each government appealed to has informed the county council that the administration of justice in each province is the responsibility of the provincial government, which in turn will only pay its normal proportion for all justice costs, claiming the Indians are wards of the Dominion of Canada and further costs will not be assumed by the province.
At the 1948 spring assizes, an Indian was convicted and sentenced to hang for a murder which occurred on the reservation, the costs of this trial were approximately $3,000-it is possible the county can recover $1,000 from the province in the normal way, the Brant county taxpayers, with those of the city of Brantford, will have to pay the balance, for as stated earlier, no taxes are paid into the county from the Indian reservation.
This is the second murder trial and conviction for an Indian in the past fifteen years, apart from other serious crimes.
We are asking each county council in Ontario to support Brant county in its appeal for more generous treatment by the dominion government, by writing to the Right Hon. W. L. Mackenzie King, Prime Minister of Canada; to the Right Hon. J. L. Ilsley, Minister of Justice; the Hon. J. A. Glen, Minister of Mines and Resources, and to its local member of parliament, requesting the government to pay an equitable sum to all counties in which there is an Indian reservation, towards payment of administration of justice costs on that reservation."
We are also sending copies of this resolution to the Right Hon. W. L. Mackenzie King, Prime Minister of Canada, the Right Hon. Minister of Justice, the Hon. Minister of Mines and Resources, and W. Ross Macdonald, Esquire, M.P., Deputy Speaker of the House of Commons.
Yours very truly,
R. E. W. Lawrason.


George Randolph Pearkes: I. wish to express my regret that such a meagre amount is being provided for the improvement of Indian reserves. I have already referred to the fact that $5,500,000 is being spent upon improvements and maintenance of our national parks for the benefit of tourists and Canadians on holiday. A few weeks ago the Minister of National Defence announced that $20 million will be spent to provide houses for members of our active forces who are married. I have no objection to that being done, but I object to only $500,000 being spent for the maintenance of the reserves and the provision of houses for our Indians.
I have brought to the attention of the department the details of the conditions that exist in my own constituency. I know whereof I speak, because I live next to an Indian reserve, and there are a number of smaller Indian reserves scattered throughout my district. There is one just outside Duncan, right on the highway. Any tourist driving up the the island highway must pass through Duncan and see the miserable hovels in which these Indians are living.
Then, right in the heart of Nanaimo is Nanaimo reserve No. 1. I went there last fall at the invitation of the chaplain of the reserve. I drove up to the boundary line and was told that I would have to leave my car. I stepped off a paved road onto a dirt track full of pot-holes. I left houses where there were electric lights, sewers and water, and I went in among hovels where there were no lights, no water, no sewers. This is right in the heart of Nanaimo beside a combined terminal for buses, rail and steamships upon which the Canadian Pacific are spending $2 million in order to attract tourists. The first thing a tourist will see will be the appalling conditions under which the Nanaimo Indians are living.
Supply-Mines and Resources

I pleaded with the department to do something to improve the roads, and they generously granted $100, making it $300 instead of $200 for the maintenance of roads. This enabled the Indians to bring in a few cartloads of cinders to put in the worst mud-holes. This is all I have been able to get from the department and it is not good enough. The Indians have pleaded that their houses be improved and that something be done to make their condition more satisfactory.
Another matter I brought to the attention of the department was the fact that the children on Nanaimo reserve No. 2. some eight miles away, have not been able to obtain any education for the last five or six years, simply and solely because the department will not bring the few Indian children on that reserve into the school at Nanaimo.
I do not care how long it takes to get these estimates through. I want the assurance from the minister that something will be done about that reserve before these estimates are passed.


Angus MacInnis: Surely this is a ridiculous way to deal with these important estimates? At this late hour we are being kept here to pass them.
Item stands.
Progress reported.



BUSINESS OF THE HOUSE

Stanley Howard Knowles: The business tomorrow?


Alphonse Fournier: Introduction of a few bills, and third reading of Bill No. 338, respecting income tax. Then we shall go into supply and consider the remainder of the items.


Stanley Howard Knowles: May I ask the hon. member for Essex West whether it is his intention to proceed with the motion for the concurrence in the report of the Indian affairs committee at eleven o'clock?


Donald Ferguson Brown: It is the present intention that the motion for concurrence will be made tomorrow.
It being twelve minutes after eleven o'clock, the house adjourned, without question put, pursuant to standing order.
[The following items were passed in committee of supply]:



DEPARTMENT OF MINES AND RESOURCES

[Stage Direction]
206.	National parks and historic sites services, $7,372,878.
207.	Grant to the Jack Miner migratory bird foundation, $5,000:
208.	Dominion wildlife service-wildlife resources conservation and development, including administration of the Migratory Birds Convention Act, $181,350.
200. Engineering and construction services, $308,988.
210.	Special projects-to provide for the construction, operation and maintenance in the Snare river drainage basin, Northwest territories of a combined storage and hydro-electric development, and the cost of transmission lines, to serve the Yellowknife district, and to authorize the Minister of Mines and Resources, with the approval of the governor general in council, to engage engineering assistance and to undertake all related works by day labour or contract, $2,275,000.
211. Grimshaw-Great Slave lake road- amount required for completion of provincial section in 1948-40 under terms of agreement with Alberta (revote), $295,576.
212.	Snow Lake mining road, Manitoba- amount required for dominion contribution in 1948-49 for construction, under terms of agreement with the province of Manitoba (revote $17,000), $60,009.
[Stage Direction]
Thursday, June 24, 1948