1949-11-10

Hon. F. G. Bradley (Secretary of State) moved: the first reading of Bill No. 174 (from the Senate), to amend the Pension Fund Societies Act.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. Argue:: 1.	What was the Increase in hospital beds, by provinces, for each of the years 1944 to 1948, inclusive?
2.	What was the number of hospital beds per thousand of population, by provinces, as at January 1, of each year, 1944 to 1949, inclusive?


Mr. Claxlon:: 
* TELEPHONE DIRECTORY-CHANGE FROM DOMINION OF CANADA TO GOVERNMENT OF CANADA
Mr. Hodgson:: 1.	Under whose authority was the name changed in the telephone directory from "Dominion of Canada" to "Government of Canada"
2,	Why was this change made?


Mr. Abbott:: Perhaps I may be permitted to answer these questions orally.
1.	The change was authorized by the deputy minister of finance, as the Department of Finance is the department now responsible for the administration of government telephone services.
2.	Following the issue of October 1, 1947, of the current letters patent constituting the office of governor general, the words "Dominion of" were omitted. The practice of omitting these words was adopted in all government documents from that time forward. This was in accordance with an opinion given by the Department of Justice that the word "dominion" does not form part of the name of this country, as is made clear in section 3 of the British North America Act.


Mr. Fullon:: In the course of his oral answer to this question, the minister used the following expression: The Department of Finance is now responsible for the government telephone services.


Douglas Charles Abbott: Is responsible for the administration of government telephone services.


Edmund Davie Fulton: I was going to ask him to clear up that statement. My understanding was that the Department of Transport administered the government telephone services.


Douglas Charles Abbott: My hon. friend is misinformed.


Edmund Davie Fulton: May I ask the minister when the change was made?


Douglas Charles Abbott: I could not answer that question offhand. Perhaps the Minister of Public Works could do so.


Mr. Fournier (Hull):: It is about a year ago that the duties were transferred from the Department of Public Works to the Department of Finance.


Edmund Davie Fulton: I have been writing to the Minister of Transport on matters affecting these services and have been receiving answers from him.


Mr. Chevrier:: In order to clarify the matter, may I say that the Department of Transport looks after government telephone services.
^HOUSING-ALBERTA


PELMO PARK
Mr. Johnston:: 1. How many houses were in the Pelmo Park housing project?

2.	What was the total value of this project?
3.	What was the financial loss to the government and/or Central Mortgage and Housing Corporation through the failure of this housing project?
4.	What was the total amount of deposits made by the purchasers?
5.	What was the total loss to the purchasers in this project?
6.	What was the amount of the total assets of the Kershaw Construction Company as estimated by the Central Mortgage and Housing Corporation when the contract was let?
7.	What actual building experience did this company possess when they received this contract?
8.	What was the cause of the failure to complete this contract by the Kershaw Construction Company?
9.	Was there any settlement made to the purchasers? If so, what were the terms of settlement?


Mr. Winters:: Mr. Speaker, much of the information sought by these questions is not available to the government. I have spoken to the hon. member for Bow River (Mr. Johnston), giving him as much information as the government has, and I understand on that basis he has agreed to drop the question.


Mr. Johnston:: Since I have the information that is available, I am prepared to drop the question.


Mr. Speaker:: Question dropped.


CHICAGO DRAINAGE CANAL
Mr. Church:: 1.	How many cubic feet of water per second is now being used by the Chicago drainage canal works in connection with the diversion of that system?
2.	Has there been any correspondence exchanged between the government of Canada and the government of the United States or any of their commissions or officers with respect to such diversion?
3.	Has a report been made in connection with such diversion?


Mr. Claxlon:: 1.	Based on an annual average, 1,500 cubic feet per second, in addition to domestic pumpage. It is understood that the latter amounts to about 1,900 cubic feet per second, making a total of approximately 3,400 cubic feet per second.
2.	Yes, although not for some years.
3.	Reports of proceedings before the United States Supreme Court have been issued in the United States. So far as is known, there are no Canadian or joint international reports on this matter.
^NEWFOUNDLAND


JUDGE IN ADMIRALTY
Mr. Higgins:: What steps have been taken by the government to appoint a judge in admiralty in Newfoundland?


Mr. Garson:: Perhaps I may be permitted to answer this question orally. Hon. Sir Brian Dunfield and Hon. H. A. Winters, judges of the Supreme Court of Newfoundland, were appointed district judges in admiralty on May 45781-102
Questions
16, 1949. Hon. Sir Albert Joseph Walsh, Chief Justice of the Supreme Court of Newfoundland, was appointed district judge in admiralty on September 13, 1949.


* WHEAT IN STORAGE
Mr. Diefenbaker:: 1.	How many bushels of wheat were in storage in Canada as on the first of October and on the first of November, 1949?
2.	What is the total amount paid by the wheat board for storage of wheat between the first day of August, 1948, and the first day of October, 1949, with particulars as to the companies to whom payment was made and the amount paid to each?


Mr. Howe:: 1.	On September 29,	1949,	162,961,023
bushels; on October 27, 1949, 179,080,499 bushels.
2.	It is not the practice of the wheat board to give particulars of current transactions. I would ask that the second part of this question be dropped.


Mr. Diefenbaker:: Will the minister allow the second part of the question to stand until I speak to him about it?


Mr. Howe:: The first part of the question is answered, and the second part stands.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Gordon Francis Higgins: What was the amount paid to Newfoundland for consumable stores and supplies taken over by Canada in (a) postal services; (b) telegraph services; (c) Gander airport?


NEWFOUNDLAND
Gordon Francis Higgins: What is the result of the consultation that has taken place between the federal government and the provincial government of Newfoundland with respect to the detailed application of term 39 of the terms of union between Canada and Newfoundland?



VETERANS LAND ACT


Hon. Milton F. Gregg (Minister of Veterans Affairs) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a bill to amend the Veterans Land Act, 1942, for the following among other purposes:
To make the benefits of the act available to veterans in receipt of pensions for disabilities which are not the result of service but were incurred during service; to provide conditions under which modifications may be made at the

Inquiries of the Ministry request of veterans in current and future contracts made thereunder; to provide conditions under which adjustments may be made with veterans who have surrendered their contracts and for the absorption of past abnormal building costs.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house. Motion agreed to.



COMBINES INVESTIGATION ACT


[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roseiown-Biggar):: May
I direct a question to the Minister of Justice? Can he answer the question I asked him on November 7 about certain correspondence between Mr. Donald Gordon, and his officers of the wartime prices and trade board, and the flour milling industry?


Stuart Sinclair Garson: Yes. Mr. Donald Gordon informs me that no communications giving assurance of privilege following decontrol measures were given by him to the milling industry, and the chairman of the wartime prices and trade board also advises me that no member of the staff of the board gave such assurances of privilege "following decontrol measures", which was the phrase used in my hon. friend's question. Moreover, the news item in the Ottawa Journal to which the hon. member for Rose-town-Biggar called attention makes no statement such as the hon. member suggests. Instead, in that particular item it is stated several times that any assurances of privilege were confined to wartime activities.



ARMISTICE DAY


[Stage Direction]
On the orders of the day:
Mr. G. K. Fraser (Peterborough West):: should like to ask the proper minister-I think it is the Secretary of State-a question. Who has given authority for the putting up of notices in government buildings throughout the country stating that veterans and civil servants generally will not be given leave from their duties tomorrow to attend Armistice day memorial services? Can that order be changed so that they may be allowed to attend these services?


Frederick Gordon Bradley: have no knowledge of any such order, Mr. Speaker. I understand that tomorrow is a Statutory holiday.


Gordon Knapman Fraser: The notices are up, anyway.



WAYS AND MEANS


[Stage Direction]
The house in committee of ways and means, Mr. Dion in the chair.
2. That the retail purchase tax be repealed and replaced by an excise tax of 10 per cent, payable by the manufacturer or importer, on all articles now subject to the retail purchase tax.
Gordon Knapman Fraser: We were on this item yesterday and there was quite a bit of misunderstanding about it. This was and still is a luxury tax, although the government call it something else; they call it an excise tax now. They have reduced it from 25 per cent to 10 per cent. When we were talking about this matter yesterday afternoon, before we adjourned for the day, we were mentioning only the 10 per cent tax. But at that time we forgot to take into consideration the fact that in this provision we should cover also the sales tax. On an article that costs say $100, you have the sales tax, and you have your 10 per cent excise tax on top of that, which makes the price $118. That is the price at which the manufacturer sells to the wholesaler. In most cases the wholesaler takes a markup of not more than about 25 per cent; therefore he adds to the $18 tax his 25 per cent, which brings it up to $22.50. The wholesaler in turn sells to the retailer, and most retailers take a margin of about 50 per cent. So the 50 per cent is added to the $22.50, and poor old John public has to pay $33.75 to enable the treasury to collect this $18 tax that the government has imposed on each $100 worth of goods. It is no wonder that the cost of living has gone up, with things of this kind happening. I feel this tax should be abolished.


Mr. Sinclair:: I should like to give one word of explanation, Mr. Chairman. Last night the committee agreed to have schedule III, which is the list of goods which are exempt from sales tax, incorporated in Hansard. Unfortunately that was not done, so I will give the schedule to Hansard now.


SCHEDULE III
[Stage Direction]
(GOODS EXEMPT FROM SALES TAX)
Foodstuffs
Barley; bread; butter; cheese; cream; eggs; egg albumen and egg yolks; glucose; honey; ice; lard; rice; salt; soups; split peas; sugar; yeast; yogurt; bakers' cakes and pies including biscuits, cookies or other similar articles; cereal breakfast foods not including beverages; fish and edible products thereof; flour including pastry, cake, biscuit, and similar mixes; foods prepared and sold exclusively for feeding infants; fruit, fresh, canned, frozen, dried or evaporated; grain grits and meals; jams, jellies, marmalades, and preserves; maple syrup; corn syrup; table syrups, molasses, and materials

to be used exclusively in the manufacture thereof; meats and poultry, fresh, cooked, canned, frozen, smoked or dried; milk, including buttermilk, condensed milk, evaporated milk, and powdered milk; peanut butter and shortening and materials for use exclusively in the manufacture thereof; spaghetti, macaroni, and vermicelli; vegetables, fresh, canned frozen or dehydrated, not including pickles, relishes, catsup, sauces, olives, horseradish, mustard, and similar goods; vegetable juices; fruit juices which consist of at least ninety-five per cent of pure juice of the fruit.
Farm and Forest
Bees; casein; fertilizer; hay; hops; shorts; straw; alfalfa meal; animals, living; baling twine for baling farm produce, and articles and materials to be used or consumed exclusively in process of manufacture thereof; beet pulp, dried; draintiles for agricultural purposes; farm produce sold by the individual farmer of his own production, not to include flowers, flowering plants or bulbs, when the sales thereof exceed five hundred dollars per annum; feeds for fur-bearing animals whose pelts have commercial value; forest products when produced and sold by the individual settler or farmer; furs, raw; gopher poison, and materials for use exclusively in its manufacture; grain or seed cleaning machines and complete parts therefor; grains and seeds in their natural state; harness for horses and complete parts therefor, and articles and materials to be used exclusively in the manufacture thereof; hides, raw and salted; logs and round unmanufactured timber; milk albumen, when for use exclusively in the production of animal or poultry feeds; nursery stock; oil cake, oil cake meal; peat moss when used for agricultural purposes, including poultry Utter; poultry, cattle and other stock feeds; poultry, living; preparations or chemicals sold for disinfecting, dipping or spraying and so used in agriculture or horticulture, and materials for use exclusively in the manufacture of such preparations; sap spouts and sap buckets, evaporators and complete parts therefor, when for use exclusively for the production of maple syrup; sawdust and wood shavings; settlers' effects; vegetable plants; wool not further prepared than washed; woollen rolls or wool yarn milled for a producer of wool from wool supplied by him for his own use.
Engines
Internal combustion traction engines, and portable engines with boilers in combination, for farm purposes, or for use exclusively in the operation of logging, such operation to include the removal of the log from stump to skidway, log dump or common or other carrier, and complete parts of all the foregoing, and articles and materials, not to include plant equipment, to be used or consumed exclusively in the manufacture of the foregoing engines, boilers or parts thereof.
Mines and Quarries
Crushed stone or crushed gravel; gold and silver in ingots, blocks, bars, drops, sheets or plates unmanufactured; ores of metals of all kinds; sand, gravel, rubble, and field stone.
Marine and Fisheries
Boats bona fide purchased by fishermen for use in the fisheries, and articles and materials to be used exclusively in the manufacture, equipment or repair of such boats; carrageen or Irish moss; cotton duck and cotton sail twine to be used only in the manufacture of equipment for ships or vessels; rope and cordage of cotton, hemp, manilla or other vegetable fibre, not exceeding one and one-half inches in circumference, for the fisheries, not including these articles for sportsmen's purposes, and materials for
Excise Tax Act
use only in the manufacture thereof; materials for use only in the construction, equipment and repair of ships; materials used as ingredients in canned fish; ships licensed to engage in the Canadian coasting trade; sinkers, and floats including trawl kegs, when for use exclusively in the fisheries, not including these articles for sportsmen's purposes.
Religious, Charitable, Health, etc.
Insulin; radium; articles and materials for the sole use of any bona fide public hospital certified to be such by the Department of National Health and Welfare, when purchased in good faith for use exclusively by the said hospital and not for resale; artificial eyes; artificial limbs, and parts thereof; bibles, missals, prayer books, psalm and hymn books, religious tracts, Sunday school lesson pictures, books, bound and unbound, pamphlets, booklets, leaflets, scripture, prayer, hymn and mass cards and religious mottoes and pictures unframed, for the promotion of religion, and materials to be used exclusively in the manufacture thereof, but not including calendars, parish reports, forms, stationery or programs; donations of clothing and books for charitable purposes; liver extract for use exclusively in the treatment of anaemia; memorials or monuments erected in memory of members of the armed forces who lost their lives in the service of their country; war veterans' badges.
Printing and Educational
Manuscript; newspapers; books for the instruction of the deaf or dumb; magazines and literary papers unbound, regularly issued at stated intervals, not less frequently than four times yearly, and printing paper and printing ink for use exclusively in their production; photographs, paintings, pastels, drawings and other art work and illustrations of all kinds, whether originals, copies or proofs, and printing plates made to reproduce the same, for use exclusively as nonadvertising news pictures or for illustrating nonadvertising articles or stories in periodical publications enjoying second-class mailing privileges, the pages of which are regularly bound, wire stitched or otherwise fastened together; textbooks, printed, authorized by the Department of Education of any province in Canada and phonograph records so authorized for instruction in the English and the French language, and materials used exclusively in the manufacture thereof.
Diplomatic
Articles for the use of the governor general; articles imported for the personal or official use of the heads of diplomatic missions, high commissioners representing other of His Majesty's governments, counsellors, secretaries and attaches at embassies, legations, and offices of high commissioners in Canada, trade commissioners, representing other of His Majesty's governments, consuls general of foreign nations who are natives or citizens of the countries they represent and who are not engaged in any other business or profession; automobiles, cigars, cigarettes, manufactured tobacco, ale, beer, stout, wines, spirits, purchased in Canada by any of the foregoing.
Certain Building Materials
Bricks, building tile, building blocks, and building stone; plaster; lime, cement; lumber; sash; doors; shingles; lath, siding; stairways; plaster boards; fibreboard, building paper and materials, other than wallpaper, manufactured wholly or in part of vegetable or mineral fibre for wall coverings or building insulation; paints, varnishes, white lead and paint oil; prepared roofings; shower baths, bathtubs, basins, faucets, closets, lavatories, sinks and laundry tubs, not including repair parts therefor, nor pipes and pipe fittings; cast iron soil pipe and cast iron fittings therefor; glass for buildings; furnaces, hot
[Stage Direction]
Excise Tax Act
water and steam radiators not to include fittings, lor the heating ol buildings; locks and lock sets; structural steel to be used exclusively for the framework and support of buildings; articles and materials to be used exclusively in the manufacture or production of the aforementioned building materials.
Coverings
Usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax and materials to be used exclusively in the manufacture of such coverings.
Firebrick, refractories, etc.
Firebrick, plastic refractories, high-temperature cement, fire clay and other refractory materials for use exclusively in the construction or repair of a furnace, kiln or other equipment of a manufacturing establishment, and materials to be used or consumed exclusively in the manufacture of such firebrick or refractory materials.
Processing materials
Materials (not to include lubricating oils or fuel oils) consumed, otherwise than by waste or wear, in the process of manufacture or production of taxable goods.
Machinery and apparatus to be used in manufacture or production
Machinery and apparatus, as defined by the Minister of National Revenue, and complete parts thereof which, in the opinion of the minister, are to be used directly in the process of manufacture or production of goods; provided that this exemption shall not apply to office equipment or motor vehicles.
Miscellaneous
British and Canadian coins and foreign gold coin; electricity; fuel other than in liquid form; natural gas and gas manufactured from coal, calcium carbide or oil for illuminating or heating purposes.
Goods enumerated in customs tariff items 173, 209b, 236b, 352a, 364, 406, 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i and complete parts thereof. 409j, 409k, 409q, 439c, 440k, 460, 476, 476a, 480, 480a, 538, 663b, 666, 667, 682, 692, 692b, 693(i), 695a, 695b, 696, 696a, 698, 700, 701, 702, 703, 704, 708, 786, 848.
Articles and materials which enter into the cost of manufacture of the goods enumerated in tariff items 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g, 409j, 409k, 409o and 439c, when imported by manufacturers for use exclusively in the manufacture in their own factories of the goods enumerated in the aforesaid tariff items, under regulations prescribed by the minister.
Articles and materials to be used exclusively in the manufacture of goods enumerated in customs tariff items 173, 406, 409, 409a. 409b, 409c, 409d, 409e, 409f, 409g, 409h, 409i, 409j, 409k, 409q, 410b, 411, 411a, 411b, 439c, 440k, 476, 476a, 480, 480a, 538, 663, 663a, 663b, 666, 667, 696, 848.
Materials not to include plant equipment consumed in process of manufacture or production, which enter directly into the cost of goods enumerated in customs tariff items 406, 409, 409a, 409b, 409c, 409d, 409e, 409f, 409g. 409h, 409i, 409j, 409k, 409q, 410b, 411, 411a, 411b, 439c, 440k, 476, 476a, 480, 480a, 538, 663, 663a, 666, 667, 696.
There was also some discussion about incorporating the schedule referring to the old excise tax rates. It has been pointed out to me that since all those rates are now changed to a flat 10 per cent, there is not much point in incorporating the schedules in
(Mr. Sinclair.]
the old act-that is, schedules I, II and III. They will be found consolidated in the new bill when it is brought in after this resolution is carried.
One other point was brought to my attention. I described the four main groups of goods in this country now, so far as taxation is concerned: the first group, on which no sales tax was levied; the second group, everything else on which sales tax was levied; the third group, on which a 10 per cent excise tax was levied in addition, and finally, the liquor and tobacco group, which has always had a traditionally high tax. There is one other small group covered by schedule IV of the act, which provides that goods made by either the institute for the blind or by deaf and dumb schools are subject to only half the sales tax.
Gordon Knapman Fraser: To go a little further in this matter: as I said before, the manufacturer's price, let us say, is $100. He adds the 8 per cent sales tax, and the 10 per cent luxury tax brings the tax up to $18, which makes the wholesaler's price $118. The wholesaler's margin is 25 per cent; therefore to that $118 is added his $29.50, which brings up the retailer's cost to $147.50. The retailer makes a margin of 50 per cent, which adds another $73.75, which brings the price of a $100 article up to $221.25 to the public. That is why I say this tax should be done away with.


Mr. Isnor:: I should like to say a word in reply to the hon. member who has just referred to the profits made by retailers. Evidently the hon. member, who has built up a case on the basis of an increase from $100 to $221.25, is not at all familiar with retail practice. I doubt very much whether any hon. member who has spoken on this question has dealt with it from a real knowledge of merchandising. I want to say definitely that it was a good move to change the 25 per cent excise tax to 10 per cent. It was a good move because it made possible the purchase of luggage and many other articles that do not come within the scope of luxury items. More than that, the 25 per cent profits tax never had a profit added to it. It meant nothing to the retailer except additional worry to collect the tax and pass it along. It also prevented the sale of luggage to many customers who required it.
When the hon. member takes $100 and adds an 8 per cent sales tax to it, he is doing what is right. The manufacturers charge and collect an 8 per cent sales tax for the government. In addition they collect a special 10 per cent excise tax for the government. The retailer does not make any profit or markup whatsoever on that $18.


Gordon Knapman Fraser: Certainly he does.


Gordon Benjamin Isnor: It is all very well for the hon. member, who does not know what he is talking about, to say that he does. The fact remains that no reliable firm in Canada will put a markup on that 10 per cent. I venture to make that assertion here today.
In addition to that, the hon. member first adds $18 to the manufacturer's price; then he puts 25 per cent on that, which makes $29.50. I do not know where he gets the 25 per cent. Then he adds another 50 per cent. The average retailer adds to his first cost what is considered a reasonable markup to make it possible for him to pay his rent and overhead expenses, including help. That figure is anywhere from 23 per cent to 29 per cent, depending on the type of business. After he has paid all his expenses, the net profit remaining to him, roughly speaking, amounts to anywhere from 3| per cent to 6 or 7 per cent. That is the story. That applies to most reliable retailers throughout Canada from the Atlantic to the Pacific. It is quite true that there is the odd case-the hon. member does not indicate a thing by shaking his head. He may shake it one way or the other. He may shake it up or down, but these are the facts. I wanted to say this word in fairness to the retailers throughout Canada.


Gordon Knapman Fraser: The hon. member has been in business for a long time. I do not know what his practice is, but let us suppose he bought an article on which there was a hidden tax, and he paid $100 for that article. Suppose he asked the wholesaler how much tax was included in the price, and the answer was $18; he would not say: I will mark it down $18 and then take my profit on the figure thus arrived at. That is not the way business is done. The figures I gave are not my own figures. They are from retailers from coast to coast, from Halifax to Victoria. They are figures obtained from over 3,700 people.


Gordon Benjamin Isnor: Would the hon. member be good enough not to quote a hundred or twenty-five or ten or eleven, but just one? Give us the figures of one retailer from Halifax. Give us the name of one firm. That is all I am asking.


Gordon Knapman Fraser: All right; any jewelry firm or hardware firm in the hon. member's city will tell him these are the facts.


Mr. Sinnott:: The hon. member said he could give the names.


Some hon. Members:: Give the name. .


Mr. Warren:: Give the name.


Mr. Hansell:: I do not want to interfere with the little boxing bout that is going on between the senior member for Halifax and
Excise Tax Act
the hon. member for Peterborough West. It does seem to me that the hon. member for Peterborough West is one punch ahead, but I shall leave that for the referee to decide. I am interested in the people and what they pay in hidden taxes. The leader of this group had something to say on that yesterday afternoon, and I fully support him in what he said. I believe the people of Canada have a right to know what they are paying in taxes every time they buy an article or whenever they do business.
I do not smoke. I understand that those who do smoke pay a lot of taxes that they do not know they are paying. I understand that if they buy a package of cigarette papers the actual price of the papers may be three cents, and there is an additional ten cents which is a tax. I do not know whether they know that or not, but I contend that on every package of cigarette papers it should be indicated that the buyer is charged ten cents for the privilege of rolling his own, and that that ten cents goes to the government.
If I had my way I would insist that on every price tag the actual price of the goods should be marked, and, in addition, the amount of tax imposed. I believe that was done in some instances during the war. We in this corner of the house believe that it is not necessary to tax to the extent that governments do today. I am not going into that now. We have said that over the past fifteen years. We believe that a substantial proportion of the money that is used by governments today could be obtained by methods other than taxing or borrowing. Be that as it may, it does seem to me that the power of money manipulation works in the dark. There is no question about that; otherwise there would not be the ignorance that there is in the country concerning money.
I do not know whether I heard a hee-haw coming from the other side of the house, but even the type of creation that uses such an expression does not understand very much about money. Holy Writ warns us about the hidden things of darkness. I believe that some of these things should be brought to light. There may be some reason to suspect that those who operate this vicious and yet powerful system would want some things hidden. The idea is not to let people know too much about it, so the tax is hidden.
I have here an empty cigarette package. While I do not know much about cigarettes, I have been told by one who smokes that this little sticker on the package has something to do with the excise tax. Upon looking

Excise Tax Act
at it I find it has the appearance of a stamp -indeed it is so designed that it looks like a valuable piece of paper-


John Ewen Sinclair: It is.


Ernest George Hansell: -as though it might have been cut from the corner of a $20 bill. I read it and I find it bears the imprint: "20 cigarettes". I do not know whether a person buying cigarettes would insist every time he bought them upon being informed that he is buying twenty of them. Surely he would understand that. What he does not know is the amount of tax he is paying on that package of cigarettes.
My leader tells me that the man who buys cigarettes is paying 29 cents in taxes every time he buys a package. Instead of a small stamp bearing the imprint "20 cigarettes" I say it should bear the words: Your government is now taxing you 29 cents on this package of cigarettes. In this way the tax would not be hidden from the eyes of those who smoke the things within the package. The blame for the tax should be placed squarely on the shoulders of the government imposing it. People should not be left under the impression that it is the manufacturer who imposes the tax-and there may be some who have that impression.
I am serious in what I say. During the war it was provided by certain regulations of the wartime prices and trade board-and if in any details I am wrong, I shall stand corrected-that, in order to have fair business practice in the fur trade, any fur when advertised had to be properly described as to the type of fur used. It was not good enough to say, "This is muskrat"-because it may not have been muskrat; it may have been tomcat. In advertising the fur the advertiser had to state the type of fur being used; if it was dyed rabbit, it had to be so stated. Under that regulation which, in my view, was a good one, people knew what they were buying. No one will gainsay that.
The same should apply in connection with taxes. People should know how much they are paying in taxes and how much for the actual article. I urge therefore that we do away with hidden taxes. Believe me, if people knew every time they spent a dollar here or there how much of it went for taxes it would not be long before they would be aroused to the necessity of some type of monetary reform.


Mr. Blackmore:: They would stop blaming private enterprise then.


Mr. Knight:: Mr. Chairman, there is no specific item under which I could mention the commodity I should like to bring to the attention of the committee, because it is not

one of the commodities from which the tax has been removed. I wish, however, to protest against the tax on ice cream.


John Ewen Sinclair: Resolution No. 5 would be the proper one.


Some hon. Members:: Carried.


Robert Ross (Roy) Knight: No, the resolution is not carried.


John Ewen Sinclair: The hon. member is out of order if he attempts to discuss a sales tax on the excise tax item. I suggest that he wait until we reach resolution 5.


Robert Ross (Roy) Knight: I am asking the Chairman for his ruling.


The Chairman:: I suggest that the hon. member wait until we are discussing resolution 5.


Major James William Coldwell: I agree with the hon. member for Peterborough West and disagree with the senior member for Halifax. After all, I believe I learned to disagree with the senior member for Halifax when some years ago I used to listen to the leaders of the party to which he belongs. In those days-and I argued the same way; I admit it-the imposition of a tariff was always alleged to be an imposition on the public, because it was not the tariff that the people paid but the pyramided price at the retail end, at which stage the cost price included the original cost and the tariff in the first instance, with at every stage the additional amount of profit added to both the original value and the tariff, and pyramided profits on both.
I think this is perfectly true with regard to the tax we are discussing today. Yesterday the parliamentary assistant referred to the dollar article with the 10 per cent tax on it, which, of course, amounted to ten cents. Then he used an extravagant markup, which is not generally used, but which I shall use because it makes a simple computation-and we reach the point where we have one dollar becoming two dollars. The 10 per cent, it is true, is 20 cents on the two dollars. But as a matter of fact when you compute the markup you are not paying 10 per cent on the two dollars, but rather 20 per cent on the original dollar-which is a different thing, indeed.
The only difference is that in one case the government gets the whole tax, and in the other case the public pays it and it is distributed to the wholesaler, the jobber, the retailer or whomever it may be. The difficulty is that the consumer pays and the government actually loses revenue in that way. I agree with the hon. member from the Social Credit group who has just spoken when he states that these things should be made known to the public.

I know that in British Columbia, Saskatchewan and other provinces where they have had sales taxes, there have been outcries against sales taxes to the extent of two or three per cent, forgetting all about the federal sales tax of 8 per cent and all the other hidden taxes. We never heard anything about that-and the strange feature of it all is that supporters of the Liberal party	are	the most violent
critics of provincial sales taxes, when they are collected directly from the public in amounts of two or three per cent-despite the fact that the federal tax imposed by the government they support is many times that large.
I agree, therefore, that these taxes should be stated to the extent we can have them stated. I do not like the idea of changing the present tax at the retail end to one at the manufacturer's end.


Mr. Low:: There is one suggestion I would pass on to the parliamentary assistant which might be followed up by his department. I believe all the discussions thus far on sales and excise taxes indicate that there ought to be some source from which members of the House of Commons can obtain authentic information as to the portion of the consumer price which in reality is taxation imposed by this or other governments, and that portion which is legitimate cost. A good many attempts have been made by associations such as the retail merchants' association to compute the effect of excise and sales taxes on consumer cost. I suspect that some of the figures given by the hon. member for Peterborough West came from such a source. If they are not correct-


Gordon Knapman Fraser: They are correct.


Solon Earl Low: I am only saying that if they are not correct, surely it is necessary that there should be placed at the disposal of agencies of that kind information that will make it possible for them to get the correct figures. I am aware of certain investigations that have been carried on in the United States, and calculations founded on fact indicate that up to 86 per cent of the consumer cost of a gallon of oil used in the transmission of an automobile consists of taxation imposed by either the state or the federal government, mainly the federal government. On a pair of denim overalls used by a farmer, up to 70 per cent of the consumer price consists of taxes imposed at various levels in manufacturing and distribution.


John Horne Blackmore: When they are pyramided.


Solon Earl Low: When they are pyramided. I think the parliamentary assistant could do this committee a service by making available
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these figures in connection with certain of the common articles used by the people of Canada from day to day, so that the consumer may know exactly what is tax and what is legitimate cost.


Mr. Harkness:: I should like to bring up the matter of portable sprinkler irrigation systems. I referred to this in the debate on the address, and requested that when the budget resolutions were brought down provision be made for removing the tax on this type of farm equipment.


Joseph-Alfred Dion: That would come under resolution 5.


Douglas Scott Harkness: I will take it up under No. 5.


Mr. Black (Cumberland):: I want to protest against the continuance of the 10 per cent tax under 3 (a), on trunks, suitcases, bags and luggage of all kinds. We are thankful that this war tax is being reduced from 35 to 10 per cent, but these articles are not luxury items and there should be no tax at all. This industry was imposed upon during the war to a greater extent than any such industry in the country.
In my constituency there is a small industry which started from limited beginnings but has grown to a fair size. Of course, it cannot compare with the large industries in the country, because it does not manufacture a full range, its products being only staple items. During the war a tax of 35 per cent was imposed upon the products of this industry. I doubt if there is a member of the house or a household in the country without a trunk, a suitcase, a bag, or luggage of some kind. Therefore I submit these articles are a necessity. I cannot understand why they should be classed with ash trays, tobacco pipes, smokers' accessories, and luxuries.
This tax cannot be justified, particularly in view of the recent devaluation of the pound sterling, which creates serious competition for this industry. Has the department taken into consideration this additional competition which the industry in my constituency and other such industries throughout Canada will have to contend against? Articles are coming into this country under a 20 per cent preference and are taking business from industries of this kind.
I consider this an unfair, unreasonable and unjust tax, and I do not believe it should be continued. If it were in order I would move that this 10 per cent tax on trunks, suitcases, bags and luggage of all kinds be deleted from the resolution.


Gordon Benjamin Isnor: I should like to associate myself with the hon. member for Cumberland in the representations he has made for the elimination of the 10 per cent tax on luggage. I do

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not do this because I am a retailer selling luggage, but rather because I feel that this industry should not receive this treatment. I want to emphasize the point made by the hon. member, that this tax places the Canadian manufacturer of luggage in an unfavourable position owing to the devaluation of the pound. A large quantity of English leather goods is coming into Canada, and with the devaluation of the pound the competition is going to be that much keener and the Canadian manufacturer will be placed in an unfair position.
The firm to which the hon. member referred, Christie Trunk and Bag Company, Limited, is a fine company which is making a good article. They are in competition with the rest of Canada, and I am anxious to see them maintain their position and continue on a fair competitive basis.
May I say to the hon. member for Cumberland that I was one of those who went to the government last year to make representations to have the 35 per cent tax reduced to the present 10 per cent. Of course we asked for the complete elimination of the tax.
For the benefit of those who do not know how this business is handled, may I say that in the case of luggage the price ticket states the tax. There is no hidden tax such as has been referred to by the hon. member for Rosetown-Biggar. Everything is distinctly marked on the price ticket, and prices are more or less set by the manufacturer.
Let me say in fairness to retailers, not just those in Halifax but in British Columbia and throughout the whole dominion-


Major James William Coldwell: We were not criticizing the retailer.


Gordon Benjamin Isnor: The hon. member started out to criticize them.


Some hon. Members:: No.


Gordon Knapman Fraser: No, we did not. We were criticizing the government.


Some hon. Members:: Order.


Gordon Benjamin Isnor: We can read what was said. I think I can follow an argument as well as the average person. Hon. members certainly tried to contend that the retailer was selling at an excessive profit, due largely to the pyramiding of the taxes. That is the position in which they try to place retailers. I want to defend the retailer and say that on the whole-and there are a great many of them throughout Canada- they are trying to carry on the same fine type of business that is carried on by other trades. I think it is safe to say that because of wartime restrictions the retailer today is making less profit than he ever made
(Mr. Isnor.]
before. I do not know whether hon. members who criticize retailers, including the hon. member for Rosetown-Biggar-


Major James William Coldwell: I rise on a question of privilege. We have not criticized retailers.


Gordon Knapman Fraser: No one has.


Major James William Coldwell: No one has. If the retailer pays out $1.25 he is entitled under our present system to a profit on his investment based on $1.25. We are not complaining about that.


Mr. Graydon:: You have a man of straw there.


Gordon Benjamin Isnor: If the hon. member for Rosetown-Biggar is withdrawing his argument, it is all right with me.


Gordon Knapman Fraser: No; he did not withdraw his argument.


Solon Earl Low: You just do not understand.


Gordon Benjamin Isnor: The hon. member says the member for Rosetown-Biggar does not understand. I agree with him.


Major James William Coldwell: What is that?


Gordon Knapman Fraser: No; it was you who did not understand.


Solon Earl Low: The hon. member for Halifax did not understand.


Major James William Coldwell: I am sorry, but the hon. member for Halifax does not seem to understand anything.


Edmund Davie Fulton: He does not even understand what he is saying himself.


Gordon Benjamin Isnor: I am most willing to be taught at any time. I have done fairly well in the retail business and made a profit in a fair legitimate way.


Mr. Drew:: At 25 per cent or 50 per cent?


Gordon Benjamin Isnor: I was about to say that today retailers are carrying on with a closer margin than ever before.


Mr. Mclvor:: That is right.


Gordon Knapman Fraser: We all agree with that.


Gordon Benjamin Isnor: You can criticize them as much as you wish-


Gordon Knapman Fraser: Nobody criticized them.


Gordon Benjamin Isnor: You may also criticize the price setting plan, but there are a great many manufactured lines today in which the retail price is more or less suggested to the retailer. The retail price is closer to cost than it ever was before. I think I should set hon. members right as to that. That is all I care to say at this time.


Mr. Church:: I wish to support what the hon. member tor Cumberland has said about the excise tax. He forgets, however, that departmental officials throughout the country will interpret the word "accessories". Having certain powers, rights and privileges, they will notify the various excise collectors what to do. The resolution may be passed in the twinkling of an eye, but departmental officials will write something different into the resolution. They can make rules and regulations apart from it. I think we should be most careful about the language that is used. I have seen examples in the city of Toronto of what happens, and I have had many complaints from retail merchants and others engaged in this kind of business. They say that they have great difficulty, and that there are different interpretations made in various places. We should clarify the matter, because if the committee passes the resolution it means it will be enforced in some places and not in others. There will be different interpretations. The department will interpret the word "accessories" as meaning something that was never intended by the resolution.


Mr. Thomas:: As to the statement made by the senior member for Halifax, I should like to say that I have been in business in one way or another for the past seventeen years. Some day I hope to have the privilege of going to Halifax and watching the hon. member work out his profit. During all the time I have been in business I have never been accused of nefarious practices. When an article costs me $1.25 I have always figured my profit on a cost of $1.25. There is no man in business in Canada today who has the time to check over all the statutes of Canada to figure out how much he has been charged in taxes, and take that off before he figures his profit.


Solon Earl Low: Not even the hon. member for Halifax.


Ray Thomas: Not even the hon. member for Halifax. If an article costs a man $1.25, he is entitled to his profit on that $1.25.


Mr. Murphy:: Would this be the appropriate time to inquire from the parliamentary assistant what the excise taxes are on tobaccos in various forms?


John Ewen Sinclair: The hon. member can find that in the Excise Act. None of these resolutions pertain to tobacco or spirits.


Thomas Langton Church: You will tie up the Christmas trade. You will not be able to get your goods out of customs.


Mr. Stanfield:: I should like to ask the
parliamentary assistant if under the old law the retail purchase tax was 25 per cent on 45781-103
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the retail price. They have made a pretty smart move. They have removed the 25 per cent tax because the public demanded it, and now they are making the manufacturer and importer collect the tax, and are hiding it so that nobody will know anything about it. Like other hon. members, I think that the tax should be shown so that people will know exactly what they are paying. The same applies to the sales tax. If the amount of the sales tax had to be shown on each article purchased, there would not be any sales tax today because people would be so much annoyed. You would need so many votes over there that you would take the sales tax off.


Solon Earl Low: I should like to ask the parliamentary assistant about the suggestion I made a few minutes ago. Does he not think that full information should be made available so that members of the house might know exactly what the situation is?


John Ewen Sinclair: I was advised yesterday that I was too eager to answer questions, and I was waiting until each resolution was fairly well completed to answer the points which have been raised. As to the question of the hon. member for Peace River, whether it would be practicable to have the sum total of all taxes shown on every item-


Solon Earl Low: Not on every one-on a representative group.


John Ewen Sinclair: The hon. member says "not on every one"; but where is he to draw the line?


Solon Earl Low: Take a representative group.


John Ewen Sinclair: The principal taxes in Canada, on the federal level, are personal income tax, corporation tax, and excise tax.


Solon Earl Low: I am speaking of hidden taxes.


John Ewen Sinclair: The hon. member accused me of being too eager yesterday; now he is somewhat eager himself. In the final tax fraction of the cost of an article these hidden taxes are embodied. Property tax is paid by the factory that made the article, also corporation taxes and provincial taxes on that level. All these are represented in the cost of the article. If you want to know where the federal taxes are to be found that the people of Canada pay, in the Excise Act there is specific information as to where taxes are levied.
The next point raised was about the matter of markups. I agree with the hon. member for Halifax that there has been a great change in opinion on the other side of the house between yesterday and this afternoon. We heard that when the government put the

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tax on the manufacturer's level, the wholesaler, the jobber and the retailer were able to pyramid it, and the hon. member for Rosetown-Biggar said that the retailer added these extra taxes on the retail level. There was a complete change when the hon. member for Halifax suggested there was an implication that retailers were taking advantage of these taxes.


George Alexander Drew: When he misrepresented what had been said.


John Ewen Sinclair: Let me say a few words about the actual form that these taxes take. If we had price control in Canada, and had definitely allotted markups, as we did under price control, then the arguments made would have been true, although even then we exempted taxes from these markups. Today we have not price control. The actual markups of the retail merchants of Canada today may be represented in terms of percentages. They are determined by the merchants on their experience of the actual cost of doing business. The same is true all the way up- the jobber, the wholesaler and the retailer. When these people receive an article from the manufacturer, they have to provide a place for selling it, employees, the cost of financing the transaction, bad debts, various social insurances such as workmen's compensation and unemployment insurance-all these things are part of the cost of doing business. Then comes the return on the investment. The actual cost of doing business also depends to some extent on the type of article produced. The member for Moose Jaw could probably give the house excellent examples of the difference in cost when one handles a very small article and a large article.


Mr. Thatcher:: It made no difference on the articles I handled for the parliamentary assistant.


John Ewen Sinclair: I want to be the first to thank the member for Moose Jaw for the very low markup he took on the article he handled for me. I believe the hon. member could give a full explanation of all these things which are incorporated in the wholesalers' and retailers' cost of doing business.
Then, as a general rule of thumb, in order to obviate the necessity of making many calculations, the merchant adds a 10, 15, or 20 per cent markup as the cost of doing business. Let us return to the article costing a dollar, which I mentioned yesterday and which the member for Rosetown-Biggar took as a good example because the calculations involved are simple. This article cost a dollar, and after going through the jobber, the wholesaler and the retailer, it resulted in a

100 per cent increase, so that without sales tax the article would cost $2. Formerly, with the addition of the 25 per cent sales tax, the selling price to the consumer would have been $2.50. Those people have said, therefore, that according to their experience the cost of doing business on a one dollar article was $1.
We are now charging 10 per cent at the manufacturers' level. This means that after these three people calculate the cost of doing business, they add this extra 10 per cent. Ten cents in the case of a dollar item does not seem very large. However, when one considers that it is a thousand dollars on ten thousand dollars, and that the carrying charges on such a sum would be an extra charge on the business it begins to loom quite large. A manufacturer should be able to give a price of $1.10, then have the article go through these three stages and reach the consumer at $2.11. Whether it is sold for $2.11 or $2.20 will depend upon competition.
We are now returning to a position of abundant supply. You see evidence of competition every time you pick up your newspaper. Sales are advertised, and we realize that competition is returning. If there is no competition, the merchant may be able to get $2.20 instead of the $2.11 which I have used as an example. However, under our system there is an opportunity for a smart young retailer such as the member for Moose Jaw or the member for Halifax to say: There is a business in which a good profit is to be made, so I am going to enter that business. That is how this markup system functions in our economy.


Percy Chapman Black: What is the justification for continuing a tax of 10 per cent on such necessities as are listed under resolution 3(a)-trunks, suitcases, bags, and luggage of all kinds?


Joseph-Alfred Dion: We are still on resolution 2.


Percy Chapman Black: Are we to continue discussing item No. 3? We have been discussing it most of the time lately.


Joseph-Alfred Dion: Shall resolution 2 carry?


Gordon Knapman Fraser: Resolution 2 has been carried.


John Ewen Sinclair: Go ahead.


Percy Chapman Black: The parliamentary assistant kindly tells me to go ahead.


Mr. Carroll:: On what item are we now?


Joseph-Alfred Dion: Resolution 3.


Mr. Gillis:: Resolution 2 has not carried
yet, has it?


Joseph-Alfred Dion: Shall resolution 2 carry?


Some hon. Members:: No.


Percy Chapman Black: The parliamentary assistant has said that I may continue.


Clarence Gillis: On a point of order, are we considering resolution 2 or resolution 3? If we are considering No. 2, the member for Cumberland is out of order. There are many of us who wish to say something about No. 2, and we do not want to be told we are out of order, Mr. Chairman, if you permit the discussion on No. 3 to continue.


Joseph-Alfred Dion: Shall resolution 2 carry?


Some hon. Members:: No.


Joseph-Alfred Dion: We are considering No. 2.


Clarence Gillis: The parliamentary assistant's explanation of the sales tax and how it is applied is almost as clear as those radio broadcasts. It would take four or five radio broadcasts to clarify it, but I do not intend that to be any reflection on him.
According to resolution No. 2, you are repealing the purchase tax. Now, the general sales tax is a purchase tax. Most of the people outside of this chamber who read resolution No. 2 and the discussion on it will assume this government is repealing the general sales tax of 8 per cent, because that applies on practically everything one purchases.


John Ewen Sinclair: The hon. member is completely out of order, of course.


Clarence Gillis: I should like to get these taxes clarified. My impression of what is being done by resolution 2 is that the tax of 25 per cent which applied to certain luxuries during the war is being removed.


John Ewen Sinclair: That is right.


Clarence Gillis: I believe that none of the taxes which applied to luxury goods during the war should be retained. The way the section is worded makes it misleading. It speaks of the "retail purchase tax", and the sales tax is a retail purchase tax. The sales tax of 8 per cent is applied by the retailer on goods purchased by the consumer. If a person buys lumber, hardware, almost anything else, he is charged the 8 per cent sales tax. I paid it on lumber I purchased less than two months ago. Some of the retailers are honest enough to mark it in as an 8 per cent sales tax, and you know what you are paying.
I suggest to the parliamentary assistant- I know he is new at this job, but perhaps he will learn as he goes along-that his explanation of this retail purchase tax should be clear and precise. Someone should say that the government is removing the 25 per cent luxury tax charged on certain luxury goods during the war, but is applying a 10 per
45781-103J
Excise Tax Act '
cent tax at the manufacturers' level. Then anyone who purchases an article within the field covered by this resolution will under1 stand that no retailer or wholesaler has the right to a markup on the 10 per cent tax. It is being removed completely, and the manufacturer is going to absorb it. None of it can be passed on to the consuming public. Am I right?


John Ewen Sinclair: The hon. member is wrong in almost everything he has said so far. Resolution 2 very clearly says that the retail purchase tax, which, in order to distinguish it from the federal sales tax, is the legal name by which this tax has been known since it was brought in, is being repealed and will be replaced by an excise tax of 10 per cent. I do not know how much more simply it can be expressed. I do not know how much simpler the English language can be.
As to his second point, on the eight per cent federal sales tax, it was never levied at the retail level. It has always been levied at the manufacturer's level. As to lumber, the eight per cent federal sales tax on lumber was removed at least three if not four years ago. This schedule III which will be on Hansard today-that is schedule III of the present Excise Tax Act-gave a long list of items which in this country today carry no sales tax; that is, no federal sales tax. Foodstuffs and building materials led all the rest of the parade. If the hon. member says that he bought lumber just two weeks ago and paid an eight per cent retail sales tax on it, I would suggest to him that he should see his good friend the hon. member for Lake Centre and institute an action in the matter.


Clarence Gillis: Two months ago. That is just about as clear as was the first statement by the parliamentary assistant. You are repealing the luxury tax of 25 per cent that was imposed during the war and which was handed on to the public.


John Ewen Sinclair: That is right.


Clarence Gillis: You are repealing that tax and imposing a 10 per cent tax on the manufacturer.


John Ewen Sinclair: That is right.


Clarence Gillis: That is clear enough. That is exactly what I said in the first place. That is the kind of explanation I want on the record, so that people outside the chamber, in reading it, will understand it.


John Ewen Sinclair: It is on the record.


Clarence Gillis: It was not on the record before; it is now. That is all I want to find out. I will reserve any questions I have on the general sales tax until we come to item 5.

Excise Tax Act


Wilbert Ross Thatcher: I agree with the hon. member tor Peterborough West in what he said about this pyramiding of taxes. I do not think there is any member in this committee, regardless of the party to which he belongs, who would suggest that these indirect taxes are not going to pyramid; and naturally, if they start at the manufacturer's level and go through the wholesaler and retailer, they will pyramid a great deal more. As I see this resolution No. 2, although it is not all we should like it to be, it is certainly a great improvement over the law we had before. I certainly do not see why the government cannot collect this tax much more easily and much more efficiently from, say, five or six manufacturers than from
50,000	or 100,000 retailers throughout the country.
Speaking from my own experience, I remember one instance in which we had an indirect tax; there was a tax on pitchers. If it was a pitcher that you put water in, the tax did not apply; but if it was a pitcher that you put on the mantelpiece, you had to pay the tax. I remember that our salesgirls always had a great deal of trouble; it was difficult for them to know when they had to charge tax and when they did not have to charge it. While this resolution is not what we should like it to be, I think it is a great improvement over what we have had.


Gordon Knapman Fraser: The hon. member for Halifax can see my correspondence at any time with regard to what I said previously. When he was speaking, he gave the house to understand that he alone was the one who had the 25 per cent luxury tax removed.


Gordon Benjamin Isnor: No, I did not.


Gordon Knapman Fraser: He tried to imply that.


Gordon Benjamin Isnor: I said that I was one of those who waited on the government. It was a fine delegation.


Gordon Knapman Fraser: I might say that the Minister of Finance received thousands and thousands of letters from every part of the country with respect to that tax. That is why it was removed. I waited on the minister not once but many times with regard to that tax. Through you, Mr. Chairman, I say to the hon. member for Halifax that no one today has criticized -the retailers. In my experience I have found only one retailer who was not honest. I do not think it was fair of the hon. member for Halifax to even suggest that anybody criticized the retailers.


Gordon Benjamin Isnor: Your whole criticism was based on that theme.


Gordon Knapman Fraser: I will say this to the hon. member for Halifax, who has criticized us
fMr. Gillis.l
for having given the retailer a markup of 50 per cent. Yesterday as reported at page 1603 of Hansard the parliamentary assistant said:
But mathematically, even though they had, for example, a 50 per cent markup on the $1.10 they would now . . .
And so on. The parliamentary assistant mentioned 50 per cent. The average retailer does charge a 50 per cent markup. Some have to charge more. It depends on whether an article is slow moving and has to be carried in stock for months and months and perhaps years.


Gordon Benjamin Isnor: Consult any of your grocers.


Gordon Knapman Fraser: I am not talking about grocers.


Gordon Benjamin Isnor: You are talking about retailers.


Gordon Knapman Fraser: Because there is not this excise tax on the goods they handle.


Gordon Benjamin Isnor: You are talking about retailers, though.


Gordon Knapman Fraser: I am talking about retailers that are interested in this tax. I am not talking about clothiers either. I agree with the hon. member who preceded me that this tax is better than the 25 per cent tax; but still it is a hidden tax and is one that should be done away with.


Ernest George Hansell: I spoke a little while ago about this excise stamp on cigarette boxes. The parliamentary assistant did not say anything about it in reply. Perhaps it was too insignificant for him to bother about. I know that in my speeches I perhaps have a habit of injecting a little bit of levity once in a while, but I do not want any minister of the crown or any parliamentary assistant to think that, because I do that, I am any the less serious in what I say. Sometimes we need to loosen up a little bit in this chamber. Since I called the attention of the parliamentary assistant to this excise stamp, stating that there were twenty cigarettes in this box instead of saying what the tax on those cigarettes was, some public-spirited citizen has sent in to me a little package of matches. I want to compliment the House of Commons for getting these little things out with the crest on them. But there is also printed on the folder: "Excise tax, J cent, paid." I should like to know why that "J cent, paid" is printed on this folder but the amount paid for tax is not printed on the stamp on the cigarette boxes. Why is there that difference?


Clarence Gillis: They are ashamed to put it on.


Ernest George Hansell: Either that, or some pressure from somewhere has been exerted to have "20 cigarettes" printed on there instead of the

amount of tax. Will the parliamentary assistant explain why that is there? I am certain that the smoker knows already that there are twenty cigarettes in that package.


Mr. Maclnnis:: At what stage?


Ernest George Hansell: Can the parliamentary assistant explain that situation to me? It is not something that is of small value at all. There is a principle involved, and there is some reason why the excise stamp states that there are twenty cigarettes in the package and yet does not state the amount of the tax.


John Ewen Sinclair: The actual tax on the cigarettes, to which my hon. friend refers, is not an excise tax under this act but an excise duty. The reason that the number of cigarettes is mentioned is this. That tax has been in effect for at least fifty years as on that stamp form. As the tax on cigarettes and tobaccos has varied from budget to budget, if after each budget we had to withdraw all the stamps that were already issued and paid for by the cigarettes and tobacco companies, and bring them back, there would obviously be this extra needless expense at each change in the actual rate. All the stamp shows is that on twenty cigarettes the present excise duty has been paid.
As to the second point, I know he will be glad to know that under resolution No. 6 we are getting rid of that stamp tax on matches and are replacing it with a 10 per cent excise tax. I can answer that question further when we come to resolution No. 6.


Clarence Gillis: I should like to ask one question before we leave this matter. Did I understand the parliamentary assistant to put a schedule on record setting out the articles affected by this tax?


John Ewen Sinclair: Yesterday afternoon, at the request of the committee, I asked Hansard to put on record schedule III of the Excise Act passed last session, which lists all the articles which are exempt from the payment of either sales or excise tax. It was not given to Hansard but it will be included in today's Hansard. Sections 1, 2 and 6 of our present Excise Act list all the excise taxes. Since most of these are being changed from a variety of rates, 15 per cent, 25 per cent and so on down to 10 per cent, there does not seem to be much point in including that. We should wait for the new bill which will be presented after these resolutions are disposed of, which will have a consolidation of the excise tax rates.


Mr. Browne (St. John's West):: I agree with what the hon. member for Peterborough West said at the beginning of the discussion this afternoon. I do not think his argument has
Excise Tax Act
been answered by the parliamentary assistant who is piloting these resolutions through the committee. I refer to the pyramiding of the costs to the consumer. If an item costs $100 and there is a 10 per cent tax placed on it and a wholesale profit of 25 per cent added and then a retailer's profit of somewhere around 50 per cent, is it not correct, Mr. Chairman, that the consumer then has to pay an extra amount of profit, since percentages are added to the 10 per cent at the beginning? So far as the government is concerned the same result would be arrived at if approximately 6 per cent were put on at the retailer level. On an item costing one dollar it would mean a saving of about 9 cents to the consumer. Why should the consumer have to pay another 9 per cent more than would be necessary to collect the same amount of money for the government?


John Ewen Sinclair: I tried to explain as best I could what happens on the actual build-up of what is called the markup. The position of the opposition is this. They are not criticizing the retailer. They agree that most retailers are working on a very low margin of profit; that is, dollars and cents profit, because that is the only sort of profit that pays bills, not percentages. Therefore if you say there is pyramiding certainly the government is not getting it. It means the retailer is getting it, and yet the assertion is made that the retailer is working on a low margin. It is obvious, whether the tax is put on at the wholesale or the retail level, the retailer is still going to have that amount of money in percentages, the amount of money necessary to market the goods. That is the argument. It is quite true that if the government levied the sales tax at the retail level instead of the manufacturers' level we could cut the rate in half, if the whole markup was a hundred per cent. The factor which gauges the tax rates that the government has is the amount of revenue we must raise to satisfy the needs of the Dominion of Canada. I have noticed that many hon. members are anxious to have taxes abolished, but I also notice that when the estimates are up for discussion many hon. members are most helpful to the ministers in suggesting bigger expenditures in their particular fields. I have not very much experience in the house of hon. members offering some new tax fields for the government to enter to raise more money, or alternatively where cuts may be made in some of the government departments. In the Department of Finance we are faced with the problem of raising the necessary money, through taxes, to meet the estimates of expenditures of the federal government.

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William Joseph Browne: That does not answer the point. To be more explicit, suppose an article costs one dollar and the tax of 10 per cent is not put on in this fashion, and the wholesaler's profit, for argument's sake is the amount that the hon. member for Peterborough West suggested, namely, 25 per cent. That brings the price to $1.25 at that level. The retailer charges 50 per cent markup. That brings the price to $1,875. With a 6 per cent tax at the retail level the government could get more money than it would get with the 10 per cent tax at the manufacturer's level, and the total cost of the article would be $1.97.


John Ewen Sinclair: Once again, these two factors enter into the picture. The government's tax program is first of all predicated on the amount of money we must raise, and we receive that amount of revenue through the 10 per cent excise tax. The second point is that hon. members on the other side have repeated that they do not think the retailer is taking advantage of it, that he is competitive, and that therefore it is not percentages, it is dollars and cents which are marked up, and which he needs to pay the cost of his business and other costs which he has to encounter. If the tax is levied at the manufacturer's level the cost of obtaining the money from the bank and the extra cost of servicing that money enters into it. Whether the tax is levied at that level or at the retail level he still has the cost of marketing his goods; that is, the jobber, the wholesaler and the retailer. So far as collection is concerned, the hon. member for Moose Jaw pointed out that from his own practical experience, and as the members of the Department of National Revenue can certainly certify, there is a tremendous improvement in that operation and in the cost of collections from a few manufacturers rather than from thousands of retailers across this country.


William Joseph Browne: The consumer is paying for it.


John Ewen Sinclair: The consumer of course pays for the cost of collection through the general taxes.


Frank Thomas Stanfield: What the .parliamentary assistant is trying to do is to make the manufacturer a tax collector for the dominion government. If you want to get away from pyramiding these taxes, put the sales tax and the purchase tax at the retail level, and you will soon get rid of pyramiding and you are also getting more money in that way. And if you do place these taxes at the retail level you will get so much political pressure brought to bear that we will soon be rid of these taxes altogether.


An hon. Member:: Where will we get the
money?


Frank Thomas Stanfield: You will get more from the retailer than you will from the wholesaler.


[Stage Direction]
Resolution agreed to.
3.	That the following excise taxes be reduced from 35 per cent to 10 per cent, namely the excise taxes on: (a) trunks, suitcases, bags, and luggage of all kinds; (b) ash trays, tobacco pipes, and smokers' accessories; and (c) fountain pens, propelling pencils, and desk accessories.
Percy Chapman Black: In discussing this resolution, what explanation has the parliamentary assistant for the continuation of the excise tax of 10 per cent on necessities such as trunks, bags and luggage of all kinds? Is the ordinary sales tax imposed on these items and the 10 per cent excise tax superimposed? What consideration, if any, is being given to the extra competition of manufacturers of these articles because of the 20 per cent depreciation of sterling? I refer to goods from the sterling area, which are imposing unfair competition on manufacturers to whom I refer. I am pleased indeed that the senior member for Halifax agreed with my statement. He referred to the Christie Trunk and Bag Company in my constituency. They have been carrying on for many years, from small beginnings and have expanded to a considerable extent. They are producing stable commodities and have been able to compete with any like production in Canada. They are having imposed upon them this unfair tax of 10 per cent. I repeat that they are manufacturing a necessity to every person in this house and to every home in Canada.


John Ewen Sinclair: The hon. member's first question was why this tax is continued at all. I think I have already given the reason. We must secure the revenue necessary. It is quite true that luggage is not a luxury. It is a necessity to many people, but it is not as necessary as housing material and food. They are in the totally exempt class.
The second question was whether the sales tax is imposed. Yes, the sales tax is imposed on all articles carrying the excise tax. The excise tax is an extra tax but it is not superimposed. They are parallel taxes.
The third question was in regard to British competition. These luggage manufacturers have had-and they are the first to admit it- very substantial aid this year, in the reduction of this 35 per cent tax down to 10 per cent. This has given them a 25 per cent margin.
The second point, so far as British competition is concerned, is that to my memory every party in the house has given lip service at least to encouraging British imports and putting them on a more competitive basis. But

the moment a British import is put on a more competitive basis we are then asked from certain quarters for a change in the tariff. Our Canadian manufacturers are getting a 25 per cent benefit because of the cut in the tax, and they should be able to compete with the British. We are giving the British entry, but we have at this time to give the British manufacturers better entry into Canada so we can sell our wheat, lumber and fish.


Percy Chapman Black: I object to this tax. As the parliamentary assistant has said, we are in favour of giving all the encouragement we can to importations from Great Britain. But, speaking for myself, and I believe for many members in the House of Commons, that must not be done at the cost of closing Canadian industries which have been in existence in Canada for many years.
This 35 per cent tax was a war tax, and we shall agree it was a necessity. The war tax should now be removed entirely. If the government is going to remove 25 of the 35 per cent tax, what justification is there for continuing the 10 per cent? Why should it not all be removed? If it was a war tax, then I say the time has long since passed when the entire tax should be removed.
With that in mind I am going to offer an amendment-and I am going to ask my hon. friend, the senior member for Halifax, to second it. I have not had the opportunity of seeing him. However he has expressed himself definitely in the house-and I presume this committee is sitting now to review the representations made by the parliamentary assistant to the minister. If our representations mean anything, then surely they mean that we have the right to express ourselves.
On that basis I am going to move:
That section 3 be amended by removing the excise tax on trunks, suit cases, bags and luggage of all kinds, and that subsections (b) and (c) be renumbered (a) and (b).
I have not had the consent of the senior member for Halifax, but-


Edmund Davie Fulton: Ask the junior member, then.


Percy Chapman Black: Yes, perhaps the junior member-because they generally work together. His great-grandfather, one of the fathers of confederation, came from my constituency. I am sure he will have some interest in the welfare of the county of Cumberland, where his great-grandfather and his grandfather had such famous careers.


John Ewen Sinclair: I would refer you, Mr. Chairman, to citation 556 in Beauchesne, which states that a committee has not the right to diminish taxation. The house has the right, provided the house at the time suggests an alternative source of revenue in the amount
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of the tax removed. Citation 556 at page 165 of the second edition very clearly sets out that there is no power in the committee to diminish taxation.


Percy Chapman Black: According to the parliamentary assistant, we are impotent here. We might as well retire and allow the government in this country to be carried on by order in council. That is what we are reduced to.


John Ewen Sinclair: The hon. member could vote down the entire resolution, if it does not please him and his party, or alternatively, when we are in the house, with Mr. Speaker in the chair, and considering the bill, he could vote out that particular section.


Percy Chapman Black: Notwithstanding what the parliamentary assistant has said, I believe every hon. member in the house is in agreement with the stand I have taken. I would like to see them given the opportunity to express themselves.


Some hon. Members:: No, no.


Percy Chapman Black: Well, they are subservient then, Mr. Chairman.


John Ewen Sinclair: On a point of privilege, the hon. member must withdraw the remark that hon. members sitting to his right are subservient.


Percy Chapman Black: I withdraw it if there are some here going to object, but everyone knows what I mean.


Mr. Gibson (Comox-Alberni):: I resent very much that remark, and I do not think the hon. member meant to say what he said. I am amazed that an hon. gentleman of his experience should rise in his place and continually suggest that this tax be reduced. He knows very well that we are paying an extra $35 million or $40 million in interest on our increased debt due to the war. When he suggests that we ought to abolish all these taxes surely he has not given the matter sufficient thought.
I have a very high regard for his intelligence. I should like to make it clear that there are manufacturers in my riding who have difficulties to contend with, and they would like to have excise taxes removed. I have never felt however that in a matter of this kind we should speak for any one individual manufacturer.


William F. Carroll: Mr. Chairman, had the amendment offered by the hon. member for Cumberland been in order I should have had much pleasure in seconding it, for the purpose of striking out subsection (a) of section 3. While this tax is legal, and all that sort of thing, it is not a fair tax upon the consumers

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of this country. When the time comes I may attempt to find out from the government how they could strike out subsection (a) and also strike out or amend section 9, where the tax on wine is reduced from 50 cents to 25 cents per gallon. There is a luxury, Mr. Chairman, where I believe the extra tax might be obtained by leaving the excise tax on wine as it is at the present time.


John Ewen Sinclair: Carried.


The Deputy Chairman:: I might tell the hon. member for Cumberland that he has not sent his motion to me, and that unless the motion is put from the Chair it is not before the committee.


William F. Carroll: I did not second it because I understood it was out of order.


John Ewen Sinclair: It is.


Percy Chapman Black: Then I would like to know if you will acept this amendment, Mr. Chairman. I am pleased to have the support of the senior member for Halifax. I would ask him, in his absence, if he would second it-and I hope that he will.


An hon. Member:: Is he subservient too?


Percy Chapman Black: No, he is not
subservient to the same extent as some of the others. However, I appreciate having the support of the hon. member for Inverness-Richmond. I should like very much to have this motion submitted to the house by the Chairman. I shall ask the page boy to take it to him so that he may read it and rule upon it formally. If it is ruled out of order now, then I shall have to take an opportunity at some other stage during the passage of this legislation to make a motion deleting this tax.


Gordon Benjamin Isnor: As the hon. member for Cumberland for some reason or other has brought my name into this matter-and I am sure that perhaps on the advice of his leader he was well advised in endeavouring to bring me into it-


An hon. Member:: Suck you in.


Gordon Benjamin Isnor: I quite appreciate the position in which the hon. member is endeavouring to place me, but I do not acknowledge it at all. I was called out of the chamber for a moment. However, if you, Mr. Chairman, would be good enough to allow me to read it I could then say whether I could support it.


Mr. Mutch:: It is not yet before the committee.


Louis-René Beaudoin: I would tell the hon. member that a seconder is not necessary in committee.


Robert Ross (Roy) Knight: If paragraph (a) is struck out will that not mean that the present tax remains?


Louis-René Beaudoin: The amendment reads:
That section 3 be amended by removing the excise tax on trunks, suitcases, bags, and luggage of all kinds, and that subsections (b) and (c) be renumbered (a) and (b).


John Ewen Sinclair: I repeat my point, that this is clearly out of order. I would refer hon. members to citations 552 and 556 of Beauchesne's second edition, and also May's twelfth edition. I quote the pertinent part of citation 552 as follows:
Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government.
If an hon. member moves to reduce the tax revenue, then he must propose a tax that will bring in an equivalent revenue. Obviously the purpose of the rule is to prevent the opposition gleefully moving for the abolition of all taxes. Under the rules they must propose an alternative tax in order to give the government the same revenue.


Louis-René Beaudoin: I think citation 552 quoted by the parliamentary assistant is somewhat pertinent to the amendment before the house. As this is an interesting point which has come up for the first time since I have been in the chair, I should like to study it and would suggest that the resolution stand and I will rule upon this matter later on.


Percy Chapman Black: That is quite agreeable, but first I should like the parliamentary assistant to tell us what revenue is expected to accrue under paragraph (a).


John Ewen Sinclair: The previous revenue was approximately $6 million; it is expected there will be a loss of revenue of $4 million; therefore, it is expected that the revenue under this item will be about $2 million.
Resolution stands.
Resolution 4 agreed to.
5. That the sales tax on the following articles be repealed: lactose; malt syrup except when sold for beverage purposes; diesel powered self-propelled trucks, mounted on rubber tired wheels, for off highway use exclusively at mines and quarries, and complete parts thereof.


Robert Ross (Roy) Knight: I should like to protest against ice cream still being taxable. This is food, it is not a luxury item. This tax is directed at the nickels of the children. I think ice cream is a much more wholesome food for children than gum or candy, the tax on

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which has been removed. Ice cream is a by-product of the dairy industry and there is likely to be a surplus in this industry before very long, particularly in view of the increased rents that are to be charged under which people will not have as much money to spend for food. I protest this tax on ice cream and ask the parliamentary assistant to tell the committee what revenue he expects to derive from it and to make some general comments on the situation.


Mr. Brooks:: I should like to supplement what has been said by the hon. member for Saskatoon. Ice cream is important as far as the dairy industry is concerned and it has always been classed as a food. It is used as a food in hospitals and by children and it seems to me that this tax is most unfair to the dairy industry which, as all hon. members know, has received some very hard knocks. Margarine is now in competition with butter, which places an added burden on the dairy farmers. I submit that this matter should be considered carefully by the committee.
As far as the farmers of my section of the country are concerned, they depend almost entirely on dairy products for their living. I have received a number of telegrams from the dairy interests in my constituency requesting that this tax be removed and I hope the parliamentary assistant will be able to give us some encouragement in this regard.


John Ewen Sinclair: This matter has been referred to by many hon. members. As far as dairy products are concerned, milk and butter are classed as staple foods and they are not subject to either sales tax or excise tax.


Alfred Johnson Brooks: But not ice cream.


John Ewen Sinclair: Forty-six per cent of the ice cream sold in Canada is sold in the form of cones. Another large but undetermined percentage is sold in the form of sundaes and dishes of ice cream, and a substantial percentage is sold in the form of bricks for use in the home as a dessert. As the hon. member has said, ice cream is in competition with candies and chocolates and chewing gum. Candy, chocolates and chewing gum used to be subject to a thirty per cent excise tax as well as the eight per cent sales tax. At that time ice cream sold in the form of cones enjoyed the protection of that thirty per cent. That thirty per cent tax has now been removed entirely and all these confections are now on the same level as ice cream, all being subject to the eight per cent sales tax.
I turn now to the comparatively small fraction of the ice cream production that is sold as a food to be used as a dessert. All foodstuffs are not exempt from the eight per
cent sales tax. All staple foodstuffs are exempt from this tax, but desserts such as gelatine preparations commonly used in the Canadian household are not exempt. Therefore ice cream when used as a dessert is on exactly the same footing with these other forms of desserts.
The situation today with regard to ice cream sold in the form of ice cream cones and desserts is that it no longer enjoys the preferential position it used to have in relation to chocolates, pop, candy and chewing gum.


Gordon Graydon: May I move away from a subject of low temperature to one which I think hon. friends will find to be of a somewhat higher temperature, particularly among those who have from time to time discussed the conditions under which the weekly newspapers of Canada operate at the present time. No doubt the parliamentary assistant has before him, or should have before him, the brief of the Canadian Weekly Newspapers Association arising out of their annual meeting at Niagara Falls nearly a year ago, one of the resolutions of which found its way to the desk of the Minister of Finance some time earlier this year. Unfortunately it did not seem to carry as much weight with the minister as one would have expected when he was preparing his budget last spring and again this fall. I think therefore it is only fit and proper that the committee should know the position which the Canadian Weekly Newspapers Association, with its many members across Canada, is facing at the present time with regard to the sales tax on newsprint.
Perhaps I could not do better than to read to the committee parts of the brief because it is short, and one which I think ought to be commended because of its clarity and the convincing arguments that it contains. The members of the Canadian Weekly Newspapers Association, which represents no less than 564 weekly newspapers in Canada, no small number as the parliamentary assistant will readily admit, decided that representations should be made to the federal government requesting that the 8 per cent tax on newsprint should be abolished. The basis for that request is set out in clear and concise fashion. I think the committee and the government would do well to ponder the matter because it seems to me the arguments in favour of their presentation are very powerful. The brief reads in part:
X. The tax does not apply to Canadian or American magazines, circulated in Canada, and competing with weekly newspapers in the national advertising field.
In other words, there is discrimination of a clear character there.

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2.	Comic books, certain week-end papers, pulp and fiction magazines printed in Canada (containing advertising) are exempt.
That is also discrimination.
3.	Radio broadcasting facilities, also a powerful competitor in the advertising field, are exempt from this tax.
Still another instance of discrimination.
4.	A survey of prices paid for newsprint by member publishers in various parts of Canada indicates an unjust inequality in the amount of taxes collected on a unit of one ton of newsprint.
5.	In each of the foregoing there is an element of discrimination which this association feels can be eliminated only by exempting newsprint used in the publication of weekly newspapers from this tax.
The brief goes on to illustrate the inequality of tax paid by publishers in various parts of Canada. They point out that the basic price of $96 per ton, which was the price at the time the brief was prepared earlier this year, applies only to purchases of carload quantities in roll form. They go on to point out, I think with a good deal of accuracy, that:
Weekly newspaper publishers, except in rare instances, purchase their supplies in one- to five-ton quantities in flat sheets at a considerably higher price. The following scale of prices from different provinces indicates the variances-
The parliamentary assistant to the Minister of Finance will be interested in all the examples, but perhaps particularly in two of them. They are:
	Cost	Eight per cent tax
	per ton	per ton
Port Alberni, B.C. .	
$130.00	$10.40Revelstoke, B.C. ...	
149.00	11.92High River, Alta. .	
183.00	14.64Wolseley, Sask. ...	
184.00	14.72Grenfell, Sask	
196.00	15.68St. James, Man. ...	
180.00	14.40Altona, Man	
170.00	13.60Amherstburg, Ont.	
111.50	8.92Lachute, Que	
132.00	10.56Granby, Que	
143.36	11.46Sackville, N.B	
137.00	10.96Springhill, N.S	
127.00	10.16That gives a general picture across Canada	as it affects those	who attend from	time totime the meetings	of the Canadian	Weekly
Newspapers Association. The brief then goes on to say:
This wide range of price is caused in the main by the variety of page size used and the fact that costs, in addition to the basic roll ton rate, are created by the operations of cutting and packing and the cost of handling through paper wholesalers instead of direct from the mill. Nevertheless it does seem that the tax on a ton of newsprint should be the same whether purchased in rolls or sheets. The publisher cannot pass on the extra costs in the form of additional charges to his subscribers.
Because it was recognized that newspapers could not pass on this sales tax to the ultimate consumer the dominion government has given newspapers relief from the tax in previous years.
Up until 1931 an exemption of one-half the tax was allowed. In 1931 the full tax was imposed

and accepted by Canadian newspapers because they recognized that such action was necessary to help correct a serious deficit in the federal budget.
In conclusion we would point out that Canada is the only country in the commonwealth in which a sales tax is charged on newsprint and that there are no federal taxes on Canadian newsprint sold in the United States.
Whatever in this may be unpalatable to the government, here is something they will enjoy. The brief continues:
We submit that the reasons for imposing the present tax in 1931 are completely invalid in 1949, at the peak of employment and prosperity-
I want the parliamentary assistant to seize upon that.
-and with a large surplus in the federal budget.
In view of the foregoing, the Canadian Weekly Newspapers Association pray the government to remove the sales tax levied upon the paper on which newspapers are published.
I want to commend to the government favourable consideration of the brief that has been submitted by the weekly newspapers association. They have presented it in a concise and brief form. It has been put before the minister in a way that I think the government would like to have most briefs presented, concise and factual, and at the same time not in a vein particularly critical of the policy of the government.
I only rise at this time to place their position on the record so that the government may have an opportunity to consider favourably what I think is something that affects a most important section of the Canadian people, the men and women who publish week by week the important news which reaches the eyes of weekly subscribers from one end of Canada to the other.


Douglas Scott Harkness: I should like to return to a subject upon which I started to speak a few moments ago, and that is the portable irrigation sprinkler systems now used extensively on farms in western Canada. When I attempted to raise this subject under section 2, the parliamentary assistant said it was entirely a sales tax that applied to them, but I still believe that is incorrect judging by the amount of tax which was collected. I know that two of these sprinkler systems were purchased by adjoining farmers. The cost was approximately $3,000. On that, they had to pay tariff charges of $300 and taxes of approximately $700, making a total of approximately $1,000 in taxes or tariff charges.
These sprinkler systems will be increasingly used, particularly in any of the dry areas of western Cananda in which water is available either in dugouts, deep wells, streams or such sources of supply. The use of them avoids a lot of the difficulties inherent in the regular irrigation systems. It avoids the necessity of

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levelling the land and putting in irrigation ditches. A lot of the land is too hilly for ordinary irrigation systems. By means of this sprinkler system, the water can be taken out of the ditch and put on any of the land that is fit for cultivation.
As I say, these systems have already been used in the last year or two to a considerable extent. In the future, they are likely to be used a great deal. For tariff purposes, excise and sales tax purposes, I believe these sprinkler systems should be considered as farm machinery. Since they have not been used extensively so far, they have not been included in the appropriate item as farm machinery. Instead of that these systems are classified along with pipe, pumps and things of that sort for tariff, excise and sales tax purposes. Some time ago I brought this matter up during the debate on the address in reply to the speech from the throne, and requested that this type of equipment be considered when the budget resolutions were being drafted. I would ask again that that be done, and that the parliamentary assistant introduce an amendment under the appropriate item removing the tax on this type of equipment.
Looking over schedule III to which the parliamentary assistant referred yesterday, which sets up the materials exempt from sales tax or excise tax, I see items such as baling twine for baling farm produce, drain tiles for agricultural purposes, gopher poison, grain or seed cleaning machines and parts thereof. This type of equipment is going to be much more important so far as increasing the food production of this country is concerned. It will increase the production of grain and will be important to the livestock which is fed on that grain. It certainly seems to me that a change should be made and the tax removed from this equipment.
Although there are no tariff changes mentioned at this time, I believe the tariffs should be amended to admit these sprinkler systems duty free. These systems are not made in Canada now, but I hope they will be soon. It is true that the aluminum pipe which is used is made in Canada to some extent, but the supply has not been sufficient to enable people to equip themselves with it, and as a result most of it comes from the United States. I do hope the parliamentary assistant will make a statement about that.


Wilbert Ross Thatcher: I should like to associate myself with the hon. member for Calgary East in his request for consideration of these sprinkler systems. One of the P.F.R.A. officials said in Regina some months ago that this new type of irrigation may revolutionize agriculture in western Canada. Not only do I
believe the government should cease to tax it, but I believe the minister should, if at all possible, make it easier for the farmers to obtain that equipment from the United States. As I understand it, today there is more or less of an embargo upon it in order to save United States dollars. This makes it almost impossible to secure that equipment. I should like to give my heartiest support to what the member for Calgary East has said.


Mr. Wright:: I should like to say a word about this matter. Really, it is more important than it may appear to many of the members in the house. Many of the irrigation projects in western Canada, especially those with small dams, make it very difficult to irrigate the land by gravity. If sprinkler systems were obtainable, it would mean that a larger portion of the land could be irrigated.
People who have not lived in the drought areas of western Canada will find it difficult to realize just what it means to a farmer in that area to be able to irrigate a small garden, or a field, to have fodder for his stock. This system might increase the areas that could be successfully irrigated by means of these small projects. I urge the government, therefore, to give serious consideration to trying to make cheaper sprinkling systems available.


Mr. Shaw:: While I agree with the representations that have been made by the three previous speakers, it is about another matter that I should like to speak at this time. It is my understanding that, when provincial governments purchase articles which would normally bear this 8 per cent sales tax, the tax is paid by the provincial government but later remitted by the federal government. In my opinion, it is quite proper that one government should not tax another government. What is forgotten, evidently, is that there is a third level of government in Canada, namely the municipal government.
The municipal government, within its sphere of activity, is much more important to the Canadian people than any other level of government. In fact, this government is closer to the people and affects their daily activities to a greater extent. While provincial governments enjoy the remission of sales tax on commodities which are not to be resold, the municipality is not in the same position. Today, municipalities are building better roads, which necessitates the use of modern, heavy equipment. This equipment is costing a tremendous amount of money, and the sales tax, being based on the cost, is also running very high. My personal view is that it would be extremely difficult to advance a sound argument against extending to the municipalities the same consideration that is

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now extended to the provincial government, namely, the remission of the sales tax on equipment which must necessarily be bought and used in connection with their operations on the roads.
I urge upon the parliamentary assistant that he impress upon the minister the necessity of giving this matter early and serious consideration. I might add that these municipalities are penalized in a second way in that this road-building equipment is classed as industrial equipment for tariff purposes. I intended to bring that up when we were considering tariffs. I would urge the parliamentary assistant not to let this matter die because it is of extreme importance. It would eliminate a degree of discrimination between one level of government in Canada and another.


Mr. Fair:: 1 should like to support the plea that has been made by the member for Red Deer. I may say that at the last session I brought the same difficulty to light, but was not successful in having the requests of two or three town councils in my constituency granted. Since the member for Red Deer has brought up the question, I should like to support the appeal he has made. As to the case that was made by the hon. member for Calgary East, supported by the hon. member for Moose Jaw and the hon. member for Melville, I also want to express my hope that the government will do something in that regard. As they have pointed out, up to the present time we have not enjoyed many of the benefits of irrigation, and for that reason have not needed the irrigation systems that have been spoken of. In the interests of Canadian agriculture and Canadian consumers as a whole, I believe the government would do well to grant the request made by those hon. members.


John Ewen Sinclair: The observations made by the hon. members will be carefully considered by the government. The reason why they may not have been included up to now may be the one pointed out by the hon. member for Calgary East, that this is a new type of irrigation; although I recall seeing some of these sprinkler systems in the Okanagan valley in British Columbia. The schedule gives considerable concessions to farm equipment. I do not doubt that the representations of the hon. members will be carefully considered, and I am quite sure that the Minister of Agriculture will add his word to those already spoken.


Mr. Ferrie:: On behalf of those in the north, in the areas that are just coming under cultivation, I wish to say a few words with regard to this big machinery for municipalities. This big machinery is something that the individual cannot very well take hold

of. The municipalities are taking hold of this machinery and are clearing land and putting it under cultivation. When they buy this machinery worth from $9,000 up to $30,000 they have to pay the 8 per cent because the municipality buys it. I should like to see that sales tax taken off that machinery just as the sales tax is taken off farm machinery because it is for farm work.


Douglas Scott Harkness: I should like to thank the parliamentary assistant for his remarks and for saying that the government will give consideration to removing the sales tax or whatever taxes there are-I think there are some excise taxes also-and the tariffs on this sprinkler irrigation equipment. I do not see, however, why there need be any delay in doing that. I should like to request that, before we finish with these resolutions, some consideration be given to the matter and that if at all possible the tax concession be brought in at this session. Before we get around to passing resolutions in the next session of parliament, there will probably be people who will have to be buying these things. It will possibly be well on in the spring or summer before we are back at this sort of business and when there will be any further opportunity to put into effect these tax concessions. As I say, it is likely to be too late for a considerable number of people. In many cases it would mean that the price of this equipment would be beyond their means and they would not be able to buy it whereas, if this tax were off, they would be able to do so. As I indicated in this one case, the tax and tariff combined amounted to more than 25 per cent of the total cost. That would mean that some people will not be able to buy this equipment and as a result would lose crops which they might otherwise save. Therefore I think it is urgent that consideration should be given to this matter at this session, and that these concessions should be made at this session, in the interests of dry-land farming and also in the interests of food production.


Mr. Murray (Cariboo):: I understand that gasoline shovels are not manufactured in Canada. In our part of the country they are an essential implement in the building of roads and for the general development of the country. If these machines are not made in Canada, it seems unfair that a tariff should be levied on those that are brought in from outside. I understand that there is one factory in Canada which produces a certain gasoline shovel, but that it is not suitable for the work in our particular part of the country. Therefore a greatly added cost is placed upon road building and the development of the country.

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Wilbert Ross Thatcher: Are hospitals, when they advantage with regard to diesel-powered make purchases, at present exempted from trucks and that now we are just adding mines sales tax?	and quarries to the schedule?


John Ewen Sinclair: Hospitals which are approved by the various provincial governments are exempted.


Wilbert Ross Thatcher: That brings me to one point to which I should like to draw the minister's attention. In my constituency we have an old age home, in which there are about fifty people who ordinarily would be in the hospital owing to the fact that their health is so bad. But there is no room for them in the hospital. Therefore they have to be put in this home for the aged. The sisters there are having great financial difficulties in keeping those people there. They are obliged to make major purchases from time to time. Just recently they had to purchase an elevator in order to move these old age pensioners from the third floor down to the first floor; that elevator cost them $1,200 and they had to pay sales tax on it. On all their purchases they are having to pay this sales tax.
The point I should like to make is this. If the government is exempting hospitals from this sales tax, would it not be possible also to exempt from it institutions such as orphanages, homes for the aged and the like? Perhaps it is not feasible to do so, but it seems reasonable to me that, when they make a request of that kind, it should be considered; and I should greatly appreciate receiving an answer from the parliamentary assistant.


John Ewen Sinclair: I can assure the hon. member that careful consideration has been given to the matter. One reason why careful consideration has been given to it is that the minister himself has in the heart of his own riding one of the largest of these homes for the aged. The difficulty, of course, comes in drawing the line. There is no difficulty with regard to hospitals because they are certified as hospitals by the various provincial governments. But as to the institutions referred to, it is difficult to know where to draw the line between convalescent homes, nursing homes, orphanages, homes for old age pensioners and the like. At the moment it has been possible to give this concession only to hospitals. It was not given in this budget but rather in a previous one. I can assure the hon. member that active consideration is being given to the next groups; that is, those groups of charitable institutions.


John Lambert Gibson: I see that the sales tax is being repealed on diesel-powered trucks for use off the highway, if they are used at mines and quarries. Do I understand that the logging industry already enjoys this


John Ewen Sinclair: It has been extended to mines and quarries if the trucks are not used on the public highway.


John Lambert Gibson: The logging industry already enjoys it.


Robert Ross (Roy) Knight: I should like to bring the discussion back for one more moment to the subject which I had broached; that was the taxation on ice cream. The parliamentary assistant's reply was perhaps more ingenious than logical, and he omitted to answer the one question which I asked, namely, what revenue the tax on that particular commodity brought in. I do not know what he is going to tell me; but whatever it is, I do not think it will be justified having regard to the hardship that it will create for the children who buy the ice cream and for the dairy people around my city, for instance. A great many farmers in my constituency make their living, as a matter of fact, from the delivery of milk to the various dairies in Saskatoon, where the commodity is turned into ice cream and then shipped out. It is an important industry not only to the children in the community but to many of their parents as well. I hope the parliamentary assistant will give me that information.


Percy Ellis Wright: Before the minister replies, I should like to say a word on this matter. According to all the reports we read in the press today, we are accumulating larger and larger surpluses of dairy products. Just yesterday in the local papers it was reported that some 73 million pounds of butter was being held in cold storage. We have large quantities of powdered and condensed milk and some 14 million pounds of cheese. Ice cream is an outlet for some of our dairy products which are accumulating in cold storage today. The government should give serious consideration to trying to provide a home market because we have lost our British market for powdered and condensed milk and many other dairy products. Surely we should be building up our home market.
To bring this thing to a head I move, seconded by the hon. member for Saskatoon:
That section 5 be amended to add ice cream to the articles on which sales tax is removed and that an amount of sales tax be added to the present sales tax on wines and spirituous liquors that will equal any revenue loss to the government as a result of this amendment.
I believe it is necessary to provide some other revenue that will equal the loss of any revenue which the government may sustain.

Excise Tax Act


John Ewen Sinclair: Mr. Chairman, I suggest that this amendment is out of order for the same reason that the last one was. In my view an hon. member cannot just make a blanket suggestion that we increase the tax on wines and spirituous liquors. He will have to make a specific recommendation for an increase in the form of this resolution, an increase of so much on wine, so much on tobacco and so much on spirits. If he puts it in that form I am sure he will be in order.
Mr. Cold well: What is the citation?


Alphonse Fournier: Citation 552.


Louis-René Beaudoin: Perhaps I should refer hon. members to citation 552 of Beauchesne's Parliamentary Rules and Forms, second edition, which is citation 500 of the third edition. It reads as follows:
Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government, as, for instance,-
And so on. It seems to me that by this motion the hon. member is trying to do what is required by the citation I have just read. I agree with the parliamentary assistant to the Minister of Finance that it is not enough to make a blanket suggestion. The hon. member does not even know how much revenue may be yielded by the suggested amendment. To comply with the requirements of citation 552 he cannot simply say that this tax be removed and be replaced by another tax that will yield as much revenue. Therefore, in my opinion, the motion is out of order, and I so rule.


Percy Chapman Black: I should like to ask the parliamentary assistant-


Percy Ellis Wright: On a matter of privilege, before you proceed-


Percy Chapman Black: Who has the floor?


Louis-René Beaudoin: I understand that the hon. member is raising a question of privilege.


Percy Ellis Wright: Yes. The parliamentary assistant said that my amendment included tobacco. It does not. It mentions only wines and spirituous liquors.


Percy Chapman Black: Under resolution 9, what gallonage of wine is taxed and what revenue is produced? The resolution reads:
That the excise tax on wines containing not more than 7 per cent of proof spirit be reduced from 50 cents per gallon to 25 cents per gallon.
The Chairman ruled my amendment to resolution 3 out of order, and allowed the resolution to stand. Just what increase would be required to produce $2 million of revenue which the parliamentary assistant said would accrue from the tax on trunks, suitcases, bags and luggage of all kinds?


John Ewen Sinclair: The hon. member is perhaps quite right in referring to resolution 9 at this time. The actual loss in revenue through cutting the tax in half on wine of less than 7 per cent proof spirit is, according to the information, negligible, because almost all the domestic wines are of more than 7 per cent alcoholic content. They are under 40 per cent. I am sure the hon. member will be interested to know that this resolution is proposed expressly at the request of some apple growers of Nova Scotia to help to provide them with an outlet for their unsaleable apples. Be that as it may, the amount of revenue involved in resolution 9 is negligible.


Louis-René Beaudoin: Perhaps I should remind the committee that we are dealing with resolution 5. Shall the resolution carry?


Mr.   Baler@: Mr. Chairman, I should like to
concur in many of the things that have been said by hon. members who have spoken on the repeal of the sales tax on heavy machinery used by the rural municipalities. The municipalities in western Canada have been using these big machines not only for breaking land and constructing roads but also to construct dugouts and small stock-watering dams for individual farmers. By so doing we are endeavouring to get them away from strictly grain growing and into more diversified farming. That is something that the Saskatchewan association of rural municipalities have asked for, for a good many years. I hope that the government will give due consideration to the repeal of this tax on heavy machinery.


Edmund Davie Fulton: At this point I should like to make an appeal for consideration to be given, in next year's budget, to the repeal of the sales tax on medical equipment. I appreciate that resolutions, once prepared and introduced in the house, are rarely if ever changed in the year of their introduction. Therefore I would direct my remarks in support of a request that this matter be given most earnest consideration to see if it cannot be contained in next year's budget. I have here a bulky file which comes from a gentleman who suffers from cancer. He uses equipment which can only be imported from the United States. It is specialized equipment and is made only in that country. Not only is a duty charged on that equipment but there is in addition the 8 per cent sales tax on top of the price, plus the duty. He has given me a sample of the way in which it works out. He had to buy specially made surgical dressings. The retail price was $11. The duty of 20 per cent added $2.20, making the price $13.20. On top of that was charged a sales tax of 8 per cent, not on the purchase

Excise Tax Act
price of $11, but on the purchase price, plus duty, of $13.20. The sales tax came to $1.06. Therefore the total price was $14.26 instead of $11. I suppose it is difficult to draw a distinction between medical equipment which must be used in serious cases and medical equipment on which it might be said it was proper to charge some form of revenue tax. I feel it is not a job beyond the potentialities of this department. Certainly people who are suffering from serious diseases such as cancer should not have to pay sales tax on the purchase of equipment without the use of which they could not exist.
Hon. members know what happens when cancer affects internal organs. In order to get about at all the sufferer has to have these expensive and complicated appliances. He virtually has to have them in order to go on living, and it seems to me that type of equipment should not be subject to sales tax.
While I am speaking about sales tax I would go further and ask that consideration be given in next year's budget to changing the tariff structure so that similar items which have to be imported from the United States, because they are not made in Canada, might not be subject to duty. I have had correspondence with the Department of National Revenue in the matter, and it is agreed that the type of equipment I have in mind is not made in Canada and can be secured only from the United States. As I have pointed out, it is subject to a tariff charge of 20 per cent.
In my correspondence with the Department of National Revenue it is pointed out by them that the tariff regulations now make it imperative that they charge the duty, that there is no alternative, and that the only way the situation can be adjusted is by a change in the tariff regulations through the budget resolutions. As no such action is contemplated in this year's budget, it is not open to me to move a resolution because there is no heading under which I could do so. I do take this opportunity however to urge the most sympathetic consideration of the plight of these people who have to obtain expensive medical appliances from the United States, without which they virtually could not live. I urge that this and similar types of equipment be relieved from duty and sales tax. Would the parliamentary assistant give us at least the undertaking that the matter will be seriously considered before the next budget is brought down.


Mr. McCusker:: Mr. Chairman, I do not know whether the hon. member for Kamloops was just unfortunate in the item he chose to exemplify his point in his argument. However, I presume he is referring to a colostomy pad, an absorption pad used for a certain
type of patient suffering from cancer of the lower bowel. I am sure there is no necessity of going to the United States to procure an absorption pad. There may be some other items the hon. member has in mind and to which he has not referred; but I do not think it is wise to rise in one's place and suggest the removal of duty from articles just because someone fancies that he receives a better article in the United States.
Let me give an example in this connection. I was called out on a very stormy day during the winter to see a patient who, it was reported, was very ill. I drove all day in a blizzard, and was stuck many times so that I had to get farm teams to pull me out. Finally I arrived, to find that the man had arthritis deformans. He was crippled, and lying in bed, but in addition he was dying from cancer of the larynx.
I advised them that the only thing they could do was to keep the poor patient comfortable under a sedative which his physician had already prescribed. However, I had no sooner left than an insurance salesman came along and said, "You should not have called that fellow in. My advice is much better. I had an uncle down in Iowa in just the same condition this man is in, and we got him an electric suit. Get one of those."
Those people were too poor to pay for my trip, but somehow or other they procured an electric suit at a cost of $125, upon which duty, taxes and everything else had to be paid. They put that poor patient in the electric suit-boots, hood and all-only to find that there was no electricity on the farm to plug it into.
I would submit that some of the suggestions we have heard today have been given just as much thought as was given to the condition of that patient and to the equipment for his treatment.


Edmund Davie Fulton: With the details of the hon. member's medical practice I am of course not familiar; but I rather fancy that upon reflection he would not wish it to be understood, from any remarks he has made, that he has no sympathy for those in this country who, because no suitable apparatus is manufactured in Canada, are compelled to rely upon articles imported from the United States. I am sure he did not wish hon. members to draw that inference from his remarks. I am sure that one in his position, with his knowledge of the suffering of some of these people whose lives could be made more comfortable by the use of appliances made only in the United States, would support the request I had made-which was not for a general and sweeping removal of the tariff items on all articles, whether they are

Excise Tax Act
made in Canada or not, but was confined to the removal of tariff items on these surgical and other appliances which must be worn by sufferers from cancer, and which are not made in this country.
Correspondence I have received is to the effect that this particular type of equipment is not made in Canada, and in this particular case it is the only type which would bring relief to the sufferer.


Emmett Andrew McCusker: Mr. Chairman, may I correct any false impression I may have left. I do not think I gave the impression that I was unsympathetic to sufferers. I am sure my young friend, who was with me overseas, knows that I am sympathetic to those who suffer, and that I looked after them to the best of my ability.
I think he also knows that the item he has cited is an unfortunate one, because it can easily be obtained in this country,- I will add that the treatment of cancer is just as advanced in this country as anywhere else, and that those who suffer from cancer are not being neglected. I want that clearly understood. We have in my city of Regina the most advanced cancer clinic on this continent, and the people there are not suffering from neglect.
If the hon. member would take the trouble to consult physicians and hospitals to find out from them what items would make the lives of these people easier, I would be the first to second a motion to have duty on such items removed. But I resent the implication that I am not sympathetic to the suffering.
The Depuiy Chairman: May I express the hope that from now on the discussion may be more relevant to the resolution before the committee.


Clarence Gillis: The hon. member for Calgary East pointed out that certain equipment was necessary for purposes of irrigation in western Canada. My understanding was that this equipment might almost revolutionize agriculture. We spend large sums of money to subsidize western agriculture. The hon. member suggested that there was a shortage of this equipment which appears to be composed of aluminum pipe. We have in this country one of the greatest aluminum industries on the North American continent.
Inasmuch as this is a new field, and the manufacturing of this requirement would pave the way for a new industry, does the parliamentary assistant not feel that the government would effect a large saving in subsidies paid to agriculture by developing an industry of this kind which could meet these requirements in Canada? Instead of sending our raw aluminum to the United States where it is used for their purposes,

with a dribble coming back here as they see fit, an industry should be established in this country to use our own raw materials. If that were done it would eliminate all this question of tariffs and taxes. Would the parliamentary assistant comment on that?


John Ewen Sinclair: I do not think that this matter comes under the Department of Finance, but I am quite sure that if this new equipment, which apparently is being used so successfully in western Canada, reaches any real volume of sales it will not be very long before the industrialists of eastern Canada will be using Canadian aluminum to satisfy the demand. That is perhaps the only argument we have for the retention of such an item.


Percy Ellis Wright: I do not believe the parliamentary assistant commented on the matter, which I raised a moment ago, of sales tax on heavy equipment used by municipalities. This is a rather important matter in western Canada where many of the municipalities are receiving grants under the P.F.R.A. to assist in the digging of dugouts, since they find that they require such equipment. Does the parliamentary assistant know whether the sales tax is rebated to the municipalities who buy this heavy equipment when it is used for P.F.R.A. purposes? A rebate is made to the provincial governments when they purchase this type of equipment and I should like to know if the municipalities receive a similar rebate.


John Ewen Sinclair: The exemption of sales tax to the province is made to the crown in the right of the province. What is being asked now is a further concession to the provinces to be passed on to the municipalities, or perhaps a concession direct to the municipalities. At the present time no such concession is being granted in this budget. As far as any tariff changes are concerned, they would be considered when the tariff act is under discussion.


Edmund Davie Fulton: I should like to go back to this matter of sales tax on surgical equipment. I am glad the hon. member for Regina City stated that there were no implications in his remarks such as I suggested there might have been.


Emmett Andrew McCusker: There was no implication in my remarks that I was not sympathetic to the patient and I want to ask the hon. member-


An hon. Member:: Sit down.


Emmett Andrew McCusker: -to withdraw that remark.


Edmund Davie Fulton: Perhaps the hon. member will permit me-


George Alexander Drew: Mr. Chairman


Excise Tax Act


Louis-René Beaudoin: Order. When the Chairman is on his feet hon. members should resume their places. I understand that the hon. member for Kamloops indicated at the beginning of his remarks that he was glad to have it confirmed by the hon. member for Regina City that there was no doubt as to his being sympathetic toward sick people. I think the hon. member for Regina City should consider that as indicating that the hon. member for Kamloops is in complete agreement with him. That should settle the matter and I think we might go on now to discuss the resolution before the committee.


Edmund Davie Fulton: There seems to be some conflict of opinion as to whether or not this equipment to which I referred was obtainable in Canada. Unfortunately I do not know anything about medical equipment, but my correspondent goes on to say:
The apparatus which I have to use is, to the best of my knowledge, all manufactured in the States, and is all patented. The result is that I not only have to pay a very high price for it but must pay duty and sales tax as well.
I sent that letter to the Department of National Revenue with the particulars of the equipment concerned. In replying, the deputy minister did not state that this equipment or a suitable substitute was manufactured in Canada, which I should think would have been the first thing he would deal with. He concluded his letter as follows:
As the department is required to collect duty on the various articles imported by your correspondent and possibly other persons in the same condition, in accordance with the regular provisions of the tariff, I can only suggest that any representations on the subject should be made to the commissioner of tariff, Department of Finance, Ottawa, that special provision be made in the tariff for free entry or lower rates of duty.
It is in accordance with that suggestion that I am making these representations. I submit that where an item can only be secured from outside Canada it should not be subject to duty or sales tax.


John Ewen Sinclair: In the past the government has shown considerable sympathy toward the problem raised by the hon. member and I would refer him to items 476 to 480a of the tariff act which cover a great number of surgical and medical supplies which can be imported free of duty from the United States. Then there is a section in the Excise Act which exempts similar surgical and medical supplies from the sales tax. Then there are the further exemptions of sales tax on articles purchased for use in hospitals. As far as purchases by individuals are concerned, I think the hon. member will appreciate the difficulty there would be in deciding just what type of equipment should receive consideration. For example, I do not think he
would suggest that patent medicines and nose drops and things like that should be exempt. I can only repeat that undoubtedly consideration will be given to the suggested changes in the tariff.


Gladstone Mansfield Ferrie: Would the item "diesel
powered, self-propelled trucks" cover caterpillars?


John Ewen Sinclair: This resolution applies to diesel powered self-propelled trucks, mounted on rubber tired wheels for off highway use exclusively at mines and quarries. I have never seen an ordinary mine truck equipped with rubber tires. This applies to the diesel trucks used in open mines and quarries.


Gladstone Mansfield Ferrie: I am referring to the caterpillar equipment that is used by municipalities for farm work.


John Ewen Sinclair: That is exempted already under another item in the schedule which I have placed on Hansard. This is a new resolution extending the exemptions to the equipment used in mines and quarries.


Gladstone Mansfield Ferrie: By municipalities or farmers?


John Ewen Sinclair: The answer is no.


Gladstone Mansfield Ferrie: We want this equipment
exempted because the municipalities use it just the same as though it were used on a farm and they must pay the 8 per cent. Municipalities in northern Ontario, northern Saskatchewan, northern Manitoba and northern Alberta are breaking up thousands and thousands of acres of land with caterpillar trucks that never go off the land. That equipment wears out on the land and yet the municipalities must pay the 8 per cent sales tax. If you are going to take this off for the miner, it should be taken off for the farmer or the municipality.


John Ewen Sinclair: If the equipment is for
exclusive farm use it would be exempt under schedule III, but if the municipality uses the equipment for road building or other purposes, it is not exempt. The engine section of schedule III says that such tractors when used exclusively for farming are exempt.


Gladstone Mansfield Ferrie: Mr. Chairman, because it is for a municipality they say we must pay on that machinery. That is the reason they will not allow us that deduction. We use it solely on the farm. The scrub cutter never goes off the farm, but it comes from the United States and we have to pay the 8 per cent sales tax on it. It cannot go on a road. It cannot be used anywhere else except on a farm. Because we are a municipality we have to pay that, and we should not have to pay it any more than the dominion government pays it.

Excise Tax Act


John Ewen Sinclair: The only answer I can give is the answer I have already given. If such equipment is used exclusively on a farm, irrespective of whether the owner is a farmer, municipality or corporation, it is exempt from sales tax.


Gladstone Mansfield Ferrie: No, not for a corporation.


Frederick Davis Shaw: I believe we should have the matter cleared up. The parliamentary assistant to the minister asserts that on purchases for municipalities for use on farms the sales tax does not apply, but I can assure him that is not correct. If it is purchased by a municipality they pay the 8 per cent sales tax no matter what it is used for. What I am asking, what the hon. member who brought up the question is asking, and what hon. members in general are asking, is that the government take into consideration the removal of this tax, or at least that the municipality pay the tax and then have it remitted to it. That is now done for the provincial government. May I add that municipalities in my province, and I presume this is true of Manitoba, Saskatchewan and other provinces, are today taking over much of the work formerly done by the provincial government. That is a further reason why consideration should be extended to municipalities.


[Stage Direction]
Resolution agreed to.
6.	That the rates of excise tax on matches be amended from the present specific proportionate rate of tax on each package, to an ad valorem tax of 10 per cent.
7.	That the present specific tax of 5 cents per pound on tires and tubes be amended to an ad valorem tax of 10 per cent.
8.	That the sales tax on the following articles be repealed: liquid fuel for lighting or heating, but not including fuel when for use in internal combustion engines; crude oil to be used for the production of fuel.
9.	That the excise tax on wines containing not more than 7 per cent of proof spirit reduced from 50 cents per gallon to 25 cents per gallon.
10.	That paragraphs 1 to 7 shall have effect on and after March 23, 1949, and paragraphs 8 and 9 shall have effect on and after October 21, 1949.
Resolutions agreed to.
3.	That the following excise taxes be reduced from 35 per cent to 10 per cent, namely, the excise taxes on: (a) trunks, suitcases, bags, and luggage of all kinds; (b) ash trays, tobacco pipes, and smokers' accessories; and (c) fountain pens, propelling pencils, and desk accessories.
Louis-René Beaudoin: We will now revert to section 3 which was allowed to stand. The hon. member for Cumberland moved an amendment which I shall read again. It reads as follows:
That section 3 be amended by removing the excise tax on trunks, suitcases, bags and luggage of all kinds, and that subsections (b) and (c) be renumbered (a) and (b).
[Mr. Ferried
May I refer hon. members to citation 500 of Beauchesne's Parliamentary Rules and Forms, third edition. I draw their attention to the last part of the citation which reads:
Amendments, therefore, can be proposed to substitute another tax of equivalent amount, for that proposed by the government, . . .
The amendment does not propose another tax of equivalent amount, and therefore I declare it out of order.


[Stage Direction]
Resolution agreed to.
Resolutions reported, read the second time and concurred in.
Mr. Mayhew (for the Minister of Finance)
thereupon moved for leave to introduce Bill No. 175, to amend the Excise Tax Act.
Motion agreed to and bill read the first time.
At six o'clock the house took recess.
[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.


[Stage Direction]
The house in committee of ways and means, Mr. Beaudoin in the chair.
Resolved that it is expedient to amend the Income War Tax Act and the Income Tax Act and to provide, amongst other things:-
1.	That, for the 1949 and subsequent taxation years, the following shall be the exemptions from individual income tax:
(a)	$2,000 in the case of a married person and persons allowed! a deduction equivalent to that of a married person and $1,000 in the case of all other persons; and
(b)	$400 in the case of dependents not eligible for family allowances, $150 in the case of children eligible for family allowances.
Gordon Knapman Fraser: Would the parliamentary
assistant say what the loss to the government would have been if these exemptions had been raised to $2,400 for married persons and $1,400 for single?


John Ewen Sinclair: I can give the figures for the exemptions at $1,250 and $2,500.


Gordon Knapman Fraser: That would be a help.


John Ewen Sinclair: One hundred and forty million dollars.


Gordon Knapman Fraser: That is quite a lot of money.


[Stage Direction]
Resolution agreed to.
2.	That, for the 1949 and subsequent taxation years, the schedule of graduated rates for individual income tax be replaced by the following schedule:
On the first $1,000 of income or any portion thereof, 15 per cent per annum; or
$150 upon the income of $1,000; and 17 per cent upon the amount by which the income exceeds $1,000 and does not exceed $2,000; or

$320 upon the income of $2,000; and 19 per cent upon the amount by which the income exceeds $2,000 and does not exceed $4,000; or $700 upon the income of $4,000; and 22 per cent upon the amount by which the income exceeds $4,000 and does not exceed $6,000; or $1,140 upon the income of $6,000; and 26 per cent upon the amount by which the income exceeds $6,000 and does not exceed $8,000; or $1,660 upon the income of $8,000; and 30 per cent upon the amount by which the income exceeds $8,000 and does not exceed $10,000; or
$2,260 upon the income of $10,000; and 35 per cent upon the amount by which the income exceeds $10,000 and does not exceed $12,000; or $2,960 upon the income of $12,000; and 40 per cent upon the amount by which the income exceeds $12,000 and does not exceed $15,000; or $4,160 upon the income of $15,000; and 45 per cent upon the amount by which the income exceeds $15,000 and does not exceed $25,000; or $8,660 upon the income of $25,000; and 50 per cent upon the amount by which the income exceeds $25,000 and does not exceed $40,000; or $16,160 upon the income of $40,000; and 55 per cent upon the amount by which the income exceeds $40,000 and does not exceed $60,000; or $27,160 upon the income of $60,000; and 60 per cent upon the amount by which the income exceeds $60,000 and does not exceed $90,000; or $45,160 upon the income of $90,000; and 65 per cent upon the amount by which the income exceeds $90,000 and does not exceed $125,000; or $67,910 upon the income of $125,000; and 70 per cent upon the amount by which the income exceeds $125,000 and does not exceed $225,000; or $137,910 upon the income of $225,000; and 75 per cent upon the amount by which the income exceeds $225,000 and does not exceed $400,000; or $269,160 upon the income of $400,000; and 80 per cent upon the amount by which the income exceeds $400,000.
Gordon Knapman Fraser: I did want to ask if more consideration could not be given to parents who are putting boys and girls through university. During the summer these boys and girls work, but if their income amounts to $410 the parents are out of luck. It costs a lot of money to put a boy or a girl through college. Could some consideration be given to that?


John Ewen Sinclair: The concession for boys or girls between the ages of 18 and 21, if attending university, is now set at $500. They are allowed extra income up to $500.


[Stage Direction]
Resolution agreed to.
3.	That, for the 1949 and subsequent taxation years, there may be deducted from tax payable by an individual resident in Canada 10 per cent of the amount of his income that is from dividends on shares in a corporation resident in Canada that was liable to corporation tax in the taxation year: Provided that in the case of dividends deemed to have been received from a personal corporation the deduction shall only be 10 per cent of that part of the income deemed to have been received by the shareholder as a dividend that the income of the corporation derived from dividends is of the whole income of the corporation.
Resolution agreed to.
Income Tax Act
4.	That, with respect to income of corporations earned on and after January 1, 1949, the present rate of tax of 30 per cent shall be reduced to 10 per cent on the first $10,000 of income and increased to 33 per cent on income in excess of $10,000 with corresponding changes in the rates of consolidations.
Resolution agreed to.
5.	That interest on unpaid/ taxes on incomes of the 1948 and subsequent taxation years for which no assessments have been issued will cease to accrue twelve months after the date for filing the return in place of twenty months.
Resolution agreed to.
6.	That, for the year 1949 and subsequent taxation years, the business losses that may be deducted from income shall include losses sustained in the five years preceding and the year following the taxation year in the place of the three years preceding and the year following the taxation year.
Resolution agreed to.
7.	That, for the purpose of computing income of the 1948 and subsequent taxation years of a member of the clergy or of a religious order or a regular minister of a religious denomination there may be deducted the value of the residence or other living accommodation enjoyed by him as such member or minister to the extent that it would otherwise be included in his income or the rent paid by him for or the fair rental value of such a residence or living accommodation.
Gordon Graydon: I should like to have some clarification of resolution No. 7 which has to do with computing the income for 1948 and subsequent taxation years for a member of the clergy or a religious order. I have received an inquiry from a minister of the United Church about this matter, and perhaps the parliamentary assistant could answer it. He asks whether it is the intention of the Minister of Finance that any ordained clergyman, irrespective of his duties in the church or outside the church, shall enjoy this exemption from taxation. In other words, do the words "a regular minister" mean any ordained minister or a minister in a charge? Some ministers are not in a charge, and that is one point this man raised.
There is another point I should like to raise. Provision is made for deduction of the value of the residence provided for the minister or rented by the minister, but what about a house that the minister owns? In many cities, ministers serving congregations own their own houses. This man suggests that such exemptions should be enlarged to include such cases.


John Ewen Sinclair: The answer to the first question is that it is not necessary for the minister to have what is ordinarily referred to as a charge. He may be assisting a minister or doing general work, but so long as his fulltime occupation is the ministry, then he is allowed this deduction. So far as the second

Income Tax Act
point is concerned, a minister who owns his own home is allowed the equivalent of the rent he would have to pay if he were renting a house of that type.


Gordon Graydon: If a minister is in some work such as teaching in a college, or something which has to do with the religious denomination to which he is attached, does he come under the provisions the parliamentary assistant has just mentioned?


John Ewen Sinclair: If, for example, he were secretary to a church council-is that what the hon. member is talking about? It would be full-time religious work, but not necessarily in charge of a congregation.


Gordon Graydon: I am thinking more particularly of a man who is teaching at the United Church college, who is a minister but is not engaged in ordinary ministerial work at the moment.


John Ewen Sinclair: He would be regarded as a teacher rather than as a minister attending to full-time religious activities.


Mr. Byrne:: Mr. Chairman, on this specific question of exemptions for the clergy, I feel that these men who make a complete sacrifice of their entire lives should be taken from the income tax rolls entirely. They should not be taxed in any way, shape, or form. This brings up the question, however, of exemptions that are made for specific purposes. It is my contention that once a person falls within the income tax field, as I attempted to point out the other day, no exemptions whatever should be made because of his particular occupation or profession.
I feel that possibly my remarks on that subject were misconstrued the other day. Once we start making exemptions for any specific purpose, then we open up a vast field which would lead to difficulties in calculation that would render it almost impossible for the income tax department to carry out its function. Suppose exemptions were to be made, to cite a specific case, for professional fees or union dues. I might say that I have been in the labour movement for some time, and as a result of that I learned one very important principle; that no matter how much I differed with the principles that were involved in a particular matter, loyalty meant a great deal in obtaining things which I sought. Possibly that is something a good many of the members here have not had the opportunity of experiencing since they were not in the same happy position as I was.
I feel there should be no particular exemption made for a house or small expenses which may be incurred by members of the

clergy, but my belief is these men should be removed entirely from the income tax roll.


Gordon Knapman Fraser: Mr. Chairman, the members at this end could not hear whether or not you were passing certain items. There was quite a bit of noise. Would the minister answer a question relating to resolution No. 3, in regard to dividends which are in an estate. Do those dividends lose their identity?


John Ewen Sinclair: I do not want to start the practice of reverting to items which have been carried. I point out that the member has one more opportunity of dealing with his point, and that is when the bill is before the house.


Edmund Davie Fulton: I was on my feet; as a matter of fact, I was just coming through the curtain when resolution No. 5 was called and resolution No. 6 was called. When I got down to my seat, intending to speak on item No. 5, Mr. Chairman, you had called resolution No. 7. I do not know whether it would be permissible to revert to resolution No. 5, inasmuch as I was on my feet when resolution No. 5 was called, as I pointed out.


Louis-René Beaudoin: By leave of the committee, I think the hon. member should be granted permission to ask his question. But I should not like to have other members go back to resolutions which have been carried. It is now fifteen minutes past eight. If it is agreeable to the committee, I will permit the hon. member for Kamloops to ask his question.


Some hon. Members:: Agreed.


Edmund Davie Fulton: Thank you, Mr. Chairman. My question has to do with the practice, which came into effect this year for the first time, of the various income tax offices throughout the country issuing assessment notices under the heading "Assessment". Most hon. members and everyone throughout the country, I think, will recall that shortly after they sent in their payments on account of income tax this year they received a notice from their appropriate income tax office headed "Assessment". That fact gave rise to the impression that these were the final assessments of their taxes due for that year. It has now been drawn to our attention that these do not represent final assessments but, in effect, are no more than an acknowledgment of the receipt of the amount of tax paid with the taxpayer's own assessment form. My question therefore is this. If this is not a final assessment, does this not have a great bearing on the matter of interest penalty which a taxpayer may be called upon to pay if his own personal assessment, for any reason, happens to be incorrect? The impression

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given by the receipt of the notice is that the Mr. Church: It is a handsome book, no income tax office has assessed his return and doubt; but it all largely comes from the has passed it as a final assessment. What is Toronto district. It would take a Philadelphia the position in that regard?	lawyer to make out his income tax.


John Ewen Sinclair: The actual assessment notice to which the hon. member refers is an assessment on the taxpayer's own return. If the taxpayer has calculated his return correctly, that is the last the taxpayer will hear of it. If, however, the return is incorrect, then at some later date he will receive a further assessment.


Edmund Davie Fulton: May I request that the department go back to the former practice of simply sending out a receipt acknowledging receipt of that amount. When the taxpayer receives such an assessment notice he naturally concludes that it represents his final assessment; whereas, as it was before, he knew it was no more than a formal acknowledgment of receipt of the amount paid.


John Ewen Sinclair: It has been pointed out to me that at least 90 per cent of the returns which are turned in are correct, and so that assessment notice is correct and is the end of the matter in 90 per cent of the cases. For the 10 per cent which are incorrect, there is of course a further assessment. I think the 90 per cent who are correct would prefer to receive such an assessment notice rather than a mere receipt, and then go on wondering whether or not they are going to be reassessed.


Donald MacInnis: It is a receipt anyway, whether it is correct or not, and it is made final by your final receipt?


John Ewen Sinclair: That is correct.


Thomas Langton Church: Under resolution No. 5, I think the minister might very well tell us where all this income tax comes from. It comes largely under resolution No. 5. The rate of interest charged is altogether too high for the amount of money collected, $4 million or $5 million. It costs several millions to collect it. In the second place it comes very largely from the Toronto district. Under one of these resolutions I hope the minister will tell the committee where all this income tax comes from. About 30 per cent comes from our own city and we get little value for it in the way of expenditure. I hope the minister will tell us where all this income tax comes from, and the amount from different districts accordingly.


John Ewen Sinclair: The hon. member can find that at his own convenience in the statistical report turned out by the Department of National Revenue, the 1949 issue, which is now available for distribution.


Edmund Davie Fulton: With respect to this matter of assessment, I would point out that it has a definite bearing on the matter of interest penalties. It seems to me that if the notice sent out within a month or two of the receipt of the payment by the taxpayer is labelled "assessment", that procedure enables the department to charge interest from the date of the mailing of the notice; whereas if the notice were labelled, as in former years, "interim receipt only", then interest would not commence to run at the full rate until the date on which the department mailed its final assessment of the taxpayer's return. In other words, because they label this notice "assessment" they are entitled to charge interest at the full rate from the date of the mailing of that notice instead of being entitled to charge the full rate only from the date of the mailing of the final notice.


John Ewen Sinclair: It is suggested to me that, if the hon. member will hold that question over until the bill is introduced, he will see that the particular point he mentions has been specifically taken care of. But in any event the taxpayer who at the time of the receipt of that notice still owes money on his return is of course going to pay interest now up to a period of only twelve months whereas before he paid it up to a period of twenty months.


Edmund Davie Fulton: There is still the difference between 6 and 7 per cent.


Gordon Graydon: On resolution No. 5-


John Ewen Sinclair: On a point of order, Mr. Chairman, I understood that the hon. member for Kamloops was granted a special concession because he walked into the house after eight o'clock and was allowed to revert to resolution No. 5. Is it the wish to revert to resolution 5?


Some hon. Members:: No.


Louis-René Beaudoin: I do not see how
I could prevent other members from asking their questions if they find themselves in the same position as that in which the hon. member for Kamloops found himself. I think that the hon. member for Peel is one of those.


Edmund Davie Fulton: We cannot hear you, Mr. Chairman.


Mr. Cruickshank:: What resolution are
you on?


Louis-René Beaudoin: On resolution No. 5.

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Gordon Graydon: I am sorry if I am contravening the rules, but I think this is a point that is deserving of some consideration by the department. There is a feeling among the taxpayers, and I think it is fairly general, that the government regards this question of interest as a sort of one-way street in its favour. If anybody overpays his taxes, the government conveniently forgets that it has had the use of the taxpayer's money for a year or so, as the case may be. On the other hand, if the taxpayer happens to underestimate his taxes, or happens to make some mistake in his return and is obliged to pay more, then of course the government comes along and exacts the full rate of interest from him. That in itself is bad enough. But there is another point which ought to be stressed. It may be that now the situation is being cured; I think perhaps to a large extent it may be. In the past, the department has been years behind in its assessments. That was not the taxpayer's fault; it was the government's fault. The result was that, because of the arrears of assessments and because of the fact that the government department itself had defaulted in bringing the assessments up to date, and which they should have brought up to date, taxpayers found that they had sometimes perhaps three years' interest to pay-I am not sure whether they went any further- which mounted up to quite a bit of money. Taxpayers complained about that, but so far as I know there never was any redress. The government ought not to put itself in a preferred position to those who have to pay the taxes. After all, if the taxpayer has to pay interest on the money that he owes to the government after the assessment has been made, then if he overpays he ought to be allowed interest on that overpayment. In addition, he should not be penalized because of the default of somebody in the department. Some explanation of the policy of the department ought to be given.


John Ewen Sinclair: I can tell the hon. member for Peel that if the return of the taxpayer is accurate, which after all is the responsibility of the taxpayer, there is no overpayment or underpayment.
As far as underpayment is concerned, the interest charged is not only interest charged on money which is owing the government but also a penalty to encourage accurate returns of income tax. So far as the other matter is concerned, the hon. member will recall that last year legislation was passed allowing interest at the rate of two per cent on overpayment; but there again overpayment, so far as the taxpayer is concerned, is because-
IThe Deputy Chairman.]


Gordon Graydon: Is that what the taxpayer in default is charged?


John Ewen Sinclair: So far as the taxpayer in default is concerned it is not only a matter of interest on the money owed to the government but also a penalty to encourage in the first place accurate returns of the taxpayer's income.


Gordon Graydon: May I suggest to the parliamentary assistant that there ought to be some kind of penalty to encourage the government to bring their assessments up to date.


John Ewen Sinclair: As I recall, the hon. member and his party have been the ones who in past years have urged great reductions in the civil service. The reason we got so far behind during the war was the lack of staff because we were holding down the civil service. We were twenty months behind. By April of next year the assessments will all be up to date. That is why we are able to close the gap from first of all no limit, then to twenty months and now to twelve months in this resolution.


Gordon Graydon: That does not help the man who has had to pay.


Louis-René Beaudoin: We will revert to resolution 7.


Daniel (Dan) McIvor: Mr. Chairman, this tax should be wiped off the slate not because ministers do not receive as large a salary as members of parliament but because they have calls that no member of parliament has to answer. I can give an illustration of some of the calls a minister has to make. Suppose he is downtown on a Saturday and sees an old friend whose legs do not seem to be able to carry him very well. He takes him home and puts him in the spare room and keeps him there a day, two days or a week and sobers him up with black coffee. The income tax department will not permit him to take that gift off his income tax. The department does not allow a minister any credit for gifts that he makes which other people do not make. The minister has continual calls on him. They are not made once in a while, but practically every day or at least every week. Because of these gifts I think this tax should be wiped off the slate. I am not speaking of one denomination only. It applies to anybody in religious work. A clergyman has those calls, and he is expected to practise what he preaches, feed the hungry and clothe the naked.


Thomas Langton Church: I asked the predecessor of the present minister a question with regard to this particular resolution. I refer to the late minister who is now a judge in Nova Scotia. I asked him this question: Do all the clergy of the Christian churches pay income tax? His

reply was that so far as he knew they did. I am glad that resolution 7 has been amended because clergymen have a great many important duties to perform. They should be all treated alike in this country. The Christian churches should not take precedence over the state. The state has to raise money by this method of income tax to enable the country to pay its debt. Some allowance should be made for all clergy of the Christian church and of other churches who are not of the Christian faith. There is this to be said about the clergy. During the depression and during the period of the late war the clergyman had to be judge, doctor and almost everything. I remember three or four clergymen coming one day to the bar of the house to visit. A few years ago I addressed a bartender's union. Because I was the head of a big city I had to treat them all alike. I said that a lawyer pleads from inside the bar. Today a minister has to use his car. He has to pay for the gasoline. He does not own a house. He has to go down to the police court to help his parishioners out.
In the Toronto district the scale of fines under this whole Income Tax Act, and particularly under this resolution, are heavier than they are in any other court in the country. They are almost five to one. This resolution should be liberally interpreted to include all the Christian clergy. There is one church that does a great deal of good work. I refer to a faith to which I do not belong. I know a great many of the clergy from their seminaries and others, and they do valuable work. That could be applied also to the other Christian denominations. In view of what the clergy are doing to help the people there should be a liberal interpretation of this resolution.


Gordon Francis Higgins: I wish to say a few words on this resolution. We did not know it before in the province of Newfoundland, that is why I draw it particularly to the attention of the parliamentary assistant. Would it not be fairer to tax the minister on gifts or on, shall we say, a private income apart from the return on his direct ministerial duties, or else raise the exemption a little higher for clergymen alone? I presume this applies equally to all provinces but the clergymen in a number of districts in the province of Newfoundland are going to find this a real hardship. I submit that to exempt the direct earnings from the ministerial duties of a clergyman would be the fairer way, or to raise the exemption to $2,000 to $2,500 in this particular case.


John Ewen Sinclair: First of all I would point out to the hon. member, as was indicated by the hon. member for Kootenay East, that it is
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difficult when one gets into this business of giving special exemptions to different groups. The present exemption can be justified in that a minister's home is, if I may use the expression, more or less his place of doing business, the place where during week days he ministers to his congregation and performs other functions in connection with his office.
This concession is an improvement in the taxation regulations, as applied to clergymen. There is one point, of course, that because of the incomes which most clergymen receive, a considerable number of them, especially if they are married with children, are now in the exempt class by reason of the increase in the basic deduction in respect of all taxpayers.


Ernest George Hansell: I should like to say a word in respect of a further deduction which in my view clergymen should have. A complaint was registered with me about a year ago where it was pointed out that clergymen are not exempt for certain travelling expenses incurred in the discharge of their regular pastoral duties. There are some clergymen occupying charges in western Canada who must cover a considerable area of ground and have considerable travelling to do in that connection. Some even have several churches in different communities to which they must travel once or twice a week. Sometimes they have to travel long distances to conduct funerals for which, on occasion, they do not accept fees. I do not think that as a rule clergymen take fees for conducting funerals. Then there are a number of other reasons for travelling.
Some may have their own cars. In the case brought to my attention neither depreciation on the car nor the gasoline bill was taken into consideration. Most clergymen do not receive large salaries. It is all very well to say that they do not come within the income tax bracket-and we know that many of them do not. But those who do are not allowed travelling expenses. I do suggest to the parliamentary assistant that some consideration should be given to this matter.


Gordon Graydon: Mr. Chairman, the parliamentary assistant indicated a moment ago that it was difficult to set aside any particular occupation or profession for special consideration in the income tax structure. I fancy most members of the committee will agree with that general principle; because it is a national levy and for that reason one would expect the government at least in a general way to take that stand.
I think however that the parliamentary assistant would agree with hon. members who have spoken, that, after all, our ministry, our clergymen, regardless of the denominations

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to which they belong, make a great contribution to our national life for which compensation is never made in dollars and cents. Perhaps it is never intended that it should be, in the minister's mind-and very often, unfortunately, it is not in the congregation's mind either. I am inclined to think that our clergymen are in an entirely different position because, in a sense, they are in a class in which they render a service, rather than in a money-making class from the income of which is siphoned off a certain percentage.
As has been mentioned by one of my colleagues, clergymen's incomes are derived in different ways. It seems to me the government should give careful consideration to the pleas which have been made on behalf of the clergy in Canada. I do not think many taxpayers would find fault with or be even mildly critical of the government if our clergymen were taken right out of the income tax brackets altogether. There would be some technical objections from the department, but I believe the policy is one which would commend itself generally, because it would be an indication of just how this parliament and the people of Canada judge, appreciate and value the work of this important section of our population which ministers to our people. It would be the most practical way of saying a word of praise to them.
We would not have a nation worth the name if we did not have our churches. For that reason, what I have said should be a guiding factor and an important feature in the formulation of government policy. I know the clergymen would not ask for it, as I am now asking; but it seems to me it is the duty of laymen throughout Canada to speak on their behalf. After all, I believe the laymen of Canada would regard it as a privilege and an honour to bear any extra burden of taxation which would become necessary by exempting these men who render such signal service in the religious life of our nation.


George Alexander Cruickshank: I am not quite clear concerning this resolution. As I understand the hon. member for Peel, the legal profession receives exemptions for expenses; is that correct in respect of people who contribute so little to the welfare of Canada? Am I to understand that the ministerial group, of which I am sure my young friend from Coast-Capilano knows so much, are being taxed? If that is so, then I say through you, Mr. Chairman, and through my young friend to the Minister of Finance, that it is high time they changed their policy.


[Stage Direction]
Resolution agreed to.

8.	That, for the 1949 and subsequent taxation years, the exemption from income of an individual in respect of a spouse supported by him shall not be reduced because of exempt income of the spouse.
John George Diefenbaker: Would the parliamentary assistant explain this resolution, and tell the committee whether it arises as the result of a court judgment?


John Ewen Sinclair: I cannot say whether it arises as the result of a court judgment, but it does arise because of the need of one special group. Under the present terms of the Income Tax Act an individual is required to reduce his present exemption by the amount of income of his spouse in excess of $250. In calculating the amount of the spouse's income to be taken into consideration, the law now requires that receipts by her which are not in themselves taxable must be included. The most typical case is probably a wife supporting a husband who was a veteran in receipt of disability pension. Such pensions are not in themselves taxable but at the present time must be taken into consideration in the wife's income, and therefore they become taxable. That is the purpose of the resolution, and the class to which this resolution is intended to refer.


Mr. Adamson:: It would include a wife's income as well from any source.


John Ewen Sinclair: Yes, from any source.


[Stage Direction]
Resolution agreed to.
9.	That, for the 1949 and subsequent taxation years, all amounts whether in the form of lump sums or otherwise, received by employees from their employers, whether before, during or after their employment, shall be included in computing income of the employee unless it is established that they cannot reasonably be regarded as consideration for entry into the employment, remuneration for services or consideration for restrictions on the activities of the employee.
Mr. Smith (Calgary West):: Would the
parliamentary assistant explain this in language so simple that even I can understand it?


John Ewen Sinclair: The purpose of this measure is to defeat practices resorted to by some taxpayers to avoid payment of income tax. These arrangements when found are usually between an employer and an employee of executive rank. In essence, they attempt to convert into a capital payment made in return for certain undertakings given by the employee a payment or series of payments that would otherwise be income of the employee. If such payments wear the guise of a capital payment they may escape income tax. It is only in very exceptional circumstances, however, that a payment made by an employer to an employee is not simply part of the terms of the employment, and it is only fair to the

great majority of taxpayers that they be kept under close surveillance and governed by the most rigid restrictions.
The purpose of the amendment that will be based on this paragraph is to bring all such payments, whether paid in a lump sum or otherwise, under scrutiny by the tax authorities. In the first instance they will all be deemed taxable unless the taxpayer can prove they were not of the type of payment I have mentioned.


Arthur Leroy Smith: I am grateful to the parliamentary assistant for that clear and lucid explanation in simple language, but would he mind telling me what it is all about? What is the evil you are seeking to correct? For instance the last three lines read:
-unless it is established that they cannot reasonably be regarded as consideration for entry into the employment, remuneration for services or consideration for restrictions on the activities of the employee.
I have read that over to myself half a dozen times and I am utterly unable to perceive any sense at all in it. I do not know what it means. Does it mean the payments that might be made to a hockey or baseball player where so much is paid for signing up?


John Ewen Sinclair: It does.


Arthur Leroy Smith: Then I need not wear the dunce's cap any longer. I think I am the only person in the committee apart from the parliamentary assistant who knew that. We have that one thing explained. Then the resolution goes on:
-remuneration for services or consideration for restrictions on the activities of the employee.
Would that be for a woman who would go out for coffee in the morning at ten o'clock or for tea in the afternoon? What does it mean?


John Ewen Sinclair: I gave the departmental
explanation; now I shall give my own. A great many attempts have been made in the United States and a few in this country by high executives of companies to get around the special rates of income tax which we have on high salaries by obtaining from the company a lump sum and hedging it around with some qualification in order to make it look like a capital gain rather than a payment for past services or present services or for entering the employ of the company or for agreeing to restrictions in the future. An employee may be asked to say that he will never leave the company and therefore the employer would have the use of that employee's services as long as he wanted them; the employee could not go over to one of his competitors.
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Gordon Graydon: That might be a boomerang.


John Ewen Sinclair: It might or might not be, I am not in position to say. The ordinary little taxpayer or employee of a company would not get things like this; it is only the top executives who are in positions of control who could arrange anything like this. It is to prevent that practice of regarding these things as though they were not actually payments for services.


Gordon Francis Higgins: Would the normal gift of cash at Christmastime to an employee be included in the employee's income?


John Ewen Sinclair: Christmas bonuses are
regarded as income. After all, they are part of the emoluments received by the employee for services rendered.


Gordon Francis Higgins: Could a gift be considered as something apart from a bonus?


John Ewen Sinclair: The only reason an employer would make a gift at Christmas or any other time during the year to an employee would be as a return for faithful service, and after all that would be part of his income whether it was paid monthly or given as a gift.


Gordon Francis Higgins: What if it were in kind rather than in cash?


John Ewen Sinclair: I am informed that the value of the gift is regarded as income.


Arthur Leroy Smith: Supposing when we leave here at Christmas we give a pair of gloves or some flowers to the secretaries who work for us, would the departmental officials regard that for one moment as being income? Surely nothing so nonsensical could be suggested?


John Ewen Sinclair: My hon. friend, who is a lawyer, will be able to give me the answer in Latin which I have been given.


Arthur Leroy Smith: What the parliamentary assistant is saying is that we are not their employers as individuals. Let us go back to the private companies and see if we can get a smart answer to that. The last line of the resolution reads:
-remuneration for services or consideration for restrictions on the activities of the employee.
I thought I understood the reply given a few moments ago, but I want to be sure. What this means is that any transfer of money or anything of value between an employer and employee is in fact income and the individual would be charged for that. Is that not the law now? I cannot see that this adds anything to the present law. 1 am working for somebody and he gives me so much money or so many potatoes or something else in kind. That is all regarded as income. It must be if

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Christmas bonuses are so regarded. I am utterly unable to see why we should have this conglomeration of words which will only confuse the simple law as it is today. Perhaps my judgment is wrong about that, but that is the way it appears to me.


Leslie Alexander Mutch: Carried.


Arthur Leroy Smith: With great respect to another parliamentary assistant who does not understand it and who probably will not even though he keeps shouting "carried"-


Leslie Alexander Mutch: With great respect, I am not saying anything about the law.


Arthur Leroy Smith: The parliamentary assistant said "carried". I heard him and I want to congratulate him on being so bright.


John Ewen Sinclair: The point I tried to make earlier was that attempts have been made here similar to those in the United States to treat these things as capital payments which are made, not for services rendered but for other reasons. A payment might be made for an employee agreeing never to work for another employer, to restrict his future activities, and it was challenged that such a payment was not income. To make it quite clear that these things would be regarded as income a clause will be inserted in the bill which perhaps my hon. friend will be able to follow much better.


John George Diefenbaker: I am all right up to the beginning of the proviso, but I should like the parliamentary assistant to explain the proviso, which reads:
-unless it is established that they cannot reasonably be regarded as consideration for entry into the employment, remuneration for services or consideration for restrictions on the activities of the employee.
Could the parliamentary assistant give examples for each of these provisos? The first is that moneys paid cannot reasonably be regarded as consideration for entry into the employment. I should like an example of that. The second is remuneration for services or consideration for restrictions on the activities of the employee. I should also like an example of that. It is so involved that I doubt whether the appeal board would be able to interpret what it means. Possibly if examples are given we can understand it.


John Ewen Sinclair: Perhaps I should first point out that the legal draftsmanship is certainly not mine, nor am I competent to interpret it. As far as the grammar is concerned, I would point out there is a double negative, and I would take it that the double negative means that these things are going to be regarded as

income. If they are anything else they are not income, but these things are. An example of the first one would be a person taking a bonus of $10,000 to begin employment with a company, in addition to his regular salary.


John George Diefenbaker: Would that be free of income tax?


John Ewen Sinclair: No, that is income. Any one of these things which are mentioned is going to be regarded as income. I must confess that if I were a lawyer I would have used the direct approach, but the double negative means if any one of these things was the reason why the capital payment was made, then that capital payment is income. If, on the other hand, it should happen that an employer had to buy a piece of property belonging to an employee, that would be a perfectly normal transaction. It is not covered by the last two lines and therefore it is not income.


John George Diefenbaker: What would be an
example of the second proviso?


John Ewen Sinclair: A straight bonus for entering service at all. Perhaps a good example of the first one would be the case of hockey and football players who are given say $10,000 to begin with in return for entering into a contract for their services with one hockey or baseball club.


John George Diefenbaker: Is that what it is to cover?


John Ewen Sinclair: That is one of the things.


Donald MacInnis: In view of the explanation of the parliamentary assistant as to the drafting, would it be correct to say that in drafting a law of this kind when the lawyers want to say yes they say "no, no"?


John George Diefenbaker: I have one more question as a matter of information, because I often hear it referred to. Suppose a person were employed by a limited company with a salary of $10,000 a year, and collected no part of his salary for a period of three years. Suppose he then discharged his liability to the company, the amount of $30,000, by selling his contract of service back to the company for $20,000. Would that be subject to income tax?


Mr. Belzile:: In this particular instance I think it would be considered as income. It discharges a debt for a salary, which salary would have been taxable in ordinary circumstances. Every year the salary of $10,000 would have been taxable. At the end of three years the amount due is $30,000. A settlement is made for $20,000. The $20,000, being in settlement of previously earned salary, is taxable.


John George Diefenbaker: It is taxable?


Gleason Belzile: It is.


Arthur Leroy Smith: Just one question, and I promise I will not rise again. I wonder if you should not have some restriction after the word "activities" as, for example, "activities in the interests of the employee". It seems to me you leave yourself wide open on the word "activities". Surely it is presumed it would be activities from which the employer benefits, or something of that kind. It occurred to me you might want to do something about that in the act. You might just look at that.


John Ewen Sinclair: Of course this is only the resolution. When we come to the bill the language will be clear.	-


Arthur Leroy Smith: I merely make the suggestion that when we come to the bill it might be advisable to restrict it.


[Stage Direction]
Resolution agreed to.
10.	That, for the 1949 and subsequent taxation years, payments made for a wheel chair may be included in the medical expenses for which a deduction from income may be made for the purpose of computing taxable income.
Gordon Knapman Fraser: On September 29 the hon. member for Macleod, I believe it was, asked a question whether payment for the services of an ambulance would be included in the exemptions, and the minister said that he did not think so. I said at that time that I thought if a doctor included in his bill the charge for the ambulance it could be deducted from the man's income tax. Will the parliamentary assistant say whether, if the ambulance charge is included in the doctor's account, it can be deducted from the individual's income tax?


John Ewen Sinclair: Before I answer a hypothetical question, what reason would there be for a doctor to include an ambulance bill in his account?


Gordon Knapman Fraser: He might own an ambulance.


An hon. Member:: He might be an undertaker, too.


Gordon Knapman Fraser: There are cases where some one party is unable to pay at the time. There are doctors who have themselves paid the charge for the ambulance, and perhaps six or seven months later have collected the amount from the individual.


John Ewen Sinclair: I can only refer the hon. member to section 26 of the Income Tax Act which gives in detail the medical charges permitted as a deduction. I am told by the medical authorities around me that they know of no case where a doctor owns an ambulance.
45781-I04J
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Gordon Knapman Fraser: That was suggested on this side of the house. The doctor behind you likely told you that, but I know of two cases where the doctor has had to pay the ambulance charges, and six or seven months afterwards has collected it.


Emmett Andrew McCusker: I have heard of cases in Ireland where the doctor made his visits in a hearse so that if he was not successful or if he arrived too late he would save the family expense, but I have not heard of doctors in Canada assuming the responsibility for the ambulance charge.


Ernest George Hansell: It is quite all right when a question is asked for the parliamentary assistant to read the act and say that is what is in the act. This afternoon, when we were talking about another tax, he said that people should know it is in the act. If the people should know certainly we should know. Therefore why does he say, "There is the act; it is in the act"? We know it is in the act. What we want is to have it taken out of the act. What we want is to have the act changed so that ambulance fees will be regarded as medical expenses. That is the point.
We should like to have some statement from him as to whether or not the government thinks it is reasonable to have ambulance fees included as a medical expense. The case I have in mind is that of a man who had to travel 200 miles in an ambulance to get special attention. His wife went with him. They had to put up at a hotel for a night before he could get a room in the hospital. He applied for exemption for those charges. I can understand if he had to go to a hotel perhaps that in itself would not involve a medical expense. I know the government would run into some difficulty and perhaps discover there were a lot of travellers who had been taken sick when they had to stay at a hotel. I can understand the hotel part not being included as medical expenses, but for the life of me I cannot understand why ambulance charges are not included in medical expenses. When one travels a couple of hundred miles by ambulance, the bill is considerable. I believe such charges should be included in medical expenses if the patient has to be transported to some place for medical attention. If the officials are doubtful about the charge, a statement from the doctor could be secured.
I believe an ambulance charge is a legitimate claim for exemption, and I should like the department to tell us whether or not they think so; and if so, will they have it changed?


John Ewen Sinclair: In answer to the initial remarks of the hon. member, may I say that the member for Peterborough West asked me

Income Tax Act
whether there was a provision in the act, and I did give him the actual section of the act. So far as the question of the member for Macleod is concerned, consideration has been given to allowing other than medical expenses, but at this time it is not government policy to extend these concessions further.


Gordon Knapman Fraser: I asked the parliamentary assistant whether an ambulance charge could be included in the doctor's bill, and be exempted in that way.


John Ewen Sinclair: No.


Mr. Applewhaite:: I had no intention of entering the discussion on this resolution, but if the department gives favourable consideration to the request which has been put forward, and perhaps with justification, for those who are fortunate enough to be able to travel via ambulance, will they also kindly remember the transportation charges which have to be met in a district such as mine where a man has to hire a plane and travel 500 or 600 miles to reach a doctor. If he does not do that, he has to wait until the following spring. This is a major item of expense, and it is an item which may be argued at considerable length. I do not intend to hold up the committee for any length of time, but I do not intend to let the people who are fortunate enough to be able to ride in an ambulance at a cost of $5 or $10 go to the department with that request and have it granted, without some consideration being given to those people who have to hire an aeroplane, which is an item of real expense.


Ernest George Hansell: My reply to the hon. gentleman who has just taken his seat is that even though a patient had to take a train, upon the doctor's insistence in writing, then that expense should be allowed. It does not make any difference.


Mr. White (Hasiings-Peierborough):: I should like to ask the parliamentary assistant whether it is not correct that the income tax department does allow ambulance charges now?


John Ewen Sinclair: The answer is no.


George Stanley White: I would suggest that the parliamentary assistant ask the Minister of National Revenue, because I know of cases where ambulance charges have been allowed.


Mr. McCann:: Mr. Chairman, the answer is no. If they were allowed, they were allowed in error.


Mr. Herridge:: Speaking about these ambulance charges, I should like to say that on numerous occasions in my district people

have to hire ambulances to go from isolated points to the cities of Trail or Nelson. Sometimes it is necessary to travel one hundred or one hundred and fifty miles, and the ambulance charge is from $35 to $70. When people meet with sickness, that is a serious expense. I would ask the parliamentary assistant to bring this matter to the attention of the government in such a way as to bring out the special circumstances mentioned by the members. This is a necessary and often costly expenditure.


Emmett Andrew McCusker: If I might speak again, I should like to correct an impression which may have been caused by a facetious remark of mine concerning the doctor in Ireland, who always travelled in the hearse to save the family expense, because he always arrived too late. I have a certain amount of sympathy for the stand that has been taken by these gentlemen tonight concerning people who live in remote areas, and who have to hire transportation to convey them to the hospital. In Saskatchewan there is an ambulance system by means of which an aeroplane will go to any spot in the province and convey the patient to hospital for the sum of $25. If the patient can pay for that, there is a charge made. If he cannot, he travels at public expense.
I can understand the reluctance of the government to accept the responsibility for transporting patients by ambulance because we know of the abuses that inevitably follow. I am quite sure the privilege would be abused. In Saskatchewan there is prepaid hospitalization today. The biggest problem facing the doctors there is to decide who should be sent to the hospital and who should be kept out. If you are going to give patients free ambulance transportation, the privilege is going to be abused. The Saskatchewan government has had to put very stiff regulations in force to prevent the abuse of its ambulance service. It is still being abused, however.
If the gentlemen who plead for an ambulance service will put forward some means of regulating it, then I will support their plea. As it is, I think it would lead to too many abuses if granted.


Gordon Knapman Fraser: I should like to say a word about the remarks of the last speaker. During the last few years there has been an increase in polio cases. The newspapers have carried reports of cases in which children have had to be rushed to the Children's hospital in Toronto or to the Toronto General hospital. Just two weeks ago, I believe, there was a case at North Bay. Patients from 200 or 300 miles away have to go to Toronto for treatment and they have to get there in a hurry. At such a time the parents never think about

the cost; the patient is their first thought. When income tax time arrives, the parents have to think of costs of that kind. I believe that where an ambulance or a car is used the expense should be allowed. This man in North Bay, a workingman, had to hire a taxi, and that is quite expensive.


[Stage Direction]
Resolution agreed to.
11.	That, for the 1949 and subsequent taxation years, $509 may be deducted from income for the purpose of computing taxable income of a taxpayer who, throughout the whole of the taxation year, was necessarily confined by reason of illness, injury or affliction to a bed or wheel chair.
Mr.   Baler@: In connection with resolution 11, I believe consideration should foe given to amending this section. In order to qualify for the exemption under this section, a taxpayer must be ill and confined to his bed or wheelchair throughout the whole of a taxation year. Since the taxation year is the calendar year, a person could be confined to a wheelchair or to bed for a period of 22 months, being eleven months in 1949 and 11 months in 1950. Such a person could not qualify for any reduction under this clause.


John Ewen Sinclair: Section 11 was intended
primarily for people who are, shall I say, chronically bedridden, people who are in their beds year after year. The case which the hon. member mentions, of a person being in bed for 11 months extending through two taxation years is not covered by this section. He is allowed, in the taxation year in which his sickness ends, the cost of the attendants, a concession granted in last year's Income Tax Act.


Mr.   Baler@: The parliamentary assistant says he is allowed the cost of the attendant?


John Ewen Sinclair: The cost of the attendant included in his medical expenses. That was allowed earlier as part of the medical expenses of somebody who was bedridden.


Mr.   Baler@: As the parliamentary assistant has mentioned attendants, I will mention something that I was not going to bring up under resolution No. 11. I happen to be familiar with a case in which the taxpayer appealed because he was not allowed the amount paid an attendant for eight consecutive months in one year. Because of the mere fact that it was not twelve months, he was not allowed his claim, and he lost the appeal for the attendant to whom he had paid a salary for the purpose of taking care of his spouse for eight months in one calendar year.


John Ewen Sinclair: If the hon. member will wait until the bill comes down, he will see the actual details. It is difficult to talk back and forth in this committee about figures of
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percentages and exemptions and make them understandable. If hon. members wait until the bill is brought down they will have the details in front of them rather than just the general resolution.


Agar Rodney Adamson: I have great sympathy with what the hon. member has just said, and I should like to support it by moving an amendment to this effect:
That the words "the whole" in the resolution be struck out and that "ten months" be substituted therefor.
I do this because I feel that in any taxation year, if a patient is bedridden for a period of ten months, which is about 80 per cent of the taxation year, he is virtually immobilized for the whole year and can be considered to be a chronically bedridden patient. I should like to move that amendment because I have sympathy with what the hon. gentleman has just said.


John Ewen Sinclair: Two points arise here, Mr. Chairman. First of all, there is the point of order. This of course is exactly the same point as we had raised this afternoon under citation 552. The other point is broader than that. It is a matter of borderlines. The hon. member says "ten months". Another member may move an amendment specifying eight month, six months, or four months. Where are you going to draw the line? In this bill we have drawn the line at one year. In any event, I submit that the hon. member's amendment is out of order under citation 552.


Agar Rodney Adamson: Speaking to the point of order, I gather that the parliamentary assistant is contending that this amendment is out of order because it reduces the revenue. As it does not increase the expenditures of the federal treasury and does not reduce the revenue in any way,-


John Ewen Sinclair: But it does.


Agar Rodney Adamson: -I feel that it is not out of order.


Louis-René Beaudoin: I may tell the hon. member that I have not his motion in writing before me.


Agar Rodney Adamson: I thought I had given it to you, Mr. Chairman. I gave it to one of the clerks.


Louis-René Beaudoin: I have it now. I understand that the contention of the parliamentary assistant is that, if this motion were to carry, it would result in a loss of revenue by the treasury.


John Ewen Sinclair: Yes. If it did not, there is no point in the hon. member moving it; because if there is no loss in revenue to the government then obviously there is no benefit to the taxpayer.

Income Tax Act


Louis-René Beaudoin: This afternoon two similar motions were made. I would refer the hon. member to citation 552 of Beau-chesne's Parliamentary Rules and Forms, second edition, which I think applies in this case as well. I would draw his attention to the following words:
Amendments, therefore, can be proposed to substitute another tax, of equivalent amount, for that proposed by the government.
As this motion is similar to the ones made this afternoon and falls under this citation 552, in my opinion it is out of order and I so rule.


[Stage Direction]
Resolution agreed to.
12.	That special deductions from income to taxpayers engaged in exploring or drilling for natural gas, oil or minerals be allowed for expenses incurred in the 1950, 1951 and 1952 operations on the same basis as for expenses in 1949 operations.
Douglas Scott Harkness: I presume that the various deductions which are spoken of here and are all lumped together will be detailed in the bill when it comes in. Is that correct?
I notice that these various tax concessions which have been allowed in the last several years with regard to drilling for gas and oil will, in this particular case, be extended for the years 1950, 1951 and 1952. For the past three or four years I have personally been attempting to get the government to include these in the regular tax structure of the country on a permanent basis. It appears as though they are making a move in that direction by making them for three years in advance, and I am glad to see that. Having gone that far, I think it would be only logical and in the best interests of the oil and gas industry if they went the whole way and put them in the permanent tax structure rather than only for three years.
In that connection, and in order to save time, may I say that I notice that resolution No. 13, which provides for special tax concessions for deep-test wells, is only for 1950, I think; in other words, it is only for one year in advance. I would suggest that it be given the same treatment as the other tax concessions in the oil and gas field. I do not see any reason why it should not be. I would suggest that it be put in the same class and given the same treatment as the rest of these concessions which are dealt with in resolution No. 12, and that they be made effective for 1950, 1951, and 1952, unless, as I say, the government sees fit to go the whole way and make these things part of the regular tax structure so that the people in the oil and gas industry would know where they stand and can make their plans accordingly. This is going to help them considerably. They will know where they stand for three years in advance. As I say, I cannot see any reason

why this deep-test well concession should be exempted. It should be included along with the others.


John Ewen Sinclair: In reply to the hon. member, may I say that I was glad to have his opinion that this is a step forward in giving the industry a three-year period of further stability in their tax structure.
As to resolution No. 13-I imagine we are considering them together, because they are in some way related-it is a special concession given to a small number of wells. Actually, I believe, there are very few at the present time, not more than a dozen at the outside. Since the number is limited, it has not the general application that resolution No. 12 has. That is the reason why they are still keeping it on a year-to-year basis. If a great number of these deep-test wells should be drilled, no doubt amendments as in No. 12 will take place, first of all in the way of extension of the period and then perhaps, as the hon. member has mentioned, some such concession permanently included in the tax structure.


John Lambert Gibson: What is the depth of a deep-test well?


George Alexander Cruickshank: I had better talk first. I should like to ask the parliamentary assistant a question in this connection. If this special privilege is to be given to these companies, will any provision be made to the effect that Canadians will be served first, prior to exportation of the gas or oil to any other country, before any permit is given?


John Ewen Sinclair: This resolution relates only to taxation and does not relate to private bills which are now before the house.


George Alexander Cruickshank: No, Mr. Chairman. I was asking the parliamentary assistant if the government would-and I presume he is speaking with authority as parliamentary assistant-prior to giving this concession, see that Canadian interests are served first.


Douglas Scott Harkness: Mr. Chairman,-


Louis-René Beaudoin: The hon. member for Calgary East.


George Alexander Cruickshank: Oh, no. I want an answer to my question.


Douglas Scott Harkness: As to deep-test wells, I think the parliamentary assistant probably has not the full information in the matter.


George Alexander Cruickshank: Or knowledge of it either.


Douglas Scott Harkness: This particular tax concession was put into effect during the war for the express purpose of encouraging people to drill wells in the foothills sections of Alberta where they had to drill to a depth of 8,000,

9,000, 10,000 or 12,000 feet in order to find an oil or gas-bearing structure. The parliamentary assistant says that only twelve or fourteen people are enjoying any advantage from it. That is because at the present time the amount of drilling in this fairly deep foothills section, where very deep drilling is required, has been pretty well suspended owing to the fact that large quantities of oil and gas have been found in the plains area in Alberta around Leduc, Redwater and so forth, where wells are only four or five thousand feet deep. The fact that oil and gas have been found in these shallower horizons does not take away the need of giving encouragement to people to drill in areas where they will have to go deeper. Therefore I cannot see the argument that the parliamentary assistant made that at the present time only twelve or fourteen people are taking advantage of this. That is no reason why they should not be placed in the same position as the other oil and gas tax concessions and extended for a period of three years.
If a company or an individual is going to drill a well in these areas where great depth is required, because the distance may be twice as great, the time taken to drill the well, instead of being twice as long, may be four or five times as long. The greater the difficulty in drilling the longer the time it takes. That makes it necessary to give the people who may be willing to drill in these areas where depth is required some assurance that they are going to have a certain amount of protection in the future so far as tax concessions are concerned. The necessity for that in deep wells is greater than in other wells, and in my opinion these deep wells should be included along with the others.


John Lambert Gibson: Has the
department determined what constitutes the depth of a deep well?


John Ewen Sinclair: I am informed that it is a matter of expense more than depth. The very expensive wells, some of which cost a quarter of a million dollars or more, and run to 9,000, 10,000, 11,000, 12,000 feet. As the hon. member for Calgary East said, an ordinary well is 3,000, 4,000, 5,000 feet deep. The actual concession is a very special one and is given to a small group. That is why at the present time this limit is placed on it.


Douglas Scott Harkness: It was not given to a small group. It is open to anybody who will drill a well in these deep horizons. As I see it, it is necessary to afford some incentive to people to drill. Because only a few people have obtained it so far is no reason why it should not be continued and put on the same
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basis as other concessions so that people who may be willing to do that drilling may have greater incentive.


Arthur Leroy Smith: In view of the answer given by the parliamentary assistant to the hon. member for Comox-Alberni, may I ask whether there is any geographical limitation as to where this deep-test assistance may be given? My memory is very hazy on this. I remember that when it was done it was done with a view to testing what we knew as marginal ground. I am not sure that I am right about that. Perhaps the parliamentary assistant can answer this simple question. Even on a yearly basis, is there any geographical limit to this assistance? Because, if that be so, what the hon. member for Calgary East has said has great force indeed. It may be that this applied only to what we called marginal areas.


John Ewen Sinclair: I am informed that the consent of the Department of Mines and Resources must be obtained before this concession is given to a test well. Aside from that, when the bill is before the house, if it is necessary we can have one of the officers of the mines and resources department here to explain these details.


Arthur Leroy Smith: The parliamentary assistant is quite right. The consent of the department has to be given. As a matter of fact, the administrator was out there at one time to study the general application. If the parliamentary assistant cannot explain it now, perhaps he might look it up before we return to it again. If what I say is right, then I am very much in favour of what the hon. member for Calgary East said.


Agar Rodney Adamson: I agree with what the two hon. members from Calgary have said. Does resolution 12 apply also to metalliferous mines? Resolution 14 refers to metalliferous mines coming into production. Resolution 12 mentions minerals only. I assume that it would also include all drilling for metals, drilling for such materials as cement, limestone, and all the non-metallic minerals and metallic minerals as well. Will the parliamentary assistant clear up that point? It is a little ambiguous. In resolution 14 metalliferous mines are definitely mentioned.


John Ewen Sinclair: Resolutions 12 and 14. Resolution 12 mentions drilling not only for oil but for minerals. Resolution 13 gives special concessions to deep-test wells and is confined to drilling for oil.


Agar Rodney Adamson: My point is this: Resolutions 12 and 13 are primarily oil resolutions. They also have application to the development of, shall we say, the non-metallic minerals such

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as cement, limestone and quarrying, gypsum and these other things which may be drilled for such as gypsum-bearing earth and other materials, which are non-metallic but it also includes metallics as well.


John Ewen Sinclair: The principal word in resolution 12 is "exploring". It is of course a concession given to a company for the cost of off-property exploration; whereas resolution 14 is a different thing. It refers to income tax on a mine once it is in production.


Agar Rodney Adamson: I realize that. That is just exactly the point I am trying to explain to the parliamentary assistant. Resolutions 12 and 13, which we are dealing with now, deal primarily with prospecting and drilling for oil.


John Ewen Sinclair: No, minerals.


Agar Rodney Adamson: There is a great deal of other prospecting and drilling going on. I want this clarified. Does it also include prospecting and drilling for metallic minerals, non-ferrous minerals and non-metallic minerals. I should like that point to be made abundantly clear to the country.


John Ewen Sinclair: That is quite true. It does refer to off-property exploration for any type of mineral. It is an extension of the existing legislation, not annually as it has been in the past but for a three-year period.


[Stage Direction]
Resolution agreed to.
13.	That special deductions from taxes to taxpayers engaged in exploring or drilling for oil for expenses incurred on deep-test oil wells be allowed for such expenses in 1950 operations on the same basis as for such expenses in 1949 operations.
14.	That the provision for the exemption of income derived from a metalliferous or industrial mineral mine that came into production during the calendar years 1946 to 1949 inclusive during the period of thirty-six months after the mine came into production be extended to exempt income from such mines that come into production during the calendar years 1950, 1951 and 1952.
Resolutions agreed to.
15.	That tax concessions under statutes of Newfoundland shall not apply in respect of taxes imposed by any act of the parliament of Canada.
Gordon Francis Higgins: I should like to say a few words on this resolution. As I understand it, this resolution is aimed directly at some three or four Newfoundland corporations. Is that so?


John Ewen Sinclair: This resolution is aimed at no corporation. It applies the taxation laws of Canada to Newfoundland.


Gordon Francis Higgins: As I understand the position, there are some three or four-three, I believe -Newfoundland corporations which have tax concessions by agreement or by statute. I believe it is by statute, although I have not

the statute here, nor have I the citation. The position is, however, that these companies have income tax concessions for a varying period of years.
By analogy, I suggest that, in connection with the sale and transfer of a house, if there is a tenant in the house at the time of the transfer when one buys the house one takes over the lease subject to the conditions of the lease. By the agreement under which we have come into confederation Canada has assumed whatever obligations were made by former Newfoundland governments. These three or four companies have tax concessions by statute; and now by this resolution the department is attempting to remove those concessions. Is that not correct?


John Ewen Sinclair: The intent is the reverse. The intention is to see that the corporations in Newfoundland shall have exactly the same federal tax laws applied to them as the corporations in any of the other nine provinces- either corporations or individuals.


Gordon Francis Higgins: Is it not a fact that the income tax of Canada will be applied to these corporations?


John Ewen Sinclair: That is right.


Gordon Francis Higgins: Even though they are exempt from taxation by statute of Newfoundland.


John Ewen Sinclair: They have never been
exempted from taxation so far as the Dominion of Canada is concerned. I would refer the hon. member to the terms of union, sections 18 (2), 27 (4) and 47, which set out the laws of Canada which should apply to Newfoundland. Not being a lawyer, I would say that, if there is a contractual relationship between these companies and the government of Newfoundland, then perhaps it still exists between them. But the Dominion of Canada was certainly no party to those contractual relations. In the terms of union it was clearly stated that when Newfoundland became a part of Canada the laws of Canada, and especially the taxation laws, would be applied in the new province as in the other nine provinces.


Gordon Francis Higgins: I presume the parliamentary assistant knows that the agreements were legal agreements that had been made prior to confederation.


John Ewen Sinclair: Perhaps the hon. member is more familiar with the terms of agreement than I am, but the sections to which I have referred do not make mention of that at all. The taxation sections apply the taxation laws of Canada to the province of N ewf oundland.


Gordon Francis Higgins: I am aware of that. I want to bring to the attention of the minister and

hon. members the position in this particular matter. I hold no particular brief for these corporations, but I do feel it is a great injustice which has been worked upon them. The situation is that by an agreement-I believe it was 1925, in respect of one corporation, in respect of another the agreement expires in 1951, and concerning the third I am not quite sure of the date it expires- these companies have been operating on the assumption that they were going to be tax exempt up to a certain figure for the particular period set forth in the statute. In one instance I believe the tax figure is $150,000 a year, no matter what the earnings are. In the case of that corporation an expansion in the plant has been made. I presume it has based its wage scale upon its taxation; and if that corporation is going to be faced with the income tax proposed by this resolution there may be serious repercussions.
I trust due consideration has been given to these corporations, and that they have had an opportunity to present their views in the matter. If not, it is grossly unfair in my opinion; and I submit that to impose this taxation at this particular time on these corporations is contrary to justice. In fact, in my opinion it is illegal. I should like to have the minister's comment in this regard.


Frederick Davis Shaw: There is one matter I should like to bring to the attention of the Minister of National Revenue. I assume that correspondence going out from a regional office would go post-free?


James Joseph McCann: No, it does not.


Frederick Davis Shaw: I would suggest therefore that officials in some of the district offices be advised to stamp their letters. Scores of envelopes like these were handed to me during the election campaign. I did not object to its occurring at that time; but the recipients were obliged to pay eight cents on each of these. When upon opening them they learned they were letters from the income tax branch it did not help matters. Most of them came to my attention in May, and I did not object too loudly at that time because we were in the campaign. I do suggest to the minister however that it is unfair to have the recipients of these letters paying extra postage. The individual who handed me this one received five within a couple of weeks and had to pay double postage on each one. I suggest this matter might be brought to the attention of the Calgary district office.


James Joseph McCann: I shall be glad to look into the matter. Our department pays postage, and it is usually done by meter. Is there any meter mark on the letter?
Animal Contagious Diseases Act


Frederick Davis Shaw: No. It just says "Come to the circus"-on such-and-such a date.


[Stage Direction]
Resolution agreed to.
Resolutions reported, read the second time and concurred in.
Mr. Sinclair (for the Minister of Finance)
thereupon moved for leave to introduce Bill No. 176, to amend the Income Tax Act and the Income War Tax Act.
Motion agreed to and bill read the first time.


[Stage Direction]
The house resumed, from Monday, November 7, consideration of the motion of Mr. Gardiner for the second reading of Bill No. 147, to amend the Animal Contagious Diseases Act.
Mr. H. O. White (Middlesex East):: Mr. Speaker, when eleven o'clock came on Monday evening we were discussing this bill and the Minister of Agriculture (Mr. Gardiner) had asked me for the date of a certain presentation made to the minister last spring. I now find it was Tuesday, March 15, 1949. I had intended to refer only to a paragraph or two of the presentation that was made, but in view of some of the things that have happened it might be well to place the whole presentation on the record at this time. It reads:
Representing cattle raisers in a group of western Ontario counties we desire to make certain representations to you and the government concerning compensation for reactors under the T.B. area test.
With the broad principle of T.B. testing and the eradication of bovine tuberculosis we are in full accord. The altered economy of the nation makes the present compensation for reactors entirely inadequate and imposes upon the loser of cattle an unfair share of the costs.
Obviously, compensation is a recognition of responsibility on the part of the state, or the public at large. The eradication of bovine tuberculosis is manifestly a public health enterprise and it is only fair that the state should share in the price that must be paid.
Under health of animals regulations obtaining up to world war II, compensation and salvage values combined to reimburse the cattle raiser to a fair extent, clean-up costs were not excessive and herds could be replaced at or around the reimbursement figures.
Then came the war. T.B. testing was discontinued and a group of counties in western Ontario which applied for the test in the late thirties are now being tested under altogether different conditions. The whole economy of the nation has changed. Cattle values have risen. All costs have multiplied and the compensation, always modest, but over long periods perhaps fair, now represents a much smaller portion of the loss.
Under present conditions the cattle raiser is compelled to bear a much larger share of the cost of this great public health enterprise. The state,

Animal Contagious Diseases Act in other words the people whose health is safeguarded by this testing program, pay a much smaller share of the cost.
In view of the magnificent war record of Canadian agriculture we cannot be convinced that the people of Canada will demand that farmers in the newly tested areas, and in areas still to be tested, shall be classed as "war casualties" and made to bear this unfair share of a post-war public health project.
Net losses are ranging from a few hundred dollars up to three and four thousand dollars. There are cases of young farmers, just getting started who have lost their entire herds, and some of these young men borrowed money to purchase the animals that have now gone to the slaughter house. Not only have they lost their herds, but they must now bear the expense of a thorough clean-up; it will cost a great deal of money, at present values, to buy in a similar number of cattle of comparable quality and the monthly cheque for milk and dairy products is forfeited until the herd is replaced.
Young farmers exposed to such a set of circumstances have commendable courage and determination if they carry on.
Middle-aged farmers are in a similar position, except that their net losses are usually much greater because of larger herds built up over the years. They, too, have fortitude and determination if they proceed to rebuild.
The situation is indeed serious-in some cases tragic. The $38 received as compensation is a ridiculously small recognition, or reward, on the part of the state, when the cattle raiser is obliged to pay $250 or $300 for cattle as good as those sacrificed in this T.B. clean-up campaign.
The inadequacy of the compensation can be further emphasized by the fact that after compensation and salvage have been received many cattle raisers suffer a net loss of two and three thousand dollars. Surely the people of Canada are not demanding that sacrifice on the part of Canadian farmers.
We submit that the regulations are too rigid. Appraisal values are now far too low and the actual compensation is grossly inadequate in these times.
More flexible regulations, with an element of adaptability about them, might be found applicable even to the circumstances about which we complain.
Recommendations
We submit that the valuation on grade cows should be raised to $100 with a comparable increase in the valuation placed on other classes of cattle.
Perhaps the severest blow is suffered by farmers in the loss of cattle going to the tank and thus, under present regulations, producing no salvage revenue. We therefore strongly urge that market value at prevailing beef prices be paid the owner, as well as compensation, for all animals declared to be tankers.
And we recommend further that these increased payments be made retroactive to the beginning of post-war area testing.
Some time later the Minister of Agriculture (Mr. Gardiner) and his parliamentary assistant made certain statements. The parliamentary assistant is reported on page 2737 of Hansard of April 29, 1949, as having answered a question asked by Mr. Daniel, the former member for Oxford, as follows:
I can assure the member that it is the intention of the government to increase the compensation paid to T.B. reactors, and also to make it retroactive.

The Minister of Agriculture is reported at page 2239 of Hansard of April 1, 1949, as having said:
I am able to state that those who are concerned with the matter have been in to see us and they did not ask for any more than we were considering giving, so I think it likely there will be satisfaction when an announcement is finally made.
A group of cattle raisers approached the department and following that the minister and his parliamentary assistant made the promises that I have referred to. This bill certainly does not live up to those promises; the promises and the practices are poles apart. In the statement made by the parliamentary assistant no reference whatever was made to tankers; the only reference was to reactors.
In legal matters a great deal of attention is paid to precedent and I should like to direct attention to the precedents that have been established by former ministers of agriculture under similar conditions, and I refer to the Hon. Mr. Burrell in 1913, the Hon. Mr. Crerar in 1918, and the Hon. Mr. Motherwell in 1923, as well as the Hon. Mr. Tolmie, who was minister of agriculture when the original motion was introduced to take care of the problems covered by this bill.
This being a money bill, I am not in position to introduce an amendment, but, as I have mentioned previously, many farmers in the counties of Oxford, Norfolk, Perth and others are disappointed. I should like to refer to one or two statements that have been made in the house on previous occasions. First I should like to quote a statement made by the late Harry Leader, former member for Portage la Prairie, as reported on page 2739 of Hansard of 1922. He said:
I wish to protest against the reduction of the indemnity paid for purebred cattle. I have received numerous letters and telegrams and I know if I stay here long enough I shall be beseiged by sheaves of letters and telegrams in regard to this matter.
Breeders are just waking up to the fact that there is going to be a reduction in the indemnity.
That was in 1922 when the government was trying to reduce the amount. If they thought it convenient to reduce it when cattle prices were going down, then surely they can find it convenient to increase it when cattle prices are much higher. Mr. Leader went on to say:
I protest against the reduction in the indemnifications for cattle . . . But what about the effect of the disease on human beings? The statistics show that one child, in every three under the age of ten who have tuberculosis, contacted the disease through a bovine origin.
It is my opinion that the work should be continued, and that farmers should not be discouraged but encouraged. Mr. Kellner, a member of the house in 1922, produced statistics to show that the average value of a grade cow in the province of Ontario was $59, and

at the same time the valuation for compensation purposes was placed at $150 for pure-breds and $60 for grades, the government paying two-thirds of those figures. Therefore I feel that the bill is not adequate and I should like to hear the parliamentary assistant explain why it is so inadequate.


Gordon Graydon: Before the motion carries, Mr. Speaker, there is one matter I want to put before the parliamentary assistant. I have raised this question time after time in the house. I brought it up again during the estimates of the Minister of Agriculture (Mr. Gardiner) in the present session. It has to do with two of the most glaring cases that agriculture has experienced in the matter of compensation paid for reactors under the tuberculosis test regulations. I regret that it is necessary to raise the subject so often, but when I was on my feet on the last occasion I cautioned the minister in connection with it, and said that I thought there was a sufficiently outstanding injustice perpetrated upon these two particular farmers and dairymen for the matter to be repeated until some remedy was provided.
The reason I am raising it again is that the principle of Bill 147 seems to be aimed not at remedying the injustice but at preventing the government from remedying it. I am not going to refer to clauses of the bill because that normally takes place in committee. One of the major principles of the bill is in section 3, and as I see it it prevents any review, unless the parliamentary assistant can give an explanation in committee to the contrary, or any payment of compensation to these farmers whose cause I have tried to champion before.
In order that the parliamentary assistant may understand the point I am raising, in a year previous to 1947, prior to which the act is not retroactive, Donald McIntyre, a farmer and dairyman living a little to the east of Stayner in the county of Simcoe, had a herd of purebred Holstein cattle which had been tested for tuberculosis for years and years under the ordinary government regulations, and had always reacted favourably. In the year 1943 or 1944-I am not sure which it is, but it is on record so often that it is easy to ascertain-forty-three out of forty-four of his herd went down and were slaughtered. When they went to the abattoir there was not a single jot or tittle of evidence that any of them had tuberculosis anywhere in their carcasses.
In addition to that, a careful examination was made by the government veterinarians at the abattoir, and the closest they could come to any sign of tuberculosis was that there was evidence that at one time one cow had had pneumonia. To me that seemed to *	45781-1054
Animal Contagious Diseases Act be stretching it pretty far, and the farmer took a similar view of it. I am told that at that particular time-and I do not think there is any doubt about the evidence in this case- there was a change in the type of serum used in the tuberculosis test. I know that changes have been made in the serum from time to time, and the department no doubt would readily explain that they were made because of certain United States regulations. Sometimes some of our cattle have been allowed to go there, and it was found when they got them there that the United States serum showed an unfavourable reaction, and that the cows were reactors.
Nevertheless, in the case to which I have referred a new serum was used, a serum that apparently was particularly severe on the system of the animal, and it caused the whole herd to go down with the exception of one cow. The veterinarians involved in the matter were not satisfied. I am satisfied also that the department was greatly concerned about what had happened. Not only did one herd go down but also another herd in the province of Nova Scotia reacted at the same time, and that farmer also lost his cattle. I think it can be established beyond any question that the serum used, severe as it was, caused these farmers to lose their herds, and to have to take a lower price by virtue thereof.
It seems to me that the act will be an insurmountable obstacle to any review or payment which might be made to these two badly used farmers. It is not as though there are hundreds of herds across Canada for which compensation will have to be paid because of the severity of this particular serum. So far as I know, and I think the records of the department will bear me out, there are only two herds. Time after time we have done things in this house to provide for special cases. Where the fault does not lie with the farmer but with the government, I think the government has a special obligation that ought to be met. I hope that the parliamentary assistant, when he comes to section 3 of the bill, will not say that the legislation rules out a review of these cases. I had hoped, from the rather favourable reaction of the minister when his estimates were before the house, that he was going to give favourable consideration to remedying this most outstanding injustice. It is a great disappointment and discouragement to me, as it is to the two farmers involved, that legislation such as this should be put on the statute books which will block the possibility of remedying an injustice. What we should be doing is passing statutes to remedy injustices, not putting on the statute books of Canada laws that will prevent injustices from

Animal Contagious Diseases Act being remedied. I do plead with the parliamentary assistant to see that, whatever happens with respect to this legislation, it does not bar the correcting of abuses such as I have outlined.
I said before, and I repeat, that neither of these two farmers is a constituent of mine. I have no axe to grind, but I have been impressed with the obvious injustice-I am not suggesting that the government was trying to get reactors among those herds, but wherever there may be some doubt the government ought to lean towards the farmer. I believe the government should pay the farmer for the loss that was occasioned through no fault of his, but owing to the fact that the serum used was too severe. As I understand, this serum was later withdrawn.
Now, that is the case in a nutshell. I regret having to raise this question time after time, but I will say, Mr. Speaker, that I intend to raise it until such time as that injustice is remedied. If this bill is going to bar the remedying of that situation, then the minister ought to review it before it finally becomes law. It is not fair; it is not just; it is not equitable. Surely, if there is any class of people in Canada deserving of justice and equity, it is the people in our agricultural sections.


Mr. L. E. Cardiff (Huron North):: Mr. Speaker, I should like to register my protest in regard to the compensation offered in this bill. I believe the parliamentary assistant and the minister know quite well that it is not sufficient. The promises which were made before the election campaign are not being fulfilled. I believe the minister should listen to the protests that have been made. The test is being conducted in my county now, and many farmers are complaining about the amount they are receiving.
I might mention one woman in particular who, before the election, wrote to me complaining about the fact that her cattle were the only cattle that reacted in that particular section. She complained bitterly. I do not know why her cattle were the only ones. It might have been that they were the only affected cattle in the section because, certainly, I do not believe any difference would be made in the tests. Apparently, she thought she was being discriminated against, and it was rather difficult to talk her out of that position. In any event, the compensation being offered in this bill is not nearly sufficient to pay for the loss sustained when cattle react to the test.
Those members who know something about keeping a dairy herd are well aware of what it costs to replenish a herd. Many herds have reacted; in some sections worse than in others. My own herd has not yet been tested,
[Mr. Graydon.l

so I am not talking about myself. I do plead with the parliamentary assistant to do everything he can to have this bill sent to a committee and re-worded, so that those who have suffered losses will receive fair compensation.


Mr. Speaker:: It is my duty to inform the house that if the parliamentary assistant to the Minister of Agriculture speaks for the minister he will close the debate.


Mr. A. C. Murray (Oxford):: Mr. Speaker, reference has been made to the tests conducted in the county of Oxford. May I ask the parliamentary assistant how many reactors there were in Oxford county? How many cattle did go to the tank within the last two and one-half years?


Mr. Speaker:: If the parliamentary assistant to the Minister of Agriculture speaks now, he will close the debate.


Mr. Robert McCubbin (Parliamentary Assistant to the Minister of Agriculture):: Mr. Speaker, in answer to the question raised by the hon. member for Oxford (Mr. Murray), I should say that that question will be answered when the bill goes to the committee. It was not my intention to say very much about this bill at this time, but owing to what has been said I feel it is my duty, as parliamentary assistant, to say something about the matter.
This question has been under discussion since last fall. Last October or November, when the federation meetings were being held in the county of Middlesex, this matter was brought to the fore quite forcibly. The feeling at the township meetings in the county of Middlesex was that the farmers were not receiving fair compensation for the reactors. I attended many of those meetings and listened to the suggestions, both pro and con, about what should be done. I was questioned about it and I asked questions of those present. I obtained the views of the farmers of my own county as best I could. There were views put forward in favour of raising the compensation for reactors, and other views in favour of raising the compensation for the reactors that went to the tank.
I listened to all those views, and considered them for some time. I came to Ottawa in December of last year, at the time of the dominion-provincial conference on agriculture, and took this matter up with our departmental officials. I asked them if some assistance could not be given the farmers who lost cattle as a result of these T.B. tests. They asked me what I wanted to do, and I said I should like to have the Animal Contagious Diseases Act amended. As such an amendment would have to be brought before parliament and parliament

was not meeting until January, nothing could be done until that time. I asked the departmental officials to consider the matter in the meantime.
As I said, the federation had met in Middlesex county. During the meeting, resolutions were passed and I have copies of those resolutions. Most of the resolutions did not request as much as we are now granting, but the resolutions differed from township to township. When parliament met in January of this year, the Minister of Agriculture (Mr. Gardiner) and the officials of the department discussed this matter. We were all of the same opinion as to what should be done for those farmers who had lost cattle as a result of the T.B. tests. Everyone in this house understands that these T.B. tests are for health purposes.
Some of the farmers are opposed to the test, just as I was back in 1939. At that time a petition was circulated in the county of Middlesex for these T.B. tests, and I was one of those bitterly opposed to it. I am not opposed to it now. I feel it is a proper move to make. The sooner our herds are cleaned up, the better. We discussed what should be done, and various ideas were expressed. The departmental officials were requested to make a survey to ascertain how much it would cost if an amendment to the act were introduced to raise the compensation to the price mentioned in the act, $60 and $150, instead of two-thirds of that amount. The survey was made and we were told what the cost would be.
During that period of time, the federation of agriculture sent a deputation to Ottawa to interview the minister and departmental officials about raising the compensation. They did not come alone. They got in touch with the surrounding counties of Middlesex, Oxford, Elgin, Lambton, Kent, Perth and Huron; and on March 15 representatives came from all those counties I have just mentioned, except Oxford. Oxford did not send a representative down on that occasion. But the other men came down. Before they came, they had discussed this matter with me or our own men of Middlesex county; and they appointed two men to come down. These were level-headed young chaps who were interested in this T.B. testing, for they both had had their own herds tested and had lost quite a few cattle by it. They came down and interviewed the minister and myself with respect to this matter.
What the hon. member for Middlesex East (Mr. White) has read is the brief that they handed to the Minister of Agriculture (Mr. Gardiner) on that occasion. The minister had discussed this matter at length with myself and with the officials. We had come to an
Animal Contagious Diseases Act agreement on it. I will take part of the responsibility for that. We felt that the best plan to follow was to pay the full price for the T.B. reactors that went to the tanks and leave the compensation what it was; that was $100 and $40. I am taking the actual amounts. I am not taking the two-thirds that is being paid. You understand that the amount was set at $60 for grades and $150 for purebreds; but we paid only two-thirds of that amount. We felt it was better to leave that amount of compensation at $40 for grade cattle and $100 for purebred cattle and to raise the amount that was paid for the T.B. reactors that went to the tank.
To the representatives of the federation who came to us on that occasion we told what we intended to do. I can tell you this, Mr. Speaker. The representatives of all those counties did not raise a dissenting voice. They said they were heartily in favour of the action we were taking. There was not much said. They asked that it be retroactive, but not much was said with respect to how far back it would go. But they went away perfectly satisfied. As I said before, I was sitting right there in the room and I did not hear one dissenting voice raised from among them.
Then we went ahead and prepared a bill in the early part of March, and our officials determined the amount of money that it would cost the dominion treasury if we followed out the policy that we had inaugurated; that was, leaving the compensation the way it was, $40 and $100, and paying the full cost of the T.B. reactors that went to the tank.
They came back with a bill prepared, and giving us the cost to the dominion treasury, saying that that act would go into effect on the first day of April of this year. You know full well that I would oppose that suggestion most strenuously. I felt that was unfair to the numerous counties and sections of the country across Canada. If we brought that bill into effect on the first of April, those that were tested before the first of April would not benefit by it, but only those that were tested after the first of April. We asked that they endeavour to make it retroactive to the time we struck upon, April 1, 1947, which was a time when we felt there was quite a bit of T.B. testing done after the war.
They then had to scrap that bill, and go ahead and make a survey of what it was going to cost to make it retroactive. You understand, Mr. Speaker, as does the house, that that would take a good deal of time. But nevertheless our officials went ahead and prepared that bill. They went ahead and told us approximately how much it was going to cost and how much money we would have to ask the dominion treasury for. As you know, our minister was in the west in the
1652	HOUSE OF
Animal Contagious Diseases Act latter part of April, and on April 29 that bill was handed to me. As you know, we dissolved on the next day. I had the bill in my pocket when the question was asked by the then member for Oxford and the then member for Bruce, when they rose in their seats across the floor of the house and asked the question that has just been read from Hansard of April 29. I made the answer that the compensation would be raised. I was sincere in that answer. I was not asked to give an explanation of it. I only said what I knew was going to take place. The hon. member for Bruce put the question to me. It will be found in Hansard of that date. I do not need to look it up; I have it here on my desk. He asked me if that would be made retroactive to the fall of 1947 and my answer was that when the bill was brought down it would be satisfactory to the good people of Bruce on that occasion; for I knew that they had not started in testing before the first of April, 1947.
That was the condition up to that date. Of course, I felt worried about this bill. I was keenly interested in it because the farmers of Canada were interested in it; and anything that is of interest to the farmers of Canada, Mr. Speaker, is of interest to me.
As I felt that the house was going to dissolve the next day and that we were going to go to the country, and as I felt keenly about that bill, 1 went to the Prime Minister (Mr. St. Laurent) and asked him if there would be a chance for me to introduce it before the house dissolved. He said that there would not, but that he would give me his word that if we were returned to power he would see to it that the bill was introduced at the first session after the election. I made that answer across the floor of the house, and you know the answer that came back, Mr. Speaker. I was hooted for that statement; for hon. members opposite felt that neither the Prime Minister nor I would have the opportunity of introducing any bill after the election. But you know what took place on June 27.
That was the condition up to that time.
I will say this, Mr. Speaker. That question was made a political football all during the election campaign. I have some of the advertisements of my worthy opponents at that time, and I know what they said. It has been stated that outside the house, with respect to this matter, I had made statements that were not true and not in accordance with the facts. I can read numerous reports, but I will read one which is from the London Free Press of May 7, when I was speaking in Seaforth at the convention that chose the present member for Huron-Perth, Mr. 

McLean. I was speaking at that convention. Here is my statement then. This was taken from the London Free Press of May 7:
There had been some criticism, said Mr. McCubbin, that the compensation paid for T.B. reactors that went to the tank was insufficient. The Prime Minister had promised that if his government was returned that the cattle producers would get full value as if the animal had gone for beef.
That is exactly my statement on that occasion. I will take another statement that I made, addressing my own nomination meeting at Strathroy; and if there are any people that I would never fool, they are my own people. I made the same statement to them. I said that, if this government was returned, a bill would be introduced with respect to compensation for T.B. reactors, and that I would see that the full cost would be paid for the T.B. reactors that went to the tank. I made that quite clear. On every occasion on which I spoke at that time I mentioned T.B. reactors that went to the tank. Nevertheless, you know what took place.
Here are some of the advertisements of my opponents. Here is the picture of my friend the leader of the opposition (Mr. Drew), and here is a whole page with respect to T.B. reactors, and with respect to what I said on that occasion. This advertisement appears in The Ledger of London, Ontario, and contains these words:
The parliamentary assistant to the Minister of Agriculture sought to whitewash this deliberate refusal to rule upon a matter so important to you. by promising to do better in the future.
What I have promised, I have just told you. In all the addresses I made in western Ontario I promised that the full beef prices would be paid for the T.B. reactors that went to the tank. I felt-and I have not changed my mind-that the fairest way to deal with this matter was as follows. The farmer has a cow, a heifer or a steer. The animal is sent to the abattoir and killed. He should get the beef value of that animal. The farmer needs to be careful with this. We know the farmers are shrewd and careful. If they send the beast to the abattoir they will get the full beef value. If the beast is infected and goes to the tank they get only the hide value. If it is not infected they will get the full beef value.
I know what the farmers in my district are receiving for these cattle that are sent to the abattoirs. These are not tankers. They get the beef value plus $38 or $40. They are well satisfied with this price. The farmer who has a T.B. reactor which goes to the tank is not satisfied now and has not been satisfied. He receives only the price of the hide, which is $6 or $8 or whatever it happens to be, plus $38 or $40. If that farmer

should receive the full beef price for the T.B. reactor I can tell the house that he would be satisfied. In my contacts with the farmers of western Ontario I have never heard one say that he was not satisfied.
The hon. member for Brant-Wentworth (Mr. Charlton) made the statement that he has not heard anyone who complained about the T.B. reactors that went to the tank. That has not been my experience. That is the man who has kicked very strongly. Hon. members will say to me: Why are you doing this? What precedent have you for this? I can tell them that there is no country in the world-and I am taking in the whole wide world-that does as much for T.B. reactors as Canada does. Take the United States. Hon. members understand the set-up there. The veterinary and a valuator come in and value the beef. Take a cow. The cow is worth $200. That is the valuation the valuator places upon it. He sends the T.B. reactor to the abattoir as a farmer in Canada would do. Say he receives $150 for the beef in that cow. Then he is paid one-third of the difference between the beef price and the valuator's price. That would be one-third of $50. Hon. members can figure that out for themselves. It will be $15 or $16. Hon. members may ask me, What about the T.B. reactor that goes to the tank? It is not worth anything as beef. The same thing takes place there. The valuation placed upon that cow or beef may be $200. He would receive $10 for the hide, and he would receive one-third of $190. Hon. members can figure that out for themselves. As a matter of fact it is $62 or $63. That is the amount of money that he would receive.
The over-all picture in the United States is as follows:	The average amount that the
federal Department of Agriculture pays across the whole country does not exceed $25 per head. I claim that we in Canada are doing the thing that is fairest to all the farmers, and that is the only way to act with them. I know that there will be the individual case as was mentioned by the hon. member for Peel (Mr. Graydon). I shall answer that when we get into committee. I feel that we are doing the fair thing by the farmers of Canada, and that is what we should do. If there is any class of people in this country who should receive due and honest consideration it is the farmers.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Dion in the chair.
Animal Contagious Diseases Act
On section 1-Compensation to owners.
Mr. Charlton:: Was the brief presented by the delegation from western Ontario the only brief considered at that time? Was the brief sent in by the Canadian Federation of Agriculture not considered at all? I have read both of these briefs. I do know that they asked for an increase in the compensation to be paid. They did not simply ask that the compensation and beef price be paid for tankers.


Robert McCubbin: The brief which I hold in my hand and which was read to the house by the hon. member for Middlesex East-


John Alpheus Charlton: That is not the one I mean. I refer to the brief of the Canadian Federation of Agriculture.


Robert McCubbin: I have no copy of that brief.


John Alpheus Charlton: The parliamentary assistant knows nothing of the brief presented by the Canadian Federation of Agriculture?


Robert McCubbin: All I know about the brief of the Canadian Federation of Agriculture is that they said they were not satisfied with the compensation that the producers were receiving, and that came from our own district of western Ontario. What they said is contained in better form in the brief that was presented and read to the house by the hon. member for Middlesex East. The thing that they dwelt on in that brief is the thing that we are doing.


John Alpheus Charlton: I realize the thing they dwelt on in the brief, but what we are asking for now is an increase in the compensation to be paid. They may have emphasized the fact that they wanted the beef price for the reactors that go to the tank. I can understand that, if the minister stated bluntly to the delegation when they were in his office what he was prepared to do, the delegation would think there was no use fighting with him. Probably for that reason they did not say that they were not satisfied. Perhaps the minister told them what he intended to do, and they took for granted that that was as far as the thing would go.
The parliamentary assistant mentioned the testing in the United States. I should like to point out to him that the test that is being done now in Canada was completed many years ago in the United States. They are not taking the considerable losses over there at the present time that the farmers are here, because the test was done some years ago. What they are cleaning up now in that country is just the odd reactor. It does not mean a terrific loss to any one breeder. In this
1654	HOUSE OF
Animal Contagious Diseases Act country the loss is considerable especially, as I said before, in a herd of purebred cattle that has been bred up over a period of twenty-five or thirty years, probably two generations. The value a farmer places on a purebred herd of cattle today is probably two or three times more than he can possibly get as compensation. He is the man who is taking the terrific loss. The test is being done for the first time. In many cases the test was promised as far back as 1938 and 1939 when the price of cattle was much lower than it is today. The test was not continued during the war. During the intervening years between then and the time the test was conducted the price of cattle more than doubled, and yet the farmers are asked to bear that burden themselves. I know, Mr. Chairman, that the parliamentary assistant to the minister is being very-


Mr. Weir:: Sympathetic is the word you want.


John Alpheus Charlton: No, not sympathetic. He is being very-


Mr. Harris (Grey-Bruce):: It is hard to say, isn't it?


John Alpheus Charlton: -very good to himself, probably, in thinking that these people are satisfied. I can tell him that they are not satisfied. I am sure he is kidding himself and the people when he says that they are going to be satisfied, because they certainly are not.


George Stanley White: Are any
payments received under this bill regarded as income for income tax purposes?


Robert McCubbin: Yes. Any moneys received from the sale of cattle, or compensation of this kind, would certainly be considered income.


George Stanley White: Where a farmer receives a total of $150 and the animal is worth $250, is any consideration given so far as income tax is concerned? He has already lost $100.


Robert McCubbin: The hon. member will have to ask the Minister of National Revenue that question.


George Stanley White: He is
not a farmer.


Robert McCubbin: As I know farmers, if a farmer receives $150 as compensation it will be shown as income, so far as income tax is concerned. But most farmers will not stop there. They will go out and buy another beast for $175 or $200.


John Alpheus Charlton: Where can a farmer buy one for that?


Lewis Elston Cardiff: If he receives only $150 for the beef on the test, he would certainly pay $250 for one as good. There is no question about that.


John Alpheus Charlton: How is the beef price established for the tanker cattle?


Robert McCubbin: The hon. member is referring to section 1, is he?


John Alpheus Charlton: That is section 1.


Robert McCubbin: No, that is section 3.


John Alpheus Charlton: It is paragraph (b) of section 1.


Robert McCubbin: If I can either read or write, when my hon. friend asks how we are going to set the price the farmer is going to receive for these cattle, he is referring to section 3, and certainly not to any other section, because in no other section does the $40 arise.


John Alpheus Charlton: I can read, all right, and I find that paragraph (b) states-
In the case of cattle, one hundred dollars for purebred animals and forty dollars for grade animals, and if the sale of the carcass is unlawful an additional amount for pure-bred and grade animals equal to the value the carcass would have if the sale were lawful, such value to be determined by the minister or by some person appointed by him for that purpose.


Lewis Elston Cardiff: It is in black and white.


Robert McCubbin: Well, it does not make much difference; it can be answered here as well as anywhere. But I would say that should come under section 3.


John Alpheus Charlton: Section 3 is the retroactive part of it.


Robert McCubbin: That is what we are worrying about.


John Alpheus Charlton: I am not.


Robert McCubbin: We do not need to worry about what is going to take place from here on; it is from here back that the trouble arises.


Gordon Graydon: Back to 1943?


John Alpheus Charlton: The parliamentary assistant is not worried, but I am worried about what will happen from here on.


Robert McCubbin: After this bill goes through -and I hope it will-a farmer in Brant county may send two cows to Hamilton, or Toronto, or wherever they may happen to go. He knows the cow that goes in there is a good cow and he can get 13 or 14 cents for it on the hoof, or from 28 to 29 dressed. That is the one cow. Then, another cow goes to the tank, one which looks just the same. He will receive that same price of 13 or 14 cents for the animal, as if it had been sold for beef.


Arthur Leroy Smith: One cow weighs 300 pounds more than the other.


Robert McCubbin: It is on the weight of the beef. After all, two cows go to the slaughter house, and they are both weighed there. One goes to the tank and the other goes for beef. He will be paid the average price of that day on that cow that goes to the tank.


Lewis Elston Cardiff: What I object to is the fact that these cows that go down are not beef cows. They are cows which have been producing milk for some time, and have very little beef on them.


An hon. Member:: Some of them have.


Lewis Elston Cardiff: But not many of them. If they were any good when milking, they have not much beef on them. I know something about beef and dairy cows. If they were beef cattle it would not be so bad; but cows which have been milking do not weigh very much when they go down on test. That is where these people lose out on their cows- because they do not weigh much.


Robert McCubbin: A statement I have here indicates that canners and cutters are from $10 to $11.75-let us say it would be 11 cents a pound, if she is a canner or a cutter. One can figure out what he would get for her- plus the $40.


John Alpheus Charlton: Is the minister going to say they are going to pay the full amount stated lere in the bill? Will they pay the full imount of $40 for grade animals, for instance?


Robert McCubbin: Yes, approximately-$38 to $40.


John Alpheus Charlton: "Approximately"-yes. I will point out to the parliamentary assistant that until last year they were paying $38 or $39 for grade cattle. I wonder if $40 is to be set for all types of grade cattle?


Robert McCubbin: It will be set for most types. One would not get $40, of course, for a calf. But for anything over two years old he would receive $38 or $40. We will admit that prior to six or eight months ago one would not receive that much. But during the last six or seven months he would have received somewhere around $38 or $39.


Harry Oliver White: I referred earlier to the fact that practically all ministers of agriculture since the time Dr. Tolmie introduced the legislation have seen fit to adjust the payments either upward or downward according to the price of cattle. The price the bill now proposes to set is the price which was invoked when the average in Ontario for cows was $59. Is the government
Animal Contagious Diseases Act now going to set a precedent which is opposite to what has been done by former ministers of agriculture since the time this type of legislation was introduced? If so, I do not think it is right.


Robert McCubbin: What the hon. member for Middlesex East has said may be true; but we are dealing now with 1949, and it will not be long until 1950. We have to bring in legislation which fits the time. We feel it is the best legislation for the present. I know in my own district farmers are receiving $175 to $200 for them, plus $40, and that is not a bad price. Some of the dairy cows do not bring that much-but you have obtained a lot of milk from them during the past summer to compensate.


John Alpheus Charlton: The parliamentary assistant is taking the present price. Is he now saying that the price of cattle is on the down trend and that therefore there is no need to increase the allowance at the present time? Is that the inference?


William Gilbert Weir: No.


John Alpheus Charlton: Is the government not considering the question I asked a moment ago regarding compensation at the figures in the old bill? That would be $150 for purebred and $60 for grade animals. Is the government not considering that at all?


Robert McCubbin: We have considered this from every angle, and we feel that what we offer here is fair to everybody concerned. The farmer may be willing to bear part of the burden, but I do not think he should be asked to bear all of it. If he has a T.B. cow or steer he is willing to bear part of it-but there is no reason why he should bear all of it. We have felt that we have taken the fairest possible action in the bill before us now.


John Alpheus Charlton: The parliamentary assistant made the statement earlier that they had asked departmental officials for some idea as to what this would cost the department. I should like the parliamentary assistant to let me know what would be the cost under this bill and what would be the cost if the compensation had been increased to $150 for pure-breds and $60 for grades? Has he obtained those figures from the departmental officials?


Robert McCubbin: I have not those figures here, but I will state that the present plan will cost more than the other plan.


John Alpheus Charlton: I hate to disagree with the parliamentary assistant but I think he is considerably out with his figures. An average of nine per cent of the reacting animals go
1656	HOUSE OF
Animal Contagious Diseases Act to the tank, and if they pay the full beef price for those animals it would cost no more than probably half what it would cost to pay the increased compensation on all types of reactors. Will the parliamentary assistant get me those figures?


Douglas Scott Harkness: I should like to interject a somewhat different note into this discussion. Looking at section 1 it would appear that our old friend the horse, or at least his owner, is going to take a beating. The section to be repealed provided for the payment of $150 for each grade horse and $300 for each purebred, but under the proposed amendment the payments will be at the rate of $100 and $200 respectively, a considerable decrease.
I imagine that the reason that was done is that the ordinary work animal on the farm is fast disappearing and in a few years there will probably be none left except in the isolated areas. Perhaps that is the reason for the reduction in payments. At the present time the grade horse, or even the purebred draft horse, brings a small price in comparison to what was obtained ten, fifteen or twenty years ago. On the other hand, light horses have been increasing in price and as far as I can see the only horse that is going to be bred in this or other countries is the light type of thoroughbred, standard bred and saddle horse.
The number of people who are riding horses has increased in recent years rather than decreased and the demand for good saddle horses is better today than it has been for many years. The type of horse that we sold for $25 to $50 in 1920 in western Canada now brings from $100 to $300. In other words, while the price of draft horses has been coming down, the price of light horses has been going up. Therefore, it would seem to be a mistake to reduce the compensation to be paid for animals destroyed under this act.
I think the parliamentary assistant knows that the thoroughbred or standard bred horse is worth more than it was twenty years ago and is worth even more than the compensation provided in the old section. The same applies to animals which are not registered, such as saddle horses. In order to protect the light horse breeders the compensation provided in the old section should be continued.


[Stage Direction]
Section agreed to.
On section 2-Repeal.
Gordon Graydon: I do not like trying to pin the parliamentary assistant down to an answer with respect to this section, but I am afraid he is in for it this time. I have tried to get something from the department


but all I have received is a very evasive answer with respect to the two cases I am interested in. Will this bill when passed create a bar or obstacle to the review of the McIntyre and Nova Scotia cases which I brought up before?


Robert McCubbin: It does not prevent the review of any case and it will not prevent the review of the cases that have been mentioned.


John Alpheus Charlton: What is the reason for repealing this section which provided the only out the farmer had if there was a mistake by either the inspector or the department?


Robert McCubbin: We felt that it was not necessary. As I told the hon. member for Peel, the farmer has a right to appeal any case if he wishes.


John Alpheus Charlton: He may have the right, but does he get redress? Apparently nothing has been done about the two cases mentioned by the hon. member for Peel.


Robert McCubbin: I should like to ask the hon. member for Peel some questions. He and I will thresh this out between us.


An hon. Member:: At the next election.


Robert McCubbin: The next election is a long way off, four or five years. There are some questions I should like to ask the hon. member and I know he will ask me some, as he has a right to do. However, that will not be done on this occasion.


Harry Oliver White: How many herds have been paid for under the section that is to be repealed? Can the parliamentary assistant give me that information by provinces?


Robert McCubbin: I cannot do that.


Harry Oliver White: Has anything been paid at all?


Robert McCubbin: If the hon. member wishes that information I shall try to get it for him, but I have not got it here tonight. The hon. member for Oxford asked me how many reactors there had been in his county and how many had gone to the tank. In the period April 1, 1947, to September 30, 1949, there were 13,969 reactors in that county, of which 1,633 went to the tank.


Lewis Elston Cardiff: After a man has had a test he is given so many days in which to clean up; how many days is he given?


Robert McCubbin: As soon as he can; there is no set day. He is asked to clean up.


Lewis Elston Cardiff: He has an opportunity then of getting another test if he so wishes? If he is not satisfied with the test, has he an opportunity of having them tested by some other veterinarian?


Robert McCubbin: No; once the government veterinarian comes in and tests the herd the farmer must abide by that.


Lewis Elston Cardiff: I am afraid there are a lot of government veterinarians who are new at the job. I am not saying they are not efficient, but there is a great deal of dissatisfaction with some of them. If a man is not satisfied with the test, I think it is only right and proper that he should have the opportunity of having another veterinarian come in and make another test.


Robert McCubbin: We would never get anywhere if we did that, but he certainly has a right to ask the head government veterinarian in the district to come. Does your head veterinarian come from Seaforth?


Lewis Elston Cardiff: I think so.


Robert McCubbin: The farmer has the right to call in the head veterinarian of the district along with the veterinarian who has made the test.


Gladstone Mansfield Ferrie: Provided that the veterinarian does not punch the ear; if he punches the ear then the animal cannot be touched.


Mr. Anderson:: I should like to ask the
parliamentary assistant a question. Can he tell me how many cattle were tested in this period in the county of Norfolk, how many reactors there were, and how many were sent to the tank?


Robert McCubbin: I cannot tell the hon. member how many cattle have been tested in Norfolk, but 111 reacted, and seven went to the tank in that period.


John Alpheus Charlton: On section 3 the parliamentary assistant can answer the question he was going to answer under section 1. Under the retroactive part of the legislation, how are they going to set the price of animals that have gone to the tank from the 31st March, 1947, up till the present time?


Robert McCubbin: As the bill indicates, power is given to the minister to set a period, and the average price will be taken in that period. It is the intention of the department to take a three-month period. We will go back to April 1, 1947, and take the average price for April, May and June. They will take the average price of steers for that three-month period, the average price of cows, the average price of calves, and so on.
Animal Contagious Diseases Act That average price will be the price paid for tuberculosis reactors that went to the tank in that period.


John Alpheus Charlton: Has the department weight slips for every one of these tanker animals?


Robert McCubbin: No, they have not got them all, I admit that. They will do it as fairly as possible. We know how many went, and we know what type they were, cows, calves or steers. They may not have the exact weights. In some cases they have and in some cases they have not. I admit that it will be a difficult job in some cases going back two years, but we will do the best we can in the interests of the farmers.


John Alpheus Charlton: As I understand, the department is going to figure out an average price for all animals that went to the tank during that three-month period.


Robert McCubbin: Taking three months at a time. Do you understand?


John Alpheus Charlton: Yes, I think I do. They will take a period of three months starting from April 1, 1947, and running through April, May and June. Then they will take another three months following that and will work in three-month periods for the whole time.


Robert McCubbin: That is right.


John Alpheus Charlton: It is possible that a calf might get the value of a cow if it is worked out on an average basis that way. It is an average price.


Robert McCubbin: An average price for calves, cows and steers.


Lewis Elston Cardiff: I should like to ask the parliamentary assistant to explain the last three lines on that page, reading:
... the owners of the slaughtered cattle shall be paid in respect of each carcass, the sale of which was unlawful at the time of slaughter . . .
What does it mean when it says, "unlawful at the time of slaughter"?


Robert McCubbin: That means that the sale of the beast for human consumption was unlawful.


Mr. Major:: Tests are now being carried on in my county, and I understand that from half to two-thirds of the cattle are already tested. Can the parliamentary assistant tell me what percentage is going down?


Robert McCubbin: In the county of Glengarry it is practically nil. Only nineteen went down in two and a half years and only five went to the tank.

Business of the House


Harry Oliver White: I am going to ask for leniency because I believe my question is out of order, but in the past where farmers have desired to have herds accredited it has been a requirement that there be ten cattle. The reason it was set at ten was the cost of going out to various places to do this. If it could be so arranged that the farmers of a township desiring to have herds accredited could have them all ready at a certain time, one trip to the township would do the whole thing, and the cost would not be so great. I think ten is too many. There are young farmers with herds of five, and with the present price of cattle I think ten is too many.


[Stage Direction]
Section agreed to.
Bill reported, read the third time and passed.

Alphonse Fournier: Tomorrow we will go into supply and take up the estimates of the Department of National Defence. If we finish them we will take up the rest of the estimates of the Department of Veterans Affairs. If more time is available, we will take up Bill 133 and Bill 143, two measures of the Department of Trade and Commerce. I am authorized to say that the Secretary of State for External Affairs will be here on the 16th and 17th of November, next Wednesday and Thursday. We shall have to make a formal motion to go into supply in order to take up his estimates on Wednesday. We will not call any new department, hoping that there will not be a long discussion before we get into supply.


Gordon Graydon: I should like to ask the minister one question as to the debate on external affairs. It is the intention of the Secretary of State for External Affairs to come back for two days, the 16th and 17th. I understand that on the second day he intends to present himself for examination before the standing committee on external affairs. The 16th is a Wednesday. Is it the intention of the government to sit for only half a day on Wednesday? If so, there will not be much opportunity for a full-dress debate on external affairs in half a day.


Alphonse Fournier: We will be sitting on Wednesday morning too. If the motion to be moved by the Prime Minister (Mr. St. Laurent) tomorrow carries, we will sit next Wednesday from eleven to one and from three to six, and on the Thursday the estimates of the department would be referred to the standing committee on external affairs.


Herbert Wilfred Herridge: On a question of privilege, tomorrow-


Mr. Deputy Speaker:: The house is now adjourned.


George Alexander Drew: No, Mr. Speaker. I should like to deal further with the question of the order of business. I believe it would be of great assistance to the members if an indication could be given as to the definite time when the bill amending the Combines Investigation Act will be brought up. I imagine that will be one of the most important debates of this session.


Alphonse Fournier: Mr. Speaker, on Monday we wish to take up the bill concerning housing; that will be the first order of business on Monday at eleven o'clock. I do not know what time will be spent on that measure, but I see no objection to proceeding with the bill to amend the Combines Investigation Act after the housing bill.


George Alexander Drew: On Monday.


Alphonse Fournier: On Monday.


Herbert Wilfred Herridge: Before the house adjourns I should like to point out that tomorrow is November 11, Remembrance day. It is a day which is very dear to the members of this house who are veterans. I believe it would be particularly fitting if the veteran members of the house were to meet here at 10:45 a.m. and parade to the national war memorial service. I suggest arrangements be made in this respect.
It being five minutes after eleven o'clock, the house adjourned, without question put, pursuant to standing order.

Friday, November 11, 1949