1952-05-08

[Stage Direction]
Mr. T. G. W. Ashbourne (Grand Falls-White Bay) presented the second report of the standing committee on marine and fisheries, and moved that the report be concurred in.
Motion agreed to.


[Stage Direction]
Mr. W. A. Robinson (Simcoe East) presented the first report of the special committee on the national film board, and moved that the report be concurred in.
Motion agreed to.

[Stage Direction]
Second report of standing committee on external affairs.-Mr. Bradette.

Right Hon. L. S. St. Laurent (Prime Minister) moved:: That votes No. 85 to No. 115 inclusive of the main estimates for 1952-53, approved and reported upon this day by the standing committee on external affairs, be referred back to the committee of supply.


[Stage Direction]
Motion agreed to.


Mr. Thatcher:: 1.	Has a decision been reached to move No. 16 regional ordnance depot from Regina to Winnipeg?
2.	If so, on what date, and for what reason?
3.	How many personnel will be transferred?


Mr. Blanchette:: 1 and 2. While no final decision has been made, additional ordnance depots are required to meet the needs of the Canadian Army, and consideration has been given to the location of regional depots adjacent to the respective command headquarters. If this is proceeded with, No. 16 regional ordnance depot in Regina would become an area ordnance depot
for the Saskatchewan area on a basis similar to that of other area ordnance depots.
3. If this proposed change is proceeded with, it would now appear unlikely that it would be necessary to transfer any personnel.



ARMED FORCES


Mr. Diefenbaker:: 1.	How many officers In the armed forces travelled by T.C.A. since the first day of January, 1951, on official business?
2.	What Is the total of expenditure paid or Incurred in such transportation?


Mr. Blanchette:: 1.	Officers in the armed forces made 5,910 trips by T.C.A. between January 1, 1951 and March 31, 1952.
2.	$735,134.95.



COST OF LIVING INDEX

Mr. Diefenbaker:: 1.	What are the particulars of the composition of the present cost-of-living index?
2.	What are the various elements making up the present cost-of-living index?
3.	In the prospective cost-of-living index, what changes are going to be made as far as the addition of further elements is concerned, or the removal of any now included?


Mr. Mcllrailh:: Composition of the present cost of living index:
1. Purpose. The dominion bureau of statistics cost of living index measures the influence of changes in retail prices of goods and services, upon the cost of a representative urban wage earner family budget.
Each index figure is a percentage which shows the relationship between the dollar cost of the index budget at a specified time, and the corresponding cost of the same budget in a reference period. The bureau's reference period now is the five-year interval 1935 to 1939, and the average cost of the index budget for this period is represented by 100-0. The comparable cost at March 1, 1952 was 189-1 per cent of its base period cost. This figure of 189-1 becomes the cost of living index for March, 1952.
The index budget. The index budget was calculated from annual purchases reported by a group of 1,439 typical wage earner families in the following cities: Charlottetown, Halifax, Saint John, Quebec, Montreal,

Questions
Ottawa, Toronto, London, Winnipeg, Saskatoon, Edmonton and Vancouver. These expenditures covered the year ending September, 1938.
The survey families averaged 4-6 persons and the majority had two or three children. Family earnings in many cases were supplemented by minor sources of income; total
incomes for these families were heavily concentrated between $1,200 and $1,600. They ranged, however, from as low as $600 up to about $2,800 per annum. There were approximately two tenant families to every one home-owning family, and about one family in three operated a motorcar.
Urban wage earner family annual living expenditures (Year ending September 30, 1938)
Budget group
Food	
Shelter	
Fuel and light...
Clothing	
Home furnishings Miscellaneous ...
Health	
Personal care . Transportation Recreation .... Life insurance
Expenditure
averages

269-5
165-8
319-4
23-9
82-1
Percentage
distribution



P.c. 19-1 11-7 22-6

[Stage Direction]
4-	3 1-7
5-	6 5-8 5-2
Total
1,413-9*
^Directly represented in the index. Other miscellaneous outlay brought the total family living expenditures to $1,453-8.
Group index numbers
The index budget is divided into six expenditure groups for which separate indexes are calculated; these are foods, fuel and light, rent, clothing, home furnishings and services, and miscellaneous items. Each group contains a list of items sufficiently large to make it representative of the merchandise field covered. It would be possible to add many more minor items without affecting the movements of the composite cost of living index by any significant amount. These additions would lengthen the time required to calculate the index and impose a greater burden upon firms making price reports, without improving the accuracy of the index. In many cases accuracy might be reduced, as comparisons on a quality basis are not possible over a long period. This would be true of style merchandise such as women's hats. The cost of all these omitted items is included in group weights, which represent all expenditures falling within the six groups noted above. The base period food weight of 31 per cent, for example, was calculated from total food costs reported by survey families, although the food index 
includes only 46 items which represent about 75 per cent of a representative family's food expenditure.
Foods. Prices used in calculating food indexes are collected on the first business day of each month from approximately 1,600 stores covering independent and chain grocers and butchers. Quotations for each of the 46 budget items are averaged and then multiplied by the budget quantity for each individual item to find the cost for that item. These individual cost figures are added together to find the total cost of the food budget; this figure is then expressed as a percentage of the corresponding reference period cost to produce the food index.
Fuel and light. Separate indexes are calculated for coal, coke, gas and electricity. The two last mentioned are reckoned from monthly bills for quantities which are typical of consumption in the cities represented. The bill for each city is weighted by the number of domestic consumers in order to calculate dominion indexes. The coal index also takes account of typical amounts consumed in different areas and of the population of each city represented in the index. Price changes

for coal are related to kinds used in the greatest quantity in each area.
Shelter. Changes in shelter costs are determined by movements of rents. Since 1948 changes in shelter costs have been determined by data obtained from rent surveys inaugurated by the special surveys division of the dominion bureau of statistics. The surveys are taken four times a year, in March, June, August and November. The rent index is calculated from a matched sample of households. That is, the aggregate rent paid by a group of households at a given point in time is compared with the aggregate rent paid by the same group of households for the same living quarters at the next point in time. By using a matched sample for each survey period, variations due to changes in the sample and to non-response are eliminated. The index is, therefore, a measure of the change of rent paid for the same accommodation. Rent reported is the cash rent paid in all cases regardless of minor changes in the services provided. Serious difficulties are involved in attempting to assess the money value of services, such as those provided by janitors, and it is not practical to attempt to adjust the index for variations in the amenities or services provided by the landlord. However, when there are changes in the amount of accommodation or space rented, the cases are eliminated from the comparison. Rent for commercial premises is specifically excluded from the calculation of the index. Thus, cases in which the rent covers both living quarters and commercial space are excluded from the aggregates from which the index is calculated. Usually, the rent index is not adjusted until one month after each survey period.
Clothing. The clothing index has been based upon a carefully selected list of men's and women's apparel. It includes no children's clothing, and omits some items of adult clothing which are of considerable importance, such as women's dresses for afternoon and evening wear, women's hats, men's hats and gloves. Unusual difficulties in maintaining continuous price series on the same quality of goods occur in clothing due to style and seasonal changes which must be excluded from price comparisons based upon quality. The items in the clothing index have been selected to represent the basic materials entering into clothing in approximately the same proportions as they would be found in a complete clothing budget. Some of the items chosen to represent basic materials form a comparatively small portion of a complete budget, but are useful in measuring clothing
Questions
price trends because of their standard construction. Women's woollen hose afford an example of such items. The index contains 33 items of clothing, piece goods and footwear, and price series for these have been examined individually over a period of years to test their reliability. Most apparel now is composed of six basic materials, cotton, wool, rayon, nylon, leather and rubber. The bureau uses a clothing list of 33 items with the knowledge that a limited but accurate price series will measure the trend of clothing prices better than a large list including items which fluctuate widely in price due to style and seasonal factors. Department stores are the source of bureau clothing prices. These distributors handle approximately one-third of the dominion's clothing trade, and make monthly price returns to the bureau, especially designed for the cost of living index.
The bureau of statistics Is concerned not only with the accuracy of prices reported, but also with the comparative quality of goods priced from month to month. It considers a decline in quality to have the same effect upon living costs as a rise in price. Field representatives have been given special instructions and training regarding this matter, and price schedules for clothing and home furnishings have been specially designed for the reporting of quality changes in addition to the recording of comparative prices.
Home furnishings and services. The home furnishings and services index is a composite of nine subgroups, including two sets of service costs in addition to actual furnishings. The nine subgroups are: furniture, electrical equipment, floor coverings, textiles furnishings, hardware, dishes and glassware, cleaning supplies, laundry and telephone. The complete group accounted for 9 per cent of the base period index budget cost, placing it next to clothing in importance. It is similar to clothing also in many details of construction. The data for furniture, electrical equipment, floor coverings, textile furnishings, hardware, dishes and glassware are obtained from department stores and the same principle of the representation of basic materials by a comparatively small number of items is used. There are 8 items of furniture, 3 of electrical equipment, 3 of floor coverings, 4 of textile furnishings, 6 of hardware, 2 of dishes and glassware, 4 of cleaning supplies, 3 laundry rates, and one type of telephone service.
Miscellaneous. Five subgroups, health maintenance, personal care, transportation, recreation and life insurance comprise the miscellaneous index. This list does not exhaust all remaining family living expend-
[Stage Direction]
Questions
itures, but most of those which are left, such as church contributions, support of dependents, etc., cannot be treated in the same way as items which are bought and sold. The index takes no account of these items which amounted to only 3 per cent of average wage-earner family living expenditures reported in the bureau's 1938 survey.
The health section is based upon prices for 6 items of household medical supplies, 2 kinds of hospital service, 3 types of doctors' fees, and rates for 6 types of dental service. In view of the stability of fees for doctors, dentists and hospitals, these records are collected only at annual intervals, while medical supplies are priced quarterly. Records of practically all miscellaneous subindexes are collected from 23 of the larger cities, chosen to give adequate regional representation.
Personal care costs are represented by 9 items of toilet requirements plus fees for men's haircuts and shaves.
Three kinds of transportations are represented in the transportation subgroup: motor car, street car and railway. The two latter present no special problems, but motor car operating costs are more difficult to measure. The bureau's record is based upon service station prices of gasoline, licence fees, tires and wage rates for garage mechanics. It is assumed that depreciation is 35 per cent of operating costs, and that for car owners as a group it remains constant from year to year.
The recreation section includes records of motion pictures theatre admissions, and newspaper, magazine and tobacco costs.
The life insurance index is based upon premiums for ordinary non-participating life policies, since these appear to give the closest possible approximation to the cost of pure risk. Averages of premiums for ages 20, 35 and 50 years have been used covering the records of 11 large companies.
The Cost of Living Index Calculation
There are two stages in the calculation of each of the six principal group indexes from which the composite number is calculated. In the first stage, the general procedure is to multiply current price averages by budget quantities. These products are added together and the resultant aggregate divided by a corresponding base period aggregate. This number is multiplied by 100-0 to secure a subgroup index for the current period. The index is then multiplied by a subgroup weight indicative of the cost of goods in this subgroup relative to all goods in the group. When all subgroups have been weighted similarly, the group index is found by adding up this second set of products and dividing by 100-0. This routine is repeated to secure the final composite cost of living index. The second and third stages of weighting are made necessary by the fact that it is not feasible to include all items in the family budget.
2.	Elements Making up the Cost of Living Index
(The Weighting System)
-	Commodity Weights	Subgroup Weight	Group Weight
	(Weekly Quantities)		
			31
		1	
		2	
Dairy products Milk		10-5 qts.		
			
	0-8 pkgs.		
Eggs				
Meats and fish			
	0-9 "		
	0-7 "		
	1-1 "		
	1-0 "		
Veal		1-0 "		
	0-3 "		
	1-5 "		
	10 "		
	0-7 "		
Fish		0-8 "		
	0-8 "		
	0-2 "		
			
[Stage Direction]
Questions
Elements Making up the Cost of Living Index-Con.
-	Commodity Weights	Subgroup Weight	Group Weight
	(Weekly Quantities)		
A. Food-			
Cereals			
Bread		12-1 lbs.		
Flour		2-9 "		
Rice		0-3 "		
Rolled oats		0-5 "		
Corn flakes, 8-oz. pkg		1-3 pkgs.		
Dry Groceries			
Granulated sugar		4-2 lbs.		
Yellow sugar		0-6 "		
Tea, §-lb. pkg		0-8 pkgs.		
Coffee		0-2 tbs.		
Cocoa, i-lb' tin		0*2 tins		
Salt		0-5 lbs.		
Vegetables			
Beans, dried		0-4 lbs.		
Onions		0-8 "		
Potatoes		120 "		
Canned tomatoes, 2|'s		0-6 tins		
Canned peas, 20 oz		0-6 "		
Canned corn, 20 oz		0-3 "		
Cabbage		1-0 lbs.		
Carrots		1-5 «		
Turnips		1-0 "		
Fruits			
Raisins		0-3 lbs.		
Prunes		0-1 "		
Strawberry jam		0-6 "		
Marmalade		0-1 "		
Canned peaches, 15 oz		0 [DOT] 2 tins		
Corn syrup, 2-lb. tin		0-25 "		
Lemons		01 doz.		
Oranges		0-7 "		
Bananas		1-2 lbs.		
			19
			6
Coal			42	
Coke			11	
		14	
		33	
	(Annual		
	Replacement		
	Allowances)		
			12
		41	
Overcoats		0-2		
Top coats		0-2		
Suits		0-8		
Sweaters		0-4		
Overalls		1*0 pairs		
Socks		9-0 "		
Underwear, athletic		1[DOT]5 sets		
Balbriggan combinations		1-0 "		
Underwear, winter		1-0 "		
Pyjamas		1*0 pairs		
Shirts, work		1-0		
Shirts, broadcloth		2-5		
Trousers, work		0-7		
1S84
[Stage Direction]
Questions
Elements Making up the Cost of Living Index-Con.
-	Commodity Weights	Subgroup Weight	Group Weight
	(Annual Replacement Allowances)		
		36	
	0-3		
	0*2		
	1-5		
	2-5		
	2-	0 pairs 3-	0 "		
			
	5-8 "		
	5-0 pairs 1-0 "		
			
	0-7 "		
	1-6		
		4	
	3-0 yards 0-3 "		
			
	0-2 "		
	0-7 "		
	2-0 "		
		19	
	2-0 pairs 0-7 "		
			
	3-5 "		
	2-0 "		
			9
		25	
	0-06		
	0-06		
	008		
	0-20		
	0-05		
	005		
	0-16		
	0-05		
		7	
	0-04		
	0-15		
	1-70		
		11	
	10		
	30		
	0-5		
	0-4		
		24	
	003		
	0-15		
	0-02		
Hardware			3	
Frying pan		0-2		
	0-25		
	0-25		
	0-25		
	1-0		
	0-2		
		2	
Set of dishes		0-1		
Glass tumblers		2-0		
		13	
			
Soap flakes		24 pkgs.		
			
	2 pkgs.		
			
[Stage Direction]
Questions
Elements Making up the Cost of Living Index-Con.
-	Commodity Weights	Subgroup Weight	Group Weight
	(Annual Replacement Allowances)	3 12	
Sheets	1 Towels	^geometric average Men's shirts	J			
			
	Per cent	
Commodity	of	SubgroupWeights	Subgroup Weight	Weight
(Annual
replacement
allowances)
Group
Weight
F. Miscellaneous Items.
1. Health	
(a) Medicines	
Aspirin tablets, box of 12,
Epsom salts	
Boracic acid, 2 ozs....
Tincture of iodine, 2 oz. .
Zinc ointment, 1 oz....
Cod liver oil	
1-3 boxes 0-7 lbs.
0-3 pkgs. 0-7 bottles
0-	7 tins
1-	3 bottles
17
(b) Hospital Charges	
Semi-private room Public ward bed...
Ratio
1
(c)	Doctors' Fees	
Office consultation	1
Ordinary day visit	j- geometric
Ordinary confinement. .. .J average
(d)	Dentists' Fees	
Amalgam filling	'
Porcelain filling	
Gold filling	 geometric
Upper and lower dentures, average
Ordinary extraction	
Prophylaxis	
18
2.
Personal Care	
(a) Personal Cleaning Supplies..
Talcum powder	
Tooth paste	
Tooth brushes	
Shaving cream	
Toilet soap	
Petroleum jelly	
Razor blades, pkgs. of 5. .. Cleansing tissue, med. pkg, Sterilized gauze, 5 yds..
1-3 tins 21-7 tubes 8-7
5-	0 tubes 52-2 bars
1-3 jars 13-1 pkgs.
6-	0 pkgs. 1-0 rolls
(b) Barbers' Fees	
Haircut (men's) Shave	
Ratio
2
9
[Stage Direction]
Questions
Elements Making up the Cost of Living Index-Con.
-		Commodity- Weights	Per cent of Subgroup Weight	Subgroup Weight	Group Weight
		(Annual Replacement Allowances)			
F. Miscellaneous Items				26	
			67		
		Percentages 42			
		9			
		8			
		35			
		6			
			4		
(c) Street car fares				29		
4. Recreation					26	
(a) Theatre admission			23		
			22		
			4		
			51		
Cigars	 Cigarettes	 Cut tobacco..	geometric average				
5. Life insurance					22	
					
3.	Addition of Further Elements to the
Prospective Index, and the Removal of Old Ones
Final decisions remain to be made on a few items in the new budget, but in total the new index will be calculated from prices of approximately 225 items as compared with the present list of 160. Additions to foods will include a considerable number of fresh fruits and vegetables; and items of children's wear will be added to the clothing index. In addition to rents it is planned to price the principal home-ownership costs if certain technical difficulties can be overcome. Fuel oil will be added and the list of household equipment and services has been expanded. The Other Commodities and Services index will include a number of additional items, in particular, a wider representation for transportation and recreation. Life insurance premiums will be dropped because they include a large element Of savings, while the other major element, risk, is related to future rather than current purchasing power measurements. Additional information concerning the new consumer price index will be found in the attached statement.

The New Consumer Price Index
(Reprinted from the Daily Bulletin, March 14, 1952, for your information)
During the latter half of 1951 the dominion bureau of statistics held numerous meetings with groups and organizations to explain and discuss the plans for the revised index which is to be renamed more accurately the consumer price index. The groups and organizations included not only a wide variety of interests but also competent technical opinion. They represented consumers, labour, management, farmers, and professional economists. In addition, it has been possible to discuss the most up-to-date techniques for constructing consumer price indexes with experts of several countries which have highly developed statistical organizations. During the course of these discussions it was decided to use 1949 as a base period and work resulting from this decision will require several months to complete. Therefore, publication will not commence before the summer of 1952, at which time a comprehensive explanation of the index will be issued. The present statement outlines briefly some of the main features which appear to have wide public interest.

Purpose and title.
The main purpose of the revision has been to bring up to date the list of items and quantities included in the index budget and to place the series on a post-war base. Thus there will be no change in the fundamental purpose of the index which is to measure changes in the prices which the consumer pays for goods and services.
While the title, "cost-of-living index", has historically been used to describe indexes which serve this purpose, it has proved confusing, and will therefore be changed to "consumer price index". This change in title is one which is being adopted widely in other countries and is made to clarify the real purpose of the index, that is, to measure changes in prices of a representative basket of goods and services.
Base period.
The post-war period selected as the base for the new index is the calendar year 1949, and the index for that year will be 100. Since prices were higher in 1949 than they were in the period 1935-39, which is the base of the present index and which now equals 100, the new index numbers will be lower, of course, than if they were on the 1935-39 base. This does not mean that prices have risen less; the percentage change in the price level shown by the new index would be the same from month to month whichever base is used.
The index budget.
In determining the items to be included in the budget it was first necessary to decide what families should be selected from the nation-wide sample of household expenditures collected for the year ending September 1948, and supplemented by four food surveys in October 1948 and March, June and September 1949. The new index has been designed to reflect the experience of families located in 27 cities, each having more than 30,000 population. They ranged in size from two adults to two adults with four children and the annual incomes of these households during the survey year ranged from $1,650 to $4,050 with the majority of incomes between $2,000 and $3,000.
The income and size limitations were selected to secure a wide coverage within which expenditure patterns could be adequately represented by the same price index. The families have not been restricted to those with wage earner heads. Actual tests showed that expenditure patterns of households with wage earner heads were almost identical with those of other urban families within the same size and income
Questions
ranges. This is not surprising when it is considered that wage earners and non-wage earners are found living on the same streets, buying in the same stores, and generally living in the same manner. It was thus possible to include families with all types of income, without making the index less representative of wage earners.
Although there have been considerable changes between pre-war and post-war purchasing habits, the general pattern of spending has altered surprisingly little. Changes in the classification of items to give more useful group indexes prevent exact comparison of the old and new index patterns, but the degree of similarity can be judged from the following summary table. The new household operation group compares roughly with a combination of the two series for fuel and light and home furnishings and services. Likewise, the new other commodities and services group contains many of the items listed in the present index under miscellaneous.
Group Base Weights of New and Old Indexes
Budget Group New index Old index
	per cent	per cent
Foods 	32	31Clothing 	11	12Shelter 	15	19Household operation	17	(Fuel and light ...	6)(Home furnishings	and services ....	9) 15Other commodities	and services 	25	Miscellaneous 	23Total 	...100	100
Final decisions remain to be made on a few items in the new budget, but in general the changes to be made can now be stated. In total the new index will be calculated from prices of approximately 225 items as compared with the present list of 160. Additions to foods will include a considerable number of fresh fruits and vegetables; and items of children's wear will be added to the clothing index. In addition to rents it is planned to price the principal home-ownership costs if certain technical difficulties can be overcome. Fuel oil will be added and the list of household equipment and services has been expanded. The other commodities and services index will include a number of additional items, in particular, a wider representation for transportation and recreation. Life insurance premiums will be dropped because they include a large element of savings, while the
[Stage Direction]
Questions
other major element, risk, is related to future rather than current purchasing power measurements.
Joint publication of the old and new series. The substitution of any new statistical series for an old one almost invariably leads to some confusion. Cost of living or consumer price indexes are used for numerous purposes, including the adjustment of wages. It seems advisable, therefore, to make available for some months, both the old series and the new. However, it is not the intention to continue the old series after the end of 1952.

Mr. Ferguson:: 1.	For what purpose were army bus 103, licence No. 6011F, and army bus 105, licence No. 6115F, used on the 2nd day of May, 1952?
2.	Were they used out of Ottawa on the 2nd day of May, 1952?
3.	If so, what trips were made, and what was the total mileage?
4.	At whose request were such trips made?
5.	What was the nature of the military duties on which they were engaged?
6.	Was any charge made for the use of the buses for such trips?
7.	Are similar arrangements to those made in this case available in every part of Canada?
8.	If not, what are the conditions under which applications for such arrangements can be made?


Mr. Blancheiie:: 1.	Transporting Royal Canadian Army cadets of Finch high school, Finch, Ontario.
2.	Yes.
3.	From Finch, Ontario to Ottawa and return. Total mileage on each bus was 185 miles.
4.	Headquarters Eastern Ontario area, Kingston, Ontario.
5.	Visit war museum and House of Commons.
6.	No charge was made.
7 and 8. Transport to assist in carrying out training programs is provided for Royal Canadian Army cadets in all parts of Canada where it can be made available.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. Diefenbaker:: 1.	How many women, as of this date, are enlisted in the armed services?
2.	How many pairs of shoes for women have been purchased or ordered by the government from June 1, 1950, month by month, to date?



ORDERS IN COUNCIL

Mr. Diefenbaker:: How many orders in council have been passed
(a)	during the year 1951; (b) since the first day of January, 1952?


Louis Stephen St-Laurent: Return tabled. LIVESTOCK



FEDERAL AND PROVINCIAL EMBARGOES ON SHIPMENTS

[Stage Direction]
On the orders of the day:
Mr. P. E. Wright (Melfori):: I wish to direct a question to the Minister of Agriculture. Has the Manitoba government lifted its embargo on the shipment of livestock from Saskatchewan to the Winnipeg stockyards? Has the federal government removed its embargo on shipments of livestock from the Winnipeg stockyards to eastern Canada?


Right Hon. J. G. Gardiner (Minister of Agriculture):: The Manitoba embargo is, I think, only against cattle. They lifted the embargo against sheep and hogs. There has been an embargo in connection with the quarantine with respect to Winnipeg on the movement of cattle past Winnipeg since the first outbreak.


Percy Ellis Wright: That is still on?


James Garfield Gardiner: It is still on.


Mr. Coldwell:: That is federal?


James Garfield Gardiner: Yes.


Mr. Harkness:: What embargoes or orders affecting the marketing or moving of livestock are now in effect in Alberta? What measures have been taken by the minister and his department to untangle the chaotic situation reported by this morning's papers to exist there?


James Garfield Gardiner: I think I stated yesterday-if I did not, I will state it now-that we have a definite understanding with all the provinces that we shall be permitted to exercise even the authority which the provinces think is their responsibility with respect to the marketing of meat as long as the United States embargo remains in effect. This arrangement has been functioning fairly satisfactorily.
Occasionally we have representations made by the provinces to the effect that something that is being done is not working as smoothly as it might. There was an arrangement made between the packing houses at Edmonton, Calgary, I think Lethbridge, and Vancouver, a day or two ago with our consent and more or less under our direction. Instructions were issued1 to both railways yesterday in the same terms. One railway interpreted them

a little differently from the other. One railway kept on shipping meat and the other did not. This was reported to us, and inside of a few hours at the outside they were both operating in the same way, namely, taking beef through to Vancouver. How the article got into the newspapers without the correction I do not know, but the whole matter was settled yesterday and there were no difficulties such as were outlined in the papers this morning for any length of time whatsoever.


Douglas Scott Harkness: Does the minister mean live beef or dressed beef?


James Garfield Gardiner: I mean dressed beef.



BEEF AND PORK


[Stage Direction]
On the orders of the day:
Mr. Carl O. Nickle (Calgary West):: I wish to direct a question to the Minister of Agriculture. In view of the increasing seriousness of the problem of surplus beef and pork piling up in government purchased stocks in western Canada, the probability that the United States market will be closed for some time-


Some hon. Members:: Question.


Carl Olof Nickle: -and the fact that Britain lacks the dollars to purchase Canada's beef and pork surplus-


Some hon. Members:: Question.


Mr. Speaker:: Order.


Carl Olof Nickle: -is the government now prepared to consider a substantial gift to Britain of a portion of this surplus pork and beef?


James Garfield Gardiner: I am not in a position to answer the question, other than to say that arrangements are being made to handle meat which I think will turn out to be satisfactory.



FUR SEALS


[Stage Direction]
On the orders of the day:
Hon. R. W. Mayhew (Minister of Fisheries):: On April 8 the hon. member for Queens (Mr. McLure) asked the following question:
Is consideration being given to Japan's claim to the restoration of that country's share in the Alaska fur seal catch and treaty? If so, to what extent will this affect the proportion of the skins that Canada now receives, and has the United States government been acquainted with the matter?
I understand that Japan has expressed its hopes to the United States government that
Inquiries of the Ministry negotiations for a new pelagic fur sealing treaty might be initiated at the earliest possible date. Preliminary to considering the Japanese request, the United States government has organized a scientific investigation for the purpose of obtaining scientific data concerning the distribution, migration and feeding habits of the fur seals of the north Pacific ocean, which might be useful in the formulation of a fur seal treaty. Two Canadian scientists have been assigned to participate in the investigations, which are now in progress.



NATURAL GAS


[Stage Direction]
On the orders of the day:
Carl Olof Nickle: I wish to direct a question to the Minister of Trade and Commerce. Has the government negotiated with, or is it now prepared to initiate negotiations with, the United States government in order to determine whether or not a large-scale long-term firm agreement is feasible for exchange of natural gas between Canada and the United States?


Mr. Speaker:: Order. I think this is a question that should be placed on the order paper. May I again remind hon. members that questions asked on the orders of the day should be for the purpose of securing information and should state only such facts as may be necessary to make the question intelligible.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Beaudoin in the chair.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Tax Act and to provide:
1.	That the excise tax on goods enumerated in schedule I of the act that are at present subject to the rate of twenty-five per cent be reduced to fifteen per cent.
2.	That the excise tax on furs and articles manufactured of fur be reduced from twenty-five per cent to fifteen per cent.
3.	That the excise tax on soft drinks be reduced from thirty per cent to fifteen per cent and that there be assessed, levied and collected an excise tax of fifteen per cent on preparations for household use in making soft drinks.
4.	That the excise tax on stoves, washing machines and refrigerators be repealed.
5.	That the excise tax on carbonic acid gas be reduced from fifty cents to twenty-five cents per pound.
6.	That the excise tax on cigarettes be reduced1 from two and three-quarter cents to two cents for each five or fraction of five cigarettes contained in each package.
[Stage Direction]
Excise Tax Act
7.	That the excise tax on manufactured tobacco be changed from five cents per ounce or fraction of an ounce to eighty cents per pound.
8.	That the excise tax on Canadian raw leaf tobacco be reduced from one and one-quarter cents per ounce or fraction of an ounce to eight cents per pound.
9.	That the sales tax on the following goods be repealed:
(a)	drinks prepared from milk or eggs;
(b)	preserved fruits;
(c)	cooking oils and salad oils but not including mayonnaise or salad dressing;
(d)	baling wire for baling farm produce;
(e)	steel pens for farm animals;
(f)	preservatives for use exclusively in treating nets, ropes and lines used in the fishing industry;
(g)	clays and earth for use exclusively as filtering materials in the refining of petroleum oils;
(h)	goods enumerated in customs tariff items 411a, 437. 476b.
10.	That any enactment founded upon this resolution be deemed to have come into force on the ninth day of April nineteen hundred and fifty-two.
Mr. Macdonnell (Greenwood):: The parliamentary assistant will know that it is in no personal sense that I begin by asking whether we are to deal with these resolutions without the benefit of the minister. We have raised that question before, and I raise it again now.


An hon. Member:: Louder.


James MacKerras Macdonnell: I am asking whether we are to deal with these resolutions without the benefit of the minister.


An hon. Member:: Don't you think the parliamentary assistant is qualified?


James MacKerras Macdonnell: I take it the answer is yes. First of all I should like to ask whether it is proposed to deal with these proposals seriatim or whether the whole is to be regarded as one resolution.


The Chairman:: If it is the unanimous wish of the committee that we study these resolutions paragraph by paragraph, of course we will follow that course. Perhaps the hon. member would indicate his idea as to how we should proceed. Is it the wish of the committee that we consider this resolution paragraph by paragraph?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Mr. Sinclair:: This has been decided in the past. We have four resolutions here, one dealing with the Excise Tax Act, one with the Excise Act, one with income tax and one with succession duties. For convenience they are broken down into paragraphs. The practice has been to consider them paragraph by paragraph; but taking the excise tax resolution as an example, the vote will be on the resolution as a whole.
So far as the other point is concerned, I rather anticipated that it would be raised so 
I looked up the record to see how these budget resolutions have been piloted through the house in recent years. I find that when the present Minister of Finance was parliamentary assistant to Mr. Ilsley in 1944 and 1945, he did the job of piloting the resolutions through. After all, they are only indications in principle of the changes which will be presented to the house later in the various bills amending these acts. I have been assistant to the present minister for four budgets now, and on each of those occasions it has been the practice to have me discuss the resolutions. In his budget speech the minister spent considerable time on the principle, and of course later when the bills are before the house he will be here to deal with them in detail.
Getting back to the original point on how we will consider these resolutions we have had a vote in this house on this very matter. We have before us four resolutions, each of which is divided into various paragraphs; but the actual vote will be on each entire resolution, not on any paragraph of any one of them.


Mr. Riley:: I would like to ask the parliamentary assistant if he intends to proceed with these resolutions in the absence of the leader of the opposition.


Mr. Graydon:: I understand that in the Department of National Revenue, particularly in the customs and excise division, there is a different method of paying employees for overtime from that followed in connection with the regular monthly or semi-monthly cheques. My information is that in some instances these employees have to wait a very long time for their overtime pay. Will the parliamentary assistant look into that matter and give the committee any information he can find, at an appropriate time? I would like him to indicate how long they have to wait for their overtime pay, and whether there is not some method by which that difficulty could be remedied so that they could get their overtime pay in the ordinary way when they get their regular cheques.


James Sinclair: Of course this question has nothing whatever to do with the four resolutions now before the committee, nor with the Department of Finance. It is a question which can be quite properly asked of the Minister of National Revenue when his estimates are before the committee, because it is purely a matter of administration within that department.


Gordon Graydon: Then perhaps my hon. friend would be a kind of honorary messenger for me and see that this request gets to the right place.


Mr. Knowles:: I wonder if I might say a word about the procedure we are following in connection with these budget resolutions. I recognize the correctness of the statement made by the parliamentary assistant to the effect that on at least two previous occasions, if not more, the house has decided by a vote that there must be only one vote on the entire resolution, no matter how many paragraphs it contains. No one in this committee will suggest that I agreed with that decision. I disagreed with it strongly; I still think the house made an incorrect decision, but we seem to have no alternative but to abide by it.
Nevertheless I think we must all recognize that it would lead to a most disorderly debate if we were to wander all over the eight or ten paragraphs into which, in the language of the parliamentary assistant, some of these resolutions are broken down. So I suggest that even if we are not given the right to vote on these paragraphs seriatim, they should be discussed seriatim so that it will be in some sort of order. I would urge, Mr. Chairman, that you find some language on the basis of which you could call for the discussion of these various paragraphs one at a time.
One other point has been mentioned, and I would like to say a word on it while I am on my feet. I recognize the fact that in a good many sessions it has been the practice for the parliamentary assistant to do some of the work of the Minister of Finance, particularly at this stage of the budget proceedings. After all, that is what parliamentary assistants are for, to take some of the load off the shoulders of their ministers. I suggest that with respect to some of these resolutions, at least with respect to some of the paragraphs in some of these resolutions, pretty important issues are involved. I would hope that if we reach an issue about which some of us feel pretty strongly, the discussion might be allowed to stand until we can have the minister here.
I hope you will not call me to order if I mention, merely as an example of what I now have in mind, paragraph 5 of the resolution respecting the Income Tax Act. It has to do with medical expenses. As the parliamentary assistant knows, we have already had considerable discussion about that matter in this house, and on one or two occasions he spoke for the Minister of Finance. As the house knows, we got into considerable confusion over that whole matter; and I feel
Excise Tax Act
that when we reach that subject we should have the right to discuss it not with the parliamentary assistant but with the responsible minister himself.
That is the paragraph about which I feel most strongly. There may be other items in these resolutions about which other members feel strongly; and I suggest that while it would be in order for us to proceed to discuss some of these matters with the parliamentary assistant, if hon. members really want to discuss important issues with the Minister of Finance, that is our right and privilege.


James MacKerras Macdonnell: I want to add just a word on the question of method. Some of us felt very strongly last year that the decision to take the items concerning the Excise Tax Act, for example, in one resolution worked, shall I say, an unfairness from our point of view, because it meant that members had no opportunity to indicate their objection to any particular item without voting against the whole resolution. However, that was done last year. I am not going to pursue the matter further now except to say that I do not think it should be regarded in any way as being accepted as a precedent. For my part I am merely refraining from putting it to the test at the moment.
I do not propose to make any extended preliminary remarks concerning the Excise Tax Act. After all, we have here in a measure an act of repentance; and repentance, as far as it goes, is an attractive thing. Even though the minister is not here to receive our congratulations on his repentance, we will, as I say, go that length with him.
With regard to the sales tax, of course there was no repentance there. We have a gesture here under paragraph 9 concerning certain articles on which the sales tax has been repealed, and when we come to that paragraph I hope to find out just what that means and just what the amounts involved are. In the meantime, I should like to ask, under paragraph 1, what is the amount involved? What amount was collected under that, and what is it expected we shall realize under the new rate?


Major James William Coldwell: Is the parliamentary assistant going to answer that now?


James Sinclair: Again I am in the hands of the house as to the way in which hon. members want these answers given. I can give them in groups or individually, but if it is done individually I shall be up and down all the time.


Louis-René Beaudoin: It would appear as though, for the convenience of members, it might be preferable to accept the suggestion that has

Excise Tax Act
been made by the parliamentary assistant and apparently agreed upon by the spokesmen for the other parties, that is, to consider the resolution as a whole for the purpose of a vote, but for the purposes of detailed discussion to call the paragraphs seriatim.


Major James William Coldwell: 1 believe it will be a little difficult to stick very closely to that particular method of dealing with this resolution, because one may wish at the beginning to make some remarks that will have general application; and that is what I wish to do.
Generally I think the house welcomes this resolution, because, as the hon. member for Greenwood has said, it is in the nature of an act of repentance for some of the taxes that were imposed last year.
Since the excise and sales tax are the hidden taxes which raise such enormous amounts of money, I was interested to get in the mail today an analysis made by a representative of the Winnipeg Tribune and published in their issue of last Saturday, May 3. Apparently this newspaper sent out one of its representatives to make house-to-house calls in the city of Winnipeg, and he called upon some fifteen modest homes of persons whose incomes were not high. It is interesting to note what this investigator found regarding the tax situation. A breakdown showed that the total income of these fifteen homes, the income of the men and women-in one case the joint incomes of a married couple, but usually individuals-was $65,400. The income tax paid amounted to $5,122; city tax amounted to $3,458. Interestingly enough, the computation-leaving out such things as amusement taxes levied by the city-showed that the hidden taxes paid by those who lived in these houses amounted to $5,229. In other words, the hidden taxes on the group of people interviewed, who, as I say, were in the very moderate, or perhaps in one or two cases what I would term the low income groups, were higher than the taxes levied directly through income tax.
I am not going to put it on the record, but a complete break-down will be found in the Saturday edition of the Winnipeg Tribune at page 5. The incomes of these fifteen families range from $1,500 to $5,900, the latter being the highest income in that group. They were a very representative group, and the survey indicates clearly that the hidden taxes are greater than the direct taxes. These are the taxes of which most people thoroughly disapprove. The occupations were: carpenter, switchboard operator, shipper, salesman, stenographer, three school teachers, one music teacher, accountant, assistant bank manager, bus driver, two secretaries, auditor, retired police officer, and [The Chairman.]
agent. Those were the occupants of the fifteen small houses the photographs of which appear on the front page of this newspaper.
The comprehensive analysis and table found on page 5 of the Winnipeg Tribune clearly indicates that the taxes on clothing, cigarettes, household furniture and other appliances exceed the income taxes paid by those individuals. No wonder that many people in the country prefer the direct income tax, because these excise taxes which we are discussing this afternoon do bear very heavily indeed on the people in the moderate and lower income groups.
I know it is argued that the larger the income the more of certain things people buy. But these taxes are levied not only on luxuries but on ordinary household necessities such as boots and shoes and a wide range of furnishings. I am very happy to see that this resolution does to some extent rectify the situation, although I should add only slightly.
The sales tax is being repealed on drinks prepared from milk or eggs, and up to this time they have borne the tax; on preserved fruits, which have borne the tax up to this time. Many times in this house we heard that food was exempt from the sales tax. The tax is being repealed also on cooking oils and salad oils, but not including mayonnaise or salad dressing. It is being repealed on some farm commodities, such as baling wire for baling farm produce, and steel pens for farm animals. The fishing industry will benefit by the repeal of the tax on preservatives for use exclusively in treating nets, ropes and lines. The tax is being repealed also on clays and earth for use exclusively as filtering materials in the refining of petroleum oils, and on the goods enumerated in customs tariff items 411a, 437 and 476b.
What I am pointing out is that I am glad to see that relief, but it does rather discount the statement made in this house from time to time that foods were not taxed. Certain drinks prepared from eggs and milk are used extensively in the feeding of invalids, and preserved fruit is used in a good many homes throughout the country. Of course, salad oils and cooking oils are now used extensively in the preparation of food in households as well as in restaurants and other places. I welcome that change, but it does indicate that although we were told from time to time that the sales tax did not apply to food, here we have a group of foods upon which the sales tax has been levied, and that tax is to an extent being repealed.

What I rose to say was that these hidden taxes in particular have imposed a greater burden, relatively, on the low income and middle income groups than on the higher income groups. I do not want to traverse the ground that I traversed in the budget debate itself, but I am glad that the excise taxes are being repealed in a number of instances or reduced in a number of others. I suppose the tax on automobiles is being reduced substantially because it has been difficult to sell automobiles. I rather suspect, however, that there may be another reason, that reason being that there is a rather important by-election in the county of Ontario in which the great motor centre of Oshawa is situated. I do not know, but very often we find that something of this sort is done when an election or by-election is in sight. It is an interesting coincidence, but of course it may not be more than a coincidence. Far be it from me to suggest-although I might think it-that the government would do anything of that sort in view of forthcoming by-elections.
The reductions that are made in these taxes are welcomed by the committee. The criticism I am making is that in most instances they do not go far enough; we still have these hidden taxes imposed, and they are quite substantial taxes. That is particularly true, of course, with regard to the sales tax. Even if two per cent of it has been earmarked for a desirable purpose, it is still 10 per cent in aggregate, namely eight per cent for federal revenue and two per cent for the special purpose.
While we are supporting the resolution because it reduces the impact of such taxes, I want to say that none the less we feel that this is the wrong way in which to raise revenue for the country; it is a method which is not based on the principle that most of us I am sure really at heart believe in, namely, the principle of the ability to pay. We shall have more to say when the individual paragraphs are discussed.


Mr. Low:: Mr. Chairman, I should just like to say a word in general about the proposals involved in this resolution concerning the excise tax. We too welcome the relief from what had become an almost intolerable situation, that is to be found in the terms of this resolution. I should like to support what the hon. member for Rosetown-Biggar has said, namely, that the hidden taxes in many instances have become heavier as a burden than are the direct taxes. That fact has been known for quite some time.
There is another evil involved in the imposition of the indirect taxes as we have been using them to raise revenue and it is this.
Excise Tax Act
In the main they are imposed at the manufacturer's level. Because of the fact that they are imposed at that level, by the time the consumer pays the final price the tax is pyramided several times. In a number of instances it can be proved without doubt that, in addition to the tax received by the government, there is also a shadow tax which pushes the price up but which the government does not get. It goes to inflate profits.
While I am not against a reasonable profit, I certainly am opposed to any taxation scheme that will inflate those profits and cause the ultimate consumer to have to pay more than he ought to pay for the goods that he buys, particularly those things that he requires to buy from day to day and from year to year in the ordinary process of living. That is one of the great objections that we have to the excise taxes as they are used by this government.
As to the economic effects of the taxes, I think it can be shown that the government could use the ultimate purchaser's tax, receive the same revenue and yet not do the economy half the harm that they are doing to it with these indirect or hidden taxes imposed at the manufacturer's level. To get away from that pyramiding I would strongly urge that we avoid hidden taxes and adopt an ultimate purchaser's tax. I know the arguments against that procedure. I know that if the consumer pays the tax and sees that it is added to the marked price, he wants to kick the dickens out of the government. I know that argument; but it does not get away from the fact that it is preferable that the tax be collected as an ultimate purchaser's tax and be remitted to the government rather than have the bad effects that the present tax method now imposes upon the economy.
It is often argued that if the excise tax is made to apply at the consumer's level we shall have to deal with many more people and will make many more people collectors of taxes. As a matter of fact that is true. But most people throughout the country who are in business are collectors of taxes for the government anyway. They are certainly collecting income taxes. They are having to make deductions at the source, and they have to make volumes of returns to the government. It would be a simple additional matter for them to make a return on the ultimate purchaser's tax. If the employers of labour across the country who are in business are given to understand that they are asked to do this in the interests of the economy of the country rather than for the purpose of imposing upon them an additional burden, I am quite sure that they would not protest at having to do the job.

Excise Tax Act
However, as has already been said, if the government persists in following its present taxation methods it will certainly persist in pyramiding prices beyond reasonable levels. That is a thing that concerns a great many people across this country.
As I say, we welcome the relief that has been provided in the resolution. I was greatly disappointed to see that the plea 1 made a year ago, and also this year during the budget debate went unheeded. On both occasions I asked that careful consideration be given to placing on the free list such materials as the concentrated vitamin E products. I do not see them under paragraph 9. I want to point out that since I spoke last year on this subject in the course of the budget debate I have investigated much further into this whole matter and have concluded that the work being done on these concentrated vitamin E products is exceedingly valuable. It is the type of work that cannot be done by any other method, apparently. I went down to the University of Ottawa to hear Dr. Shute present an illustrated lecture on this subject. He used coloured photographs-which, by the way, cannot be camouflaged. Coloured photographs are difficult to touch over; they therefore showed the actual situation as they existed before and after. His lecture, together with other information that I have been able to get, convinced me beyond a shadow of a doubt that the di-alpha tocopherols are exceedingly valuable in treating heart and vascular diseases. There are in Canada today many people who are receiving great relief from those conditions through the use of heroic doses of di-alpha tocopherol in various forms. I am quite well aware of the fact that the Canadian Medical Association has not yet placed its seal of approval on di-alpha tocopherol and the claims of the discoverers with regard to its uses in heart and vascular cases. I realize that, but I am also fully aware of the fact that a reasonable investigation has not yet been made by the medical association. That is a fact, and it can be proven. But the results of the treatment can be proven also. They show beyond doubt that this substance is most valuable. The tragedy of the situation is that when cases become quite advanced the only way relief can come to the patient is through his taking these heroic doses day after day for the rest of his life. That means a very large outlay, because the cost of the substance is high. It has to be brought across the boundary line from Rochester, where it is distilled from wheat germ; and it has to pay a duty. Before it can be brought

into the country for sale it has to pay a sales tax on the duty paid price, which boosts the cost to these people beyond their ability to pay.
An association has been formed in this country known as the Vitamin E Society of Canada. As a matter of fact, one of the members on the Liberal side of the house is the president. He and his own family have had evidence of the value of this substance in the treatment of heart and vascular diseases. It seems to me that the pleas of a group of 1,500 people who make up that society should not be just turned aside lightly. That is not all. It can be shown that more than 1,500 medical men in the country are prescribing the substance-well, a year ago they were prescribing it; if they have continued, it means in fact that they have found it is valuable in the treatment of these heart and vascular disorders.
I am hoping that before we get through the discussion of these resolutions the minister, or his assistant, will give -assurance that careful consideration will be given to putting this substance on the free list so far as sales tax and customs duty are concerned, so that these poor people who have to buy the material to get any relief whatever, or indeed to keep themselves alive, may get away from paying the very heavy price they now pay for it.


James Sinclair: Perhaps I can answer two or three questions now. The hon. member for Greenwood asked first of all the total revenue involved in the past year in this particular excise tax. The amount is a little more than $150 million. The revenue reduction during the present fiscal year, 1952-53, will be $55,900,000, and a reduction when applied over the full year-that is next year-will be $61,700,000.


James MacKerras Macdonnell: Is that the
reduction?


James Sinclair: That is the reduction. The total revenue for the past year was a little over $150 million.
So far as the remarks of the hon. member for Rosetown-Biggar are concerned, I regret I did not read this article in the Winnipeg Tribune, but two things struck me immediately about it. I think that any statistician in the country would be very dubious about any survey made on an examination of only fifteen samples. Here our bureau of statistics like to take a very large number of cases in surveys so that a proper average can be obtained. The second point which I am a little surprised at is the ability of a newspaperman to actually get down to a figure apparently as closely as he has done to show the impact on the individual of the federal

sales tax and excise tax which are not levied, of course, at the retail level but back at the manufacturer's level, where the individual has no knowledge. This is a calculation which the statisticians in our department and in the department of the bureau of statistics have considerable difficulty in estimating.
The third point is of course perhaps a good demonstration of the difficulties and fallacies of sampling just one group-in this case low-income families. For example, take a married man with two children. For ease of calculation we will take two children not in receipt of family allowances, so there will not be any compensating factor of exemption for family allowances. This man has to earn more than $2,800 a year before he pays any income tax. So that you could say that that man is entirely taxed indirectly. He is paying one hundred per cent indirect taxes to the federal government. That would be a pretty alarming statement. On the other hand, we can say with pride that this situation develops because this man receives the highest income tax exemptions of any country in the world.
At the other extreme this reporter could have gone to the rich men in Winnipeg-I do not know which part of the city they live in-and interviewed them, and he would have found that about ninety-nine per cent of their taxes were direct taxes, because of course the direct income tax is so heavily progressive in the upper brackets that-


Major James William Coldwell: The impact of the higher taxes would not be as great on that man as on the man in the low-income group.


James Sinclair: Mainly because the impact of this violently progressive system of income tax is so terrific on that man. The best way to get the national average, to see the national impact of the direct taxes against indirect taxes, is by using the illustration which I am very grateful to the hon. member for Peace River for provoking me into finding out. That is the study of the change in incidence of tax since this government took power. I mentioned that in my speech on the budget. In 1935 over 23 per cent of our total tax revenues-and after all, the tax revenue comes out of all the people of Canada- were direct. The rest were indirect, or 77 per cent. Today 62 per cent of the federal government tax revenues are from direct taxes. So we have advanced into the field of direct taxation more and more; and as we are able to increase income tax exemptions, for example, those members of the opposition can quote all the more alarming examples by taking people over or under income tax, in which case they pay one hundred per cent indirect say in the low field; but I think the 55704-126i
Excise Tax Act
national average has shown the direction towards direct taxation which this government is following.
The hon. member for Rosetown-Biggar went off the first item onto the sales tax item. I do not know whether I should answer him now, or whether I should preserve an orderly discussion and keep my reply until we reach paragraph 9. He mentioned, for example, that perhaps there are many foods which are not now exempt from sales tax. Well, if he will read schedule III of the Excise Tax Act he will have some difficulty in finding any food purchased by the ordinary householder of Canada-


Major James William Coldwell: I was speaking in the past tense.


James Sinclair: Even in the best example he used he made a fairly understandable error. He talked about the item as of preserved fruits. Actually, preserves in the ordinary sense used by the family have been exempt for many years. Preserved fruit made in the Okanagan valley out of Zuka melons used as fruit filling for cakes for example. They are not candied fruits, and certainly are not preserves, and this item is applicable to that very small field.
So far as salad oils and cooking oils are concerned the hon. member was quite right in pointing out why this has been done. Formerly, and not so long ago, the household used solid fats such as lard and shortening, and the restaurants used cooking oils. Today the housewives also have gone into the use of cooking oils and liquids rather than solids. This is now recognized by the item in the sales tax resolution, paragraph 9.


Mr. Murray (Cariboo):: That would include margarine?


James Sinclair: I am afraid the hon. member has not given this the study he usually gives these things, for as far as margarine is concerned I think it is the only basic food in Canada which does pay a 10 per cent sales tax. However, I do not intend on this resolution to be provoked into a discussion of margarine.


George Matheson Murray: Margarine is a product of a certain cooking oil which is imported into this country.


James Sinclair: These are cooking oils and salad oils. Margarine as a manufacturer's product is not an oil. It is actually in solid form and is taxable at 10 per cent sales tax under the federal government's Excise Tax Act.
As far as these drinks are concerned, we have had a most interesting discussion in

Excise Tax Act
past years. There were certain prepared drinks which were made out of fresh milk. Those were exempt because milk always has been exempt, as have eggs. Some manufacturers were going into the business of canning or bottling these drinks and it was contended that they too should be exempt, and this was done. The manufacturers were also making other drinks out of dried milk and dried eggs and they also contended that their products should not be taxed, and we have agreed now to this.
The hon. member probably has the schedule to the Excise Tax Act before him and he will see that the only foods, if you can call them foods, still under the schedule subject to sales tax are various fancy relishes, pickles and things like that. A continuous pressure is being exerted to have them too exempt.
The hon. member commented on baling wire. I think the decision this year is as a result of the discussion last year when several hon. members from the prairies pointed out the inconsistency of exempting baling twine and not baling wire. Not so many years ago only baling twine was used and it is only recently that baling wire has been used to any national extent. Now that hon. members have drawn the attention of the government to the fact that this is a necessary agricultural product, it is included.
The hon. member for Peace River again brought up this interesting question of the incidence of the indirect taxes when applied at the manufacturing level. Perhaps I have had some little effect on him because he seems to remember one major point I brought up and perhaps one minor one. Undoubtedly a tax imposed at the manufacturing level is the easiest and cheapest to collect. There are comparatively few manufacturers. Their sales are not generally made for cash but rather by invoice and there is an accurate record of their sales. The cost of collecting a tax is always important because it would be ridiculous to have a tax when the cost of collection was excessive.


Solon Earl Low: Are the manufacturers paid for making the deduction at the source?


James Sinclair: No. The second point was with regard to public acceptance. The hon. member contended that if the public realized that the tax was being imposed they would be more hostile. That is not borne out by the experience of my own province. When the province first imposed a direct sales tax there was great resentment, but when I go home now I am always amazed to see how readily the people pay it. They realize that the tax is put to a good use of which they approve. There is perhaps a third

reason why the federal government has not since the war intervened in the indirect field at the retail level. If the provinces are to have a sales tax they are restricted to a tax at that level.
The other point, which is a matter of considerable importance as far as the efficacy of collection is concerned, is that manufacturers generally make only the one type of goods. That is, a manufacturer would manufacture an article which is either taxable or not taxable. On the other hand, the little retailer handles dozens of articles, some subject to sales tax, some subject to excise tax and others subject to no tax at all. There would be a real accounting job forced on that man if he had to collect tax on his sales, and also the opportunity for evasion would be considerable. It has been a great problem for the provincial administrations which have sales taxes with exemptions.
Some of the states in the United States have found it better to do away with exemptions entirely, to impose a turnover tax of a certain percentage. But that immediately would give rise to members of parliament or members of the legislatures asking for the removal of that tax on food or other things and soon you would be converting from a straight turnover tax to a sales tax.
Then there is the matter of drugs. The minister and his budget committee have given further consideration to extending the list of drugs to be exempted. As was pointed out earlier in this debate some years ago the 5 per cent average medical deduction was reduced to 4 per cent in order to cover the cost of drugs. Consideration has been given to the type of drug which is expensive and in fairly wide national demand, the type of drug which is not used so much for the cure of a disease as for its continual treatment. I suppose insulin is the best example.
The minister has examined the various representations which have been made. Naturally neither the minister nor his budget committee are medical experts and they must rely to a great extent on the advice of the Department of National Health and Welfare and the Canadian Medical Association, who after all are the ones who are using these drugs for their patients across Canada. Some of the recent drugs which have been suggested for exemption include substitute blood plasma, aureomycin and streptomycin, and vitamins of high concentration. The minister is giving continual study to these requests and as the opportunity offers the list of drug exemptions is extended.


Mr. McLure:: A few moments ago the parliamentary assistant introduced a new matter

when he said that oleomargarine was the only foodstuff that pays the 10 per cent sales tax. How much per pound is paid on oleomargarine in the way of sales tax? By asking that question I hope to find out what I have never been able to find out, the cost of a pound of margarine.


James Sinclair: Obviously I have not those figures before me because margarine does not come within the scope of this resolution. I am informed that the actual tax on margarine is around three cents per pound. It varies as the price varies. Once again may I say that that subject is not covered by the resolution. I shall be glad to answer any questions that are within the scope of the resolution.


Winfield Chester Scott McLure: At three cents per pound that would be placing the cost of the manufactured article at about 27 or 28 cents, which is ridiculous as we know. However, that is not what I want to speak about at the present time. The excise tax on furs and articles manufactured of fur has been reduced from 25 to 15 per cent. When this tax was imposed they imposed it on the raw article. Then another tax is imposed on the processed article, and then there is the sales tax besides.
A farmer finds that he has to pay a tax of $3 on an article which cost him $20 to raise, and that leaves his return at $17 for the raw article. When it is processed another tax is imposed on the tax already paid. These taxes are pyramided and taxed over again. As I have said on several occasions, the trouble is that those who imposed this tax had no idea what they were taxing. But they still continue using the same method and tax this article twice when other articles are not taxed in the same way. They tax it in the raw state, in the processed state and then as a finished garment.


James Sinclair: I cannot quite understand the hon. member's first point. Schedule III of the Excise Tax Act shows the exemptions from excise tax and at the bottom he will find "furs, raw." I am informed they have been that way for many years.


Winfield Chester Scott McLure: I know that there is a tax.


James Sinclair: There is no federal tax on raw furs.


Winfield Chester Scott McLure: No federal tax?


James Sinclair: There is no federal tax on raw furs.


Winfield Chester Scott McLure: I beg to differ with you. If you are correct I should have quite a premium coming back to me. I have already paid it for this season.


James Sinclair: I would suggest that the hon. member go to the office where he paid it. It
Excise Tax Act
might well be a provincial royalty, which some of the provinces have. So far as the federal Excise Tax Act is concerned, if the hon. member will refer to page 38, schedule III, at the bottom of the page, he will find that raw furs, as are almost all raw products for manufacture in Canada, are exempt from tax. There is of course an excise tax on the processed article. The excise tax which we are now dealing with covers a very wide field of manufactured and processed goods in Canada, but there is no federal tax on raw furs.


Winfield Chester Scott McLure: Let me try to prove it this way. A farmer has raised a fox and has a silver fox skin. We will say that it costs $20. That is a raw skin. The moment he sells it or offers it for sale to be processed and made into a garment there is a 15 per cent tax applied on that raw article with the result that the purchaser's price is reduced and the farmer only receives $17. I should like to have that explained. I have asked for an explanation on other occasions but it just comes back to the same thing. Surely there is some explanation, or admit that that is so.


James Sinclair: All I can read is the law. First of all there is the fact that there is no tax payable on raw furs, which are exempt under schedule III. Then I would refer to page 13 of the office consolidation of the Excise Tax Act. Section 80A reads as follows:
There shall be imposed, levied and collected, an excise tax equal to 25 per cent-
That is now changed to 15 per cent. [DOT]
-of the current market value of all dressed furs, dyed furs and dressed and dyed furs . . .


George Matheson Murray: With respect to the importation of furs, a large quantity of furs is being imported into Canada at the present time. Is there any possibility of having an embargo placed upon Russian furs entering the Canadian market?


James Sinclair: That is an entirely different matter under the customs tariff resolution. It is not an item of the present resolution. There is a resolution concerning the customs tariff, but according to my recollection it does not include any reference to that.


George Matheson Murray: I shall bring it up later.


Mr. Johnston:: I want to ask a question for information. First let me say with respect to the tax on cigarettes that I understand the tax was reduced-


James Sinclair: May I raise a point? Did we agree to take up the resolution item by item? As the hon. member for Winnipeg North Centre pointed out, to dash around from item to item is a little confusing. The cigarette item is well along in the resolution.

Excise Tax Act


Charles Edward Johnston: I am speaking generally.


Louis-René Beaudoin: Order. I understood from the remarks made by the leader of the C.C.F. group that a general discussion of the resolution would take place first. Judging by the remarks of the hon. member for Queens, his questions pertain to a specific paragraph, and the hon. member for Bow River has addressed himself to the tax on cigarettes. If the general discussion is concluded possibly we might discipline ourselves and agree to study the resolution paragraph by paragraph.


Mr. Cannon:: Before we finish the general discussion-


Louis-René Beaudoin: I understand it is not finished yet. The hon. member for Bow River has some remarks of a general character.


Charles Edward Johnston: We had been speaking about margarine and everything else and I thought we might do a little smoking for a while. There were two or three other items to which I wanted to refer but I will make my remarks when we come to the particular section.


Mr. Fraser:: The parliamentary assistant mentioned that some drugs and vitamins of high vitamin content were exempt. Would that include super A's with a strength of
50,000	units?


James Sinclair: Are you referring to the list I read?


Gordon Knapman Fraser: No, I am referring to your remarks in answer to one of the members.


James Sinclair: I gave a list of the drugs to which consideration is now being given, but the ones actually included at the moment are insulin, radium, cortisone, ACTH and liver extract.


Gordon Knapman Fraser: Then the minister also mentioned certain vitamins.


James Sinclair: No. I read a list of drugs of this type which had been put forward for further consideration.


Charles-Arthur Dumoulin Cannon: On the general question of the sales tax, I wish to bring to the attention of the minister and his parliamentary assistant on behalf of my constituents an application they have made that certain articles used by fishermen should be exempt from the sales tax. The general principle that commercial fishermen should benefit by exemption from the sales tax has been on our statutes for some time. At the present time motors for fishing boats, fish nets, fish lines, cordages and barrels for salt fish are exempt. I have had some correspondence with respect to this matter with the Department of Finance, which so far has not produced any success, suggesting that rubber boots, rubber suits, fishermen's work clothes and gasoline and oil
[Mr. Sinclair.
used by commercial fishermen in their fishing operations should also be exempt from the sales tax. The fact is recognized that fishermen's living conditions and income are not any too good particularly in my county where the fish they catch are all processed into smoked and salt fish which are sold at a comparatively low price. I submit if this request were granted it would not make much difference from the point of view of revenue for the department but would mean a lot to the fishermen who have been asking for it insistently and have written to me on several occasions in that connection.


James Sinclair: Since this matter refers specifically to item 9 of the resolution, perhaps I might defer my reply until we reach that item.


Mr. Cruickshank:: May I ask a question?


Louis-René Beaudoin: Order. Do we now start to discuss the resolution paragraph by paragraph?


Mr. Fournier (Hull):: Yes.


Louis-René Beaudoin: Then we limit ourselves to paragraph 1.


Alphonse Fournier: Agreed.


Louis-René Beaudoin: The other paragraphs will be called later.


George Matheson Murray: What about the income tax?


Louis-René Beaudoin: We are now dealing with the Excise Tax Act. There are also resolutions concerning the Income Tax Act, succession duties and so on. I understand then that hon. members agree to limit themselves to discussing paragraph 1 of this Excise Tax Act resolution.


George Alexander Cruickshank: I want to be in order at all times, but as a matter of information, since margarine was mentioned a moment ago, I should like to know under what item that will come. I sent to my secretary for certain information and she sent me the wrong papers. The information I have entirely discredits the parliamentary assistant.


Louis-René Beaudoin: Margarine was only mentioned incidentlly. If any discussion is to be entertained in that regard it would be on paragraph 9. We are now on paragraph 1.


Stanley Howard Knowles: Can the parliamentary assistant say whether, when this resolution and the section of the bill based thereon are passed, any 25 per cent excise taxes at all will remain?


James Sinclair: There will be none at all.


Charles Edward Johnston: I would like to know whether the companies, say the automobile manufacturers, have reduced their prices to the full

extent of the tax reduction. If the government and members of parliament generally see fit to reduce a tax because of its effect on the buying public, then I think it only fair that this house should make sure that tax reduction is passed on to the consumer.
I do not want to give away any cabinet secrets but my information is that there was an understanding with the government that in the case of some of these tax reductions the full amount of the reduction would be passed on to the consuming public. My observation, together with items I have seen in the newspapers concerning the prices of cars, would lead me to believe that this full tax reduction has not been reflected in the cash price of cars. I would like to ask the parliamentary assistant whether that is so. We should know.


James Sinclair: In the first place the government does not make any agreements with any industries in regard to tax changes. Such changes are first announced in the house after they have been given consideration by the minister and later by the cabinet. The second point is that the government does not set the prices of automobiles.


Charles Edward Johnston: I did not suggest that you should set the prices of automobiles, but I certainly think you have an obligation to see that tax reductions are reflected in prices.


James Sinclair: It would be difficult to do that without setting prices. This matter has been raised in the house; and as hon, members know the representations on this matter for reduction of tax were made partly by the public, partly by the dealers and partly by the manufacturers, who said a reduction in taxation was necessary in order to sell cars. My own feeling from watching the advertisements is that in the light cars, for example, the reduction in advertised prices has been about $150 or $160, which is about 10 per cent of the manufacturers' selling price on such cars. The competition in the automobile business today I think is sufficient safeguard to ensure that manufacturers and dealers will put their products in their showroom windows at the lowest possible prices.


Charles Edward Johnston: That does not answer the question I asked. I am not mentioning the car dealers or manufacturers to direct any particular criticism at them; I am using them only as an illustration because when I was speaking the other evening the Minister of National Health and Welfare asked me, "What about cars?" According to the article to which I was referring on that occasion, speaking from memory the price of a $2,300 car had been reduced by $140. On the basis of that clipping, which I later sent over to
Excise Tax Act
the minister on his suggestion, the tax reduction of $140 had been based on the price of $2,300, and certainly that is not a 10 per cent reduction.


James Sinclair: The hon. member knows, of course, that the 10 per cent is on the selling price at the factory.


Charles Edward Johnston: That is right; and as the
Minister of National Health and Welfare and I were sitting at his desk discussing this newspaper clipping we came to the conclusion that the price indicated was the manufacturer's price. That is the point I want to make. In the interests of the country I do hot think we should reduce a tax and then have a company, I do not care whether it is a manufacturer of automobiles or anything else, make a profit on that tax reduction. I believe any reductions should be passed on to the consuming public in full, and I think the government has both a moral and a legal obligation to see that this is done.


James Sinclair: I am not here to defend the automobile industry or the car dealers-


Charles Edward Johnston: I want it understood that I am not trying to criticize the automobile industry as such.


James Sinclair: Most of us who understand that the tax is paid on the manufacturers' selling price realize that the reductions have been pretty well in line with the 10 per cent reduction in tax. However, I might point out a fact which has not been given very much publicity. Individual dealers who had cars on hand have suffered quite a loss because of this reduction in tax. They have not publicly complained about it; but when they acquire a car from one manufacturer they pay the tax, and the cars they had on hand on April 8 were cars on which they had paid a tax of 25 per cent. Far from trying to squeeze the public I think the car dealers of Canada, in giving these reductions immediately, showed they were willing to pass along these reductions despite the fact that they had paid the higher tax on those cars they had in stock.


Charles Edward Johnston: I do not want any misunderstanding in this regard. I can quite understand that a dealer with two or three cars in stock at that time might have taken a loss; but this tax is not applicable to just one or two cars, or one or two cans of tobacco a dealer may have had on his shelf. This is a process which is going to continue for quite a long time, and the parliamentary assistant should not try to suggest that it only affects one or two cars. It will affect every car a dealer gets for perhaps a year or more.

Excise Tax Act


George Matheson Murray: In my part of British Columbia the dealers passed the reduction on to the public. That was stated in half a dozen different newspapers, and the dealers were commended on having done so and given the public a square deal. Of course the dealers out there are not chisellers; they do what is in the public interest.


Percy Ellis Wright: I thought I heard the parliamentary assistant say there had been no complaints from dealers who had been caught with more than the usual stock of cars on hand when this tax change took place.


James Sinclair: I said there had been no public complaints. Of course the dealers made representations, but they have not been crying to high heaven in the press that they were caught with these cars on hand. The next morning they offered reductions.


Percy Ellis Wright: In the northern part of western Canada where the harvest was not completed last year many dealers were caught with very large stocks of 1951 cars they were unable to sell. Then the budget came along this spring, before the crop was harvested, and there was a reduction of 10 per cent. Many of those dealers are in rather serious difficulties. Because of the late harvest last year they were unable to sell their stock, and they have had to take a loss on the 1951 cars together with the budget reduction of 10 per cent, which means that on many of those cars they will lose from $300 to $500. I have had letters in regard to this matter from a number of dealers, and have forwarded them to the minister.


James Sinclair: I would question just one thing; that is, how they can lose $300 to $500 by this 10 per cent reduction in excise tax.


Percy Ellis Wright: I said they had that loss when they had to sell a 1951 car in 1952, along with the tax reduction. Of course I am not saying the government is responsible for that, but I am saying they have suffered this loss. It is made greater by the fact that they were unable to dispose of their cars last fall and had them on hand this spring when the tax was reduced. The loss is much greater than it would have been in an ordinary year, and therefore this has been a serious matter for them.


Stanley Howard Knowles: When the automobile people made their representations to the government prior to the date of the budget, asking that consideration be given to reducing the excise tax, I believe they also made representations with respect to the level at which the tax is applied. I know the parliamentary assistant has already discussed this matter in general terms in reply to the remarks of the

hon. member for Peace River earlier this afternoon, but I should be glad to hear from him any words he may care to offer in connection with this practice as applied specifically to automobiles.
I raise it in this connection for one or two reasons which I shall indicate. I understand that the tax is imposed at the manufacturers' level. That means, so I am told, that many if not all dealers throughout the country, when they take cars into stock, have to pay the excise tax in advance, even though those cars may be held for some time. The results of that are at least two. One is the result that the member for Peace River and others have referred to from time to time, namely the pyramiding of the cost to the eventual consumer. The other is the amount of money which dealers-and they are not all big fellows-may have to tie up in the form of these excise tax payments which they must make in advance.
I understand that some representations were made by the automobile dealers requesting that a change be made in that respect. They asked that the tax be not levied until the actual sale of the hew car is made by the dealer. These people point out that the argument that the parliamentary assistant used today about it being difficult to apply these taxes generally at the last point because of the wide variety of goods and services that are sold in a country like ours hardly applies to automobiles. The automobile is a fairly substantial piece of machinery; every car is well registered, and automobiles do not go astray as public property does sometimes. In that case it should be quite feasible to apply the tax at the point where the car is sold by the dealer to the final purchaser.
One of the reasons that I should like to see it done is to see what the result would be in terms of advantage to the dealers and advantage to the final consumer. I think it would be of advantage to both. It would be a help to the dealers in not having to tie up in advance that money which is simply money paid to the government. It should result also in a lower price for the car to the consumer if the tax does not appear until that final stage. I wonder whether any consideration was given to that specific request from the automobile dealers with reference to this tax on automobiles.


James Sinclair: This problem is not unique with automobile dealers. It may be a little more striking, but it does not affect the automobile dealer any more than the dealer, for example, in electrical appliances. A dealer in electrical appliances may have $50,000 worth

of stock in his store on which exactly the same excise tax has been paid at the manufacturers' level. He has had to finance that extra carrying charge in exactly the same way. It looks a little more striking in the case of the automobile dealer because he had fewer units, but I am quite sure the aggregate of a big appliance store as against an ordinary automobile dealer is about the same.
It gets back to the basic problem of whether the tax is to be levied at the manufacturers' level, where it is easily controllable and easily collected, or at the retail level. The first break in the principle, of course, would immediately result in demands from the next largest group of appliance dealers, and so on all the way down. Actually the problem of financing the price paid to the manufacturer is always with the retailers, and that price has always included not only the selling price of the manufacturers but whatever federal or local taxes may be embedded in it. So far as the automobile trade is concerned, because of the very great difficulty some of them had experienced in recent months, they have become highly competitive. The pyramiding to which reference has been made may occur when it is a seller's market, when the dealers can sell anything they get and when, by rule of thumb, they put on 25 per cent or 50 per cent mark-up on anything they buy. Once selling becomes competitive however, and it certainly has been in the automobile field and the appliance field in the last six months, then the dealer can no longer operate in that manner. The retailer has to consider the value of any trade-in; he is aware of the actual mark-up he is getting and sets his price accordingly.
I could not ask for any better evidence of that than from the hon. member for Yale (Mr. Jones), who must have had a very vivid experience in the last six months in pricing in that field.


Stanley Howard Knowles: There are two comments I want to make. First, I think it would obviously require a great many more electric irons to be in stock to equal $50,000 than it would in the case of automobiles, if the hypothetical example of the parliamentary assistant is used. The other thing I wish to say is that the main argument the parliamentary assistant uses against making this change is that if this break were made and it were done for one group, in due course he would probably have to do it for others. I do not see that it is an argument against taking a step in the right direction to say that you may have to take further steps in that same direction later. Despite the satisfaction of the parliamentary assistant that he has answered this question 55704-127
Excise Tax Act
on former occasions and has answered it again today, I do not feel that he has yet dealt with it satisfactorily so far as we are concerned. Our contention is that by imposing these taxes at the manufacturers' level, it is necessary for the dealers to finance them and this policy does lend itself to pyramiding so far as the consumer is concerned.


Major James William Coldwell: If I may follow the hon. member, I should like to emphasize one point that the parliamentary assistant overlooked. He speaks of a retailer having $50,000 worth of electrical appliances, and that is true. It would, however, be a fairly large retailer, whereas throughout the country you find a good many small automobile dealers in the smaller places who might have $50,000 worth of automobiles which they are pledged to sell. In other words, many of the automobile dealers are small people in the sense of having capital, whereas any electrical dealer with $50,000 worth of stock would be fairly large and have a fairly large amount of capital.
The whole problem, as I see it, is that automobile dealers who perform a useful service in the smaller communities in servicing automobiles are often people with a relatively small amount of capital, and the imposition of this tax at the level where it is now imposed does make it difficult for them to finance; that is the whole argument. It is not that we want to extend this principle, but you have a group of people who are in a peculiar position in relation to their capital assets and their ability to pay this particular tax, and at the same time perform a service that is necessary in the community. I think that is the plea that has been made.


James MacKerras Macdonnell: I have a question which is somewhat similar. I am told that taxes were collected on cars held by dealers on consignment. My understanding is that the tax is payable when a sale takes place. I take it when a car is on consignment no sale has taken place-


James Sinclair: The member raises a case which I remember of one of the larger automobile concerns in Canada who, anticipating perhaps some reduction in taxes, sent the cars to their dealers on consignment for a month before the budget. They said that because of that they had not made a sale to the dealer and there was no need to pay the tax until an actual sale had been made. The Department of Justice ruled that under the actual wording of the act the tax was payable at the time of delivery by the manufacturer, so taxes have been assessed on those cars just as on the cars from other automobile firms which were sent forward in the old way.

Excise Tax Act


Mr. Ferrie:: May I ask the parliamentary assistant this question? Does the provincial government pay this excise tax?


James Sinclair: You mean the provincial government buying cars? For example, on their cars?


Gladstone Mansfield Ferrie: No; buying equipment. Never mind buying cars.


James Sinclair: It will depend.


Gladstone Mansfield Ferrie: On their road equipment, their snow equipment?


James Sinclair: That is exempt.


Gladstone Mansfield Ferrie: The parliamentary assistant says that is exempt?


James Sinclair: Yes.


Gladstone Mansfield Ferrie: If the provincial government is exempt, why is not municipal government exempt?


James Sinclair: On my notes here I have the hon. member's name marked down because he raised this problem last year and the arguments against this are the same as those which I advanced last year. We have had the discussions almost every year on that subject. The extension of the right of exemption from excise tax and sales tax to the provincial government is as old as the sales tax. The municipalities are creations of the provincial government. The reasons that I advanced last year still apply. The government has reviewed the situation and has decided that the exemption should be extended only to the provincial governments.


James MacKerras Macdonnell: I want to come back to my question. I am a great believer in people paying their taxes, but one runs into cases where governments seem to be-what shall I say-without conscience in the matter of taxes. Today things are being done which in ordinary dealings between individuals would be regarded as intolerable.
I know there is a law to be kept. I know that the parliamentary assistant said that the argument of the Department of Justice is that the tax became payable on delivery, apparently regardless of sale. It seems a curious point, but I am not going to set myself up in argument with the Department of Justice. The question I want to ask is this. Were there distinctions? Were there cases where cars had been delivered on consignment, let us say under legal circumstances A, where they were not regarded as taxable and in other cases where, under legal circumstances B, owing to some slight difference no doubt in the agreement, it was held that they were not taxable on the ground, I presume, that delivery had not taken place?


James Sinclair: I would prefer to give a full answer to this question when the excise tax bill is actually before us; but the information I have at the moment is that some companies actually rented warehouse space, moved cars from their factories into those warehouses without consignment to any dealer, and actually held the cars themselves; in other words, they distributed them around in order to get them away from the factory. I am informed-but I would want to check that information and give the exact details when the bill is before us-that the tax was not payable; that is, that the 25 per cent tax was not payable on those cars. However, I will give the exact details as to the number of cars involved, if any, when the bill is before us next week.


Louis-René Beaudoin: Is discussion concluded on paragraph 1?


Mr. Browne (St. John's West):: I have one question, Mr. Chairman. I am sorry I was not here for all of the discussion. What was the tax before 1951 on these items? Was it all 15 per cent?


James Sinclair: It was not quite all the same. It was 15 per cent on most but it was 30 per cent on soft drinks, candy, chocolate and chewing gum. We are now back to the 1950 status, with the improvement that the 30 per cent tax on confectionery is now also 15 per cent.


William Joseph Browne: On luggage?


James Sinclair: Yes.


William Joseph Browne: What was the tax on luggage?


James Sinclair: It was 15 per cent then. In 1947-48, of course, or up to 1948 we had a 35 per cent luxury tax, a war tax. That was removed in 1948 or 1949. But actually, before these increases were made the excise tax was 15 per cent across the board, with the exception of soft drinks, chocolates, chewing gum and candy where it was 30 per cent. Now it is all 15 per cent.


Louis-René Beaudoin: Shall we go on to paragraph 2?


James MacKerras Macdonnell: On paragraph 2, Mr. Chairman-


Louis-René Beaudoin: We are still on paragraph
1.	I asked a moment ago if discussion had terminated on paragraph 1. The hon. member for St. John's West said he had just one more question. Now I am asking whether we can move on to paragraph 2. Is it agreed that we should do so?


Some hon. Members:: Agreed.


Louis-René Beaudoin: If the hon. member wishes to address himself to paragraph 1, he may still do so. Shall we move on to paragraph 2?


Some hon. Members:: Agreed.


James MacKerras Macdonnell: I want to know the amount of the tax collected and the amount of the anticipated loss.


James Sinclair: The tax collected last year, the balance, was $4,792,000. The effect of the reduction this year will be $2-1 million and a full year $2-3 million. These figures are all out of balance as far as straight mathematical proportion is concerned because of the lag in collections. The month of March is not due, for example, or is not in the hands of the government until May. That is why this figure is out of proportion. You will remember last year the figure on soft drinks, where the big consumption is in the summer months. The reductions in revenue are not strictly proportionate owing to the fact that three-quarters of the year is involved in one case and the full year in another.


Mr. Noseworthy:: Did I understand the parliamentary assistant to say that there is no tax on raw furs as such?


James Sinclair: That is right.


Joseph William Noseworthy: There is a 15 per cent tax now on the raw furs when they are cleaned and dried?


James Sinclair: When they are dressed and dyed.


Joseph William Noseworthy: There is another 15 per
cent excise tax when those furs are made up into the finished article?


James Sinclair: No.


Joseph William Noseworthy: For instance, into fur coats?


James Sinclair: No.


Joseph William Noseworthy: There is what-a 10 per cent tax?


James Sinclair: A 10 per cent sales tax.


Joseph William Noseworthy: There are just the two taxes?


James Sinclair: That is right.


Louis-René Beaudoin: Shall we move on to paragraph 3?


George Matheson Murray: I think the government could well consider further reducing this tax. It would be a great help to the trappers in the northwest who are having a very hard time this year. There are great changes in the use of furs, in styles and so on. The hon. member mentioned silver fox. A few years ago they were worth $50. Today 55704-127J
Excise Tax Act
you can buy them from the trapper for $50 a dozen up where I am. Mink, which formerly were expensive, are now greatly reduced.


James Sinclair: They are not yet essential to life.


George Matheson Murray: Then as to stone marten, I discussed this matter with a trapper the other day at Lower Post, B.C., and at Fort St. John, my home. He had 220 pelts of stone marten and found no market for them above $20. This time a year ago, or two years ago, those pelts were worth $50. We have the finest fur in the world being produced in a state of nature up in the northern part of Canada and also being produced under farming conditions. It would be a good idea to reduce all kinds of taxes on these furs, including the sales tax, so that people would be encouraged to wear more of them. Another thing to be remembered is that furs are not a luxury. They may be considered as such down in the southern part of Ontario or in places with warmer climates. But in western Canada fur garments are vitally necessary and they should be made as cheap as possible to the consumer.


Winfield Chester Scott McLure: There is an excise tax on raw furs. Either the government are collecting it or somebody else is collecting it for them. I want to bring to the attention of the parliamentary assistant this fact. This is before the reduction of the tax to 15 per cent, and when it was 25 per cent. I have a couple of items here. The owner of these did not want to sell them at the low price at which he thought raw furs were going, so he decided that he would have them made up. He shipped the raw skins to have them tanned. One bunch of them were valued at $20, less than the cost of producing them. On those skins at $20 there was an excise tax of $5. Then there was another bunch priced at $17, and the excise tax on those raw skins was $4.65 each. That was on the raw furs. Then they were tanned. After that they were processed, and finally he paid the 10 per cent sales tax. To say that there is no excise tax on raw furs is to say something that is not true. Somebody is making a mistake. We are paying it, whether the government is getting it or not. If it is sidetracked, that is a different thing.


James MacKerras Macdonnell: Perhaps that is where the surplus comes from.


Winfield Chester Scott McLure: Well, it would make quite a surplus.


Louis-René Beaudoin: Shall we move on to paragraph 3, excise tax on soft drinks?


Stanley Howard Knowles: May I ask the parliamentary assistant whether in any discussions that took place between the soft drink people and the government, prior to the date of the budget,

Excise Tax Act
any comments were made as to whether or not any tax reduction would be passed on to the consumer? I recognize the position he took a while ago this afternoon when he said to someone to my left-I think the hon. member for Bow River-that the government could not enter into any agreement or undertaking with any group of people in this country as to what would happen as a result of budgetary changes; hence, the way I put my question. Were there any discussions on this point? Did the government have any reason to believe that if it reduced the tax on soft drinks the price to the consumer would be reduced accordingly?


James Sinclair: Mr. Chairman, no such promise or undertaking was made. I may say in this connection that the representations which were made were made, I suppose, by a great number of members of parliament who have small bottling works in their ridings, by the small bottling works and by the trade association. I cannot say that I can recall myself any representations by the two or three large operators in the country. It was the small operators working, either on their own drinks or on licence or royalty from other concerns, who felt the impact of the reduction last year in the candy, chocolate and chewing gum tax from 30 per cent to 15 per cent. There is a field which is shared by them, and when we gave the candy people a reduction of 15 per cent tax, then they were getting mainly from the children a much larger volume of sales for those articles, which of course resulted in a falling off in the sales of soft drinks. I remember in particular the western small bottlers association coming down here with the actual financial statements of a series of small bottling plants in the four western provinces, and pointing out that far from making money because of this tax reduction to their competitors, they were actually losing money. They asked for this reduction in tax not so they could reduce the price of their products, but just so they could stay in business. They have been very gratified to get it. Most of these small bottling plants feel that now, because of this reduction, they will be able to stay in business and get their fair share of what you might call the confectionery market.


George Alexander Cruickshank: I should like to ask one
question in case I misunderstood the parliamentary assistant. I understand we are on paragraph 3, Mr. Chairman?


Louis-René Beaudoin: Yes.


George Alexander Cruickshank: Am I correct in believing that chewing gum also is included?


James Sinclair: The present tax on chewing gum is 15 per cent.


George Alexander Cruickshank: Is chewing gum under this item? I have gone to a lot of trouble to be here for paragraph No. 9, and I want to ask the parliamentary assistant this question. Are any mineral or vegetable oils used in the manufacture of chewing gum?


James Sinclair: Chewing gum is not in this item. This is a soft drink item.


George Alexander Cruickshank: The hon. member mentioned chewing gum himself two minutes ago.


James Sinclair: I mentioned chewing gum, candy and chocolate only because they are competitive fields. Since I did not expect to be asked questions about the manufacture of chewing gum I have not the answers here. But my recollection from my school books is that chewing gum is made out of chicle, which is a product of Central America. I should be very glad to write the hon. member a letter if I find out that any vegetable oils are used in chewing gum.


George Alexander Cruickshank: No, he will not write me a letter. He will answer before we get to paragraph 9, because I have some figures to put on the record.


Winfield Chester Scott McLure: I take it for granted that since the parliamentary assistant did not take issue with me there is a tax on raw furs; as I have shown, on a $20 skin there is a tax of $5, which has now been reduced to $3.


James Sinclair: The only reason I did not answer was that I had already answered it twice today, and I get a little tired of listening to my own voice. I will again read the act because neither the parliamentary assistant, the minister, nor the government decides it; it is the Excise Tax Act. I refer the hon. member to schedule III of the Excise Tax Act, the one which in fact specifically exempts raw furs. I also refer the hon. member to section 80A which says that there shall be an excise tax on processed, dyed, dressed furs, the manufacturer's product, which the hon. member mentioned. There is an excise tax on the processed product, as the hon. member for York South mentioned, whether that fur is incorporated into a garment, whether it be entirely a fur garment. When it is made into a fur garment then there is a general sales tax of 10 per cent applied. Beyond that I can make no other answer, except to refer the hon. gentleman to the act which was passed in a previous session of this parliament.


Louis-René Beaudoin: We are now considering paragraph 3, excise tax on soft drinks. The hon. member for York South.


Winfield Chester Scott McLure: Allow me one more question, Mr. Chairman. I might say that I have an invoice in my hand. I do not wish to put it on the record since it is rather of a private nature. This invoice shows positively just what I said a moment ago. This was before the reduction, of course. It is dated March 1, and on a skin valued at $20 the sum of $5 was paid, and when it came down to $17 or $16, the sum of $4.65 was paid.


Joseph William Noseworthy: I have one supplementary question. Is the tax collected on dressed furs based on the additional value that the dressing adds to the raw fur, plus the value added by the dyeing and dressing?


James Sinclair: The value of the saleable product; that is the raw product plus whatever manufacturing cost has gone into it. It is the same as the tax on this pen; it is the cost of the pen when sold, not just the cost of the work which went into the materials of the pen.


Joseph William Noseworthy: Can the parliamentary assistant tell me the relative value of the fur before it is dressed and dyed and after?


James Sinclair: That would be a matter that would depend on the fur and- on the degree of processing. I think that the most difficult of all processing is the one we hear about every year when the Minister of Fisheries makes his statement on Canada's share of fur seals from the Aleutian islands. It would depend entirely on the skin and the actual degree of work done on the skin, as in any other manufacturing process.


Joseph William Noseworthy: I think it will be found out that the value upon which the dressed skin is taxed is largely made up of the value of the raw skin and- that the dressing and dyeing has comparatively little bearing on the original value.


James Sinclair: I would doubt that very much on most skins, although that may be true with rabbit skins. In the case of most skins the actual -work of processing and dyeing and making the coat is where the real cost is involved.
Mr. Nose worthy: That does not enter into the tax for dyeing.


James Sinclair: The coat would be sales taxed, but here again I do not pretend to be an expert as to the division of costs as between processing, dyeing and tanning the fur. The hon. member for Queens may be, but I certainly am not.


Mr. Nowlan:: Is that latter part of the paragraph dealing with preparations for household use new?
Excise Tax Act


James Sinclair: This paragraph is hew. The small bottlers pointed out that these chemical preparations-I suppose most hon. members know them by their trade names-which are being sold are strong competition to the bottled soft drinks. It was felt in fairness that whether a drink was bottled or in a dry form it should have the same rate of tax applied. I think these things are almost entirely a matter for the manufacturers.


George Clyde Nowlan: I note the parliamentary assistant used the word "chemical," but this paragraph refers only to preparations for household use. I would imagine there will be tremendous difficulty in administering this section when that term is used. I am thinking of lime juice which is used extensively during the summertime.


James Sinclair: Lime juice would be exempt under another category.


George Clyde Nowlan: This does not say "chemical," it says "preparations for household use." That would include chocolate milk.


James Sinclair: Which would be exempt under the schedule.


George Clyde Nowlan: It says "preparations for
household use." I think there should be a clear understanding of what it covers.


James Sinclair: The Department of National Revenue have a clear understanding because they actually phrased the resolution so that it would cover these things.


Stanley Howard Knowles: Coloured powders.


James MacKerras Macdonnell: I want to know the amount of tax obtained.


James Sinclair: The tax secured last year was $19 million; the revenue reduction this fiscal year will be $10 million; for the full year, $11 million.


Stanley Howard Knowles: How much do you expect to get from these coloured powders?


James Sinclair: We have no estimate on that at all.


Louis-René Beaudoin: Shall we go on to paragraph 4?


Stanley Howard Knowles: Despite what the parliamentary assistant said when we started this discussion today, I think he will agree with me when I say that it is too bad we cannot have a vote on this paragraph of this resolution by itself. I am sure that if we had a recorded vote this is one paragraph where the vote would be unanimous, including those on the other side of the house who supported the imposition of this tax last year.


George Alexander Cruickshank: We did not.

Excise Tax Act


Gordon Knapman Fraser: You certainly did.


James MacKerras Macdonnell: You may not
have known it, but you did.


Stanley Howard Knowles: I am simply trying to point out that all of us support the removal of this tax and that includes those on the other side who a year ago supported its imposition. I think that what has been said during the budget debate and today has been well put. It has been pointed out that it was most unfortunate that this tax should have been imposed. It created a great hardship. When the income tax is put up one year and then brought down the next, although one might complain at least it must be admitted that it is across the board and affects everyone.
But here was a tax which affected only those whose circumstances were such that they had to make these purchases during that twelve-month period. I think it emphasizes the particular unfairness of having put this tax on stoves, washing machines and refrigerators a year ago. It seems to me that the government ought to find some way to make redress to these people who were put in that unfortunate position of having to pay this extra cost. It will be a long time before many people in this country forget the unfairness of that tax. We are glad to see it go.


Alphonse Fournier: If they forget, you will tell them about it.


James MacKerras Macdonnell: I want the figures for paragraph 4.


James Sinclair: Revenue this year, $10-5 million; reduction of revenue for this fiscal year, $10 million; for the full year, $11 million.


James MacKerras Macdonnell: That leads me to make this comment. I understood the parliamentary assistant to say that under paragraph 1 of schedule I of the Excise Tax Act, the reduction for the remaining part of the year would be about $55 million, or about $65 million for the full year.


James Sinclair: $61-7 million.


James MacKerras Macdonnell: If we add
the reduction under paragraph 4, which is the same kind of thing, it gives a total of $71 million. I think the people who bought these articles last year and were unnecessarily taxed should know that they were taxed to the extent of $72 million. I should like to refer to some of the items to show how they come within the range of the ordinary necessities that people, particularly householders, have to have. Schedule I includes automobiles, cameras and other things, but section 3 (a) covers electrical appliances adapted to household or apartment use, such as blankets, chafing dishes and so on. Then
[Mr. Cruickshank.l
section (b) covers appliances adapted to household or apartment use such as stoves, hot plates, grills, washing machines and so on.
This tax was protested against last year but despite our objections we did not have a chance to vote on the thing. I hope that somehow or other these people who have paid this $72 million will know that they paid it and I hope they will endeavour to find out where the money went. It may be said to them that some of it went to the foreign exchange control board.


Alphonse Fournier: Rehearsing a political speech.


James MacKerras Macdonnell: I notice that schedule I refers to stoves and then in paragraph (b) there is reference to stoves when designed for using other than solid fuel. In that case the tax is reduced from 25 to 15 per cent. Here we have a provision under which the tax is to be repealed on stoves apparently without any limitations. Is there some explanation of that? Have I made my point?


James Sinclair: What date is the act you have?


Mr. McCann:: Get the one I gave you.


James MacKerras Macdonnell: Yes. I got this from a very responsible quarter.


James Joseph McCann: Throw the other away. It is four years out of date.


James MacKerras Macdonnell: I got this from a very responsible quarter. This is August, 1951.


James Sinclair: Page 34.


James Joseph McCann: You picked up the wrong one.


James MacKerras Macdonnell: I have the August, 1951, consolidation of the Excise Tax Act with amendments to date.


James Sinclair: Page 34, 3(b).


James MacKerras Macdonnell: Page 34,
3(b). The stoves there are of a peculiar kind, but under 4 the word "stoves" apparently is used without limitation of any kind.


James Sinclair: I am afraid I still do not get your point because this refers to all stoves.


James MacKerras Macdonnell: Under 4 the excise tax on stoves is repealed.


James Sinclair: That is right.


James MacKerras Macdonnell: That means there is no tax.


James Sinclair: That is right.


James MacKerras Macdonnell: Under (a) the tax on stoves of a certain kind is reduced from 25 to 15 per cent.


James Sinclair: Putting it in the 15 per cent bracket, which has now been removed.


James MacKerras Macdonnell: One of us
is not quite grasping the other's point. There is no limitation in No. 4 on the word "stoves".
It does not say stoves of a particular kind; it says "stoves". Should you not say "stoves other than those described in schedule 1"?


James Sinclair: There is no excise tax on stoves. As far as 3(b) is concerned, the effect of this is that there is no excise tax on stoves. As to the special 15 per cent excise tax, if you will recall we had quite an animated discussion about one particular group of stoves, combination stoves. The 15 per cent excise tax was imposed on electrical stoves but stoves using solid fuels were not included. Now we are removing the 15 per cent tax which is in 3(b), page 34, schedule I. We removed the 15 per cent tax on both electric stoves and combination stoves. There is no tax on stoves using solid fuels. Neither pays the 15 per cent tax now.


James MacKerras Macdonnell: I am sorry to be so persistent but I want to read this.
I have read, I believe correctly, from schedule I of the Excise Tax Act, and that does include these stoves. Item 1 says that the excise tax on the goods enumerated in schedule I that are at present subject to the rate of 25 per cent shall be reduced to 15 per cent. Are there some of these in schedule I that are not subject to the 25 per cent?


James Sinclair: It said specifically in 3 (b) that stoves were subject to 15 per cent. There were never any stoves subject to 25 per cent. The 15 per cent tax on electric stoves is now removed. There was never an excise tax on the ordinary coal and wood stoves. The hon. member will note that the 25 per cent is at the end of 3 (a) but 3 (b), which specifically mentions stoves, is 15 per cent, and that tax has been removed. While I am on my feet, although I am anxious to get the resolutions through, I do not think I should allow this chance to pass without saying that first of all every member in the house just loves to vote for tax cuts, especially when elections or by-elections are near. Therefore the hon. member for Winnipeg North Centre cannot assume very much of a cloak of virtue when he says how anxious the members of his group are to vote for tax cuts.


Stanley Howard Knowles: I said your fellows want to vote for these cuts this year.


James Sinclair: Of course they do. Last year when the excise tax increases were instituted we were faced with increasing expenditures for defence. First of all we had to raise
Excise Tax Act
revenue. The second problem was the rate of spending at that time. One reason why we had to have consumer credit regulations was to put a check on such spending in order to conserve two things in particular that were in very short supply at that time, steel and copper. Since that time two or three things have happened. Government revenues have been more abundant than was forecast by some hon. members opposite who again predicted collapse. Our tax needs are not as great to raise the revenue required. The supply of steel and copper has greatly improved during the last year. For these reasons we were able to make these reductions. Because it is good sense as far as the country is concerned to vote for tax increases under certain conditions does not make it any less good sense to remove such increases when conditions have ameliorated.


George Alexander Cruickshank: In the opinion of the parliamentary assistant, or his department, did not price maintenance have a great deal to do with reducing the cost of refrigerators washing machines and other electrical appliances?


James Sinclair: All I can say to that, although it is not quite within the resolution, is that there certainly has been much keener competition, especially in my home city of Vancouver, between sellers, competition which was not possible otherwise under the old price fixing by manufacturer.


George Alexander Cruickshank: Did the hon. member for Greenwood not oppose that?


Louis-René Beaudoin: Order. If we may take it that the discussion is concluded on paragraph 4 we will proceed with paragraph 5. If there is no discussion on paragraph 5 we will take up paragraph 6.


Gordon Knapman Fraser: With respect to paragraph 6 since the small reduction that was made in the tax on cigarettes, has there been any increase in revenue or in the consumption of cigarettes?


James Sinclair: We cannot tell because our receipts of revenue run more than a month behind. The tobacco factories make their end of the month returns one month in arrears, and therefore we have no knowledge of that yet.


Gordon Knapman Fraser: What was the loss last year as the result of the imposition of the extra tax?


James Sinclair: Far from a loss, we actually got a very healthy revenue out of the tax. We did not lose money on the tax.

Excise Tax Act


Gordon Knapman Fraser: You got a healthy revenue but not as much as you got the year before. That is what I want to get.


James Sinclair: You want the reduction in revenue compared with the year before?


Gordon Knapman Fraser: Yes.


James Sinclair: You want the reduction in occurred because of less smoking of cigarettes, and of course there was an increase in the smoking of cut tobacco. The decrease in the case of cigarettes was $4,658,446.


George Matheson Murray: It would be interesting to have an estimate of the number of people who decided to quit smoking cigarettes and who discovered, as the hon. member for Fort William has always pointed out, that it is a very harmful and unnecessary habit. In increasing the tax to the extent that he did, the Minister of Finance performed a great work of reform and cured hundreds of people from coast to coast of this iniquitous habit.


Major James William Coldwell: What was the increased revenue from cut tobacco?


James Sinclair: It was a little over $12 million. We dropped $4 million on cigarettes and picked up an extra $12 million. Cut tobacco rose from $21,888,000 to $34,110,000. On balance we were up about $8 million.


Charles Edward Johnston: I should like to ask the par-liamentaiy assistant which was more effective in bringing about the loss in revenue, the increased tax on cigarettes or the 2 cents that the companies added to their price?


James Sinclair: Of course I am not in a position to answer that. I am here to answer questions on taxation and not on merchandising practices.


Charles Edward Johnston: The same thing is involved with respect to cars which I was discussing a while ago. Now we find that it is also true of cigarettes. The price of cigarettes was not raised at the time the tax was imposed but the cigarette companies came to the government and put on a good deal of pressure to have the tax reduced. In their wisdom the government decided that they were not able to reduce the tax and there was a loss of revenue. In order to magnify the loss of revenue and increase the pressure which they could put upon the government to reduce the tax, the tobacco companies raised their price another 2 cents. That certainly did not help the situation. Now a tax reduction is introduced on cigarettes. The price was reduced by 3 cents but the tobacco companies are still in the position of making an extra profit of 2 cents on every pack. In effect that is making a profit on reduced taxation.

We find that occurring all along the line. In almost every case where a tax reduction has been effected we find that almost all these great companies, these financial octopuses-
1	am not saying all of them but the tobacco companies are one example-are making an increased profit on tax reductions. I think that practice should be stopped.
My next question, Mr. Chairman-I suppose I will be out of order, and if so you will tell me-was going to be whether there has been a reduction in the price of cut tobacco, which was mentioned a moment ago, because of the reduction in tax?


Louis-René Beaudoin: Perhaps we could consider paragraphs 6 and 7 together.


Charles Edward Johnston: I know it comes under 7.


Louis-René Beaudoin: Let us consider the two together and the hon. member will be in order.


Charles Edward Johnston: Then perhaps the minister will answer the question.


James Sinclair: It might be better if we did take them together. As to the first point, in reference to the 2 cent increase charged by the cigarette manufacturers last year, I am not a smoker myself but I recall from press clippings that they said it was due first of all to the increased wages they paid their employees and in the second place-perhaps members from the tobacco growing areas can confirm this-because they had paid the highest prices on record for the Canadian tobacco crop. If the hon. member expects a rollback of that 2 cents I presume he would also expect a rollback in the wages paid the employees and the prices paid the growers.


Charles Edward Johnston: That is a lot of hooey. The parliamentary assistant knows very well that these companies could easily give back that
2	cents without affecting wages at all. I am sure of one thing, that these companies never increased the wages of their employees because of the increased profits they made through the tax reductions. You can't get away with that.


James Sinclair: I cannot follow the hon. member at all. I was only repeating the statement at the time that the increase was due to the higher wages they paid last year and to the record prices for tobacco they paid Canadian farmers. They said1 that as a result they found it necessary to increase prices by 2 cents. I suggest that the obvious implication of the hon. member is that if he wants that 2 cents rolled back then there should be a rollback in the prices paid Canadian farmers and a rollback in the wages paid Canadian workers.


Charles Edward Johnston: I never suggested any such thing.

Excise Tax Act


James Sinclair: The hon. member's second one of those small packages of tobacco point shows the serious consideration he containing an ounce and one-third, you paid has given these resolutions. There is no the tax for two ounces. By changing it reduction on the tax on cut tobacco, so that it to the basis of a pound, a package of an is impossible for the companies to make a ounce and one-third will pay the tax for profit on a reduction we did not give.	an ounce and one-third.


Charles Edward Johnston: I did not say there was; I w-s asking if there would be.


Gordon Knapman Fraser: I have no brief for the tobacco manufacturers, but the hon. member for Bow River said they had made extra profits. Well, in reading some of their reports I noted that the last two dividends of one company had been cut from 12 cents per share to 2J cents. That shows they are not making a large profit.


Charles Edward Johnston: That has nothing to do [DOT] with it.


Louis-René Beaudoin: In order to conduct an orderly discussion perhaps we might dispose of paragraph 6 and deal with paragraphs 7 and 8, since I think they go well together. Has the discussion terminated on paragraph 6?


Some hon. Members:: Agreed.


Louis-René Beaudoin: Then we will take paragraphs 7 and 8.


William Joseph Browne: Under
which of these items would plug tobacco come? That is the hard pressed tobacco Dr block tobacco generally used by fishermen in Newfoundland for chewing and smoking in their pipes. At the present time in my province it costs 60 cents a plug. It used to cost 27 cents before union. Perhaps the parliamentary assistant would be able to tell us the reason for the great increase.


James Sinclair: This is the proper item, dealing with manufactured tobacco. One of the differences between the Newfoundland system of taxation and our system was the fact that we did tax liquor and tobacco more heavily than they did, so when they came into confederation and felt the impact of our taxation it may well be that the cost of these tobaccos increased. I would suggest to the hon. member, however, that there were other financial transactions which were to the advantage of most Newfoundlanders, which more than compensate for the extra cost of plug tobacco.


Percy Ellis Wright: I would like to know the effect of the change from 5 cents per ounce to 80 cents per pound. Those two figures appear the same.


James Sinclair: They are the same. It is a question of the interpretation of the law. Up to now the tax has been 5 cents per ounce or fraction thereof. If you bought


Winfield Chester Scott McLure: There is no reduction in this at all. Paragraph 7 says the excise tax on manufactured tobacco is to be changed from 5 cents per ounce to 80 cents per pound. In paragraph 7 the excise tax on raw leaf tobacco is reduced from 1} cents per ounce to 8 cents per pound, so there is no reduction whatever in the first paragraph; it is just a change. I would like an explanation of paragraph 8 in connection with the manufacture of chewing tobacco. They say the proper way to use tobacco is to masticate it, that you get more for your money that way than any other way. What is the effect of the reduction in paragraph 8?


James Sinclair: Paragraph 7 deals with all manufactured tobacco other than cigarettes. The effect of this change will be that the manufacturer who for reasons of packaging wants to put up his manufactured tobacco in quantities including a fraction of an ounce, for example three and a half ounces, no longer will be penalized. Previously he would be charged duty on four ounces. This will make it possible for the manufacturer to pack his tobacco in any size package he wishes with the knowledge that he will pay tax on that tobacco pro rata at the rate of 80 cents per pound. That has to do with all manufactured tobacco other than cigarettes, such as chewing, smoking and cut tobacco. Paragraph 8 deals with raw tobacco, the leaf tobacco which is not further manufactured into plugs, or cut, or made into cigarettes. The reduction in tax is given as an incentive to grow more of this class of tobacco.


William Joseph Browne: This raw leaf tobacco is just as it is produced by the farmer?


James Sinclair: That is right.


William Joseph Browne: I take it
paragraph 7 includes plug tobacco and refined tobacco for making cigarettes. That tobacco has a higher price than plug tobacco in the trade, without any tax being levied on it. It costs more to produce, does it not?


James Sinclair: I cannot say as far as the
actual cost of manufacture is concerned. In these tobacco taxes we are not concerned with the ad valorem value; it is a specific tax of so much a pound. Whether they make it into plugs or into fine cut for rolling cigarettes or into chewing tobacco, the tax is 80 cents a pound. If the cost of making chewing

Excise Tax Act
tobacco is less than the cost of making fine cut, then of course the cost to the consumer will be less; but that is a manufacturing problem.


William Joseph Browne: But the tax
is the same?


James Sinclair: Yes.


James MacKerras Macdonnell: Do I understand that the change was made in paragraph 7 because you could not work out the tax on let us say an ounce and a half if the rate was 5 cents an ounce; that you had to make it 80 cents a pound so the tax could be worked out?


James Sinclair: The previous system actually penalized manufacturers for packing their tobacco in other than even ounces. Apparently there are good reasons in the trade why they do not want to pack tobacco in two ounce, four ounce or eight ounce packages. Under the law as it was, you paid 5 cents an ounce or fraction thereof, so if you chose to have a package weighing five and one-third ounces you did not pay tax for five and one-third ounces but for six ounces. You paid for the five ounces and had to pay for a full ounce on the one third. Today you will pay one third of 80 cents.


James MacKerras Macdonnell: Why could you not have said "at the rate of 5 cents an ounce"? Would that not have done the same thing?


James Sinclair: At the rate of 5 cents an ounce or 80 cents a pound makes no difference. We are removing a penalty under the old wording.


James MacKerras Macdonnell: I see that.


Joseph William Noseworthy: I understand, then, that the Imperial Tobacco Company will have to pay tax on the tobacco in bond, then another tax on that when it is processed into cigarettes and then a tax on the cigarettes?


James Sinclair: No; there is one part of this country where the people buy this raw tobacco and smoke it without the necessity of Imperial Tobacco or any other company manufacturing it. On that we get a tax under paragraph 8. So far as the tax on manufactured tobacco is concerned, the excise tax, that is paid by the manufacturer on his manufactured product. The farmer who sells to the manufacturer does not pay that tax at that level, so there is no pyramiding of the tax in that way. This tobacco covered by paragraph 8 is tobacco which is not later manufactured so there is no manufacturing level at which we can recover taxes.


Louis-René Beaudoin: We shall pass on to paragraph 9 which repeals the sales tax on a number of items. Perhaps hon. members could limit their discussion to the items contained in subparagraphs (a) to Oh).


George Alexander Cruickshank: On paragraph 9-


Stanley Howard Knowles: Could we not, first of all, have a general discussion on the sales tax? I think perhaps the member for Fraser Valley would agree to that proposal.


George Alexander Cruickshank: It was my understanding from the parliamentary assistant himself that we should follow this procedure, but if I am out of order I shall wait until later.


Louis-René Beaudoin: Before we began discussion of this resolution paragraph by paragraph I understood that it had been suggested by the hon. member for Rosetown-Biggar that we were going to have a general discussion on the resolution, and that took place. I thought therefore that, following what we have been doing since the first paragraphs have been discussed, we might analyse each subparagraph seriatim if that is agreeable.


Stanley Howard Knowles: I was not asking that we should have a broad general discussion such as we had when we were on the first paragraph, but I am suggesting we might at this point have a discussion on the general principle of the sales tax before you ask us to confine our remarks to these particular items.


Louis-René Beaudoin: To follow the wish of the hon. member, if he is to observe the rules, his general discussion of the sales tax would have to be restricted to the particular items mentioned here. He could discuss, generally, that the sales tax is being repealed on the items mentioned in subparagraphs (a) to Oh).


Stanley Howard Knowles: I think the chairman should permit me to welcome the repeal of the sales tax on some items, and to express the hope that it might be repealed on some others as well. The parliamentary assistant has already indicated that there are a few items in connection with which the minister is considering whether or not the tax might be repealed. As a matter of fact, I wanted- I see the chairman is nodding his head.


Louis-René Beaudoin: That, of course, would be a reference in passing.


George Alexander Cruickshank: May I not have a word in this?


Stanley Howard Knowles: I shall be glad to yield to the hon. member and make my remarks later.


Louis-René Beaudoin: Perhaps the hon. member wishes to speak on the matter of procedure we are now discussing.


George Alexander Cruickshank: I am not speaking on the point of order, Mr. Chairman. When I got up some time ago I bowed to the fact that I was possibly out of order, and would wait until another section was called. I represent a dairy district and am therefore interested in this paragraph 9 (a), drinks prepared from milk or eggs. In some areas ice cream is being produced from imported foreign oils. I should like to know from the parliamentary assistant what steps are being taken to protect the people of Canada.
I have a parliamentary return-which is certainly not anything I made up-and it shows that since 1948 approximately 735,450,612 pounds of soya beans have been brought in and manufactured. Some of this material has gone to make the drinks mentioned in paragraph 9 (a). In a return tabled for the member for Lanark it is shown that since 1948,	239,607,700 pounds of copra were
brought in duty free, and that was not mentioned in the previous return. Among other things, this material was manufactured into drinks prepared from milk or eggs. I know that the word "margarine" is almost as repulsive to the parliamentary assistant as it is to me, although from a different angle. I am leaving margarine out of this discussion, because no one would accuse a person of drinking margarine. Milk drinks are definitely being made from these imported oils, and are being sold in Canada. Under a ruling of the Supreme Court of Canada, margarine is also being made and some provinces are even colouring it. The same ruling of the supreme court permits the manufacture of ice cream or these milk drinks out of imported oils.
I should like the parliamentary assistant to tell me just how much the revenues of the Dominion of Canada will be affected by the repeal of the sales tax on drinks prepared from milk or eggs. Obviously it will affect the revenue of every farmer within the dominion.


James Sinclair: This item, of course, is a further help to the dairy industry of Canada. You will recall that two or three years ago when ice cream was classed as a confectionery we had strong representations, from every corner of the house and especially from members representing farm constituencies, that ice cream be no longer classed as a confection but rather as a food. It was pointed out that would be of assistance to the dairy farmers, and because of that two years ago ice cream was included in the schedule of exemptions from sales tax.
Last year, further representations were made that there were many wholesome drinks made from milk which should get preferential
Excise Tax Act
treatment over other drinks that are not fresh products. We therefore exempted from sales tax preparations made from fresh milk. It has since been pointed out by people who are interested in dairy products that other good manufactured drinks are made out of powdered milk or skim milk and eggs, which are also dairy products. The Minister of Finance has therefore made this further extension of the exemption from sales tax to those drinks which are made from milk or eggs. If these drinks are made from substitutes for milk or eggs such as soya bean oil, to which the member referred, then they are not in this classification and are not exempt from the tax but would pay the sales tax of 10 per cent.


George Alexander Cruickshank: May I say a supplementary word? I think that is a fair explanation that we have had from the parliamentary assistant. It is clear in my mind and I hope it is to the press of Canada and to all the producers of Canada that they cannot in the future use this imported copra or soy bean oil to manufacture drinks as they are doing today and as they have been doing for the last six months.


James Sinclair: I want to make it clear, Mr. Chairman, that it is no such thing. I said that drinks which are manufactured from milk and eggs are now going to be exempt from sales tax. Drinks which are manufactured from other things-soft drinks, for example -are going .to bear a 15 per cent excise tax as well as sales tax. Other drinks prepared from other materials will come under the usual sales tax of 10 per cent. The only assertion I have made now is that drinks prepared either from fresh milk, dried, powdered or skim milk, or eggs are now totally exempt from sales tax.


George Alexander Cruickshank: I understood the parliamentary assistant to say this. He clearly stated powdered milk and so on, and I accept that statement. But he has also implied, if not stated, that these copra and soy bean oils imported duty free will no longer be permitted in use without taxation-that is sales tax-in milk drinks or in other milk products. He definitely stated that.


James Sinclair: They always have paid sales tax.


Gordon Knapman Fraser: I want to ask this question. This includes liquid and powdered drinks?


James Sinclair: No; drinks.


Gordon Knapman Fraser: This is put in the liquid form?


James Sinclair: That is right.

Excise Tax Act


Gordon Knapman Fraser: Then the tax will still remain on the powdered form of drinks?


Major James William Coldwell: On such things as Vi-Tone?


Gordon Knapman Fraser: Or Ovaltine?


James Sinclair: First of all, Ovaltine is not a drink. It is only a drink when it is mixed with water or milk. In the second place those are preparations not solely prepared from milk and eggs.


Gordon Knapman Fraser: This tax still remains on powdered drinks?


James Sinclair: That is right.


Major James William Coldwell: I have just one word to say. I want to support the hon. member for Peace River in regretting that more drugs have not been placed on the exempt list, particularly vitamin E. I do not want to labour the point because the hon. member for Peace River has dealt with it well in the past and today. I just want to say that I am in full support of what he has said.


Stanley Howard Knowles: Mr. Chairman, I agree with my leader that the hon. member for Peace River has done an excellent job in pressing this point with respect to vitamin E and some other drugs as well. I also feel that further consideration should be given to the whole question of the sales tax and other forms of taxation on drugs and medicines generally. A while ago I put on the order paper some questions with respect to this matter, and I received the answers the day after the budget was brought down. They are to be found at pages 1936, 1937 and 1938 of Hansard for April 9, 1952. I asked these questions:
1.	What drugs and medicines are subject to import duty?
2.	What is the rate of duty on these drugs and medicines?
3.	What other taxes are drugs and medicines subject to, and what are the rates of such other taxes?
It took about two and a half pages to give the details of the duties on drugs and medicines. I will not say anything more about that matter at this point. I will raise that question again when we get to the customs tariff resolutions. I just want to mention in passing that, in addition to the sales tax that applies on drugs and medicines, a good many of them are subject to customs tariffs of various rates.
With regard to question No. 3 which I just quoted, this was the answer given, and of course it corresponds to what the parliamentary assistant said earlier this afternoon:
Sales tax of 10 per cent on drugs and medicines except ACTH; cortisone; insulin; liver extract for use exclusively in the treatment of anaemia.
I believe the parliamentary assistant named one other substance.


James Sinclair: Radium.


Stanley Howard Knowles: Yes; he mentioned radium. The four that are listed in the answer that I have just given correspond, of course, to the drugs which are allowed as medical expenses when one computes his personal income tax, provided you get above that 4 per cent floor. We are glad to know that this principle has been recognized as far as it has. But I submit that there are a great many other drugs-not only vitamin E and highly concentrated vitamins-which for the sake of health people are called upon to purchase and to use over a long and continuing period of time. They are almost in the class of food, in the sense that people are required to make use of them. I feel strongly that the sales tax should be removed from those products.
We have in the house two or three druggists, one of whom I see to my right; I refer to the hon. member for Oxford. No doubt they are interested because they are druggists. I was not thinking of that, however. They will know the truth of what I am saying. Although there are perhaps many patented medicines on their shelves on which taxation is not out of the way, they will know that there are many products, vitamins and various other items, that are really essential and which should not be taxed in this way. As I say, the answers given to my questions on April 9 indicate a form of double taxation on a good many of these drugs if they have to be imported into Canada from some other country.
Mr. Chairman, it is obvious that there are a number of questions here that all tie in together, I hope you will not think I am out of order if I just mention these in passing in order to indicate how broad this field is. The question that we will be debating at another point, namely, the 4 per cent floor under medical expenses, is related to this matter. The whole question of health insurance is related to it. My feeling is that this government has moved far too slowly in the field of enabling the people of Canada to do something that will help with regard to medical expenses of one kind or another. I think it is a minimum request that we are making when we ask that there should not be this heavy taxation on drugs and medicines.


Percy Ellis Wright: I just want to ask the minister what things are enumerated in customs tariff 411a, 437 and 476b.


James Sinclair: Would you mind if we first called (a), (b) and (c)? When we get to them I will give the answer. Would the hon. member mind waiting until we get to (h)? I will read off the whole thing then. We are at (a) now.


Percy Ellis Wright: Oh, I understand. I thought we were on the clause as a whole.


Louis-René Beaudoin: Is there any further discussion on (a)?


Some hon. Members:: Carried.


Gordon Knapman Fraser: I should like to ask the parliamentary assistant why no consideration was given to taking the excise tax off the powdered preparations. It was only put on last year or the year before.


James Sinclair: No, no;-


Gordon Knapman Fraser: It has only been on a short time.


James Sinclair: -this is not excise tax. This is sales tax.


Gordon Knapman Fraser: Sales tax, I should say.


James Sinclair: It has always been on.


Gordon Knapman Fraser: And it is going to continue?


James Sinclair: It is not on powdered milk.


Gordon Knapman Fraser: I know it is not on powdered milk. But as to a preparation like Ovaltine, it is made of milk and eggs, and milk has to be added in order to use it.


James Sinclair: The same sort of answer as that given with regard to soft drinks, candy, chocolate and what not, applies to Ovaltine. Tea and coffee are fairly heavily taxed, and the 10 per cent sales tax does not seem out of line by way of comparison in the same field. As you have seen in the years you have been here, this field of food exemption has been steadily extended until now only specialty foods such as that and various relishes and pickles are not now exempt from sales tax.


Louis-René Beaudoin: Shall we pass on to (b) of paragraph 9?


Gordon Knapman Fraser: What does this include? Is that for soda fountain purposes or all preserved fruits?


James Sinclair: These preserved fruits are a very narrow class; ordinary preserves, jams, jellies and preserves are already included. There is quite a developing industry of making fruits for baking which are not candied fruits; the Zuka melons of the Okanagan valley are used principally for that. They do not come under the classification of candied fruits, but do not class as home preserves. They were subject to sales tax. They have now been relieved of sales tax.


Gordon Knapman Fraser: Would that include cocktail cherries?
Excise Tax Act


James Sinclair: It would include cocktail cherries, if they were not a candied maraschino. A lot of cocktail cherries are made out of these melons. If it were a candied cherry -most of them are-it would not qualify. The bakers use these preserves a great deal for making their cakes.


Gordon Knapman Fraser: Where is your explanation of just what preserved fruits means in this instance?


James Sinclair: That is the interpretation of the Department of National Revenue.


Louis-René Beaudoin: Shall we pass on to (c)?


Mr. Blackmore:: Before we pass on, I believe that someone ought to say something about what I am going to say now.


Daniel Aloysius Riley: Are you going to take forty minutes to say it?


John Horne Blackmore: We will wait and see. I believe there is altogether too much of a tendency for people in the cabinet, and even members of parliament, to live in a sort of ivory tower. I do not believe that a man like the parliamentary assistant-I have a lot of admiration for him-begins to realize the degree of suffering and privation which is being endured by the common man and his wife throughout the country generally. The income tax and other taxes are so severe, the municipal taxes are so severe, and then the sales taxes are so severe, that if any one of them has a mishap in his family it becomes almost utterly impossible for him to carry on.


George Matheson Murray: It is still better than Russia.


John Horne Blackmore: That is no credit to us. Perhaps the hon. member wants us to be like that.


Louis-René Beaudoin: I do hope that the hon. member will soon give consideration to paragraph (c), cooking oils and salad oils but not including mayonnaise or salad dressing.


John Horne Blackmore: I cannot hear what you say, Mr. Chairman, there are so many people trying to talk.


Louis-René Beaudoin: We had a discussion as to the procedure and it was agreed-


John Horne Blackmore: I still cannot hear you, Mr. Chairman.


Louis-René Beaudoin: I am sorry; I will try to make myself understood. At the beginning of our consideration of these resolutions we had a discussion on procedure. It was agreed that we would limit ourselves to a study of these resolutions paragraph by paragraph. We have proceeded along those lines, and we have already considered all the paragraphs

Excise Tax Act
except paragraph number 9. We have now arrived at a discussion of the subparagraph on sales tax. We have considered the subparagraph on drinks prepared from milk or eggs and also the one on preserved fruits. We are now discussing cooking oils and salad oils but not including mayonnaise or salad dressing. The hon. member may speak.


John Horne Blackmore: Thank you, Mr. Chairman. I was going to say that taxes on absolute necessities, such as certain drugs that mean life or death, are just simply close to criminal. One or two people have written to me concerning their situation. They have simply had to give up their loved ones to die because they could not possibly afford to bring in needed drugs to keep them alive. The drugs are available; they are just across the line. If the taxes were removed they would have a much better chance of getting them; but these taxes, as I have said, are becoming positively criminal. Someone ought to tell the parliamentary assistant, and I hope he tells the Minister of Finance, that he should not try to laugh off too many of these things. Our Minister of Finance comes in here with a jaunty air as if there was not a care in the world.


An hon. Member:: Would you like him to look sober?


John Horne Blackmore: We would like him to look like a sober man, not like a man who is laughing at a funeral. I hope it is conveyed to the Minister of Finance, that something ought to be done for the great common man throughout this country.


Louis-René Beaudoin: Shall we move to subparagraph (d), baling wire for baling farm produce?


Winfield Chester Scott McLure: Have you passed subparagraph (c>?


Louis-René Beaudoin: I have just called subparagraph (d). If there is no discussion on this subparagraph, we shall move to subparagraph (e), steel pens for farm animals.


Winfield Chester Scott McLure: I should like to revert to subparagraph (c). The sales tax is repealed on cooking oils and salads, but not including mayonnaise or salad dressing. Does that include the oils for the manufacture of oleomargarine? Or should it read, but not oils for the manufacture of oleomargarine?


James Sinclair: This tax of course is put on the manufactured product, when the product is packaged and sold as a cooking oil. I will not use the trade name, there are many of them on the market made out of soybean oil, some animal oils, sunflower seed oil. It refers to an oil used as shortening in cooking. Restaurants have used them for many
[The Chairman.]
years. In recent years housewives are turning more and more to using these cooking oils, instead of the same things solidified into lard or shortening. Because of the change in the housewife's habits we are now including these cooking and salad oils used in the homes. They are now exempt from sales tax.


Winfield Chester Scott McLure: Is margarine not a solidified oil? Should it not come under this?


James Sinclair: Margarine as such pays a ten per cent sales tax. Butter is exempt; lard is exempt; shortening is exempt; margarine pays 10 per cent sales tax. Those cooking oils-


Mr. Gibson:: Why?


James Sinclair: Because it is the law.


John Lambert Gibson: That is no answer.


James Sinclair: These cooking oils are now being included on the same basis as lard and shortening because the housewives are using them in increasing quantities.


Louis-René Beaudoin: Is there any further discussion on this question?


George Alexander Cruickshank: Mr. Chairman-


Some hon. Members:: Six o'clock.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Louis-René Beaudoin: We were dealing with subparagraph (c) of paragraph 8.


James MacKerras Macdonnell: I should like to ask for consent to revert to subparagraph (b) for one moment to bring something to the attention of the parliamentary assistant. Some of us feel strongly about legislating in this, shall I say, condensed manner. In this case just the words "preserved fruits" are used and I understand that the details are set out in regulations. Would the parliamentary assistant seriously consider spelling out in the bill, either by reference to the regulations or in some other way, a provision that would settle any doubts.


James Sinclair: Perhaps it would be easier if I read the whole clause as it will appear in the final act. It will be:
Fruit, fresh, canned, frozen, dried, evaporated, preserved.


James MacKerras Macdonnell: It seems to me that the difficulty is in not having a further definition of the words "preserved fruits." I understand that there is a regulation which I presume can be altered from

time to time and I still raise the question whether we should be legislating in this way.


James Sinclair: The department must accept the terminology generally used by the trade. As far as the people who are dealing in these things are concerned, this category of fruit, fresh, canned, frozen, dried, evaporated, preserved has a quite clear meaning to them. It has a meaning quite separate from that of the housewife in connection with jams, jellies and preserves of that type.


James MacKerras Macdonnell: If that is the lull statement then it looks as though I am answered. I was told that there is a regulation, but we can deal with that when the bill is before us.


Louis-René Beaudoin: Subparagraph (c). If there is no discussion, subparagraph (d).


Winfield Chester Scott McLure: This item covers baling wire for baling farm produce. This would be the wire used for baling hay, straw, sawdust, shavings and other such things. I understand that it also includes chicken wire used by farmers. Can the parliamentary assistant state whether I am right?


James Sinclair: I am afraid you are not. Chicken wire is not generally used for baling purposes. Baling wire is the wire commonly referred to as hay wire which is used for the purposes mentioned by the hon. member. This wire is used instead of the twine which was used in the past.


Percy Ellis Wright: I think I will have to correct the farming knowledge of the parliamentary assistant when he says that baling wire is something used in place of the baling twine which was used in the past. As a matter of fact, there were only a few machines which used twine. Baling wire has been used extensively for at least fifty years to my knowledge.


James Sinclair: I am happy to have that correction and perhaps that will satisfy the hon. member for Queens.


Louis-René Beaudoin: Subparagraph (e).


Winfield Chester Scott McLure: Would this cover pens made of fine steel wire which would be used by farmers who are interested in raising mink? I think it should include this type of wire because furs are being taxed in other places and some consideration should be given to the fur producer.


James Sinclair: This item would not cover the wire used in making pens to enclose fur animals or poultry, for instance. This is the recognition of a need for greater extension to include newer types of farm equipment.
Excise Tax Act
Last year we had a rather unusual item in connection with milking parlours. That seemed a rather odd thing to members who were not acquainted with farm operations, but it was a perfectly proper development in the dairying industry. These steel pens are sold as a unit. It is not a matter of stringing wire on posts. Requests have been made by farm members of this house and by cattle associations for the inclusion of this item. Last year we included stanchions, feeding troughs and milking parlours and this is another extension of the exemption of articles of farm equipment.


Louis-René Beaudoin: Subparagraph (f).


James Sinclair: The hon. member for Iles-de-la-Madeleine stated earlier that he appreciated the exemption being applied to preservatives used to remove slime from nets and lines or to increase their life. He asked also that rubber boots and rubber capes used by fishermen should be exempted. That raises a difficult problem in the taxation of commodities, the problem of control. Rubber boots and rubber capes are not used solely by fishermen nor are they sold only through fishing supply houses. They are sold generally for industrial and ordinary use. The manufacturer sells to the wholesalers and suppliers, who then sell them to the fishing supply people and to many other retailers. Because of that administrative problem it has not been possible, despite the hon. member's representations, to include them in the considerable list of fishing supplies which are now exempt from the sales tax.


Mr. Stuart (Charlotte):: This item is of great interest to the members from the maritime provinces. For some time I have wondered why preservatives used in the fishing industry were not exempt from sales tax. This matter has been brought to the attention of the department and discussed in the house on different occasions. I had received correspondence from fishermen in the province of New Brunswick, from manufacturers, wholesalers and retailers, bringing this matter to my attention. Together with the hon. member for Saint John-Albert, the matter was taken up with the department some time ago. Speaking in the chamber on March 12, I mentioned the fact that pesticides or insecticides used in agriculture were exempt from sales tax. For that reason I would expect that materials used for the same purpose in the fishing industry would receive the same treatment. For the benefit of those who do not have any knowledge about this small item, I might say that coal tar is one product used to a great extent all over the maritime provinces.

Excise Tax Act
We have to contend with the marine borer and in many parts of the maritime provinces lobster pots have to be dipped completely in coal tar. Prior to the war coal tar sold for $5, $6 or $7 a barrel. Since the war it has steadily increased in price until today it costs the fishermen about $22 a barrel, and there was a sales tax of $2.20 added to that retail price. I know this step will be appreciated by those engaged in the fishing industry. Catechu and other preservatives are also used. They would come under this item and that also will be of some benefit to the fishermen. I want to take this opportunity to thank those responsible for giving serious consideration to this problem and finally deciding to do away with the sales tax. I can assure the officials of the department who are responsible that the move will be appreciated by all fishermen of the maritime provinces.


Daniel Aloysius Riley: I should like to endorse what the hon. member for Charlotte has just said with respect to this concession to the fishermen of the maritime provinces particularly. At the same time I should like to point out that the hon. member for Charlotte first brought this matter to my attention a couple of years ago. I join with him in expressing the appreciation of the fishermen of our part of the country for the relief given to them under this item. The loss of revenue to the government may not amount to very much but the saving to the fishermen, who felt previously that they could ill afford to pay this tax, is a really big item to them. Again I should like to thank the officials of the department responsible for this relief.


George Clyde Nowlan: I should also like to say a word about this matter. The fishermen on the bay of Fundy coast engaged in hand lining and that type of fishing are also interested in this matter, and I know that the relief that has been given will be appreciated by them. However, I would suggest to the parliamentary assistant that this is only a beginning on what I think should be further consideration of the problem of the fishermen. After all, the department has gone a long way throughout the years in dealing with the farmer. Today a very large part of the equipment used in the farming industry is exempt from sales tax, and properly so. The fisherman, who is also a primary producer and who is facing very serious problems, should be given more consideration than has been the case heretofore. The parliamentary assistant mentioned a moment ago the problem involved in connection with the goods mentioned by the hon. member for Iles-de-la-Madeleine. Obviously there are administrative problems but I think they can be overcome. Gasoline used by farmers is coloured

in some way and is not liable for tax. I am quite sure that the manufacturers of fishermen's goods could put a mark on them of some kind so that they could be recognized as such and be exempt from sales tax if such an exemption were granted. Some sort of brand could be put on them, probably not by way of colour but in some other way.


Mr. Byrne:: So the miner could not wear them.


George Clyde Nowlan: I am sure it can be done. It is a matter of working it out. We realize there are administrative details but there are far greater problems confronting the fishing industry today than the problems of administration confronting the department. I hope that the department and the parliamentary assistant in reviewing the matter in the future will give further consideration to the relaxation of sales tax on this branch of primary industry.


John Lambert Gibson: Can the parliamentary
assistant tell me if this provision applies to the creosote used in the treatment of piling with respect to some types of fish traps? It might apply there on the same basis.


James Sinclair: If the hon. member will read the item he will see it refers to preservatives for use exclusively in treating nets, ropes and lines used in the fishing industry. I had not thought, as perhaps I should have, of the fact that the piles used in one or two types of fish traps in the riding of the hon. member for Nanaimo, I believe, are creosoted pilings. However, that is a problem that could be raised at a future date. I should like to add one thing to the helpful remarks of the hon. member for Annapolis-Kings. I think some members would be pleasantly surprised if they would look at schedule III and see to what extent we do exempt from sales tax materials used by fishermen. I think that in the house, probably because the farming group is a little more vocal, we have tended to overlook the fact that the government has given very wide exemptions with respect to the articles used by fishermen in commercial fishing. We are always anxious to consider new proposals such as have been made by the hon. member for Annapolis-Kings and the hon. member for Comox-Alberni.


Winfield Chester Scott McLure: Has the parliamentary
assistant a list of what are termed preservatives for the treating of rope? If a fisherman were using a quantity of such material for that purpose would his word be taken that it was a preservative for treating rope? For instance, there is one called cutch which is largely used in the treating of nets of all kinds, rope and other lines used in fishing.

It is one of the best preservatives for taking care of fishermen's nets in order to avoid mildew in the hot weather when they are not being used. Would the preservative have to be specified or would a declaration from the fisherman be sufficient?


James Sinclair: In inquiring about this matter I of course was thinking of the types of preservatives used by the fishermen in my own riding, but I am happy to tell the hon. member that the officials of the department mentioned cutch used in the maritimes and said it was a most excellent preservative with no administrative problems since it apparently has no other use except as a preservative of netting. It is included.


Winfield Chester Scott McLure: It is a soluble gum.


John Lambert Gibson: Not much of a preservative, either.


Mr. Carroll:: There is good reason for thanksgiving this evening so far as the items included in this particular paragraph are concerned. On behalf of the fishermen of the constituency I represent-and there are many of them-I want to thank the government and the Department of Finance particularly for the splendid effort they are making to help the fishermen to reduce their costs of production.
Some three years ago I raised the question that was brought up today by the hon. member for Gaspe, not with the finance department especially but with certain members of the government. I was interested in having something done to reduce the sales and other taxes on gasoline used by fishermen. At that time I was given the same explanation the parliamentary assistant has given tonight. Of course I can see great difficulties in the way of doing anything of that kind, though of course it has been done in other industries. I was glad to hear the parliamentary assistant point out that many things have been done to reduce the cost of production of the fishermen, though often these are not well known by some of the smaller fishermen. The parliamentary assistant pointed out that there is a schedule which sets out all the articles on which taxes have been removed. I do not want to delay the committee longer; I rose only for the purpose I indicated.


Mr. Ashbourne:: On behalf of the fishermen of Newfoundland and Labrador I should like to say a word of thanks for this exemption from the sales tax. As other hon. members have said already, I would like to see the government go further and exempt certain other items as well. In regard to rope, for example, I know certain sizes of rope are exempt now from sales tax, but I think the officials of the department might look into
Excise Tax Act
the possibility of having the larger sizes exempt as well. While the smaller sizes of rope are used by the individual fishermen, the larger sizes are used on the vessels in which these fishermen go out to sea.
While I am on my feet I would like to support the request made this afternoon by the hon. member for Iles-de-la-Madeleine that certain other articles he referred to be exempt in order that the expenses of the fishermen might be reduced and their earnings increased. I hope the minister will be able to give sympathetic consideration to that request, particularly now when we see the decline of the fisheries in our area. All these things enter into the costs of the fishermen. Cutch, which was mentioned a moment ago, is used almost exclusively in the barking of nets and twine used by the fishermen. Some of them also use it for barking their sails; and I am very glad this preservative has now been included in the exempt items.
As I said before, I would like to see this list of exemptions made much larger, in order that these men who gain their livelihood reaping the harvest of the sea may be encouraged by seeing something done to assist them. I may be out of order, Mr. Chairman, but these men who go out to catch the fish realize that they do not qualify for unemployment insurance, as do men in other work. That is an additional reason why they should be given further help, so they may continue their work of providing the good protein food so necessary for our people.


William Joseph Browne: What section does this come under? Is it under the Excise Tax Act?


James Sinclair: Schedule III gives the exemptions from sales tax, and these will be added to that.


William Joseph Browne: How much will the government lose in revenue by removing this tax?


James Sinclair: This is one of the items where it is very difficult to make any estimate, because chemicals of the creosote-copper sulphate type are used in many other lines of industry and are taxed. They are under one tariff item, so it would be impossible to make an estimate.


William Joseph Browne: I suppose it would be a comparatively small amount?


James Sinclair: I know that to fishermen in my own riding the cost of washing nets is very considerable. As far as the eastern fishermen are concerned, the members who have spoken tonight seem to think this is a substantial cost to the individual fisherman.

Excise Tax Act


William Joseph Browne: Do you
know the revenue from that complete item at the present time?


Andrew Wesley Stuart: If I may say so,
it will save thousands of dollars to maritime fishermen.


James Sinclair: The answer is the same. It is a problem which very often occurs here when exemptions are made for one class within a group. Aside from this one material, cutch, apparently the other preservatives are widely used also in other branches of industry where they are not exempt. Since they were all taxable, there has never been any attempt in our tax records to set aside for example the copper sulphate used for preserving nets, as distinct from that used in many other branches of industry. That is why it is impossible to give an estimate. The only measure we have of the importance of the issue is the fact that representations have been made by members of parliament from fishing ridings and by fishermen's associations, asking for the removal of this tax.


William Joseph Browne: Has any
consideration been given to removing the duty on material which goes into the manufacture of nets? For instance, they are going to use a great deal of nylon now, which I understand is very much stronger and more lasting than the material now in use. Is any consideration being given to taking the duty or sales tax off that material; or is there any sales tax on it?


James Sinclair: At the present time there is no sales tax. A year or two ago we had a debate on that matter. Up to that time nylon had been included in the lingerie items in the tariff, because that was its principal use. It was only when the other use developed, first of all on the west coast in connection with tuna fishing and latterly, though not to any great extent, in connection with nets-though it was used to a considerable extent in making small ropes and lines-that further consideration had to be given. When we come to the Customs Tariff I can explain that; but there is no sales tax on nylon when used for fishing lines.


John Lambert Gibson: I wonder if the parliamentary assistant could tell me whether this also applies to anhydrous copper sulphate?


James Sinclair: When used as a preservative for fishing nets.


Louis-René Beaudoin: Then have we concluded the discussion on subparagraph (f) ?


Some hon. Members:: Agreed.


Louis-René Beaudoin: Then we will take up subparagraph (g). Is there any discussion? If not we will go on to subparagraph (h).


Percy Ellis Wright: What is the customs tariff now on items 411a, 437 and 476b?


James Sinclair: The reason we are putting 411a in here is to carry out what has been the administrative practice under a ruling of the tariff appeal board. Item 411a reads: Machinery, logging cars, cranes, blocks and tackle, wire rope, but not including wire rope to be used for guy ropes or in braking logs going down grade, and complete parts of all the foregoing, 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.
That is at present administratively carried out, but we are now putting it in the act.
The second thing is perhaps of more general interest, though I am quite sure that item 411a is of great interest to certain hon. members here. Item 437 covers the following: Locomotives, cars and coaches and repair equipment, belonging to railroads, brought temporarily into Canada for the purpose of clearing obstructions, fighting fires or making emergency repairs on railway lines within Canada;
When railway equipment is brought in here from the United States on rental to Canadian railways, as sometimes occurs, we do charge them sales tax. Occasionally when a disaster occurs, such as a bridge going out or a fire, it is necessary to move in railway equipment through the United States to fix the bridge or fight the fire. The Railway Association has made representations that it was unfair to assess sales tax or the l/60th duty per month on railway apparatus brought in for that purpose.
The item also covers:
. . . detector cars when Imported to test rail in tracks in Canada.
There are new types of cars turned out by the Sperry Company whereby the car itself going down the track can detect a crack in the rails that is not obvious so far as the observation of the track walker is concerned. There are no such cars permanently in Canada, and up to the present time they have come in for testing Canadian lines.
The third item covers:
Surgical suction apparatus including motive power; prepared surgical sutures; ethylene; operating room lights designed to minimize shadow, not including bulbs; all the foregoing of a class or kind not made in Canada, and complete parts thereof, for the use of any public hospital, under regulations prescribed by the minister.
There is one other item which I should mention because it is not covered by the resolution. The customs tariff item and the excise tax items should be generally in the same language, and these items on artificial limbs have been different in the two acts.

Tonight, therefore, in the excise tax resolution and in the customs tariff resolution we are going to make the items the same. Item 236b in the excise tax schedule reads, "spinal braces and parts thereof; artificial limbs and parts thereof". We are changing that to read, "artificial limbs, spinal and other orthopedic braces and parts of the foregoing". The same wording will be in the customs tariff resolution to which we shall come later.


Percy Ellis Wright: There is just one question I wanted to ask the parliamentary assistant concerning the sales tax. Can he tell me whether sales tax is charged on tires for farm wagons for replacement purposes or on tires for farm machinery for replacement purposes?


James Sinclair: My understanding is that they are, but I can have confirmation of that in just a moment or two. If we are not on this resolution, I shall answer that on the next resolution.


James Allen (Jim) Byrne: Can the parliamentary assistant say whether any consideration has been given to exempting safety equipment which the boys are required to wear in accordance with their duties in the mines?


James Sinclair: I do not know of any request having been made but the hard hats, for example, that are used by both loggers and miners in British Columbia are taxable.


Mr. Jones:: Is consideration being given to exempting from sales tax materials and goods used in the treatment of cancer? I have been asked about it. I feel it should be exempted, because the material cannot be purchased in Canada at all. These victims have to buy it in large quantities.


James Sinclair: I am not familiar with the equipment to which the hon. member is referring. This afternoon I said that recommendations, for the most part, did come from the Department of National Health and Welfare and further back from the medical profession. Radium is free from sales tax, and it is used in the treatment of cancer. Perhaps if the hon. member would let me know a few of the details concerning this other equipment, I could give him an answer. X-ray apparatus which is used in the treatment of cancer is also exempt.


Owen Lewis Jones: The doctor orders the patient to purchase this equipment for his own use, and this particular patient drew to my attention that it was not available in Canada. I would be pleased to give further particulars to the minister. Could that be exempted later?
Excise Tax Act


James Sinclair: The matter could be given study. All these things have to be studied, and the question has not been raised.


Owen Lewis Jones: If the merits of the case warrant exemption, could that be done?


James Sinclair: Once again I may say that these exemptions for drugs and for equipment are generally given in cases where the drug is not being used as an immediate cure but as a continuing treatment. The example I used this afternoon was insulin for diabetes. If the hon. member cares to provide the minister or myself with the details the matter can be given consideration, but whether the consideration will be favourable will depend upon the recommendation of the medical authorities and the extent of the use of the particular apparatus.


Mr. Knight:: There is one thing that is in continuing use by the victims of deafness. Did the government give consideration to the exemption from duties and sales tax of equipment for the deaf? It is a plea that I have made before in this house. All this equipment comes from the United States and there is always a hold-up at the border. The equipment is so expensive that in many cases people have to do with items for a long time because they cannot afford to have duplicates. If anything is to be done about it, it should be taken into immediate consideration. Has the parliamentary assistant any comment on that?


James Sinclair: The comment I have is that it has been given consideration and a step forward has been taken. The hon. member has said most of the apparatus does come from the United States. I do not want to be out of order, but if you look ahead in the customs tariff items you will find item 482 has been extended. We can resume this discussion when we get to the customs tariff resolution.


Stanley Howard Knowles: This is just a technical question, but when the parliamentary assistant first began to discuss paragraph 9(h) he said that these changes were being made to bring the statutory provisions into line with administrative practice following a decision of the tariff board. I am not criticizing the changes that have been made. They sound very good to me, but I should like to know how a decision of the tariff board affected sales tax matters.


James Sinclair: The first point, of course, so far as the tariff board is concerned, is that not only matters in respect of tariff coming under the Department of National Revenue, but also rulings by the department on excise and sales tax matters can be appealed to the tariff appeal board. That is the first

Excise Tax Act
point. The second point was that the appeal was made against the wording in the act. The intent had been carried out by the department. This was the intent that had been carried out. The ruling of the tariff board on the present wording in the act was adverse to that intent. Item 411a has now been changed to carry out what was the practice, what was the intent and what is the wish of the industry as far as that is concerned. But the hon. member's primary point is as to appeal to the tariff board. That board can be appealed to on matters of excise tax or sales tax as well as tariffs.


Robert Ross (Roy) Knight: Before we get too far from the item which I raised, I should like to point out that what the parliamentary assistant was talking about in item 482 was the matter of tariffs. I think he said that.


James Sinclair: No.


Robert Ross (Roy) Knight: This particular item on which we are now working is paragraph 9, which reads "That the sales tax on the following goods be repealed." My question had not reference to item 482 in the tariff rates which we shall come to later. What I asked him was whether any consideration has been given to the abolition of the sales tax on those particular goods.


James Sinclair: The reason I mentioned the customs tariff, Mr. Chairman, was that he actually asked me whether anything had been done in that regard. I said that nothing had been done.


Robert Ross (Roy) Knight: I beg the parliamentary assistant's pardon. I did not ask him any such thing. I asked whether the government had given any consideration to the abolition of the sales tax on those particular items, namely equipment for the deaf, such as batteries and so on.


James Sinclair: 
Robert Ross (Roy) Knight: I am talking about the sales tax. I should like to know where that sales tax on such goods is collected. As to this equipment for the deaf which is coming from the United States, where is the sales tax collected?


James Sinclair: The sales tax on any import is collected at the place of import.


Robert Ross (Roy) Knight: Exactly; and that is the point. That is the reason why I mentioned that these goods came chiefly from the United States. In my experience-and I have had half a dozen cases of this particular type- the fact is that this sales tax is collected at the border, and the delay is not owing to the tariff or the customs duty but is owing to the collection of the sales tax at the border point. I have known, from my own experience, of a lady who had to wait ten days or two weeks until these formalities were taken care of; in her particular case she could perhaps afford to pay the sales tax. But the point is that the sales tax is collected at the border and it causes delay. That was her particular complaint, and I think her complaint was a valid one. These people are absolutely helpless without their hearing aids; they might as well not be living as far as any association With other people is concerned.


James Sinclair: Mr. Chairman, the sales tax on goods which are imported is collected by exactly the same officials who collect the customs tariff and the excise tax, if applicable, namely the officers of the customs and excise division of the Department of National Revenue. I pointed out that consideration has been given, that a measure of relief has been given,-


Robert Ross (Roy) Knight: With regard to the sales tax?


James Sinclair: -a measure of relief actually more substantial than mere removal of the sales tax, if he will consult the customs tariff.


Robert Ross (Roy) Knight: I suggest that the parliamentary assistant should talk about relief in the tariff when we come to item 482, if I may use his own words. I am talking about alleviation of the sales tax, as mentioned in this paragraph 9 with which we are now dealing.


James Sinclair: I do not know how often I have to tell the hon. member that there was no relief given in the sales tax; but in the consideration of that problem, very substantial relief has been given to imports, which is the very point he himself raised when he mentioned the fact that most of these goods come from the United States. Despite what the hon. member may think, I am sure most

of the people in Canada who need these hearing aids will be grateful for the substantial reduction in the tariff which is included in the schedule.


Robert Ross (Roy) Knight: Mr. Chairman, I did not ask for any postscript to the answer to my question. I am to understand, then, that there has been no alleviation in this budget with regard to the sales tax on equipment for the deaf? Can the parliamentary assistant answer that question yes or no and let us get on with something else?


James Sinclair: I am happy to find that at last the hon. member has understood.' There is no reduction in the sales tax on this equipment. And I again say, so that he will not be able to misunderstand me the next time, that there has been a substantial reduction in the customs tariff. If the hon. member is sincerely interested in the problem, I would suggest that he study the full impact of all taxation on such things, not merely the excise tax.


Robert Ross (Roy) Knight: We will deal with the other matter when we come to it.


Louis-René Beaudoin: Shall we take up paragraph 10? Is that agreed?


Mr. Catherwood:: Before we come to
paragraph 10, may I ask this question? As a result of the explanation given by the parliamentary assistant it would be impossible to estimate the loss of revenue in a section such as this. Can he tell me approximately what would be the total loss of revenue resulting from a repeal of the sales tax, under section 9, on all these items (a) to (h) inclusive?


James Sinclair: In his budget address the minister gave the estimate on those as $1 million.


Louis-René Beaudoin: Shall we take up paragraph 10?


James Sinclair: One moment, Mr. Chairman. The hon. member for Melfort asked me whether tires for replacements on farm equipment are exempt from sales tax. The answer is yes, on farm implements and on any farm machinery. That is in the farm implement item 409b, etc.


Percy Ellis Wright: Sales tax is not collected on tires for farm machinery?


James Sinclair: On those items which are in that class in item 409.


Percy Ellis Wright: Can you give us those?


James Sinclair: It is the farm implement item. This is put in the Excise Tax Act. There is at least a page and a half of them.
Excise Tax Act


Louis-René Beaudoin: Shall we now take up paragraph 10?


Some hon. Members:: Agreed.


Louis-René Beaudoin: Is there any discussion of paragraph 10?


Some hon. Members:: Carried.


Louis-René Beaudoin: Shall the resolution carry?


James MacKerras Macdonnell: Mr. Chairman, I want to make an attempt to convince the parliamentary assistant that there is still an inconsistency as between paragraph 1 and paragraph 4. I want him to look at the Excise Tax Act and either agree with me or tell me where I am wrong. On page 34 of the Excise Tax Act it is stated that stoves of a certain type are subject to 15 per cent tax. Then paragraph 1 states that articles in schedule I of the act that are at present subject to the rate of 25 per cent be reduced to 15 per cent. I take it that that does not affect the status of these stoves which remain at 15 per cent so far as paragraph 1 is concerned. If I am right up to that point, then I suggest to the parliamentary assistant that when you come to paragraph 4, there should be some qualification- in the word "stoves", something to the effect "That the excise tax on stoves other than those referred to in 3(b) of schedule I."


James Sinclair: The actual resolution says that the excise tax on goods enumerated in schedule I of the act which are at the present time subject to the rate of 25 per cent are going to be reduced to 15 per cent. Well, that does not include 3(b) because 3(b) is not at 25 per cent; it is at 15 per cent. That is the electrical appliances group on which we put a special tax of 15 per cent, and now paragraph 4 says that is all repealed.


James MacKerras Macdonnell: In other words, you say that paragraph 4 comes along and repeals the tax on all stoves? It does away with the effect of 3(b) on stoves?


James Sinclair: Yes; and when the bill comes along 3(b) will not be in it. The first resolution, the 25 per cent rate under paragraph 3 is repealed, and then the fourth paragraph says that this special 15 per cent tax on stoves-it is generally referred to as being on electrical appliances-is also repealed.


James MacKerras Macdonnell: If that is what is in the bill perhaps that covers it, but it does seem to me to be a roundabout way to get at it.


[Stage Direction]
Resolution agreed to.
[Stage Direction]
Excise Act
Louis-René Beaudoin: We shall now take up the resolution dealing with the Excise Act which reads as follows:


EXCISE ACT
[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Excise Act, 1934 and to provide:
1.	That the duty of excise on spirits distilled from wine produced from native fruits and used in the treatment of domestic wine be repealed.
2.	That the duty of excise on spirits used directly in the manufacture of goods subject to excise tax under schedule I of the Excise Tax Act be repealed.
3.	That the duty of excise on beer or malt liquor brewed in whole or in part from any substance other than malt be reduced from forty-five cents to forty-two cents per gallon.
4.	That any enactment founded upon this resolution be deemed to have come into force on the ninth day of April nineteen hundred and fifty-two.
We shall deal with the paragraphs seriatim. Is there any discussion on paragraph 1?
Stanley Howard Knowles: Will the parliamentary assistant explain this paragraph? Perhaps he can give a general explanation with regard to this resolution as a whole.


James Sinclair: Hon. members may recall that those members who are from the areas of Canada which produce wine, the Niagara peninsula, part of Quebec, the Okanagan valley and Vancouver island, at various times have protested against foreign wines in one respect being more favourably treated as far as taxation is concerned-that is aside from customs tax-than domestic wines. The reason for that lay in the fact that as far as light wines are concerned, wines of ordinary fermentation, Canadian wines have an advantage; but on wines which are called fortified wines, wines to which spirits are added, heavier wines, for example, sherry, to which grape alcohol has been added, the Canadian wines suffer a disadvantage because we levy an excise duty on the spirits which they use to fortify the wine, and when the wine is sold to the public we put an excise tax on it. They objected first of all to the fact that we levied this excise duty on what was an article used in the manufacture of goods. In general we try to avoid that. They objected also to the fact that there was a pyramiding of taxes since the excise tax was then paid on the resulting cost of the wine, which included not only the cost of the spirits to fortify the wine, but the excise duty on it. And the various members from those ridings, the grape growers association and the wine growers associations on many occasions have asked that this problem be considered. It has been, and we are now removing the extra duty of $1.50 a gallon on those spirits which are used in the manufacture of these strong wines to fortify them. We still at the end have the
[Mr. Macdonnell (Greenwood) .1
same excise taxes; that is, when the wines are sold to the public, of 50 cents a gallon on still wines, and $2.50 a gallon on sparkling wine.


Mr. Adamson:: What is the difference
between light wine and strong wine? What is the difference in alcoholic content? When does a wine become strong wine, and when does it cease being a light wine?


James Sinclair: My understanding is just at the point when it is fortified; when it has gone through its own process of natural fermentation and then has to be fortified with distilled spirit, ' which is generally a grape brandy, it is a strong wine; that is the wine on which this special excise duty is applied. On the ordinary wine, which is not fortified, this duty of course does not apply. It was only on the wines such as port and sherry, which come to my mind, continental wines which are fortified, that this applied.


Agar Rodney Adamson: Irrespective of the strength of the wine at natural fermentation, it does not come into this category?


James Sinclair: Light-


Agar Rodney Adamson: No matter how strong is the alcoholic content of natural wine, it does not come under this?


James Sinclair: A natural wine does not use spirits for its fortification. I think if you remember your high school chemistry, or perhaps your efforts and mine to make home brew or homemade wine, you will recall that there is an early limit to natural fermentation.


Agar Rodney Adamson: It blew up eventually.


James Sinclair: There is little variation
between the strength of natural fermentation of wine and beer. The next step to get it up to 20 per cent alcoholic content can only be reached by the addition of the spirits. I think the hon. member for Lincoln wants to speak on this. He is more of an authority on this matter than you or I.


Mr. Cavers:: I should like to compliment the Minister of Finance and his parliamentary assistant on the inclusion of this matter in the tax item that we are discussing at this time, because it has to do with a very important industry in the district from which I come, namely, the producing of grapes in the district of the Niagara peninsula. There are many grape growers in the Niagara peninsula, the majority in the constituency of Lincoln and some in the constituency of Welland.


Mr. Lennard:: What about Wentworth?


Harry Peter Cavers: And there are some in Wentworth too. To a great extent, they depend

on the growing of grapes. We appreciate very much the effort that has been made by the Minister of Finance and his parliamentary assistant in arranging to have this tax repealed which we feel is an unjust tax on the grape growers of the Niagara district. It put us in a very unfavourable position with regard to wine which is imported from California, South Africa, South America and other countries. This deletion is only fair treatment for the grape growers and domestic wine producers of the province of Ontario.


Louis-René Beaudoin: We shall now discuss
paragraph 2 which deals with the excise tax on spirits used directly in the manufacture of goods.


James Sinclair: I may give a word of explanation on this. These spirits referred to in item 1 are also used in the manufacture of certain mouth washes and hair lotions and things like that, and exactly the same argument applies, namely, that they pay an excise duty when they manufacture it, then they pay an excise tax and a sales tax on the finished product. Since we were clearing up the situation as far as the wine growers were concerned we decided to do the same thing with respect to those other manufactured products.


Louis-René Beaudoin: Is there any discussion on paragraph 3?


Stanley Howard Knowles: I am glad to hear the parliamentary assistant admit in what he has said on the first two paragraphs of this resolution that there is such a thing as a tax that pyramids.


James Sinclair: Very rare-these cases are so rare-


Some hon. Members:: Oh, oh.


James Sinclair: Hon. members are laughing, but they will recall that our two main indirect taxes are sales taxes and excise taxes, and they are not pyramided. They are calculated on the same base. This was one of the rare examples where there was one in the wine. I made a little error with the wine, since the excise tax on wine is specified by the gal-lonage. Therefore it was not pyramided; but in the case of the mouth washes and the hair lotions there was an element of pyramiding because of the application of 10 per cent sales tax to the finished product.


Louis-René Beaudoin: If there is no discussion on paragraph 3, we shall proceed with paragraph 4.


James Sinclair: There is another anomaly in paragraph 3. Ninety-five per cent of the beer in Canada is made from malt, and we tax the malt to secure the tax on the beer pro-
Customs Tariff
duced, and we tax it at the rate of 21 cents a pound. It takes two pounds of malt to make a gallon of beer, and that is at the rate of 42 cents a gallon. There are several other beers in Canada, some made from rice and some made from corn flakes, other than malt, and they have been in the past taxed at 45 cents a gallon. Those who were in this type of brewing business complained that they were being discriminated against and so the tax has been reduced on these rice and corn beers to the same rate as on the malt beers, 42 cents per gallon.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
1. Resolved, that schedule A to the customs tariff be amended by striking thereout tariff items 216d, 216e, 216f, 231d, 231e, 237(a), 237(b), 237(c), 237(d), 238(1), 238(2), 238(3)	(i), 238(3)	(ii), 238(4)	(i),
238(4) (ii), 238(5) (i), 238(5) (ii), 238(6) (i), 238(6) (ii), 238a, 238b, 238c, 238d, 238e, 238f, 238g, 318, 319, 320, 321, 322, 322a, 323, 324 and 325, the several enumerations of goods respectively, and the several rates of duties of customs, if any, set opposite each of the said items, and by inserting the following items, enumerations and rates of duty in said schedule A.
James MacKerras Macdonnell: I hope the parliamentary assistant is going to make a general explanation. The minister referred to this in most general terms. I understand that the chief items to be dealt with concern glass and plastic. I understand also that there are actually some increases in the tariff rates with which I am sure the parliamentary assistant will want to deal more particularly because we were assured not long ago in the most moving terms that the raising of the tariff was ah unholy thing that this government would never do.


James Sinclair: Hon. members will realize, as the minister pointed out in his budget speech, that these items fall mainly into three classes. The minister's remarks will be found on page 1256 of Hansard. The first class covers changes which are consequent upon investigations which were carried out by the tariff appeal board on plastics and glass. There are actually four voluminous and excellent reports which the minister tabled the night he gave his budget speech.
The second group covers changes in classification and nomenclature. This is a very rapidly developing world as far as chemicals and other specialized products are concerned and new names, descriptions and terms are being created. It was necessary to bring the tariff items up to date as far as names were concerned.
The third group covers the incorporation into the tariff schedules of various reductions made by order in council under section 284 of the Customs Act. The governor in council

Customs Tariff
has authority to reduce the tariff on materials which are used in the manufacture of goods in Canada. The governor in council cannot reduce the tariff on manufactured articles, but it can be reduced on primary products. Some of these reductions by order in council go back as far as 1907 and they are now being incorporated in the schedule.
The first group of items, as I say, are as a consequence of investigations which have been made in recent years by the tariff appeal board on both plastics and glass. Last year the tariff board made an interim report, and we adopted into our schedule, certain items covering plastics both of the cellulose and resin type. I find it most difficult to condense the report-


James MacKerras Macdonnell: Does the
parliamentary assistant intend to come back to plastics later on?


James Sinclair: I think the glass items are first. I find it most difficult to condense this most exhaustive report on the glass industry. Some hon. members may have read it, and others may not have had the time. I have a statement here of information culled from that long report which may or may not be of value.
The essence is that here in Canada there are two principal manufacturers of glass, one a branch of a British company and one a branch of a United States company. They make what is commonly called sheet glass; they do not make plate glass. There are considerable imports from Great Britain, the United States, Belgium, France and Czechoslovakia.
When glass is imported for manufacture into other products, such as plate glass and the better qualities of sheet glass for manufacture into mirrors, it was subject to a drawback of 50 per cent. The main consequence of this report on glass has been a reduction in the tariff on glass and the removal of the 50 per cent drawback which had been allowed on glass imported for manufacture into mirrors, for laminated glass, for thermopane double glass and so on.
This is an extremely technical thing and I can read this statement if hon. members desire. The only purpose in reading it would be to place on the record a summary of this excellent report by the tariff board.


James MacKerras Macdonnell: I do not want the parliamentary assistant to have to read a long report, but it seems to me he might deal briefly with the expectations as to the course of trade and prices which are expected to flow from the recommendations.


James Sinclair: To forecast trade and prices would be rather difficult. Perhaps it might be helpful if I gave this report. The total imports during 1951 of sheet and plate glass were valued at about $14 million, of which the United Kingdom supplied $5,600,000 worth. Imports from foreign countries were valued at about $8,400,000, of which the United States supplied $4,400,000 worth, Belgium $2,500,000 worth, France $570,000, Czechoslovakia $450,000 worth, and Germany about $300,000 worth.
The most important item in the new glass schedule is item 319, which covers plate glass, formerly dutiable under tariff items 320, 321 and 322. Item 320 covered plate glass in sheets up to 7 square feet and was duty free under the British preferential tariff and a most-favoured-nation rate of 10 per cent. Item 321 provided for plate glass in sheets over 7, but not over 25 square feet, duty free under the British preferential tariff with a most-favoured-nation rate of 20 per cent.
I might say in passing that there is no general rate on glass because countries outside the general agreement covering most favoured nations are not exporters of glass, or for that matter manufacturers of glass,


Mrs. Fairclough:: Except Czechoslovakia.


James Sinclair: Czechoslovakia is a member of the general agreement on tariffs and trade.
Item 322 provided for plate glass, n.o.p., at rates of 17-J per cent under the British preferential and 25 per cent under the mostfavoured-nation tariff. A drawback of 99 per cent of the customs duty applied to plate glass when used in the manufacture of safety glass. This provision for a drawback is now being cancelled and plate glass will continue to be duty free under the British preferential tariff with a most-favoured-nation rate of 5 per cent.
The imports of plate glass during 1951 were valued at $6,730,000. The United Kingdom supplied $2,167,000 worth, United States $3,460,000 worth, Belgium $970,000 worth, France $72,000 worth, and Germany $62,000 worth.
The item of second importance in the new glass schedule is item 318, which now covers ordinary window glass and thick window glass. The former item 318 provided for ordinary window glass duty free under the British preferential tariff with a most-favourednation rate of 10 per cent. Item 319 provided for thick window glass duty free under the British preferential tariff with a mostfavoured-nation rate of 20 per cent. A drawback of 50 per cent of the duty was allowed on

thick window glass and plate glass used in the manufacture of mirrors. The drawback provision is cancelled and window glass continues duty free under the British preferential tariff with a reduction in the most-favoured-nation rate from 10 per cent to 7J per cent. Imports during 1951 of the glass covered by the new item 318 were valued at $5,450,000 of which the United Kingdom supplied over $2,720,000 worth, Belgium $1,400,000, France, $450,000, Czechoslovakia, $446,000 and Germany $225,000.
The other important items in the new glass schedule are 322(a), 322(b) and 323, the items covering laminated glass or safety glass. We have had plate glass, sheet glass and now this is the third major glass item in Canadian industry. During 1951 the imports of the glass provided for in these items amounted to only $129,000 worth, but during 1950 the value of the safety glass manufactured in Canada reached almost $10 million. There was $10 million worth made in Canada and $129,000 worth imported. Laminated glass and manufactures thereof were formerly dutiable under tariff item 322a at the rate of 17J per cent under the British preferential tariff and 25 per cent under the mostfavoured-nation tariff. The new item 322(a) reduces the tariff on laminated glass, not further processed than cut into rectangles, to 5 per cent under the British preferential tariff and 124 per cent under the mostfavoured-nation tariff. The former rates of 174 per cent under the British preferential tariff and 25 per cent under the mostfavoured-nation tariff are continued on laminated glass further processed than cut into rectangles and on manufactures of laminated glass. In other words, the semifinished product when imported in sheets without finishing into sizes carries a considerably lower tariff than the finished product when it is brought in exactly in the shape of windshields and so on. Those are the three principal classifications and the three principal items.


James MacKerras Macdonnell: I recognize the difficulty of assessing business conditions in Czechoslovakia, but no doubt that was taken into consideration. Would the parliamentary assistant say something about the Czechoslovakian situation?


James Sinclair: This resolution is actually on the tariff items and not on tariff policy. Czechoslovakia is still one of the agreeing parties comprising the thirty-four countries which form part of the general agreement.


James MacKerras Macdonnell: And as such entitled to most-favoured-nation treatment.
Customs Tariff


James Sinclair: And as such is entitled to most-favoured-nation treatment unless there is a specific denunciation of that country by another member. That of course was the situation last summer at Geneva when the Americans and the Czechs both denounced the agreement they had made with each other, both however remaining in the general agreement.


James MacKerras Macdonnell: What was the reason for that denunciation?


James Sinclair: I was there. There was several reasons given on both sides such as the failure to carry out not just tariff reductions but other obligations reached under the agreement. However, I do not think it is proper for me in discussing a tariff item to discuss tariff policy. The second part deals with plastics.


Louis-René Beaudoin: The first part has to do with glass and the second part has to do with synthetic resins.


James Sinclair: I can make the same sort of summary of the report if it is desired or perhaps members would rather read it themselves.


George Clyde Nowlan: As to the first paragraph, can the parliamentary assistant tell us what happened? I notice that 238e is set forth in the one but I do not find it enumerated in the schedule. Is that repealed or does it appear under another number?


James Sinclair: The hon. member is now on
plastics?


George Clyde Nowlan: On the tariffs.


James Sinclair: The tariff on plastics.


George Clyde Nowlan: That is right. I might give the background of why I am raising the matter. There has been some correspondence with the department by farmers of my constituency about the importation of plastic silo tops manufactured in the United States. There is a letter from the deputy minister of the department stating that if they are synthetic resins they come under item 711 at a 20 per cent ad valorem rate, and if made of cellulose acetate under tariff item 238 at 25 per cent. I was hopeful that possibly 238e had disappeared and therefore they could come in there.


James Sinclair: Perhaps I could give a short summary of the plastic situation. These old items are removed from the tariff schedule and these new items, including the items passed last year on cellulose and resin plastics, are now a part of the 900 sequence items.


George Clyde Nowlan: That is what I feared when I looked it over.

Customs Tariff


James Sinclair: If you want the rates I can give you the rates.


George Clyde Nowlan: Where are they now?


James Sinclair: Item 915. The great difficulty is in knowing exactly what type of plastic article the hon. member is referring to because one has to be an organic chemist of pretty high standing to pick out these various plastics.


George Clyde Nowlan: The deputy minister says it comes under synthetic resin which would be 711-this was written last year by the department-or else 238e if made of cellulose acetate.


James Sinclair: Item 908 is the one that now has to do with manufactures of synthetic resins. The rates are 15 per cent, 20 per cent and 30 per cent.


George Clyde Nowlan: The most-favoured-nation
rate is 20 per cent.


James Sinclair: Yes.


George Clyde Nowlan: I know that the policy of
the department in many cases has been to reduce or abolish the tariff on imported farm machinery of a type not manufactured in Canada. This particular type of equipment is essentially for farms and nothing else. They are plastic covers for silos which of course are in great demand today. We .have a letter from the department saying in one case that there is no sales tax because it is for exclusive use by farmers, and then the other letter says that there must be a duty of either 20 or 25 per cent because it comes under one or other of these old items which, as you say, are now 908 or something else.


James Sinclair: That is the problem with the inclusion of this very wide range of plastics in the raw, semi-manufactured and manufactured states. I must confess that, in all the study I have done on these resolutions so far, the most baffling has been this report on plastics because the language is completely foreign to that used by anybody in the House of Commons. The tariff board spent a great deal of time on an actual study of the situation. They called in not only the manufacturers of the basic plastic products but also the manufacturers of the secondary products, and this schedule is to their general satisfaction. It carries through the same basic principle of giving a low tariff or no tariff at all on raw materials not of a class or kind manufactured in Canada, with a slight tariff on those which are manufactured in Canada, and intermediate tariff on semi-processed imports, and a higher tariff on finished articles.

The plastics industry is growing very rapidly in Canada today, particularly in the west, in Alberta with the resins and in British Columbia with the cellulose plastics. In the semi-processed stage the rates are higher; and in the finished stage, which Canadian manufacturers should be able to manufacture if not from primary plastics of Canadian manufacture then from plastics imported from Britain or the United States, the rates are still higher. That is the general pattern which rims through this new schedule which now covers both resin and cellulose plastics.


George Clyde Nowlan: I quite appreciate the problems in connection with the development of the plastic industry, but I think the hon. gentleman will agree that this type of plastic covering will have a very small demand in Canada as a whole. I would think it is a type particularly suitable and necessary for farm use, and I suggest that consideration should be given to its exemption when used on farms. I am quite sure it is not manufactured in Canada at all, or if it is the manufacturing is done in western Canada, which raises problems of freight, deliveries and so on in the east.


James Sinclair: That will certainly be given consideration. Now that we have this complete plastics schedule in the tariff I have no doubt we are going to get many requests during the coming year for tariff concessions on items used in fishing, farming and mining. As a matter of fact one item has been mentioned already by various hon. members, a small fishing apparatus which is made of plastic and which is included in an amendment to this schedule.


James MacKerras Macdonnell: I fully realize the force of what the parliamentary assistant says about this strange new language we are now speaking, but there are one or two general business considerations which I think are relevant. Can we be informed as to how much of what we use in Canada is currently being imported; how much is made by whom, and who are the chief competitors? In other words, just what has induced the tariff board to recommend certain liftings in the tariff?


James Sinclair: All that information is
detailed in this report by the tariff board Every manufacturer in Canada is listed here, with what he makes and what he imports. I am afraid I cannot easily summarize that for the committee except by reading the very long report. The number of secondary manufacturers in Canada is growing very rapidly. We have a fair number of primary manufacturers, and this development in Alberta

with natural gas and oil has given that industry great encouragement. The Columbia cellulose plant in Prince Rupert, which is going to have a chemical plant in Edmonton, is another example of that development. But except by reading the report to the committee in detail, with column after column of figures showing the production of individual companies, I am afraid I cannot give any easy summary.
There is one important point in my opinion, however, which I think should be emphasized. As you know, by the Geneva agreements many of our existing tariff rates have been bound for three years, which means we cannot increase them. Even though we can give reductions to other countries, we cannot increase those rates. Those bindings, of course, were given in return for bindings of value to Canada in other countries; but we were very careful in new fields, where we could not assess the impact of such bindings, not to give any assurances or bindings of that kind. I would like to draw attention to a paragraph in the report of the tariff board which points that out:
The board does not, in this report, recommend rates of duty which will apply when goods not now made in Canada begin to be produced in this country. The board is aware that industry is concerned lest low or free rates on goods not now manufactured in Canada may become bound against increase under international agreement.
They are thinking, of course, of the general agreement on tariffs and trade.
In view of the rapidity with which this industry is developing and changing, the board recommends that those responsible for Canada's tariff policy bear this point in mind when undertaking international negotiations or, indeed, when new materials in this field are produced in quantity in Canada.
I may say the Minister of Finance has certainly accepted this recommendation. Moreover the chairman of the tariff board, which made this report, has been on the various Canadian delegations at Havana, Geneva, Annecy and Torquay at which various items were bound, so he is well aware of the problem.


James MacKerras Macdonnell: I want to go back and ask one question on glass. One of the things that concern one is that as I understand it there is now an abandonment of the drawback, so that Britain and Czechoslovakia are left competing with each other. I have forgotten just what rates were indicated by the parliamentary assistant, but in any case there was formerly a substantial British preference. Have we any assurance that the basis of competition will be fair, and that the dumping regulations now in force will be effective with regard to Czechoslovakia?
55704-128J
Customs Tariff


James Sinclair: The problem of establishing fair market values for goods from behind the iron curtain is very difficult. That was one of the points raised by the Americans in their denunciation of their trade relations with Czechoslovakia. It is almost impossible for our trade commissioners to circulate freely in Czechoslovakia and find out the current selling prices in that country of the type of goods they send to us. It is even more difficult for individual salesmen going to Czechoslovakia to ascertain those prices. On the other hand it is perfectly open to any Czechoslovakian trade commission or businessman to come to this country and find the fair market price of any commodity. That is undoubtedly a great problem.
However, I think most hon. members are aware that the glass industry was recently the subject of a report by the combines investigation branch. It is an industry in which there is not as much competition as generally exists in other industries in Canada. We have for the most part the Pilkington group of England, who are here with two branch factories, and the Pittsburgh Glass Company of the United States who are here with two or three factories under various names. The only real competition for those two groups comes from those individual Canadian importers who bring in Belgian, French. German and Czechoslovakian glass. Personally I feel that it is pretty healthy to have that competition, especially when you remember that there is only one glass company in all Britain. The Pilkington company is the only glass company there.
I do not want to bring in the findings of the combines branch in connection with the glass industry of Canada, but I feel that the removal of the drawback and the lowering of the duty will be a healthy thing as far as competition in the glass industry in Canada is concerned, and will be of benefit to those who use glass, especially the ordinary household where glass is used for windows and mirrors.


Mr. Hosking:: With regard to imports from Czechoslovakia, I have looked through these tariff changes for items dealing with hats and dresses. The hat industry in Canada is finding it very hard to remain in business in competition with imports from Czechoslovakia, where the cost of manufacturing the article apparently is not known and cannot be assessed. Has the department given consideration to having our own government fix a value for these Czechoslovakian products when they come in, and charge the tariff on that assessed value, instead of accepting the figures of these countries behind the iron curtain in regard to the

Customs Tariff
cost of manufacturing these articles? That would apply to glass and hats and other articles which, in order to hurt us, they send here in quantities at will, and on which no basic value can be set because we have no access to their records.


James Sinclair: That matter, of course, does not relate either to this resolution or to the Department of Finance. There is provision in the law-


Louis-René Beaudoin: If it does not relate to the resolution now before us, I am afraid the hon. member will have to ask his question at another time. Shall this resolution carry?


Agar Rodney Adamson: The minister said no plate glass was made here, and I realize that. When he mentions heavy glass, does he know whether any 32 ounce glass is made in Canada? There is single diamond, double diamond and 32 ounce glass, which I think is especially heavy. Is the latter type manufactured in Canada?


James Sinclair: I do not believe so. I do not recall any mention in this report of heavy sheet glass. Both thin sheet glass and ordinary window glass are the types made in Canada. Cast and rolled glass are also types not made or made in very small quantities. Most of it is imported from either Britain or the United States.


Agar Rodney Adamson: The reason for asking is that I had to buy some the other day, and I was informed that I could not get it in Canada.
I had to import Belgian glass, I think it was.


James Sinclair: I have one or two amendments to resolution 2. This is the second class, and perhaps I could give a general summary of the type of change made in this class. Resolution 2 contains 89 items, containing 27 new tariff items established to meet some of the many representations received for reductions in tariff during the last twelve months; 7 items on which the existing rates have been modified with no change in wording; 46 items in regard to which the wording has been clarified or revised to provide for additional products; 9 items which do not precisely fall in any of the above groups.
Some of the principal products covered by the group of 27 items referred to above are: pollen; culinary herbs; carbon tissue paper; plant protectors; extenders or substitutes for blood plasma; mullite; chemical preparations for coating the inside of fluorescent lamps or electronic tubes; plasticizers of petroleum origin; cast shapes of melted basalt rock; overhead rail tracks for industrial plants; dredges for removing the overburden in mines; ball and roller bearings for the repair of agricultural implements; machinery and apparatus
[Mr. Hosklng.l
for the manufacture of antibiotics, etc.; instruments for the interpretation of aerial photographs; automatic pilots and thermostatic controls for gas water heaters; apparatus for the receiving and transmitting of photographs by wire; steel rolls filled or surfaced with paper or cotton; scale parts; wood split pulleys; tires and tubes for tractors; material for electrotypes and engravings; waste containing aluminum oxide; United Nations and North Atlantic treaty publications; and materials for use in the manufacture of oil well drilling machinery and apparatus. On all of the foregoing the tariff has been substantially reduced or eliminated.
The general tariff on bananas has been reduced from $1 per stem or bunch to $1 per hundred pounds. The general tariff is the most important tariff so far as bananas are concerned, because our sources of supply are countries which are neither under the British preferential nor under the mostfavoured-nation tariff. As I said, the general tariff has been reduced from $1 per stem to $1 per hundred pounds; the British preferential rate of 10 per cent and the mostfavoured-nation rate of 17 J per cent on olives, sulphured or in brine, not bottled, has been suspended until July 1, 1953; the most-favoured-nation rate of 15 per cent on aircraft, complete parts thereof, and engines therefor, when of types and sizes not made in Canada, has been suspended until July 1, 1955; and the most-favoured-nation rate on ovens for commercial bakeries has been reduced from 10 per cent to 7i per cent.
The group of 46 items consists mainly of amendments to facilitate administration and to remove anomalies.


James MacKerras Macdonnell: May I ask what the parliamentary assistant is reading from? Are these amendments to this schedule we have here?


James Sinclair: This is a summary of the changes covered by the second resolution. Actually, the second resolution is embedded right in the schedule. You have to look along past the end of the plastic schedules to find it. It is at the bottom of page 13 if you have the separate resolutions.
The third group covered by this resolution is a group of 46 items consisting mainly of amendments to facilitate administration and to remove anomalies. The wording of some items has been widened in scope. The most important items in this group are those covering automobile parts, the wordings of which have been revised and brought up to date during trade agreement negotiations when some of the most-favoured-nation rates were reduced from 25 per cent to 17J per cent. The item covering tractors has been amended

to provide for accessories therefor. The wording of the item covering rubber tires has been amended to continue duty free entry of tractor tires which were formerly covered by an administrative ruling. That is part of the problem which the member for Melfort raised. The tariff has been reduced on milk evaporators from 10 per cent to 74 per cent and the wording of this item has been widened to cover milk driers. The item covering off-highway trucks has been amended to include half-tracks. The revised wording of the item covering photographic cameras and equipment is now being inserted in the permanent tariff. I do not know whether members want to ask questions on the individual items or perhaps I should move the amendments to the items.


Mr. Helme:: Mr. Chairman, I wonder if I might mention item 409m which has to do with internal combustion traction engines. I take it this will mean gas, gasoline distillate and diesel engine tractors. Up to the present time there have been three classifications for internal combustion tractors. Am I to understand from this that all three classifications will be free of duty now?


James Sinclair: All internal combustion tractors are now free of duty.


Francis Heselton Helme: It says "accessories", and they have been a rather difficult thing in connection with farm tractors in so far as lighting equipment or starting equipment was concerned. There has been a lot of trouble. Will they be free of duty, too?


James Sinclair: 
Ellen Louks Fairclough: It is some proviso.


Louis-René Beaudoin: This amendment is moved by the Minister of Public Works on behalf of the Minister of Finance. Shall I dispense with the reading of the amendment?


Some hon. Members:: Agreed.


Louis-René Beaudoin: Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
James Sinclair: The next amendment is to tariff item 197f. I beg leave to move, or at least the Minister of Public Works will move:
That schedule A to the customs tariff as amended by resolution 2 be further amended by striking thereout tariff item 197f and inserting in lieu thereof in said schedule A the following item, enumeration and rates of duty:
"197f. Carbon tissue paper, valued at not less than forty cents per pound, for use in the manufacture of carbon paper.
B.P.	M.F.N.	Gen.Free	71 p.c.	25 p.c.
This is paper produced by Britain, carbon tissue paper not manufactured here in Canada. It is a carbon paper made out of rag stock. It is of better quality than that made in this

Customs Tariff
country from ordinary newsprint or cellulose. To make quite sure that this reduction to the British covered only rag stock paper a value of not less than 40 cents per pound has been placed on it.


Ellen Louks Fairclough: One hundred per cent rag content?


James Sinclair: Almost, because it is 40 cents per pound. It is not entirely, but almost.


Ellen Louks Fairclough: Do we not produce in Canada one hundred per -cent rag content?


James Sinclair: Not at all. Ours is all cellulose.


Ellen Louks Fairclough: Oh, no.


James Sinclair: That is the information I have here.


Louis-René Beaudoin: The committee has heard the amendment proposed by the Minister of Public Works. Is the committee agreeable to the amendment?


James MacKerras Macdonnell: Is the parliamentary assistant not going to answer the question raised by the hon. member for Hamilton West?


James Sinclair: I thought I just did that. Of this type, our imports last year amounted to
783,000	pounds valued at $348,000. The United Kingdom supplied 298,599 pounds valued at $197,700. The United States supplied 484,505 pounds valued at $150,422.


Louis-René Beaudoin: Shall I again dispense with the reading of the amendment?


Some hon. Members:: Agreed.


Ellen Louks Fairclough: Mr. Chairman, it may be that in this particular classification, where you get into a tissue stock, we do not produce it in Canada in 100 per cent rag content. But 100 per cent rag content stock is produced in Canada. Can the parliamentary assistant say whether or not any 100 per -cent rag content stock is produced here in other weights?


James Sinclair: This is for the manufacture of carbon tissue paper.


Ellen Louks Fairclough: It is a tissue stock.


James Sinclair: We have no information on that from those who manufacture it. There are very excellent 100 per cent rag stock papers made in Canada; there are also some fine papers made. But as to a tissue for the manufacture of carbon paper, the information of the tariff commissioner is that this class of rag stock comes entirely from Britain and the United States. This item is for the advantage of the British. It does not affect any Canadian manufacturer of this carbon tissue paper because ours is valued at less than 40 cents a pound and is therefore not affected.


Louis-René Beaudoin: Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
James Sinclair: There is an amendment to the section just mentioned by the hon. member for Prince Albert. I beg leave to move, or rather the Minister of Public Works moves:
That schedule A to the customs tariff as amended by resolution 2 be further amended by striking thereout tariff item 409m (1) and inserting in lieu thereof in said schedule A the following item, enumeration and rates of duty:
"409m (1) Internal combustion tractors (not to include highway truck-tractors) -
The important part is that in parenthesis.
*-and accessories therefor: parts of all the foregoing.
B.P.	M.F.N.	Gen.Free	Free	Free
This is to make sure that these so-called highway truck-tractors are not included; but all the ordinary tractors, as we think of them, are now free from tariff as are accessories as well.


Francis Heselton Helme: Do accessories include replacement rubber tires and tubes?


James Sinclair: I am told that will be covered in item 618(b) which we shall come to in just a moment.


Percy Ellis Wright: On this item I have a suggestion to make to the parliamentary assistant. I have -been given to understand that this word "accessories" does not cover all of the attachments which should be covered under this item and that representations have been made that the words "attachments and accessories" should be used there instead of simply the word "accessories". I have been informed that there is a great difficulty in the department in distinguishing between what is an attachment and what is an accessory. I am told that it would simplify the administration and would widen the application of this item if the two words were used.


James Sinclair: The second section of this item 409 specifies attachments. I think there is quite a difference between an attachment and an accessory. A plough pulled behind a tractor could be called an attachment.


Percy Ellis Wright: It also is covered under other items.


James Sinclair: That is, of course, the point I am getting at. There is difficulty in the department in distinguishing between what is an accessory and what is a gadget. Again that is a problem of administration. But the present exemption includes the generally accepted accessories to a tractor and they are free in the British, most-favoured-nation and general tariffs.


Percy Ellis Wright: Have representations not been made by the Canadian Federation of Agriculture and other bodies which are interested in having this word accessories widened by using the word attachments there, or in having this item widened by using the word attachments as well as accessories? I am given to understand that there is difficulty in the matter and that it would simplify things greatly if the word attachments were used. If it is possible, will the parliamentary assistant let this amendment stand tonight and make more inquiries with regard to this matter. The second item mentions attachments to be combined with automobiles in Canada for use on traction engines and parts thereof. It uses the word attachment there and not the word accessories. I think there is a point here which should be investigated.


James Sinclair: In the discussion of the tariff schedule, a discussion which is almost continuous in the department-because these representations come forward the year round, unlike income tax representations which are generally made just before the budget-I do not know of any item to which more attention has been given than to this tractor item because of the problem raised and because of the wide use of tractors. I am informed that the Canadian Federation of Agriculture made such a suggestion. The Canadian Federation of Agriculture, in putting forward proposals on behalf of the farmers, naturally want all taxes removed from all types of equipment that can be possibly used by farmers, and to a great degree that has been accomplished in recent years; but as far as the administration of the Department of National Revenue is concerned, this is the wording which they want, and in view of their experience this is the wording which will include all bona fide accessories on tractors, but will exclude others.


Percy Ellis Wright: If there is any regulation which distinguishes between attachments and accessories I should like to know just what the interpretation is as to what is an attachment and what is an accessory. They must have some definition which they go by. I would like to get these two definitions.


James Sinclair: I am informed that neither we nor the United States department of internal revenue have any clear-cut distinction by regulations between an accessory and an attachment. It is the past practice of the department which has been their guide, as to what is a useful accessory and what is not. When the actual bill is before the house we shall have the same item back again, and
Customs Tariff
I shall at that time have with me whatever
rulings the department has given in the past on accessories.


Francis Heselton Helme: Item 409m (2) reads:
Traction attachments designed to be combined with automobiles in Canada for use as traction engines and parts thereof.
I believe this relates to an attachment which can be put on automobiles. You take the back wheels off the automobile and put the tractor wheels on and make a light tractor of it.


James Sinclair: That is right.


Francis Heselton Helme: There are other things pertaining to tractors that are referred to as attachments. For instance, in the trade we refer to lighting attachments, starting attachments, belt pulley attachments, power take-off attachments, hydraulic pump attachments, and so on. These are part of the tractor. I should like to have a clarification of that, if I may.


James Sinclair: I am informed that these are all classed as tractor accessories by the department.


Francis Heselton Helme: They would be free, then.


James Sinclair: That is right.


Louis-René Beaudoin: Hon. members have heard the amendment. Shall it carry?


Percy Ellis Wright: Just one further point. Would a two-wheel platform on rubber tires, attached to an automobile be considered an attachment and be free of duty?


James Sinclair: It certainly does not come under this item. I am informed that it is not-you mean the ordinary little trailer?


Percy Ellis Wright: A two-wheel trailer.


James Sinclair: No, it is not exempt.


[Stage Direction]
Amendment agreed to.
Louis-René Beaudoin: We now come to tariff item 618b.


Francis Heselton Helme: Before we take up item 618b may I refer to item 427b on page 19? This item refers to ball and roller bearings and complete parts thereof for the repair of agricultural implements and agricultural machinery specified in certain tariff items. Across this country we have harvesting equipment, combine harvesters. I was informed last summer-this was in July-by a field man of the customs department that combines as a machine are brought into this country duty free, but any parts that might be required for these combines, once they are in service, are subject to duty. That would of course

Customs Tariff
include ball bearings. It does not seem reasonable to me that when a machine that was brought in here duty free requires replacement parts duty should have to be paid on them. May we have some information on that?


James Sinclair: This amendment is made
specifically to cover that point. It is quite true that in our tariff schedule we still have a few items under which the article itself, with accessories, can be brought in as a unit free of tariff. But when individual parts are replaced some of them-they are getting rarer and rarer-are not duty free. The main reason for such a situation is that the parts may be in very common use in other classes of goods which have paid tariff on the way through. The same situation exists in other goods. As an example I refer to the matter of rubber boots and rubber clothing for fishermen, raised by the hon. member for Iles-de-la-Madeleine when we were discussing the last resolution. This item 427b has been placed specifically in the tariff this year to make sure that not only are the ball bearings and the roller bearings for agricultural implements free when they come in as part of the machinery, but that they are also free as replacements.


Francis Heselton Helme: Am I to understand then from this item that combine harvester, thresher machines are in as agricultural implements?


James Sinclair: Yes.


Francis Heselton Helme: Agricultural implements are duty free?


James Sinclair: Yes.


Francis Heselton Helme: And combine harvesters are wholly used on the farms for threshing and harvesting?


James Sinclair: That is right.


Francis Heselton Helme: It does not seem reasonable to me that parts of these machines should be subject to any duty whatsoever, because they cannot be put on the highway or put to any other use. I must say that with respect to threshing machines which were in use previous to the bringing out of combines-some of them are still in use as a matter of fact- their parts are duty free. They both do practically the same job.


James Sinclair: In the actual case the hon. member referred to, the thresher combine, the parts for them are now duty free. Ball bearings are an example of a commodity which could be well used in other types of machinery which, as a whole coming into the country, might not be duty free. This is an example of the item I was talking about

which could be used both on duty free equipment and on equipment which pays duty. To clear up the situation, however, we are specifically including now ball bearings and rollers of all agricultural implements as parts which come in duty free.


Louis-René Beaudoin: Are there any other amendments?


James Sinclair: Yes. I have an amendment to item 447c. This is a new item to provide for duty free entry under the British preferential and most-favoured-nation tariffs of "steel rolls, filled or surfaced with paper or cotton, for use exclusively in the manufacture of paper". These rolls were formerly dutiable under tariff item 446a at the rate of 10 per cent under the British preferential tariff and 22J per cent under the most-favourednation tariff. These rolls are not made in Canada and have to be returned every few months to the United States to be refilled. Each time of their return, duty is assessed at the rate of 22J per cent.
During the calendar year 1951, 9 new rolls and 77 refilled rolls were imported, the value of which was over $62,000. About 75 per cent of the cost of the refilled roll is represented by the cost of the refilling.
For a number of years the tariff has provided for duty free entry from all countries of forged steel rolls for rolling ferrous or non-ferrous, metals, and for sandcast or cast iron rolls for rolling iron or steel or for use in manufacturing paper.
Since the item has been included, the industry has drawn attention to the fact that the wording was not quite exact as far as their purpose was concerned. Therefore the Minister of Public Works will move that tariff item 447c as at present worded be struck out and the following be substituted:
"447c. Supercalender rolls consisting of a steel core filled with discs of paper or textile fabrics, or both, for use exclusively in the manufacture of paper.
B.P.	M.F.N.	Gen.Free	Free	35 per cent


James MacKerras Macdonnell: Where are the rolls chiefly from?


James Sinclair: Entirely from the United States.


James MacKerras Macdonnell: What is the reason for doing away with the British preference?


Mr. Hunter:: You cannot make it any freer than free.


James MacKerras Macdonnell: Formerly it was 10 per cent on the British preference, 22J per cent most-favoured-nation, and now they are on the same basis.


James Sinclair: Correct. It is just carrying out the general government policy as far as trading is concerned. We cannot get these rolls from the British. The British have supplied none of these rolls.


James MacKerras Macdonnell: That is my whole point.


James Sinclair: All these rolls come from United States.


Ellen Louks Fairclough: All of them?


Agar Rodney Adamson: Are not any made in Canada?


[Stage Direction]
Amendment agreed to.
James Sinclair: I have another amendment to move in connection with item 41 Of. Up until now we have permitted the tax free importation of dredges used for gold alluvial mining. These dredges are used mainly in the Northwest Territories and the Yukon. It is proposed now to provide for another type of dredge used in alluvial mining in connection with the iron mines in northwestern Ontario. In drafting the item some doubt was expressed as to whether or not the pipe leading away from the dredge through which the dredged material was dumped could be considered part of the dredge, which was certainly the intention. I shall ask my colleague to move an amendment accordingly.


Alphonse Fournier: I move:
That schedule A to the customs tariff as amended by resolution 2 be further amended by striking thereout tariff item 410f(2) and inserting in lieu thereof in said schedule A the following item, enumeration and rates of duty:
410f (2). Complete dredging plant, including integrated floating and shore discharge pipe line and booster station equipment, for development of mineral deposits; parts of all the foregoing.
Most-
British	Favoured-
Preferential	Nation	GeneralTariff	Tariff	TariffFree	Free	25 per cent


Agar Rodney Adamson: Where do most of these come from?


James Sinclair: The United States.


[Stage Direction]
Amendment agreed to.
James Sinclair: There is a suggested amendment to item 618b.


Alphonse Fournier: I move:
That schedule A to the customs tariff as amended by resolution 2 be further amended by striking thereout tariff item 618b (1) and inserting in lieu thereof in said schedule A the following item, enumeration and rates of duty:
618b. Tires and tubes, wholly or in part of rubber:
(1) For replacement on the agricultural implements and agricultural machinery specified in
Customs Tariff
tariff items 409b, 409c, 409d, 409e, 409f, 409h, 409j, 4091, and the tractors provided for in tariff item 409m.
British
Preferential
Tariff
Most-
Favoured-
Nation
Tariff
Free
Free
General
Tariff
Free


Percy Ellis Wright: As most farm machinery today is on rubber this amendment will be of considerable assistance in connection with replacements. Will this apply to farm wagons?


James Sinclair: No.


Percy Ellis Wright: I think the government might go the whole way and make it apply to farm wagons.


James Sinclair: Up until now farm wagons have been looked upon as having other uses as well as agricultural. We have gone quite a long way in this budget in expanding the field of lowered tariff on agricultural items.


[Stage Direction]
Amendment agreed to.	[DOT]
James Sinclair: I shall ask my colleague to move an amendment in connection with 682a.


Alphonse Fournier: I move:
That schedule A to the customs tariff be further amended by striking thereout tariff item 682a and inserting in lieu thereof in said schedule A the following item, enumeration and rates of duty:
682a. Net floats of any material except wood, for use exclusively in commercial fishing; carapace measures of any material.
British
Preferential
Tariff
Free
Most-
Favoured-
Nation	General
Tariff	Tariff
Free	Free


James Sinclair: In the description of fishing equipment to be exempted we have added "carapace measures of any material." I notice the hon. member for Winnipeg North Centre is smiling. It may be that he does not appreciate the importance of these things to our fisheries. An apparatus for the measuring of lobsters must be effective, in view of the strict enforcement of the law by the fishery department.


Stanley Howard Knowles: The parliamentary assistant does not know my background or he would not say that.


James Sinclair: I am surprised the hon. member laughed.


Stanley Howard Knowles: It may be that I was enjoying what the hon. member said.


[Stage Direction]
Amendment agreed to.
Robert Ross (Roy) Knight: I should like to say a word in connection with books, and I am speaking

Customs Tariff
now on item 708a. Certain publications are admitted to Canada free, but I suggest that there are other publications which should be admitted free and which should not be subject to sales tax. I think hon. members will agree that a contact with books generally is the best form of adult education you can have. There is a school of thought among educators and others that we are neglecting to make the works of the literary masters available to our students, even our university students.
We seem to be turning more and more to digests, synopses and extracts, and to my mind those are no substitute for the original book in the hands of the student. I think the main reason for such substitution is the high price of books. As far as the reading public is concerned, and I am afraid this includes the younger reading public, it seems to be turning more and more to trash, the kind of book that is the cheapest. I refer mainly to the 25 cent books to be purchased in drug stores, pool rooms or tobacconists.
I should like to say something with regard to censorship for the benefit of the Minister of National Revenue. I do not intend to commit myself now as being in favour or not in favour of censoring our reading matter, since I should be called to order, but I do want to say that we might as well not have any censorship in this country as to have the type of censorship we have.


Louis-René Beaudoin: May I ask the hon. member to what item he is addressing his remarks.


Robert Ross (Roy) Knight: Item 708a.


Louis-René Beaudoin: That refers to publications of the United Nations.


Robert Ross (Roy) Knight: Perhaps the item should be 696 which refers to items for the use of colleges, academies, schools or seminaries of learning in Canada.


Louis-René Beaudoin: The two items are 696 and 708a.


Robert Ross (Roy) Knight: I shall trust to the discretion of the chairman to direct me as to which item is the appropriate one.


Louis-René Beaudoin: Perhaps I should inform the hon. member that the reason I rose was that I heard him speak about the censorship exercised by the Department of National Revenue. We are dealing now with various items, and if he is dealing with 696 or 708a he may do so but only inasmuch as they have to do with the increase or reduction of tariffs, or whatever treatment they are being given under this resolution.


Robert Ross (Roy) Knight: I shall avoid censorship, Mr. Chairman. I merely want to say that many

of these 25 cent penny dreadfuls can be found among the books which are on the censorship list of Canada. However, I shall say no more about that. With respect to the publication of decent literature we are very far behind Great Britain, for example, in the publishing of cheap editions of good books. Rather than restricting, I think the government should encourage the widest circulation of books and literature of all sorts. The sales tax and the customs duty do raise the prices of books which in my estimation are altogether too high in Canada, and that is one of the reasons why people are forced to read the sort of thing about which I have been talking.
Another point is that Canadian publishing houses, in selling books which they bring in from the United States and upon which they pay duty and brokerage, charge Canadian customers 10 per cent more than the price for which the Canadian customer can purchase the same book from the original publisher in the United States and then pay the customs duty and sales tax himself. These United States exporters find it convenient to set up branches in Canada, and we are in fact subsidizing the establishment of these institutions at the expense of the public and the Canadia university student in particular.
To come back to the tariff, I am aware that on the free list of publications there are, as well as those mentioned in 708a, certain educational books for university libraries or books prescribed for the regular curricula of schools and universities. However, I want to point out that unlike the items in 708a, reference books which are brought in by bona fide professors in universities and teachers in schools for reference purposes are subject to the tariff which is not charged on the publications in this item. I think that is a state of affairs that could very well be altered. If a professor or teacher is worthy of the name he does not confine himself to the textbooks prescribed by the curriculum. He wants reference books, and as long as he is a bona fide university professor or teacher I see no reason why these books should not be admitted free. I shall go further and say that it would be better for the educational standards of the country-and goodness knows education at the moment is in a deplorable state-if educational books of all types were admitted free of not only customs duty but sales tax, for sale not only to people in educational institutions but to the public at large. In my opinion the government should collect no revenue which involves any limitation upon the wide circulation of educational books. Indeed, I think I would go further and say on any books.


Agar Rodney Adamson: Mr. Chairman-


James Sinclair: I should like to speak on this item. Are you going to speak on books?


Agar Rodney Adamson: Yes. I shall be very brief. I had had representations from libraries and others along the general line indicated by the hon. member who has just spoken. Certain public libraries and our parliamentary library, I believe, have to pay not only duty but sales tax on books brought into Canada. I think it is a rather anomalous situation that at least should be considered.


James Sinclair: I have heard so much about this matter in recent years that I think tonight I had better put on the record exactly what the situation is as far as books are concerned. To listen to the hon. member for Saskatoon, one would think there was a heavy tariff on books. Actually there is no tariff at all on any book coming into Canada from within the British commonwealth. I think our first responsibility is to see that there is the freest exchange of books and literature between the various members of the commonwealth. I think it might also be desirable to put on the record the various tariff items as far as books, pamphlets and periodicals are concerned, which those who are really interested in this matter could have easily consulted the customs tariff and ascertained. Tariff item 169 reads as follows:
Books, viz.:-Novels or works of fiction, or literature of a similar character, unbound or paper bound or in sheets, but not to include Christmas annuals, or publications commonly known as juvenile and toy books.
Under the British preferential tariff they are free, most-favoured-nation tariff 10 per cent, and general tariff 25 per cent. Then we have four separate treaties with various other countries to permit the free exchange of books between our country and those countries. Tariff item 170 reads as follows:
Books, periodicals and pamphlets, or parts thereof, printed, bound, unbound, or in sheets (not to include blank account books, copy books, or books to be written or drawn upon (in any other than the English language).
Under the British preferential tariff they are free, most-favoured-nation tariff free, and general tariff free. We also have a reference to the United States trade agreement there. The next tariff item which members could have read is 171. It reads as follows:
Books, printed, periodicals and pamphlets, or parts thereof, not otherwise provided for, not to include blank account books, copy books, or books to be written or drawn upon.
In other words, blank books do not come in under that item but other books not otherwise provided for do. Under the British preferential tariff they are free, most-favourednation tariff 10 per cent, the general tariff 55704-129J
Customs Tariff
10 per cent. Then we have four other trade agreements with special reference to free exchange between these countries and our country. The next item is 171a which reads as follows:
Printed sections of dictionaries and encyclopedias, unbound, consisting of not less than eight uncut pages, when imported by book binders to be bound in cloth or leather in their own factories.
Under the British preference they are free, most-favoured-nation free, and general tariff free. Then we have tariff item 172 which reads as follows:
Books, pamphlets and charts, printed or published by any government abroad; official financial and business reports and statements issued by companies or associations abroad; books, pamphlets and reports, for the promotion of religion, medicine and surgery, the fine arts, law, science, technical training, and the study of languages, not including dictionaries.
We covered those in the previous item. The item continues:
Scripture and prayer cards, and religious pictures and mottos, not to include frames; books, bound or unbound, which have been actually printed and manufactured more than twelve years; manuscripts; insurance maps; freight rates, passenger rates and timetables issued by transportation companies abroad and relating to transportation outside of Canada in book or in pamphlet form.
Under the British preferential tariff they are free, most-favoured-nation tariff free and general tariff free. Tariff item 172a refers to tourist literature from any country and in each case entry is free of duty.
Item 172b:
Prayer books, missals, psalters, religious pictures and mottoes, not to include frames; free, free, free.
Then item 173:
Books which are included in the curriculum of any university, college or school in Canada for use as text books or as works of reference, not to include dictionaries; printed books, pamphlets and cards for use in schools to test the degree of intelligence of pupils; all books for bona fide libraries, and being the property of the organized authorities of such libraries and not in any case the property of individuals or business concerns, under such regulations as may be prescribed by the minister; directories for free reference libraries; books received from free lending libraries abroad, subject to return under customs supervision, within sixty days: free, free, free.
The Minister of Public Works tells me to send the hon. member a copy of the rest of the schedule. Actually, of course, the great bulk of the books imported into Canada come in free. The one substantial class of books on which there are tariffs are novels from the United States, on which the tariff is 10 per cent. I emphasize again that these books for use in colleges, schools and universities, or books coming to bona fide libraries from any country, come in free. Books in foreign languages come in

Customs Tariff
free. All books from the British commonwealth come in free. So the position, far from being that suggested by the remarks of the hon. member for Saskatoon, is that the tariff actually affects very few publications as far as the importation of books into Canada is concerned.


Robert Ross (Roy) Knight: I am glad the parliamentary assistant has been able to tell me that we have free entry of books into this country. I did not hear what the tariff is on books coming from the United States.


James Sinclair: It is 10 per cent on novels, nothing on books for schools, universities, libraries.


Robert Ross (Roy) Knight: When my hon. friend says that books for universities come in free it is a bit misleading, because bona fide university professors do not obtain all their books free. I suppose a great many Canadians get or would like to get books from the United States, but on those books they have to pay a customs duty as well as a sales tax.
Perhaps the greatest point the parliamentary assistant made was that there is no need to raise -this question, that books are practically free as far as tariff is concerned. He told us about books from the commonwealth and all the rest of it; he read a long list of things that come in free. The point is that I can base my argument on that very fact. I would say the revenue the Canadian government is getting from the restrictions it is imposing on the importation of books to this country is not worth it. Perhaps the parliamentary assistant could tell me just how much the duty on books is worth to the national revenue of this country. As I interpret his words it would be very little indeed; -and if it is very little indeed I would say it has only nuisance value, so why not do away with it -altogether? That is exactly the plea I am making, and I think that is one reason why this particular tax should be done away with.
I would like to ask the parliamentary assistant two questions. What is the total revenue accruing to the funds of Canada through the imposition of duties on books? I would have liked to include in that a question as to the amount that would be lost through abolition of the sales tax, but at the moment I suppose I can only ask about the customs duties. My second question is, what are the four countries with which he said we had a special treaty in this regard?


James Sinclair: My duties as parliamentary assistant here, I think, are to put through the items appearing in the schedules now before this house. I do not think it is part of my task to read, as I had to read, the existing tariff schedules to an hon. member who wants to make a long speech on books. I would have thought he would read the schedules before making that speech. The same is true in regard to revenue.


Robert Ross (Roy) Knight: On a point of privilege, Mr. Chairman, I have not asked the parliamentary assistant to read anything. I asked him a question. I asked him the revenue accruing to Canada through the importation of books, and I asked him the names of the four countries with which Canada has a special treaty in this regard. The parliamentary assistant seems to be particularly cantankerous tonight. On my last question he tried to cut me down. He is most unreasonable, as I see it. I want the information. What are we here for if we cannot get information?


James Sinclair: One of the simple reasons we are here is to get information from the many documents the government and the library provide hon. members. There is no item in this schedule dealing with books. The only item having to do with publications at all refers to publications of the United Nations and its agencies and publications of the North Atlantic Treaty Organization and its agencies. There is no loss there because we have not been charging tariffs on these items. As far as the revenue on books is concerned, if the hon. member cannot dig it out of the publications supplied to him, all he has to do is put a question on the order paper, as he has done so often, and he will get the full story of the tariff on books and the countries with whom we have these agreements, together with the revenue last year or ten years ago or twenty years ago.


James MacKerras Macdonnell: I think it is a pity we should have to be scolded. As a matter of fact I listened with great interest to what the parliamentary assistant had to say. I loved the sonorous way he rolled out the word "free", and I think we all received a little education. I think he should be glad of an opportunity to give us that education, and not scold us.


James Sinclair: Nothing was further from my mind than to scold the hon. member for Greenwood, because I will say he does a little research before he comes into the House of Commons on matters he intends to speak on.


James MacKerras Macdonnell: I was as
ignorant as anyone else on this subject. Everything the parliamentary assistant said was interesting to me. I was glad to hear it, and I think we might all be glad that we received this bit of education, thanks to the hon. member for Saskatoon. I am glad personally.


James Sinclair: If my job here is to give interesting information on all items which are not in the schedule now before this house, I could be here a long, long time. I do not think the hon. member for Greenwood would be so grateful for all the irrelevant information I might produce. I think my job here is to discuss the implications of these reductions in tariff which are proposed in this schedule.


Ellen Louks Fairclough: I think the whole answer is that the parliamentary assistant has not explained the difficulty in which the hon. member for Saskatoon finds himself. It is the old story of the difference between theory and practice. If a university wishes to import these books true enough they come in duty free. If a professor imports them in his own name he pays the tariff, unless he has the foresight to go to his board and ask that they import them in their name on his behalf. There should not be that differentiation. If a book is free to the university it should be free to the professor in the university.


James Sinclair: In my own fairly long
experience with universities most professors wanting books have the library acquire them, and in that case they are free.


Ellen Louks Fairclough: If the professor pays for the book he should get it free of duty.


Stanley Howard Knowles: In view of the communicative mood in which my hon. friend the parliamentary assistant finds himself I will give him a chance to give other information. I shall relate what I have to say to items such as 206a and 220b. There may other items in the group now before us which are also related to the question I have in mind. The question I wish to put to the parliamentary assistant is this. To what extent are there any tariff changes in the group of items now before us affecting drugs and medicines? I said this afternoon when we were on another item that at pages 1396 to 1398 of Hansard for April 9, 1952, would be found answers to questions of mine having to do with sales tax and tariff rates on drugs and medicines. Naturally I am not going to read to the parliamentary assistant now the long list of items on those three pages, but I would call
Customs Tariff
his attention to one item in particular. I take it from page 1397 of Hansard, under item 220, which is perhaps one of the most important items in relation to the question of duties on drugs and medicines.
Item 220 reads:
All medicinal and pharmaceutical preparations, compounded of more than one substance, including patent and proprietary preparations, tinctures, pills, powders, troches, lozenges, filled capsules, tablets, syrups, cordials, bitters, anodynes, tonics, plasters, liniments, salves, ointments, pastes, drops, waters, essences and oils, n.o.p.;
When dry, the British preferential tariff is 17J per cent; the most-favoured-nation tariff 20 per cent and the general tariff 25 per cent.
There is more to that item 220, but that is all I need to read at this time. I notice that item 220d is referred to in the schedule now before us, but there is no reference to item 220 itself. I should like to know whether consideration has been given to reducing this omnibus tariff on medicinal and pharmaceutical preparations. I do not know whether the parliamentary assistant has taken the trouble to look up the three pages of Hansard to which I referred. He will see that there is a long list there of items which the Minister of National Revenue, in his answer to my question, regarded as referring to drugs and medicines. I have tried to compare that list of items with the items in this group, although I confess that I have not taken every one and checked it. I hope the parliamentary assistant will not accuse me of not doing enough research on the matter, but I did not find many cases, if any, where the tariff has been reduced on so-called drugs and medicines.


James Sinclair: The one covering item in this schedule is 206a(3). You can see the class, so far as the item-


Stanley Howard Knowles: That is the only item in which there has been a change? Is that all the parliamentary assistant has to say?


James Sinclair: I think that if the hon. member reads over the list he will find that most of those are of a class or kind made in Canada. There is always a difference in the schedule of rates for products which are not made in Canada and products which are made in Canada. A year or two ago we had a discussion on the same problem in connection with antibiotics, whether or not it was worth while to encourage, by some tariff protection, the construction of plants to make

Customs Tariff
penicillin, aureomycin and these other antibiotics. In looking over item 220 I would say that almost all of those articles are of a class or kind made in Canada.


Stanley Howard Knowles: Is it possible to ascertain tonight, or shall I put it on the order paper, what the revenue is from an item like 220?


James Sinclair: I certainly cannot tell the hon. member that tonight because item 220 is not here. There is a new item 220d for coating fluorescent lamps.


Stanley Howard Knowles: I notice that the official in
front of the parliamentary assistant is looking at a book. Can he find it?


James Sinclair: He is an official on tariffs, not of the Department of National Revenue which is the one that records statistics so far as revenue is concerned.


Stanley Howard Knowles: I just want to say, as was pointed out this afternoon, that the cost of drugs and medicines to the Canadian people does seem to be increased far more than I think it should be by the imposition of the sales tax we were talking about this afternoon, and now by far too many duties on this long list of medicinal items. I certainly hope that the government will give further consideration to both of these pleas that we have made today, for the elimination of the sales tax on medicines and for reducing or eliminating tariff thereon.
Has the parliamentary assistant been able to get any information as to the revenue obtained by the federal government on drugs and medicines, in any form that the parliamentary assistant can give it?


James Sinclair: I have here a report on trade in Canada for 1950 in which the classification is not by tariff items, but on these medicinal, chemical and pharmaceutical preparations- this does not include Canadian production which is the greater part of this field-total imports were almost $6 million, $5,892,000, and the tax paid was $1,154,000, which is a little less than 20 per cent.


Stanley Howard Knowles: And the cost of the products produced in Canada would equal the cost of those brought in from the United States, plus the tariff.


James Sinclair: Is that a statement or a
question?


Stanley Howard Knowles: It is a statement with which I am sure the parliamentary assistant agrees.


Agar Rodney Adamson: I should like to ask the minister a question on item 199h, on page 16,

concerning pots, boxes, bands, collars or protectors for plants. I have had very strong representations made to me by several of the greenhouse men and market gardeners in my constituency concerning this item. They request the elimination of the tariff, as it is not an item that is made in Canada at all and it is an essential item for the production of plants, flowers and other crops.
Now, I gather that the general tariff rate is 10 per cent, and there has been a substantial reduction which I am sure my constituents will be glad to see. I gather that the greater part of the importations-all of It is imported-comes under the item of the general tariff-


James Sinclair: No, all of it comes in under either most-favoured-nation or British preferential tariff rates.


Agar Rodney Adamson: I am glad to hear that. Then, it is virtually a removal of the tariff on this item.


Carl Olof Nickle: I should like to ask the parliamentary assistant a question referring especially to item 848(1) and (2) on page 33. I judge that 848(2) is a new item covering materials for use in the manufacture of the goods enumerated in tariff item 848(1). Is that correct?


James Sinclair: It is new, yes, because out in your province there is the beginning of an industry in the manufacture of this oil well drilling equipment. We are now, therefore, extending the exemption which is given to most industries in Canada, that the primary products they use in manufacture shall be exempt or have low rates of duty.


Carl Olof Nickle: I am glad to have that included. It will have a very material effect on stimulating the production of oilfield equipment in Canada. One point in item 848(1) is not clear. We have there a list of machinery and apparatus, which is free, including casing and tubing and drill pipe for use in connection with natural gas or oil wells. Does this free list cover steel or iron pipe used for gathering oil or gas for transportation or distribution?


James Sinclair: No, it does not. That part is an old item. Actually, the change in the schedule is 848(2), materials for the use in the manufacture of goods enumerated in tariff item 848(1). The manufacturing process gets this special provision but not the transportation end, the movement away from the well in the pipe lines.


Carl Olof Nickle: Can the parliamentary assistant advise me what the tariff is at present on iron or steel pipe for transmission?


James Sinclair: Item 397, pipes and tubes, of wrought iron or steel, plain or coated, welded or seamless, with plain or processed ends: 15 per cent, the British preferential tariff; 22J per cent, the most-favoured-nation tariff; and 30 per cent, the general tariff.


Carl Olof Nickle: In view of the fact that pipe used for transmission and the gathering of oil and gas is a material item in the cost of construction of pipe lines and in view of the fact that transmission is a material item in the cost of the oil or gas to the consumer, will the tariff board or the government consider placing line pipe or pipe for the transmission of oil or gas in the same category as pipe actually used in the boring of a well?


James Sinclair: Consideration was given to that question three or four years ago and I believe there was actually an item placed in the tariff schedule resolution but it was withdrawn in the following bill because of the opposition of quite a number of western members to any increase in the tariff on pipe. However, consideration is given to all of these representations. There is, of course, quite a substantial pipe industry in Canada itself, using Canadian steel out of Hamilton, Algoma and Sydney.


Louis-René Beaudoin: Shall resolution 2 carry?


Carl Olof Nickle: Just one more question, Mr. Chairman. The parliamentary assistant mentioned the fact that we have mills in Canada rolling iron pipe. I believe the maximum diameter of pipe that can be rolled in Canada is 16 inch, which is smaller than the diameter of pipe used for any large oil or gas pipe line such as those that are now contemplated east and west in Alberta. Inasmuch as pipe larger in diameter than 16 inches cannot be rolled in Canada, should not that larger pipe come into Canada from United States mills free of duty?


James Sinclair: The government's policy at the moment is that it should not. Consideration can be given. The tariff on pipe at the moment is a measure of protection to those mills in eastern Canada. No doubt as the oil and gas industry develops, and there is going to be this greater demand for such pipe, the Canadian mills will, as they have in the past, extend to meet that demand. But at the moment there has been no change made in the tariff on such sized pipe.


Louis-René Beaudoin: Shall this resolution carry?


[Stage Direction]
Resolution agreed to.
Dominion Succession Duty Act
Resolutions 2 and 3 agreed to.
4. Resolved, that schedule B to the customs tariff be amended by striking thereout tariff items 1014 and 1067, the enumerations of goods and the rates of drawback of customs duties set opposite each of said items.
Stanley Howard Knowles: If resolution 3 has been carried, may I ask a question with respect to 4? Can the parliamentary assistant tell us what is meant by items 1014 and 1067?


James Sinclair: Those are the two drawback items on glass which, as a consequence of the tariff board's report on glass, are now dropped.


[Stage Direction]
Resolution agreed to.
Resolution 5 agreed to.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Dominion Succession Duty Act to correct certain anomalies, to clarify the application of certain provisions and to make certain technical amendments.
James Sinclair: Perhaps I should say just a word. This resolution does not give much in the way of detail because there is no general change in the rates or in the incidence of the taxes. As hon. members know, an overhaul of the succession duty law is needed. We had hoped to be able to bring forward a full revision for the consideration of hon. members at this time but it has not been possible to do this. There are, however, a few amendments of a technical nature which require immediate attention. These amendments are not matters of policy but are merely clarifying certain provisions of the law and removing certain anomalies. It is difficult to discuss them without the bill. They are almost entirely legal points such as those which the hon. member for Hamilton West raised in her speech in the budget debate. The minister will be putting through this bill. The resolution is just in effect a warning to members to the effect that there are going to be technical amendments made to the succession duty act, because of the experience in recent years, without changing the basic rates of duty or the levels.


Ellen Louks Fairclough: Mr. Chairman, I was not prepared to speak upon this subject at the moment because I thought we were taking the income tax resolution first. However, in the amendments to the Dominion Succession Duty Act I hope that cognizance will be taken of the incidence of double taxation of which I spoke and of which I gave an example in my remarks on the budget. I believe this is a situation which is well known in the taxation

Dominion Succession Duty Act field and one which has long required some revision. If this is one of the points which it is intended to rectify, with the introduction of this resolution, I would be heartily in favour of it. In going into the matter I trust that not only this particular problem will be rectified but also the many others which are familiar to all of us in the field of succession duty and income tax incidence.


James Sinclair: Perhaps I should explain to the hon. member that she was quite right in saying that the list given last night indicated that the income tax resolution would come first. But since this is only a warning if we do get it through tonight it means that perhaps the bills based on the three resolutions can be circulated tomorrow and then we can start afresh on the fourth resolution, namely the income tax resolution. When the succession duties bill is in your hands you will be better able to see whether the points you have in mind are covered. The minister also told me to say that the usual period will intervene between the introduction of the income tax bill and the succession duty bill and discussion in the house. These are very technical bills requiring detailed study, unlike the excise tax and the customs tariff bills which are quite straightforward. There will be an interval of probably a week between the circulation tomorrow of the income tax and succession duty bills and the discussion in the house by the minister on second reading.


Agar Rodney Adamson: I hope that the anomaly with regard to the succession duties between the common law provinces and the province of Quebec will be considered when this bill is being brought down. I refer to the situation which at present exists whereby in the common law provinces, when a taxpayer dies, his estate for succession duty purposes is considered in toto and duties are levied on the entire estate whereas under the civil laws of the province of Quebec, when a taxpayer dies it is considered that half of his estate belongs to his wife and succession duties are levied on merely the half of the estate considered as belonging to him.
It appears to me that that is an anomaly which should be eradicated. I think that the situation under the Quebec law is a good one because it certainly provides for the widow a degree of security which is not found under the laws of the common law provinces. I feel that that is one of the points which might form the basis of discussion in a dominion-provincial conference so that succession duties shall be levied on an equal

basis throughout the entire dominion. I understand that unless there is a marriage contract in the province of Quebec the taxation as I have explained it is in force; but if there is a marriage contract, then of course the terms of that contract are valid. I feel, Mr. Chairman, that since we are discussing this very serious matter of succession duties, the double succession duties that are levied, particularly in the province of Ontario, consideration should be given so that succession duties shall be considered on the same basis throughout the entire dominion.


James MacKerras Macdonnell: Has the
parliamentary assistant available the basic figures showing what the succession duty has yielded in the way of revenue during the course of the years it has been running? Perhaps I could wait until we have the bill.


James Sinclair: The amount is shown in the budget papers. My recollection is that it was $32 million last year-that is federal succession duty, of course. Pardon me, the forecast of revenue in the coming year is $43 million. The rates of course are not changed. Last year it was $38 million; this year $43 million; and the forecast for next year is also $43 million.


George Clyde Nowlan: The parliamentary assistant said that this resolution was a warning. I think it should be a warning against having resolutions such as this. It reads:
That it is expedient to introduce a measure to amend the Dominion Succession Duty Act-
If it stopped there it would have been much clearer and much better. It then goes on to say:
-to correct certain anomalies.-
Which I presume is the amendment. Then it continues:
-to clarify the application of certain provisions and to make certain technical amendments.
I think it is a warning against having any resolution such as this, Mr. Chairman. We would be much better off if we did not have any resolution such as this.


James Sinclair: That very point was discussed as to whether a resolution was needed at all. I used the word "warning" perhaps in a colloquial sense; but it was an indication to the house that a tax measure or a money measure was coming. Since this involves changes in the law without a change in the rate or in the incidence of the tax doubt was expressed as to whether a resolution was needed at all. If we had no resolution we might have been subjected to the criticism

that we were bringing in a change in a tax bill without a resolution. If we had left it as an amendment to the Dominion Succession Duty Act, then there would be a question in hon. members' minds that perhaps we were going to change the rate. They would have said: if they are not going to change the rate, why do they not say so; this was the decision made, and the resolution is an indication to the house that the succession duty act is to be amended, but not amended in a way to levy new tax changes, changing the rates or changing the incidence.


Solon Earl Low: It would have been better simply to have said: "Resolved that it is expedient to introduce a measure to amend the Dominion Succession Duty Act but not to change the rates." As it is, it is the height of vague ambiguity.


[Stage Direction]
Resolution agreed to.
Progress reported.
Business of the House BUSINESS OF THE HOUSE
Alphonse Fournier: Tomorrow we will continue in ways and means with the last budget resolution concerning income tax. If we have time we shall take up the resolution in the name of the Minister of National Defence. It was discussed yesterday and the debate was adjourned by the hon. member for Nanaimo; then the resolution in the name of the Secretary of State for External Affairs concerning a treaty of peace between Canada and Japan; next, the resolution in the name of the Minister of Mines and Technical Surveys concerning the Emergency Gold Mining Assistance Act; then if we have more time we shall take up a little bill of the Minister of Justice to amend the Prisons and Reformatories Act, and then Bill No. 93 to amend the Export and Import Permits Act.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, May 9, 1952