1953-03-19

[Stage Direction]
Second report of special committee appointed to consider Bill No. 107, to amend the Post Office Act and also the regulations, general administration and operation of the rural mail delivery service.-Mr. McCubbin.


Right Hon. C. D. Howe (for the Minister of Transport):: Mr. Speaker, I wish to lay
on the table, on behalf of the Minister of Transport (Mr. Chevrier), the capital budgets of the Canadian National Railways and the Canadian National (West Indies) Steamships, Limited for the year 1953.
I move:
That these capital budgets be submitted to the special committee on railways and shipping.


[Stage Direction]
Motion agreed to.


Mr. Speaker:: I have the honour to inform the house that I have received a communication enclosing the text of a resolution passed February 11, 1953 by the second chamber of the States-General of The Netherlands expressing the appreciation of the people of that country for the help given to those who have suffered from the recent floods.
I have directed that the resolution and covering letter be printed in today's Votes and Proceedings.



QUESTIONS


CENTRAL MORTGAGE AND HOUSING


Mr. Diefenbaker:: 1.	(a) What is the total expenditure made by way of payment or advanced by the Central Mortgage and Housing Corporation on the island of Montreal for (i) residential buildings; (ii) commercial buildings, year by year since the first day of January 1948 and to date; (b) what is the total amount of all repayments made since said date to this date?
2.	Of the above amount, how much has been paid and/or what advances have been made to
68108-196J
Suburban Enterprises Incorporated in respect of (a) the buildings comprising the 1139 Norgate apartments in Ville St. Laurent; (b) the Norgate shopping centre; (c) any other developments?
3.	How much was paid to Suburban Enterprises Incorporated, or any of its officers, in respect of (a) Cummings homes; (b) Cummings apartments development scheme on Cote de Liesse road; (c) any other developments?
4.	How much of the advances referred to, or expenditures made, have been repaid to date by said Suburban Enterprises Incorporated?
5.	Are inspections made of the various properties referred to above?
6.	If so, on what dates in 1952 were such inspections made?


Mr. Winters:: 1.	(a) From January 1, 1948 to December 31, 1952
(i)	1948, $8,752,536.15; 1949, $37,191,827.26; 1950, $35,970,558.66; 1951, $5,417,679.37; 1952, $20,364,735.16.
(ii)	Nil.
(b) From January 1, 1948 to December 31, 1952, $5,670,939.51 (exclusive of repayments for joint loans).
2.	(a) Nil; (b) nil; (c) nil.
3.	Central Mortgage and Housing Corporation has no contractual relationship with Suburban Enterprises Inc., but on the basis of information supplied by Suburban Enterprises Inc., as to their officers and directors:
(a)	$2,153,685.36.
(b)	$990,100.
(c)	Crevier street apartments, $1,953,044; Cote St. Luc apartments, $898,000; Laurentian boulevard apartments, $179,500; Deguire avenue apartments, $1,161,000; Rainbow village, $679,000; Walkley avenue apartments, $615,100; Norgate apartments-St. Laurent, $6,507,600.
4.	Nil. See answer to No. 2.
5.	Yes (a) during construction;
(b) after construction as to the administration by the owners as it may affect the rental guarantee given by Central Mortgage and Housing Corporation.
6.	Norgate shopping centre. See 2b.
(a) Laurentian boulevard apartments, September 30; October 17, 24, 29, 31; November
5,	12, 14, 19, 24, 28; December 3, 10, 15, 29.
Deguire avenue apartments, June 11, 19;
July 2, 11, 14, 25, 28; August 7, 19; September 3, 17, 19, 24; October 8, 9, 21, 30; November
6,	7, 17, 24, 28; December 2, 4, 9, 10, 29.

Questions
Rainbow village, June 23, 25; July 8, 14, 22, 25; August 20, 28; September 11, 15; October 8, 23, 28, 31; November 7, 17, 24, 28; December
2,	4, 10, 23, 29.
Cummings apartments, Cote de Liesse, June 23, 27; July 25; August 6, 19, 25; September 5; October 2, 10, 14, 24, 27, 30; November 4, 6, 14, 26, 28; December 1, 2, 3, 19, 22, 29.
Cummings houses, no inspections

construction completed prior to 1952.
(b) Crevier street apartments, July 18.
Cote St. Luc apartments, no inspections in 1952-contracts not completed.
Walkley avenue apartments, June 6, 23.
Norgate apartments-St. Laurent, April 1,
3,	8, 9, 10, 21, 22; May 5, 7, 8, 12, 13.



DEFENCE PRODUCTION


Mr. Hodgson:: 1.	Was a contract let to MacDonald Brothers Aircraft Ltd., of Winnipeg, by defence production department, in February, 1953, for accessories?
2.	If so, what is the description of such accessories?
3.	What was the total amount of the contract?
4.	What is the term of the contract?
5.	On what terms are payments made?
6.	How was the contract let, by tender or on a cost plus basis?


Mr. Dickey:: 1.	Yes.
2.	651 items of Mitchell airframe spares and accessories.
3.	$2 million ceiling.
4.	This delivery to be completed in six months.
5.	Actual cost to the contractor as determined in accordance with costing memorandum DDP-31-plus a profit of 7J per cent thereon.
6.	The contract was negotiated with MacDonald Brothers Aircraft Limited who have a licence agreement with North American Aviation Incorporated to manufacture Mitchell spares.



PORTABLE GASOLINE TRUCKS

Mr. Pearkes:: 1.	How many portable gasoline tanks or trucks, of approximately 500 gallon maximum capacity, have been purchased for the Department of National Defence since 1949?
2.	What was the price paid for this equipment, and from what firms was this equipment obtained?
3.	What distribution has been made of the equipment obtained?


Mr. Bradley:: 1.	None.
2 and 3. Answered by No. 1.



DEFENCE PRODUCTION


Mr. Pearkes:: 1.	How many dollar-a-year-men are employed in the Department of Defence Production?
2.	What are their names?
3.	What appointments do they hold?
4.	From what companies were they recruited?


Mr. Dickey:: 1.	The Department of Defence Production has associated with it 18 people who are on loan from industry and who are not paid a salary by the department.
2.	Shown in the following list.
3.	Shown in the following list.
4.	Shown in the following list:
Bell, W. G., associate director, electronics division, Bell Telephone Co. of Canada.
Bertram, A. A., adviser, small industries branch, John Bertram & Sons Ltd.
Burns, M. C., assistant director, petroleum division, Imperial Oil Ltd.
Cartwright, A. E., scrap inspector, nonferrous metals division, Crane Ltd., Montreal.
Clarke, K. H. J., chief of allocations, nonferrous metals division, International Nickel Co.
Cragg, L. C., special consultant, industrial security, Hydro Electric Power Commission of Ont.
Craig, A. P., director, shipbuilding division, Canadian Westinghouse Co. Ltd.
Grant, G. M., co-ordinator of production, Bell Telephone Co. of Canada.
Hanna, G. S., director, petroleum division, British American Oil Co.
Harris, K. S., director, steel division, business consultant.
Harry, W., chief, bar products and struc-turals section, Algoma Steel Corp., Ltd.
Hayes, F. C., consultant, fibreboard containers, purchasing, Containers Statistics Ltd.
Marsland, S., director, machine tools division, Harley-Kay-Marsland Ltd.
Mitchell, R. A., director, mechanical transport division, International Harvester Co. of Canada.
McLachlan, W. R., director, electronics division, John Inglis Co. of Canada.
Neary, I., production engineer, electronics division, Addison Industries Ltd.
Packham, J. M., executive assistant, shipbuilding division, Canadian Vickers Ltd.
Reid, W. J. W., director, gun division, Otis Elevator Ltd.



CUSTOMS DUTIES COLLECTED

Mr. Coldwell:: Under section 6 of the Customs Tariff for the years 1946 to 1952 inclusive:
1.	What was the amount of the duties collected in each year?

2.	What was the total amount of duties collected in each year on goods imported from the United Kingdom?
3.	What was the total amount of duties collected in each year on goods imported from the United States?
4.	What was the total amount of duties collected in each of these years on passenger cars imported from the United Kingdom, and how many cars did this include?
5.	What was the total amount of duties collected for each of these years on passenger automobiles imported from the United Kingdom, valued at not more than $1,200 each, and how many units did this include?
6.	What was the total amount of duties collected for each of these years on passenger automobiles imported from the United Kingdom, valued at not less than $1,200 and not more than $2,100 each, and how many units did this include?
7.	What was the total amount of duties collected for each of these years on freight automobiles imported from the United Kingdom, and how many units did this include?


Mr. Mcllrailh:: 1. 1946,	$392;	1947,	$758,132;	1948,
$1,343,550; 1949, $1,673,925; 1950, $1,735,543; 1951, $1,547,287; 1952, $1,373,929.
2 to 7. Information not available. No record is kept of the above duties by countries or by commodities.



QUESTIONS PASSED AS ORDERS FOR RETURNS


HOUSING


Mr. Maclnnis:: 1.	How many homes (family units) were (a) started; (b) finished, in the calendar years 1950, 1951 and 1952?
2.	How many of these homes had (a) financial assistance under the National Housing Act; (b) any other governmental assistance; (c) were constructed by the national housing and Central Mortgage and Housing Corporation?



THE CORONATION


Mr. Cruickshank:: 1.	What are the names and addresses of all living Canadian recipients of the Victoria Cross?
2.	Did the Canadian government pay their expenses to London on a previous occasion?
3.	Will their expenses be paid to the coronation? If not, for what reason?


Mr. Bradley:: Return tabled.



INQUIRY AS TO NEGOTIATIONS REGARDING INTERNATIONAL WHEAT AGREEMENT

[Stage Direction]
On the orders of the day;
Mr. G. M. Ferrie (Mackenzie):: I should like to direct a question to the Minister of Trade and Commerce. In view of press statements of yesterday and today that the negotiations regarding the international wheat agreement have broken down, is the minister prepared to make a statement?
Inquiries of the Ministry


Clarence Decatur Howe: So far as I know the negotiations have not broken down. Our representatives are strongly of the opinion that after seven weeks of negotiation the hour of decision has arrived, and we hope a decision can be reached within the next few days; but in the meantime the negotiations are still proceeding.


Mr. J. G. Diefenbaker (Lake Centre):: Arising out of the reply the minister has just given, may I ask this question. Is he prepared to comment on the statement made by the leader of the Australian delegation, as reported in the press, that there is little hope of achieving an agreement on the basis of present prices, and whether or not negotiations toward lower prices have in fact been undertaken by the Canadian delegation?


Clarence Decatur Howe: I am not quite clear what my hon. friend means, by "present prices". Does he mean, the prices under the present agreement?


John George Diefenbaker: Yes.


Clarence Decatur Howe: There is no suggestion that prices in the present agreement will govern. The Australian minister gave his opinion. His opinion is not my opinion. I have consistently refused to express any opinion, and I am afraid I shall have to take that position now.



THE CORONATION


[Stage Direction]
On the orders of the day:
Hon. Brooke Claxton (Minister of National Defence):: Yesterday the hon. member for Nanaimo asked a question regarding the composition of the coronation contingent, and I am very glad to put the answer on Hansard now, if I may. The matter of particular interest to hon. members is that there will be included in the representation of the reserve army two winners of the Victoria Cross, both commanding reserve regiments, namely Lieutenant Colonel C. C. Merritt, V.C., and Lieutenant Colonel Paul Triquet, V.C., one commanding the Seaforth Highlanders of Vancouver and the other the Regiment de Levis. The answer is as follows:
Composition of Canadian Coronation Contingent
Commander
Commander R. P. Welland, D.S.C. and Bar, C.D. Lieut.-Col. J. R. Stone, D.S.O. and Bar, M.C. Wing Commander J. V. Watts, D.S.O., D.F.C. and Bar.
Total
Active Force
R.C.N	 86
Army	 2061
R.C.A.F	 1222



THANKSGIVING DAY


[Stage Direction]
On the orders of the day:
Mr. Donald M. Fleming (Eglinton):: May
I ask the Prime Minister whether, in keeping with the custom of many years past, the government proposes to proclaim the second Monday in October as national Thanksgiving day.


Right Hon. L. S. St. Laurent (Prime Minister):: The matter has not yet been given consideration by the government.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. G. F. Higgins (St. John's East):: I
should like to direct a question to the Minister of Fisheries of which I gave him notice. He is not here, but perhaps the parliamentary assistant can answer. Is the minister prepared to comment on the statement made by columnist Arthur Blakely in the Montreal Gazette of today's date relative to important steps to be taken by the Department of Fisheries to conserve stocks of Atlantic salmon in Labrador? I gave full particulars to the minister.


Mr. J. Watson MacNaughi (Parliamentary Assistant to the Minister of Fisheries):: The
question of the hon. gentleman will have to be taken as notice and an answer brought in tomorrow.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Beaudoin in the chair.
['for leave to introduce Bill No. 227, to amend the Customs Tariff.\nMotion agreed to and bill read the first time.']
The Chairman:: The house in committee
of ways and means on the Income Tax Act resolutions, the Excise Tax Act, the Excise Act, 1934 and the Customs Tariff.


Mr. Fournier (Hull):: We shall deal with
the Customs Tariff.


Louis-René Beaudoin: The first resolution to be dealt with is the one regarding the Customs Tariff.



[Stage Direction]
1.	Resolved, that the Customs Tariff be amended to provide
(a) that "machinery" shall not include motive power which when detached from the machine, will operate, and (b) that yarns, textiles and manufactures thereof shall not be regarded as being composed in part of specified materials unless those materials constitute over five per cent by weight thereof.
2.	Resolved, that schedule A to the customs tariff be amended by deleting therefrom the following enumeration of goods and rate of additional duty of customs:
Cigarettes weighing not more than three pounds per thousand-$2.00 per thousand.
3.	Resolved, that schedule A to the customs tariff be further amended by striking thereout tariff items 105c, 173, 272b, 272c, 280 (2) and (3), 409c, 409e (i), (ii) and (iii), 409g, 409q, 4101, 410p, 410q, 412, 412a, 436, 440k (1), 442, 442d, 476a, 478, 479, 538, 538a, 538b, 567b, 657a, 681b, 691 and 696, 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.
Mr. Jean Lesage (Parliamentary Assistant to the Minister of Finance):: Resolution No.
1 provides for two interpretive notes.

Regarding subparagraph (a), I have to say that there have been some highly technical difficulties in trying to reach a proper definition of the word "machinery". I understand it is important to make sure that there will not be any increases in the rates because of a new definition. It has been felt that there is need at this time for further study, and consequently I will suggest that subparagraph (a) be dropped.
As regards subparagraph (b), resolution 1 was inserted, as I said a few moments ago, as an interpretive note for the definition of two items. Since it is proposed not to proceed with subparagraph (a), I suggest that we do not deal with subparagraph (b) of resolution 1; but when we reach resolution 3 I shall ask a minister of the crown to move an amendment to item 561 which will have the same effect. Accordingly, Mr. Chairman, I suggest that resolution 1 be dropped.


Louis-René Beaudoin: Is it the wish of the
committee that resolution 1 be dropped?


Mr. Macdonnell (Greenwood):: I should
like to make one or two comments on it first. First of all, Mr. Chairman, am I right in thinking that it is customary, when these budget resolutions are called and the first item comes up to have a certain amount of general discussion? That, I understand, has been the practice; and if it has, I should like to follow it now. Unless you rule against me I shall proceed to do so.


Jean Lesage: May I point out that the general discussion usually comes on the resolution dealing with the schedule to the Customs Tariff. That is resolution 3. This year, in the matter of the Customs Tariff, we have four resolutions, the first of which is being dropped. Then No. 2 is for a specific item, while resolution No. 3 covers a number of amendments to schedule A of the Customs Tariff.


James MacKerras Macdonnell: I raised my point because I do not think what the parliamentary assistant has said is really in answer to what I have said. We are now beginning the discussion of the budget resolutions. There are resolutions to amend the Income Tax Act, the Excise Tax Act, the Excise Act, 1934 and the Customs Tariff.
I am now asking for your decision, Mr. Chairman, as to whether we may make general observations on the budget at this stage. I might reassure you by stating that I am not going to repeat at this time the speech I made a month ago. However, there are some general observations I should like to make. It has occurred to me that this is the only convenient time there will be to
Customs Tariff
make a general statement because, once this' item is passed, we will go on from one detail to another.


Louis-René Beaudoin: Perhaps I might inform hon. members that in committee the chairman is guided by standing order 58 (2)
which states:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
It is the practice to have a somewhat general discussion on the first clause called. At this time the committee has agreed to consider first the resolutions relating to the Customs Tariff. Whatever discussions take place must be relevant to the amendments proposed to the Customs Tariff in this amending resolution, and to nothing else.
The proposal was made by the parliamentary assistant that resolution No. 1 be dropped, and I think we should deal with that suggestion first. There is no use going on to debate a resolution which it has been proposed to drop. Is it agreed that we drop resolution No. 1?


James MacKerras Macdonnell: I shall have something to say on that. I do not wish to seem too persistent, but I would like to have a ruling. Do I understand the ruling is that there must be no general discussion now on this resolution? My understanding, from the time I have been in the house, has been that on the first resolution there has been an opportunity for some general discussion. I will not insist further, and if Your Honour's ruling is against me I shall proceed to comment on the resolutions before us.


Louis-René Beaudoin: I am afraid it is.


James MacKerras Macdonnell: Then I wish to say something about resolution No. 1 before it is dropped, because it seems to me we ought to have some clarification. It is rather extraordinary that there have been two cases where the government has got off on the wrong foot, and has had to come to the house and change its attitude. The first, of course, was with regard to the 15 per cent excise tax. I shall not deal with that at length, except to point out that we have in that connection what would seem to be a change. The minister has said it was not a change, but I think he will have difficulty in answering the conundrum:	When is a
change not a change?
However, I shall not pursue that. On these Customs Tariff resolutions I do wish to bring to the attention of the committee-

Customs Tariff


Louis-René Beaudoin: Then do I understand that the hon. member has completed his remarks about resolution No. 1, which is to be dropped?


James MacKerras Macdonnell: No.


Louis-René Beaudoin: Is he agreed that resolution No. 1 be dropped?


James MacKerras Macdonnell: No.


Mr. Fournier (Maisonneuve-Rosemont):: it is agreed, let us proceed.


James MacKerras Macdonnell: No. The
resolution before us is an important one. It has been commented upon in the press, and is a very far-rea-ching matter. Before we just drop it out of sight I think it would be well to have before the committee and the public some of the considerations involved in it.
I propose therefore to read a lengthy dispatch from the Winnipeg Free Press of February 21, in which this resolution is commented upon, because I take it that it was the difficulties mentioned in this extract I am about to read which caused the government to reconsider its position. I believe we would understand the situation better if the parliamentary assistant would take us just a little more into his confidence. This article in the Winnipeg Free Press, by Victor Mackie, states:
Millions of dollars of imports will be affected by the proposed amendment to the Customs Tariff involving motive power for machinery, introduced into parliament by Hon. Douglas Abbott, Minister of Finance, in his budget.
So sweeping is the wording of the proposed amendment that there are serious questions being raised here as to whether it may involve a breach of the general agreement on tariffs and trade.
The machinery item, of a class or kind not made in Canada (item 427A) is a bound item under GATT. The proposed amendment would remove from that item detachable motors, such as electric motors or other types of motive power. It would in effect make the motors dutiable at a higher rate of tariff and consequently it could be argued that it was a clear breach of GATT.
However the national revenue department presumably would reply that it was not a breach of GATT because for years it has been separating electric motors from machinery imports for the purposes of applying the tariff. There are suggestions that the amendment included in the budget will have to be reworded-
That was a bit of inspiration, apparently, on the part of the correspondent.
-and made more specific before it is presented to parliament for approval.
And later in the same article:
This wording is sweeping, taking in not only electrical motors but all other types of motive power.
There are indications that it may be redrafted and made to apply to electrical motors, particularly.

I wish to read further from this article, because evidently this has been a matter of considerable difficulty. It has been before the tariff board. I shall read further from this extract, where it deals with the discussions before that board:
If machinery of a class or kind not made in Canada is admissible for duty purposes with its electric motor as one entity the whole only pays a tariff of 71 per cent. But if the electric motor is detached and a tariff imposed against the motor separately, it pays a high tariff of 221 per cent.
The tariff board ruled on the cases that came before it that the electric motors as part of machinery were entities and it did not matter whether they were detached. The motor and machine paid the low rate. After these rulings Dave Sim, the deputy minister of national revenue, asked the tariff board for guidance as to whether it had been applying the "proper principle" in the past in ruling that the electric motor should be detached and made dutiable as a separate entity.
For years the department has sought to apply the rule that if the motor could be detached then it should be dutiable at the higher rate of duty as a separate entity.
The tariff board held hearings on the request of the deputy minister for guidance. It had not yet reached a decision when the budget was brought down incorporating the board amendment that "machinery" will not include motive power which when detached from the machine will operate. It is believed that in the light of the budget resolution the request to the board for guidance will now be withdrawn.
Parliament when it enacts the amendment as proposed in the budget, or a rewritten amendment, will establish the principle of whether electric motors are to be dutiable at a higher rate of duty when detachable.
I have brought this before the committee because it does seem to me that after a month-and it is just a month since the rapturous night of the budget; it is quieter now-we might have had from the parliamentary assistant who, I am sure, wishes to be co-operative in every possible way, something more than merely a statement that this was going to be, as I think he said, "dropped." I do not know whether he said, "dropped for rewording." The parliamentary assistant used very much the same language as the minister used the other day when talking about the excise tax, something about the difficulty of technical wording. I cannot find the exact phrase.
I raise this because it seems to me the matter has most important implications. It raises the question of our membership in the general agreement on tariffs and trade; it raises the question of the criticisms we have been making of the United States for its exclusive attitudes in the matter of tariffs; it raises the question as to the implications of the conversations which were had by the Prime Minister and the Minister of Finance in London in December; it raises the question which was raised vividly by the chancellor

of the British exchequer when he was here a week ago. For these reasons I thought it worth while to try to expose to the house the very important principles involved and the important economic consequences that may follow, and also the relationships which we have assumed in various ways with other countries.


Jean Lesage: Dropped.


Mr. Browne (St. John's West):: Does not the parliamentary assistant have to give some reply to the hon. member for Greenwood?


Some hon. Members:: No.


Jean Lesage: I do not see what I could say in reply because my hon. friend has given additional reasons why the resolution should be dropped. I have nothing to add.


Louis-René Beaudoin: The resolution is dropped.
Resolution dropped.
2.	That schedule A to the customs tariff be amended by deleting therefrom the following enumeration of goods and rate of additional duty of customs:
Cigarettes weighing not more than three pounds per thousand-$2 per thousand.


[Stage Direction]
Resolution agreed to.
3.	That schedule A to the customs tariff be further amended by striking thereout tariff items 105c, 173, 272b, 272c, 280 ( 2) and (3); 409c, 409e (i), (ii) and (iii), 409g, 409q, 4101, 410p, 410q, 412, 412a, 436, 440k (1), 442, 442d, 476a, 478, 479, 538, 538a, 538b, 576b, 657a, 681b, 691 and 696, 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.
Major James William Coldwell: I believe the parliamentary
assistant has some suggestions to make for the placing of certain other pieces of farm machinery on the free list. I had the opportunity recently of approaching the Minister of Finance in connection with a certain piece of machinery which is in general use in western Canada. There are several other items in the same category which the minister informed me he intended to put on the free list. Can the parliamentary assistant tell us whether that is so?


Jean Lesage: The hon. member for
Rosetown-Biggar is right. There are a few items to be added to the list, and I have amendments which I will have moved. I felt that in order to have an orderly discussion we should call the items one by one. We might do that in spite of the fact that the resolution covers all of the items.


Major James William Coldwell: I wanted to make sure that
this was not being overlooked at this stage.


James MacKerras Macdonnell: I hope I
will not be regarded as being disorderly if I
Customs Tariff
ask what I intended to ask before. Could we have some indication as to when this first resolution will be back before us. Will it be at this session? Will it be this week?
I take it that it has to be reworded.


Jean Lesage: I do not believe it will come
back at this session. As to when it will come back later is a matter of government policy.


James MacKerras Macdonnell: Then I have been very stupid. 1 did not fully understand the parliamentary assistant when he said that it should be dropped. I was wrong in thinking there was a possibility of it coming back. Apparently it is being dropped out of sight.


Jean Lesage: Resolution No. 1 has been
dropped, so there is nothing to add. It is not half-dropped, as the Minister of National Revenue tells me.


Mr. Gillis:: What happens if you want to
discuss something which is not included in the printed list? The chairman has ruled already that we can discuss only things that are related to the items as printed. I should like to say something about certain accessories to hearing aids. Could that be included under machinery?


Louis-René Beaudoin: If it is relevant the hon. member can speak about it, but if it is not relevant I am afraid he cannot speak about hearing aids on the machinery item. The suggestion is made by the parliamentary assistant that we proceed by calling these tariff items one by one. Is that procedure agreed to?


Some hon. Members:: Agreed.


Louis-René Beaudoin: Item 105c.


Mr. Fulton:: To begin with I might say I am very fond of olives, but I am curious and a little disturbed to see that they are going to be dutiable after July 1, 1954, as I read the schedule. How is the government able to look ahead for nearly eighteen months and decide that this item which is to be free up to July 1, 1954 will thereafter be faced with a tariff varying from 10 per cent to 30 per cent? I am sure those who like olives or who attend cocktail parties will share my concern.


Jean Lesage: The budget of 1952 provided for a change in the tariff on this item to be in effect for one year, up to July 1, 1953. We are proposing to provide the change for another year. Next year parliament will have an opportunity to look at the matter again. The rates of free, free and 30 per cent will be in effect until July 1, 1954, and

Customs Tariff
next year parliament will have an opportunity to look at the matter and decide what it will be after July 1, 1954.


Edmund Davie Fulton: I am grateful for that explanation by the parliamentary assistant. Is there an olive-growing industry in Canada which requires some protection? Is that why you are doing this only from year to year instead of eliminating it altogether?


Jean Lesage: No.


Edmund Davie Fulton: I do not suppose the loss of revenue would be very great. Surely there has been sufficient experience gained during the year in which they have been free. There would not seem to be such a great loss of revenue that you would have to put the duty back on. Why don't you just drop it altogether?


Jean Lesage: It is done at this time for the improvement of our trade with Spain, Greece and Italy, but we want to be as careful as we can so that we may keep this item for bargaining purposes.


William Joseph Browne: Would Spain, Greece and Italy come under the most-favoured-nation tariff or under the general tariff?


Jean Lesage: Under the most-favourednation tariff.


Louis-René Beaudoin: We will pass on to item No. 173.


Mr. Knight:: I am glad that the list of books to be admitted free to this country has been extended. The fourth part of this item reads:
Single copies of books when sent to a reviewer of books for bona fide review purposes; single copies1 of books when sent unsolicited and without charge to faculty members of universities or colleges.
There is another class of books which I suggest should also be free when imported. I refer to textbooks bought by qualified professors of universities or colleges which are outside the curriculum with which they are concerned. From the point of view of education it is essential that these professors should have this type of book. If a professor at the University of Saskatchewan, McGill or some other university decides that he should have certain background material- and in my opinion it is essential that he should have background material not definitely upon the curriculum, reference works by which he can increase his own knowledge of the subject and so become a more efficient teacher of it-then he certainly should be allowed to import such books free of duty. The fact that they are not on the free list now may be for the reason that the matter has simply been overlooked because,

as I interpret the new spirit with reference to the business of books, and particularly with respect to the abolition of the sales tax, something for which I have worked for years and upon which I congratulate the government, I should think the government would also be in favour of adding that one classification of books to the duty free list.
Any man who is going to teach a course must have a wide background of reference material with respect to his subject quite apart from the actual books which are on the course to be taught. I should like some comment on this matter. Even at this stage surely it should be possible to include that class of books.


Jean Lesage: I understand that if a
university professor imports such a book for use in a university library entry will be free. If it is for his own use-


Robert Ross (Roy) Knight: That is not what I am asking. I am well aware that at the present time libraries can import books free, and I am well aware that any books on the regular curriculum of a university are admitted free. What I am asking is that the privilege which is extended to the university professor to receive an unsolicited book duty free should be extended to the case where he himself sends to the United States, let us say, and orders a reference book having to do with the course which he has to teach. I know the matter is somewhat academic and technical, and that is why I believe the government have overlooked it. With the new spirit of promotion of books I am quite sure that if the government had thought about the matter these would have been included in the list. Why in the world should a man be allowed to receive an unsolicited book duty free and yet have to pay duty on a reference work which he needs for background material in connection with one of his classes when he brings it in of his own volition rather than having it sent to him by somebody else? To me the thing is ridiculous.


Mr. Brooks:: Could he not get the book through his university library under item 173?


Robert Ross (Roy) Knight: Quite often university libraries are small, or the university does not have too much money to expend on such -books. On the other hand, when a professor is willing to spend his own money for a reference book which will broaden his knowledge of the subject I think it is all for the good of himself, his classes and the country generally that a wide background of reference material should be available to him.
It is only a small matter. A professor might order perhaps two or three books in a

year. A bona fide professor of a university teaching a definite course in a particular subject should be allowed to import reference books on that subject duty free in order to assist him in his work, whether the books are solicited or unsolicited. Personally I do not see any reason for this particular clause. I would have thought that where a man expresses a need for such a book, orders it and pays for it would have been the first place to do away with the tariff. I welcome the one concession, but I think the other is more necessary.


Jean Lesage: I can assure the hon. member that his representations will be considered. However, I should point out to him that what he proposes now would give rise to many administrative difficulties. What would be the test? Would it be the professor's judgment? To what kind of professors should we extend this privilege? Would clergymen, for instance, ask for the same privilege? Would other classes of people ask for the same privilege? I am not entering into a debate with the hon. member. I am just making him aware of the administrative difficulties which will be studied in the light of his representations, which representations will also be most carefully and sympathetically examined.


Robert Ross (Roy) Knight: I do not admit that there would be such difficulties as the parliamentary assistant has dragged out of an imaginary hat. He asks what is a professor? Is he a clergyman?


Jean Lesage: No, no.


Robert Ross (Roy) Knight: I say it is easy enough to establish the identity of a bona fide professor teaching in a bona fide university in Canada. It is easy enough for him to prove that he is teaching a certain course and that he needs the reference book to teach that subject. So far as I am concerned he should have it, and the fewer obstacles that are put in his way the better for him, for his classes and for education in the country generally. I am making a definite appeal. I hope I am making myself dear. I am asking that a bona fide professor of a bona fide university teaching a course in a particular subject should be able to send to the United States and buy himself a book or two books and not be charged duty on them.


Major James William Coldwell: I want to support my hon. friend, but I should like to go a step further. I cannot understand the parliamentary assistant's objection with respect to distinguishing what a university professor is, and the statement he made that you might have to iput lawyers and clergymen on the same list. As a matter of fact we have
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narrowed the provision here to provide for unsolicited books to be received duty free by a professor in a bona fide university or college, but I should like to go one step further. In the interests of education and general culture in our country I say that books of this type should be admitted duty free whether they are imported by a university professor, a teacher or by someone interested in the subject who wishes to enlarge and improve his own education.
I think we make a mistake when we subject books of this description to any duty at all, because in this new country of ours we want to build up the best kind of libraries we -can; and individuals who can build up libraries of books of this description for their own education can make a worthwhile contribution to the country. Many of us know of individuals in the older parts of Canada, Ontario and Quebec, who have -built up libraries. Those of us who come from older countries know of individuals with quite extensive libraries of reference books.
While I support the plea of the hon. member for Saskatoon, I should like the consideration to extend to something more than that, to the free -entry of books of this description that would be useful to teachers, lawyers, doctors, -clergymen and others -who are promoting the general culture and general educational welfare and standards of the country. I should like to make that plea for the future in any event.


Jean Lesage: The hon. member for Rose-town-Biggar has given as examples lawyers and clergymen. May I draw his attention to item 172 -under which the following books all come in free, whatever may be their source; books, pamphlets and reports for the promotion of religion, medicine and surgery, the fine arts, law, science, technical training and the study of languages. I do not know exactly what the hon. member for Saskatoon has in mind.


Major James William Coldwell: As a matter of fact the parliamentary assistant himself raised the question in reply to the hon. member for Saskatoon with respect to books imported by the clergy, lawyers and doctors.


Jean Lesage: Not lawyers or doctors.


Major James William Coldwell: I did not know what the interpretation of this particular item was. If it is as narrow as I infer from the reply to my hon. friend, then I want to see it greatly expanded.


Gordon Francis Higgins: I would like to add- to the remarks -by my hon. friends to the left and go a little further in this matter. I feel that all books should be duty free. In the days

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before we became part of this great dominion and were just Newfoundland, they all came in duty free. I do not see that you are any more educated up here than we are; there are a lot of people in Newfoundland who would like to buy books, and a few cents makes a difference. I see no very good reason which the parliamentary assistant can give why any duty should be imposed on books of any kind. Is it because you are trying to protect the bookmakers or booksellers here; or is the amount you require so great that we have to put taxation on books?


Major James William Coldwell: I will go along with that.


Jean Lesage: Well, Mr. Chairman, practically all technical books are free. There is a duty of 10 per cent on fiction, novels. It is a question of knowing whether that small protection should be left for our printing industry.
Mr. Nose worthy: May I put a question for information? With respect to the first item in 173, do I understand correctly that any teacher or student may import a book that is either an authorized textbook or a book of reference on a school course duty free?


Jean Lesage: There is no change there, Mr. Chairman.


Mr. Noseworthy:: What is that?


Jean Lesage: There is no change in 173 (1).


Joseph William Noseworthy: I am asking what the situation is now. Are they free?


Jean Lesage: They are free, Mr. Chairman. That is shown in black and white in the resolution.


Louis-René Beaudoin: Shall we pass on to 199j?


Joseph William Noseworthy: I have a second question on 173. What does the department require from an individual importer to indicate that a certain book is a prescribed book of reference in a school?


Jean Lesage: Mr. Chairman, the department requires reasonable proof that it is on the curriculum.


Mr. McLure:: Why are dictionaries not included?


Louis-René Beaudoin: Did the parliamentary
assistant hear the question?


Jean Lesage: It is the first request we have had along that line.


Winfield Chester Scott McLure: What?


Jean Lesage: It is the first request that has ever come to the department, according to the information I have, for the freeing of dictionaries.


Mr. McCann:: May I interject that I think it would make it a lot simpler if it were understood that the changes, which are ordinarily underlined in an act, are here in fine print. In the first part, books, etc., that is what is in the tariff now. There is no change in part 1. When you come to the fine print under that item that is a change. By reading the two together you get a full idea of what the changes are and what already is in the tariff.


Winfield Chester Scott McLure: I think the parliamentary assistant misunderstood my question. I want to know why dictionaries were set aside as separate from all others, and what duty there is now on dictionaries.


Jean Lesage: The duty is 10 per cent, Mr. Chairman, and it is because they are printed in Canada.


Louis-René Beaudoin: Shall the item carry?


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 199j.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 237.


Alfred Johnson Brooks: I would like to ask the minister why these cannot come in free under the general tariff. As I understand it, isotopes are produced for medicine, agriculture and industry; and it does seem to me that they should be free.


Jean Lesage: Mr. Chairman, as my hon. friend knows the production of isotopes has been temporarily suspended; and that is the reason for the change.


Mr. Adamson:: Can the parliamentary assistant say whether the United States imposes a duty on Canadian isotopes?


Jean Lesage: No, Mr. Chairman, not according to the information I have.


Major James William Coldwell: I thought the hon. gentleman was discussing 199j. I cannot understand why wire reinforced paper tape, printed or not, imported for use in the packaging of fruit, vegetables and other farm or garden produce should be taxed at 5 per cent when we seem to have a policy, and I think it is the policy adopted by the government, of letting farm machinery and supplies in free. It seems to me that this is a supply used in the fruit and vegetable industry; and if we allow farm equipment to be imported and used in other branches of agriculture, I cannot see why there should be a duty of 5 per cent under the British preferential tariff and the other rates of duty as given there, on something that is necessary for the fruit and vegetable industry. The packaging;

of imported fruits, vegetables and other garden or farm produce is certainly quite extensive today.


Jean Lesage: According to my information the use of these twist-ems is not very great.
I have seem some pictures of them, and they are mainly used to wrap vegetables in retail stores.


Major James William Coldwell: The people who buy fruits and vegetables have to pay for them. Look at the rates. There is a small decrease, but under the British preferential tariff the rate is 5 per cent and under the most-favourednation class it is 10 per cent and under the general tariff it is still 35 per cent.


Jean Lesage: I do not think it can be said that it is only a small reduction. It is from 25 per cent to 10 per cent under the mostfavoured-nation class; and those things were coming in from the United States.


Major James William Coldwell: Supposing fruit and vegetables come in, as they do very largely, packaged in the United States; is the package charged under the general tariff or what is the situation? Suppose, for example, that spinach comes into Canada in packages. Is the package valued separately from the contents and is a duty of 35 per cent charged on the package in which the spinach comes?


Jean Lesage: It is included; but may I stress the point that these twist-ems are not used extensively. They are used in retail stores to put for example around six bananas, and things of that nature.


Major James William Coldwell: But my hon. friend cannot go into many retail stores; otherwise he would know that these things are packaged and, I believe, packaged in the United States. If you walk into stores here you will sometimes see "Texas" on a package of washed vegetables or something of that sort.


James Joseph McCann: The principal reason is to advertise Texas or some other place.


Major James William Coldwell: It may be advertising Texas, but I believe that some of these vegetables are packaged or crated in Texas.


James Joseph McCann: Surely.


Major James William Coldwell: And if they are, and if the Canadian consumer is taxed on the package at the rate of 35 per cent, that increases the cost of these vegetables and the cost of living; and it seems to me that is entirely at variance with the policy of this parliament of allowing foodstuffs and farm supplies free into Canada. This is a supply. Perhaps I should say this. I have not much sympathy with the idea of washing and packaging turnips, carrots and spinach and everything that comes in. I think it increases the cost
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of living. But it is done extensively now and people are buying them, and they expect it.


Jean Lesage: I am not sure that I understand exactly the point the hon. member wants to make. He speaks of a duty of 35 per cent on vegetables coming from the United States. There is no such duty of 35 per cent on vegetables coming from the United States. On the other hand, do I understand that the hon. member wants all vegetables to come from the United States free? Is that what he means?


Major James William Coldwell: I am talking about the packages in which the vegetables come. It is clearly stated here that the following shall be dutiable:
Wire reinforced paper tape, printed or not, imported for use in the packaging of fruit, vegetables and other farm or garden produce.
There is wire in all these things. I do not think they should be taxed. That is the point I am making.


Jean Lesage: I can say that it has been estimated that the Canadian consumption of these twist-ems items would not amount to more than $15,000 a year.


Major James William Coldwell: I do not know what the value is, but the principle is wrong.


Louis-René Beaudoin: Are we through with our discussion on item 237? If so, the next is item 272b, petroleum waxes, et cetera.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 280, grease and oils.


Mr. Harkness:: May I ask what is the effect of this change, adding "and oils"? What oils will those be; what kind of oils?


Jean Lesage: The former item 280, subparagraph 2, provided for duty free entry from all countries of grease, rough, the refuse of animal fat, for the manufacture of soap and oils only. Item 280, subparagraph 3, provides for inedible oils without admixture, obtained from animal fat, for use in the manufacture of soap or oils. The two items are now combined in one item only in order to facilitate administration.


Douglas Scott Harkness: If I understand the matter correctly, there is no real change by that addition?


Jean Lesage: No.


Douglas Scott Harkness: It is just a matter of combining the two of them into one?


Jean Lesage: There is no change made except for administrative purposes.


Douglas Scott Harkness: All the oils that are mentioned here are non-edible oils, are they?

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Jean Lesage: They are not.


Douglas Scott Harkness: I beg your pardon?


Jean Lesage: They are not.


Douglas Scott Harkness: I am not sure that I understand what the parliamentary assistant means. Does he mean they are not edible oils?


Jean Lesage: They are not edible oils.


Alfred Johnson Brooks: Could they be refined or made into margarine or anything of that nature?


Jean Lesage: No.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 403, wire rope or cable.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 409c, ploughs and parts thereof.


Mr. Fair:: What does that mean? I should like to get an explanation of it. As I read it, it means that plough bolts are put into the other list. Is that correct?


Jean Lesage: That is right.


Robert Fair: That is quite a consolation to the farmers.


Major James William Coldwell: I was going to ask if this is where it was intended to include them.


Jean Lesage: Yes. We are on item 409c now.


Mr. Quelch:: Mr. Chairman-[DOT]


Louis-René Beaudoin: Order. The hon. member for Battle River wants to say something. He has been trying to get the floor for some time.


Robert Fair: I wanted to get a little bit of information from the parliamentary assistant in connection with the importation of small gasoline engines used for pumping water, running fanning mills, cement mixers and things of that kind.


Louis-René Beaudoin: Order. Does that come under item 409c?


James Joseph McCann: No.


Jean Lesage: No.


Robert Fair: Not particularly; no.


Louis-René Beaudoin: Then shall we pass on to item 409e? Perhaps the hon. member can reserve his question until we reach an item to which it will be relevant. We are now on item 409e, spraying and dusting machines.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 409g, incubators for hatching eggs.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 409q.


Jean Lesage: Mr. Chairman, I will ask my colleague the Minister of National Revenue to move an amendment to item 409f which is not in the list. It is proposed to amend this item to provide for hydraulic hoists for unloading vehicles for use on the farm for farm purposes only. That was the point raised by the hon. member for Rosetown-Biggar.


Major James William Coldwell: That is the point I raised with the minister.


Jean Lesage: I would ask the Minister of National Revenue to move that amendment.


James Joseph McCann: I move:
That the following item be inserted in resolution 3, of February 19, 1953:
409f-Grain crusher; grain or hay grinders; grain or hay dryers; milk coolers; steel stanchions for confining livestock either in pens or individually, including complete equipment for milking parlours; automatic stock watering bowls; barn litter carriers and track; sprinkler irrigation systems; barn hay forks, carriage, pulleys and track; hydraulic hoists for unloading vehicles; all the foregoing for use on the farm for farm purposes only; hay loaders, hay tedders, potato planters, potato diggers, fodder or feed cutters, ensilage cutters, post hole diggers, snaths, stumping machines, grain loaders or elevators with a capacity not exceeding 40 bushels per minute and all other agricultural implements or agricultural machinery, n.o.p., and complete parts of all the foregoing	Free-Free-Free.


Major James William Coldwell: I should like to express appreciation, to the minister and the department for the prompt manner in which they considered this point. I brought it to their attention only ten days ago. We have it on the free list today. I want to express my appreciation to the minister for his prompt action.


James MacKerras Macdonnell: I wonder if the parliamentary assistant could satisfy my curiosity about item 409e by telling me what is apparatus for the destruction of predatory animals by the discharge of poisonous cartridges.


Jean Lesage: Mr. Chairman, I know that it is usually called a coyote-getter.


Mr. Herridge:: Which item are we on, Mr. Chairman? Are we on the amendment that was moved?


Douglas Scott Harkness: That is what I was going to ask.


Louis-René Beaudoin: We were on the amendment that was offered until the hon. member for Greenwood interjected a question having to do with item 409e which was carried a few moments ago. But I presumed it was with the unanimous consent of the committee that such question was asked. We therefore come back to item 409f. That is the amendment

which was offered. Does the hon. member wish to speak to the amendment?


Herbert Wilfred Herridge: Yes. It was carried rather
hurriedly and some of us did not realize it. Like the hon. member for Rosetown-Biggar, I was pleased to hear this amendment; but I was rather disappointed that grindstones for mowing machines were not included. All farmers who cut grain and hay with certain types of machinery use grindstones for mowing machines. As grinders were mentioned for other machinery used on the farm, it does not seem logical to exclude grindstones used for mowing machines or grain-cutting machines. I would urge the minister to give consideration to the inclusion of these grindstones.


Jean Lesage: I can assure the hon. member that consideration will be given to his representation.


Mr. Hosking:: I should like to ask the parliamentary assistant what is the change in the item covering equipment for confining livestock either in pens or individually, including complete equipment for milking parlours; automatic stock-watering bowls; barn litter carriers and track; sprinkler irrigation systems, etc. Can he tell me what the change is?


Jean Lesage: There is no change in the item. The only change is to add to the list "hydraulic hoists for unloading vehicles".


Henry Alfred Hosking: Otherwise it is exactly the same?


Jean Lesage: It is identical.


Douglas Scott Harkness: I should like to ask a question in connection with, sprinkler irrigation systems. The parliamentary assistant may remember that two years ago I had quite a long discussion with the minister in connection with this particular matter. Do these sprinkler irrigation systems include the pumps and engines which work them? Is that now the interpretation placed on this item?


Jean Lesage: I am informed that the answer is yes.


Louis-René Beaudoin: Shall we now pass on to 409q?


Robert Fair: Perhaps I can get the information I want under this item. I want to find out what the regulations are in connection with the importation of small gasoline engines to be used on pumps, fanning mills, small cement mixers and things of that kind. Do they come in free of duty?


Jean Lesage: I do not believe cement mixers could be considered as agricultural implements.
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Robert Fair: Well, call it a fanning mill or a pump engine or a small grain loader or something of that kind.


Jean Lesage: Yes, for fanning mills; any agricultural implement is free under this item.


Mr. Wright:: With engines attached to them? I refer to small combustion engines up to 5 horsepower.


Jean Lesage: If they are to be attached; if incorporated, they are free.


Percy Ellis Wright: What is the definition of "attached" and the word "auxiliary"? There must be some definition, because I was charged duty a couple of years ago on bringing in one to be attached. I should like to know what the definition of "attached" is.


Jean Lesage: Was it before 1950?


Percy Ellis Wright: Yes.


Jean Lesage: There has been a change since.


Douglas Scott Harkness: Over a year and a half ago I bought an electric motor to work a pump, and I certainly had to pay duty on it. There seemed to be no relaxation of duty as far as electric motors for that purpose were concerned at that time.


Jean Lesage: A pump is not necessarily an agricultural implement. Moreover, that is one of the definitions that prompted the dropping of resolution 1.


Douglas Scott Harkness: I think that was the very point we were trying to get at, namely the definition of an agricultural implement, or what sort of motor was meant that would be attached to it. Certainly a pump on a farm used entirely for watering livestock is a piece of agricultural machinery. There is no question about that.


Robert Fair: I want to pursue that a little farther. When I was home during the Christmas recess one of the machine agents handed me a form, in fact forms from two companies, and they read like this:
I also certify that the internal combustion engine described is being purchased by me for installation on my farm and that this engine will be used for agricultural purposes only and will be incorporated in or attached to agricultural machinery as classified by the Canadian customs act which permits an internal combustion engine to be imported free of duty and sales tax only if used to operate the following farm machinery:
Then follow a number of farm machines. In other parts of the form it states that it has to be bolted down or attached solidly on one particular piece of machinery and cannot be used around the farm. When I was farming we had part of the time one pump engine

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which was from 2J to 3 horsepower. It was a gasoline engine. When the time came either in the fall or spring, whichever was convenient, to clean grain, where we had only-one gasoline engine we took it off a pump and used it on the fanning mill. According to another part of this form the dealer's certificate reads like this:
I/we certify that the above certificate is correct. I/we agree to indemnify the Canadian Fairbanks-Morse Company Limited in the event that a customs inspection should prove this sale unqualified for duty exemption.
At the bottom of the form we find the following:
Warning-An engine used for attachment to cement mixers, wood sawing machines, pump jacks, water pumps, et cetera does not qualify for duty and tax exemption as this equipment is not classified in the customs tariff as agricultural machinery.
To me that is one of the craziest things in the world, because if you do not have to use it for pumps or fanning mills on the farm you do have to use these small wood-sawing machines to saw wood. I think this item needs revision and I should like to know what comment the parliamentary assistant has in this connection.


Victor Quelch: I should like to support what the hon. member says. Surely the department should be interested in getting the most efficient operation of engines on the farm. If you are going to say that the engine must be attached to the machine, it means that if you are going to use the engine on the fanning mill you have to attach the engine to it. But you do not operate that way. You attach the fanning mill to the skids and attach the engine to the skids as well. With respect to grain loaders, today we do have engines attached to grain loaders; but there is nothing to stop a farmer taking them off and using them on other machines. Instead of the word "attached" the words used should be "used for the operation of". The great majority of engines are not attached to machines. Certainly you are going to make farming more expensive if you are going to insist that a specific farm machine must have an engine attached to it in order to benefit from this resolution.


Jean Lesage: The greatest consideration will be given to the suggestion made by the hon. member for Acadia.


Robert Fair: I hope you will bring a farmer into consultation with the officials of your customs department, because it certainly needs something like that in connection with some of the items that are in existence at the present time.


Douglas Scott Harkness: Is consideration being given, as I would hope it might be, particularly to

this matter of pump engines on farms? That is an instance where the engine is attached definitely to the head of the well and bolted down, and in most cases it is not moved. That type of engine is used purely for farm purposes, and I do not see how from any point of view of common sense it can be classed as anything but farm machinery. Nevertheless, under the law as it stands at the present time it does not get the benefit of coming in free.


Louis-René Beaudoin: We shall now deal with 4101.


Agar Rodney Adamson: I should like to ask a question on this item and on 410q, both dealing with mining.


Louis-René Beaudoin: Shall we consider them together?


Agar Rodney Adamson: I think they could be considered together, because one deals with crushers and the other with pumps. Item 4101 starts oft by dealing with coal crushers. In the last sentence it deals with crushers for quarries, or in metallurgical operations or in the beneficiation of non-metalliferous ores. Surely crushers for all mines would come under this clause. Crushing machinery is one of the most expensive items and a very large item in all mining operations. Some consideration should be given to having the tariff reduced here, particularly for gold mining which is in such a bad way at the present time.
I particularly want to deal with 410q. which has to do with pumps. These pumps are the pumps which I imagine would be operating what are known as the Oliver filters and the American filters which extract the gold from the cyanide solution which is known as the pregnant solution. They are used in the process of extracting the precious metals from this solution and are a very important item in any milling operation. It seems that these pumps, which are a very essential part of any precious metal mine, are taxed at the highest rate of any in the schedule. I wondered whether there was any reason for this, particularly as precious metal mines, both gold and silver, are in a very serious position at the present time.


Jean Lesage: My only comment is to draw the attention of the hon. member to the fact that these machines are made in Canada.


James Joseph McCann: There is an addition to this, so that it includes asbestos.


Jean Lesage: That is the purpose of the amendment. The purpose was to include asbestos, which is a non-metalliferous ore, as well as gypsum and talc, etc. My comment

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was in answer to the plea for a further reduc- from United States companies for a period tion in tariff when those machines are not of two or three years, because there are not made in Canada.	enough today in Canada.


Louis-René Beaudoin: Then I understand that 4101 and 410p are agreed to?


Some hon. Members:: Agreed.


Louis-René Beaudoin: Then items 410q, 412, and 412a.


Some hon. Members:: Agreed.


Louis-René Beaudoin: Item 415a.


Douglas Scott Harkness: I notice that this item refers to refrigerator parts of iron or steel, of which iron or steel or both are the component materials of chief value. The duties would appear to have been reduced slightly. Has any consideration been given to reducing refrigerator parts other than those of iron and steel? Why does not the reduction apply to all parts?


Jean Lesage: I am informed that most of the other parts come in at lower rates, under other tariff items.


Douglas Scott Harkness: I do not know that that is a satisfactory answer. I suggest it might be advisable to have all refrigerator parts at one place in the tariff, instead of having them scattered throughout a number of items.


James Joseph McCann: This item brings the tariff on parts down to the same rate as the tariff on finished refrigerators. Formerly the tariff on parts was at a higher rate.


Douglas Scott Harkness: I am glad that is so. My purpose was to try to have the rate on all parts brought down, instead of just on iron and steel parts.


Some hon. Members:: Agreed.
The Chairman.: Item 436.


James MacKerras Macdonnell: I have a question which, perhaps, is prompted by curiosity. I notice that there is no duty on locomotives crossing the international boundary line; but in the case of locomotives carrying freight from one Canadian point to another there is a duty. The item says:
Provided, however, that if such locomotives and railway rolling stock are used temporarily in the transportation of goods from a place in Canada to another place in Canada-
And so on. I do not understand the use of the word "temporarily".


Jean Lesage: Frequently in the past-and I know both the large railway companies still do it-freight cars have been rented. This applies mostly to tank cars from United States companies. These cars carry freight between two Canadian cities. They are rented


James MacKerras Macdonnell: Is there any limit as to time?


Jean Lesage: No, there is no limit. Of course they are imported for a certain time, and there has to be some way of assessing the duty on the rental value of those cars.


Agar Rodney Adamson: I see here an interesting clause which I have not seen before, where it says that this item shall apply so long as the United States gives us the same concession we give them. Are there any other items in this class, or is this the only one?


Jean Lesage: There is one more, I understand.


Agar Rodney Adamson: I am not complaining about it.


Jean Lesage: Item 460 refers to-
Materials to be used in Canada for the construction of bridges and tunnels crossing the boundary between the United States and Canada, when similar materials are admitted free under similar circumstances into the United States, under regulations prescribed by the Minister of National Revenue.
Those are the only two items.


Agar Rodney Adamson: That is a pretty restricted item.


Some hon. Members:: Agreed.


Louis-René Beaudoin: Items 440k, 442 and 442d.


Some hon. Members:: Agreed.


Louis-René Beaudoin: Item 443d.


Jean Lesage: The Minister of National
Revenue will move an amendment to this item.


James Joseph McCann: I move:
That tariff item 443d, as contained in resolution 3 of February 19, 1953, be amended to read as follows:
"443d. Gas control devices of a class or kind not made in Canada:
(1)	For use on cooking apparatus or on apparatus for heating buildings or in the gas line between such apparatus and the meter; and parts thereof: British preferential tariff, free; most favoured nation tariff, 7J per cent; general tariff, 30 per cent.
(2)	For the manufacture or repair of, or for conversion to, gas-fired apparatus for cooking or for heating buildings; and parts thereof: British preferential tariff, free; most favoured nation tariff, 71 per cent; general tariff, 30 per cent."


Douglas Scott Harkness: Is this to be added to the present tariff item 443d?


Jean Lesage: It is a substitution, but the wording is exactly the same with the exception that it adds the words, "for use on cooking apparatus". The original item covered only apparatus for heating purposes.

Customs Tariff


Douglas Scott Harkness: I presume this refers to thermostats. Are thermostats used in gas furnaces or gas cooking stoves now admitted at the same rate as thermostats used on coal or electric stoves, or other appliances of a similar nature?


James Joseph McCann: This applies mainly to meters.


Jean Lesage: The rates are about the same. In one instance the rates are free and 10 per cent, while in this they are free and 7J per cent. On the electrical apparatus it is higher.


Douglas Scott Harkness: I have raised the point because for some considerable "time the tariff, excise tax and sales tax on gas stoves have been very much in excess of those on coal stoves. I come from an area in which practically all cooking and heating is done by gas. I have been interested in this matter for some time, and have brought it to the attention of the Minister of Finance in previous years.
I submit that there should be no distinction between coal and gas stoves used for cooking or heating purposes. The result of the general tariff, sales and excise structure has been to place at a disadvantage those who use 'gas for cooking and heating. As I understand this item it covers thermostatic devices used in connection with the use of gas, and these will now be brought in under the same rate of duty as thermostatic devices used in connection with the use of coal.


Jean Lesage: Yes. The bon. member is referring to excise and sales taxes, but we are dealing here with customs duties on gas control devices.


Douglas Scott Harkness: This item applies only to thermostats?


Jean Lesage: Yes.


[Stage Direction]
Amendment agreed to.
Louis-René Beaudoin: Item 443e.


Douglas Scott Harkness: This item covers timing devices for apparatus for cooking or heating buildings, and I assume that these are the same as were covered by the amendment just agreed to. That would apply, I would think, as far as gas is concerned. If that is the case, I wonder why the rate is 15 per cent in this case and 22\ per cent, as against 7J per cent and 30 per cent. What is the difference between these timing devices and the thermostats used in connection with cooking stoves?


Jean Lesage: I understand the hon. member wants to know the difference between gas control devices under 443d and timing devices under 443e?


Douglas Scott Harkness: Yes.


Jean Lesage: Timing devices are clocks, and formerly paid a rate of duty as clocks. That was quite a heavy rate. Item 443d covers safety devices which must be incorporated in gas-fired apparatus. They are quite different from timing devices, which are clocks.


Douglas Scott Harkness: Then it would appear that the answer I got to my other question was wrong, that 443d does not apply to thermostats. Nearly all thermostats used in western Canada in connection with gas heating embody a clock. You set your thermostat at possibly 50 and then it can be set to turn the heat up to 70 at 6, 6.30 or any other time in the morning you want it set for. All those thermostats embody that principle. I understand from what the parliamentary assistant just said that thermostats would not come under 443d.


Jean Lesage: We may not be as far advanced in the east as you are in the west. I have a thermostat in my home which does not embody a timing device.


Douglas Scott Harkness: We had them before the war.


Jean Lesage: So much the better for you.


Douglas Scott Harkness: Do I understand that thermostats do not come under 443d?


Jean Lesage: If they are timing devices, yes; if they are not, no.


Douglas Scott Harkness: I think you mean the
opposite.


Jean Lesage: You are right.


Douglas Scott Harkness: I submit that all these items should be on the same basis. I can see no material difference between them. Whether you call a thermostat a gas control device or a timing device, the purpose it accomplishes is the same; and it seems to me they should all be on the same basis of free, 7j per cent and 30 per cent instead of 15 per cent, 22j per cent and 30 per cent. I wonder if we could have some comment on that. As I said before, those who use natural gas for cooking or heating seem to be discriminated against as far as the tariff, sales tax and excise tax structure are concerned.


Jean Lesage: Far from it. The change made in item 443d will reduce the duty on gas control devices which are not made in Canada. Because of the greatly increased distribution of natural gas the production of gas-fired apparatus has been greatly extended and the safety measures which must be incorporated in gas-fired apparatus require that these control devices be used. That is why the rate has been reduced. The items

covered by 443e were formerly dutiable as clocks at the rate of 30 per cent plus 40 cents each, and the rate is now brought down to 15 per cent, 22J per cent and 30 per cent.


Mr. Hansell:: Why should there be discrimination between devices in connection with the use of gas and the same devices when used in connection with oil? In the west as well as in the east a good deal of oil-burning equipment is being installed for cooking and heating purposes. Gas is piped principally to the large urban centres. Even in the west the smaller rural areas find it difficult to obtain gas, even some towns of considerable population, because it is not considered economically feasible to pipe the gas from the main line. Many farmers living right in gas-producing areas are unable to get gas because it must be piped. But all these people are able to get oil and a great deal is being used today. The same type of thermostat and other apparatus is used. I should like to ask the parliamentary assistant if they have given consideration to these devices on oil-burning furnaces and equipment.


Jean Lesage: I am informed that the apparatus on oil stoves and furnaces is much simpler than gas cooking and heating apparatus. I am also informed that the Department of National Revenue and the Department of Finance have received no representations whatsoever with respect to such apparatus for oil stoves and furnaces. If representations are made about any difficulties, my hon. friend may rest assured that they will receive the highest consideration.


Ernest George Hansell: I would only point out that while there may not be such intricate apparatus on oil-burning cooking stoves, there is very intricate apparatus on oil furnaces.


Jean Lesage: They are made in Canada. The difference is that the apparatus is made in Canada while what is covered under 443d and 443e is not made in Canada.


Ernest George Hansell: That is quite so, but I do not think we can say they are all made in Canada. However, the parliamentary assistant's interest in the matter of representation is, I think, well taken.


Henry Alfred Hosking: Has the minister made a careful study of what effect the lowering of these tariffs will have on the manufacturers of such goods in the Dominion of Canada? One of the most important things we have to watch in Canada at this time is the situation with respect to labour. Will any of the tariff changes on these pieces of equipment affect the labour market? We have a firm in my city manufacturing this type of equipment,
Customs Tariff
and I was wondering what care had been taken to see that such changes will not cause hardship.


Jean Lesage: This would not apply to 443d and 443e because these kinds of apparatus are not made in Canada; but I can assure my hon. friend that whatever the reductions, they are made in the light of the protection that should be given to the Canadian industry while at the same time taking into consideration the general policy of the government which is of course to have as free a universal trade as possible.


Louis-René Beaudoin: We will now pass on to item 476a.


Mr. Catherwood:: This item includes a great variety of equipment for hospitals, but it does not specifically mention private hospitals. There are many private hospitals operating in towns and villages throughout the country which are doing an excellent job. Has consideration been given to that point?


James Joseph McCann: The only change in this item is electroencephalographic paper. That is a type of sensitized paper used by brain specialists to record the X-ray that is taken in these particular cases. It would not be used in private hospitals at all. It is a highly specialized type of work, and such paper is used in general hospitals.


Louis-René Beaudoin: Item 478.


Herbert Wilfred Herridge: I should like to bring something to the parliamentary assistant's attention with respect to this item. I am not quite sure whether I am in order, but I think the humanitarian instincts of the chairman will cause my pleas to be listened to. Under section 2, aural and nasal prostheses, I want to deal for a moment with auditory prosthesis which is not included in this item.


Jean Lesage: Hearing aids?


Herbert Wilfred Herridge: No. I happen to have in my constituency a poor young chap who is without ears. He has had to have plastic ears made and has to send to the United States for the material to stick them on.


Jean Lesage: That is what the amendment is for, to cover that.


Herbert Wilfred Herridge: Is there an amendment
coming?


Jean Lesage: For the common man, aural and nasal prostheses are false noses and ears, together with specially designed adhesives for use therewith. That is what is provided for in this amendment.


Herbert Wilfred Herridge: I must express my sincere appreciation of the response to my pleas.

Customs Tariff


Jean Lesage: This provision was made in answer to the plea of the hon. member of last year.


Herbert Wilfred Herridge: Thank you very much.


Douglas Scott Harkness: In view of what we have just heard, may I ask the parliamentary assistant whether this item includes hearing aids and things of that kind?


Jean Lesage: Hearing aids come in free under item 482 and have done so since last year, I believe. The amendment was brought in last year.


James Joseph McCann: It is not printed here.


Douglas Scott Harkness: No.


James Joseph McCann: No, it is another item.


Jean Lesage: It is item 482, which was amended last year.


Douglas Scott Harkness: I should like to ask another question. Do I understand that under this amendment all prosthetic appliances now come in duty free? That is something we have been pushing for ever since I have been in the house. I am glad these additions to the free list have been made. I hope that completes the entire list of prosthetic devices, so that people who are so handicapped will no longer have to pay duty on any such devices, no matter what they may be, which have to be imported.


Jean Lesage: If the hon. member has any specific case to bring to the attention of the department, consideration will certainly be given to it. We do not know of any. We have had no representations, and nothing has been brought to the attention of the officials of the department. The item is as broad as it can be, and we do not know of anything else of that kind that should be covered.


Douglas Scott Harkness: My question simply was whether, as far as the parliamentary assistant and the people advising him know, all prosthetic devices are now covered?


Jean Lesage: I am informed that, so far as the officials know, they are.


Douglas Scott Harkness: That is very good.


Louis-René Beaudoin: Item 567b.


Major James William Coldwell: I notice that practically all church furniture, with the exception of church vestments of any material, come in free. Farther down I see that communion sets, oil stocks, crosiers, sprinklers, etc., are all free. I have not been able to understand why church vestments such as cassocks, surplices, coats, mitres and so on, and the gowns that are worn by United Church and Presbyterian ministers, are not also put on the free list.

I think they should be. Church vestments of any material enter under rates of 10 per cent, 10 per cent or 20 per cent. I may have misinterpreted the item, and if I have I should like to be corrected. I think all church furniture should enter free. Mind you, I am in favour of putting all the items under item 691 on the free list, but I wonder why church vestments of any material should be treated differently from church furniture of the type that is used in some of our churches.


Jean Lesage: May I ask the hon. member where he finds "church furniture"?


Major James William Coldwell: I would consider that the items in 691, statuettes and so on, are church furniture. I use that term in a wide sense. Why should church cassocks, surplices and gowns worn by United Church and Presbyterian ministers be treated differently from those used in my own denomination, the Anglican Church, or in the Roman Catholic Church?


Jean Lesage: I am informed that most of the items in 691 are not made in Canada, while there is quite a big industry of church vestments in Canada. That is the reason.


Major James William Coldwell: That is protection.


Jean Lesage: It is very small. It is only 10 per cent.


Major James William Coldwell: I thought we were free traders.


Herbert Wilfred Herridge: I would like to ask the
minister a question in view of the fact that I have received letters from several churches in my constituency, particularly small churches, asking that certain types of organs come in free. I do not know whether I am correctly informed, but I am told that it has not been possible to get that type of organ in Canada. Has any consideration been given to allowing church organs free entry if they are not obtainable here?


Jean Lesage: I know there is quite an organ industry in Canada, and I have not heard that there are any kinds of organs that are not made in Canada. We are, I believe, exporters and not importers of organs. Canada has quite a reputation for making organs.


Major James William Coldwell: A pretty good protectionist government today.


Jean Lesage: Mr. Chairman, may I go back to item 561? It is not on the list, but I will ask that the Minister of National Revenue move an amendment to item 561. It was originally covered, in subparagraph (b) of resolution No. 1.

Customs Tariff


James Joseph McCann: I move:
That the following item be inserted in resolution No. 3 of February 19. 1953:
561. Woven fabrics wholly or in part of synthetic textile fibres or filaments, not containing wool, not including fabrics in chief part by weight
of silk, n.o.p	
and, per pound	
This is the new part of the item:
Woven fabrics containing five per cent or less, by not dutiable under this item, but are dutiable as remaining constituents.
	Most	
British	Favoured	
Preferential	Nation	GeneralTariff	Tariff	Tariff27\ per cent	40 per cent	45 per cent40 cents	40 centsweight, of synthetic textile yarns or	filaments arethough such	fabrics were composed	only of the


Louis-René Beaudoin: Hon. members have heard the amendment moved by the Minister of National Revenue. Is the motion agreed to?


Douglas Scott Harkness: I heard it but I have not understood it, Mr. Chairman. I wonder if the minister would explain what it means.


Jean Lesage: In the past, Mr. Chairman, dress and shirting material of cotton containing a few threads of nylon or rayon was dutiable as artificial silk fabric at the mostfavoured-nation rate of 25 per cent plus 30 cents per pound, instead of cotton fabric at 17J per cent plus 3 cents per pound. Under this proviso the rate is 17J per cent plus 3 cents if the material contains not more than 5 per cent by weight of rayon, nylon or any other synthetic textile yarn.
I can tell hon. members that according to my information the question has been discussed with the representatives of the textile industry. It was not felt that it was reasonable to classify the whole cloth as nylon, for instance, because there were sometimes two, three, four or five threads of nylon in a cotton cloth.


Mr. Macdonald (Edmonlon East):: Mr. Chairman, is this a new amendment to resolution 1 (b)?


Jean Lesage: It replaces 1 (b). It is now an amendment to item 561 under resolution 3.


Albert Frederick Macdonald: Originally 1 (b) stated that there would be an exemption up to 5 per cent, but I understood the parliamentary assistant a moment ago to say it would be subject to this tariff if it did not contain more than 5 per cent. If it did contain more it would be subject to the tariff.


Douglas Scott Harkness: I wonder if we could have an answer to this general question. Does this raise the tariff on this particular type of fabric, does it reduce it, or does it leave it at the same point?


Jean Lesage: It reduces it. A piece of cotton cloth comes in from the United States at 17| per cent plus 3 cents per pound-if it is only cotton. Under item 561, as it was, if you imported a piece of cotton with a few threads of nylon in it, the whole cloth had to be considered for customs purposes as nylon because 561 says:
Woven fabrics, wholly or in part of synthetic textiles

So one single thread was enough for it to be considered as "in part rayon" and it was classified as rayon, as if the whole cloth had been rayon. The duty was 25 per cent plus 30 cents per pound. This has the effect, in instances provided for under the amendment, if the synthetic content is not more than 5 per cent, of reducing the rate.


James MacKerras Macdonnell: I am interested in one thing. This is moved as an amendment to resolution 3, but I understood either the minister or the parliamentary assistant to say that it was designed to take the place of subsection (b) of resolution 1.


Jean Lesage: Exactly.


James MacKerras Macdonnell: I am ignorant of the technicalities but it seems to me very hard to see the slightest resemblance between subsection (b) and what is now being done. Perhaps it is only a matter of academic interest, but I would be interested in knowing why it is said that one takes the place of the other.


Jean Lesage: I think the best answer would be for me to read 1 (b):
1.	Resolved, that the Customs Tariff be amended to provide (b) that yarns, textiles and manufactures thereof shall not be regarded as being composed in part of specified materials unless those materials constitute over five per cent by weight thereof.
That is the purpose of the amendment to 561.


Louis-René Beaudoin: Shall 561 as amended
carry?

Customs Tariff


Some hon. Members:: Carried. The Chairman: Item 604.


Some hon. Members:: Carried. The Chairman: Item 657a.
657a. Cinematograph or moving picture films, positives, n.o.p.:
(1)	one and one-eighth of an inch in width
and over-per linear foot	
(2)	Under one and one-eighth of an inch in
width . . . per linear foot	
In no case shall the duty exceed


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


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 680b.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 681b.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 691.


Herbert Wilfred Herridge: Thanks to the kindness of the hon. member for Hamilton West and the hon. member for Rosetown-Biggar, it has been pointed out to me they thought I was talking about electronic organs and that the minister was thinking of pipe organs. I was speaking of electronic organs. I was informed they were not manufactured in Canada, that small churches often wished to import them and that they have to pay a duty on importing them at the present time. Has the importation of these organs for church purposes been given consideration?


Jean Lesage: I thank the hon. member for drawing this matter to my attention. According to the information I now have, these organs he is speaking about would not be made in Canada; I refer to these electronic organs.


Herbert Wilfred Herridge: I am speaking of electronic organs.


Jean Lesage: According to my information organs of that kind are not made in Canada.


Herbert Wilfred Herridge: They are not made in Canada?


Jean Lesage: No.


Herbert Wilfred Herridge: Has consideration been given to allowing them to come into Canada free of duty, for church purposes only?


Major James William Coldwell: Or for schools.
(The Chairman.]


Jean Lesage: I have another amendment here, Mr. Chairman.


James Joseph McCann: I would like to move:
That tariff item 657a, as contained in resolution 3 of February 19, 1953, be amended to read as follows:
	Most	
British	Favoured	
Preferential	Nation	GeneralTariff	Tariff	Tariffcents	cents	centsU	li	3cents	centsFree	n	3per cent	per cent20	30


Herbert Wilfred Herridge: Yes, or schools.


Jean Lesage: Consideration will be given to this representation, Mr. Chairman. I was mixed up with electric organs which are made in Canada; but I understand that the hon. member is talking about electronic organs.


Herbert Wilfred Herridge: That is correct.


Jean Lesage: Consideration will be given to that matter.


Mrs. Fairclough:: Are they presently
admitted free if they come under the classification of memorials?


James Joseph McCann: That is sales tax.


Jean Lesage: I believe that is sales tax.


Ellen Louks Fairclough: I know about the sales tax but I am asking if the duty is also waived in that event.


Jean Lesage: According to my information the answer is no.


Louis-René Beaudoin: Item 696.


Some hon. Members:: Carried.


Louis-René Beaudoin: Item 703.


Henry Alfred Hosking: I should like to commend the minister for allowing veterans to bring back $1,000 worth of goods when they have been out of the country on service for a year. I think this is a good policy. A veteran during the period that he is abroad likes to pick up souvenirs and things that he will value for the rest of his life. I should like to commend the minister and his staff for having had the forethought to put in this item so that these veterans can bring back these souvenirs and objects which they will enjoy for the rest of their lives in Canada.


[Stage Direction]
Resolution agreed to.
Louis-René Beaudoin: Will the parliamentary
assistant now inform us what resolution he wants to proceed with next?


Jean Lesage: The Excise Act.


Louis-René Beaudoin: I have one resolution on the Excise Tax Act and then one on the Excise Act, 1934.


Jean Lesage: It is the Excise Act, 1934- cigarettes.
excise act, 1934
Resolved, that it is expedient to introduce a measure to amend the Excise Act, 1934, and to provide, amongst other things:
1.	That the excise duty on cigarettes weighing not more than two and one-half pounds per thousand be reduced from six dollars per thousand to four dollars per thousand.
2.	That the excise duty on cigarettes weighing more than two and one-half pounds per thousand be reduced from eleven dollars per thousand to five dollars per thousand.
3.	That any enactment founded upon this resolution be deemed to have come into force on the twentieth day of February, nineteen hundred and fifty-three.


Louis-René Beaudoin: For the purpose of orderly discussion we might perhaps take the resolution paragraph by paragraph, starting with paragraph 1.


Jean Lesage: Mr. Chairman, in this case I believe that the paragraphs might be studied as a whole. The resolution is all about cigarettes. It is all about the excise duty on cigarettes. It is all part of the same thing.


Louis-René Beaudoin: It is immaterial to me. I thought it might be more convenient if members wished to discuss it paragraph by paragraph. But if it all pertains to the same subject, perhaps it might be just as convenient to discuss the three paragraphs together.


Herbert Wilfred Herridge: Mr. Chairman, I might inform the committee that since I spoke on the budget and made a plea for pipe smokers, I have been given a most gorgeous scroll. I have been made an honorary member of the Maple Leaf Pipe Smokers. I am rising to inquire why the department, in reducing the tax on tobacco, does not give to pipe smokers and to those who roll their own cigarettes the same consideration as is given to those who smoke ready-made cigarettes. I might say that Professor Einstein says he believes that pipe smoking contributes to calm and objective judgment in all human affairs. I think a reduction in taxation on pipe tobacco and to those who roll their own cigarettes would be working towards some social improvement in the country. Would the parliamentary assistant mind explaining why the government discriminates in this way
Excise Act
between those who smoke ready-made cigarettes and those who smoke pipes and roll their own cigarettes?


Jean Lesage: I do not believe that my hon. friend's plea could fall on more sympathetic ears than on those of the Secretary of State, the Minister of National Revenue and myself because we are three pipe smokers. But I want to draw the attention of the hon. member for Kootenay West to the fact that, in spite of the reduction in tax announced on ready-made cigarettes, the price will be 33 cents for a package of 20 and the combined excise tax, excise duty and sales tax will be 17J cents which is more than half of the cost to the consumer. I am not taking into account any provincial sales tax. The ordinary cost price of fine-cut tobacco, for one-eighth of a pound, is 45 cents, I believe. On this the combined excise duty, excise tax and sales tax is 14 cents, which is less than one third. Hence if there is some discrimination, it is against the cigarette smokers. The combined federal taxes on one pound of fine-cut tobacco are $1.15; while for cigarette smokers, on one pound of tobacco for cigarettes, the tax is $3.20. Of course if you are a pipe smoker and you cut your own-and some people do it-the combined excise tax and excise duty is 28 cents a pound.


Major James William Coldwell: But think of the smell.


Jean Lesage: Oh, yes. But I do not believe there is any discrimination against the pipe smokers.


Louis-René Beaudoin: Shall we carry this paragraph of the resolution?


Some hon. Members:: Carried.


Mr. Fraser:: Does the minister think that this small cut in tax is going to help the smuggling situation or is going to stop smuggling?


Jean Lesage: I do not believe that I should say what I was going to say-


Louis-René Beaudoin: Are we not getting into a matter which is perhaps irrelevant? I would not mind the parliamentary assistant giving an answer if it is understood that it is not going to initiate a debate as to whether the action taken by the government is going to increase or to decrease smuggling.


Gordon Knapman Fraser: I think he should give an answer.


Louis-René Beaudoin: If it is the unanimous wish of the committee that some impressions be given by the parliamentary assistant, it is quite agreeable to me.


James MacKerras Macdonnell: With deference, Mr. Chairman, may I ask if that is not relevant?

Excise Tax Act


Gordon Knapman Fraser: Certainly it is.


James MacKerras Macdonnell: I ask you to
consider whether that is irrelevant at all. It seems to me that that is one of the tests.


Jean Lesage: The answer is easy. We hope it will reduce smuggling.


Gordon Knapman Fraser: You are not sure?


Jean Lesage: Well, Mr. Chairman-


Louis-René Beaudoin: Order. Much as the hon. member for Greenwood would like to have a discussion of smuggling in relation to the action taken by the government and much as he contends that it is relevant to discussion of this amendment, I beg to differ with him because this is a resolution to amend the Excise Act, to provide that the duty on cigarettes and so on will be such and such. The effects of this may be to increase sales or to decrease sales. It may have an effect on smuggling and other things. It may have an effect on the health of people who smoke. Therefore, if the discussion is to be relevant, we shall have to avoid discussing the effects of smoking on health and the effect on smuggling, etc.


Gordon Knapman Fraser: Smoking never hurt your health, did it, Mr. Chairman?


Louis-René Beaudoin: I am not too sure of that. Does the resolution carry?


Some hon. Members:: Agreed.


[Stage Direction]
Resolution agreed to.
Agar Rodney Adamson: Which one shall we take next?


Louis-René Beaudoin: We have finished with the Excise Act, 1934, but we have the Excise Tax Act.


Agar Rodney Adamson: The Excise Tax Act is still to come.


Jean Lesage: We are coming to that now.


Louis-René Beaudoin: We shall now consider the Excise Tax Act.


EXCISE TAX ACT
[Stage Direction]
That it is expedient to introduce a measure to amend the Excise Tax Act and to provide, amongst other things:
T. That the securities transfer tax be repealed.
2.	That the stamp tax on cheques and certain other instruments be repealed.
3.	That the sales tax on the following goods be
repealed:	(a) books, printed and bound, which
contain no advertising and which are solely for educational, technical, cultural or literary purposes, and materials used exclusively in the production thereof, but without limiting the generality of the foregoing, not including directories, price lists, timetables, rate books, catalogues, periodic reports, fashion books, albums, books for writing or drawing upon, nor any books similar to the foregoing exceptions: (b) school and college year books and materials used exclusively in the pro-

duction thereof; (c) materials used exclusively in the production of newspapers; (d) materials used exclusively in the production of magazines and literary papers unbound, regularly issued at stated intervals, not less frequently than four times yearly; (e) materials for use exclusively in the manufacture of the goods enumerated in schedule III under the heading "Foodstuffs"; (f) materials which are consumed or expended in the manufacture or production of goods; (g) friction disc sharpeners; (h) goods enumerated in customs tariff items 436 and 697.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on tires and tubes in whole or in part of rubber, to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
5.	That there be imposed, levied and collected an excise tax of fifteen per cent on camera lenses, except those sold for industrial or professional photographers' use.
6.	That there be imposed, levied and collected a sales tax of ten per cent and an excise tax of fifteen per cent on candy, chocolate and confectionery payable by persons, firms and corporations who package those goods for sale except where they are packaged by a retailer on his retail premises for sale therefrom to consumers.
7.	That any enactment founded upon this resolution be deemed to have come into force on the twentieth day of February, nineteen hundred and fifty-three.
Agar Rodney Adamson: How much did this tax raise during the last fiscal year?


Jean Lesage: Approximately $3 million.


Agar Rodney Adamson: And it was entirely on stock transfers, a security transfers tax?


Jean Lesage: Bonds, as well as stacks, a tax on securities.


Agar Rodney Adamson: I should like to ask the same question with respect to the stamp tax on cheques and other instruments. I do not know whether the minister gave that when he presented the budget or not.


Jean Lesage: Yes, he did. He gave the figure as $12 million, including the loss on post office revenues.


Louis-René Beaudoin: We shall now deal with paragraph 3 which has to do with the sales tax on books, and so forth.


Gordon Knapman Fraser: What do materials that are referred to in paragraph (c) include?


Jean Lesage: I have a list here. Other materials used in the production of newspapers, apart from paper and ink.


Gordon Knapman Fraser: This covers paper?


Jean Lesage: No, paper and ink are already exempt for magazines. The purpose of this amendment is to exempt not only paper and ink but all materials which are used in the production of newspapers and magazines; that is to say, paper, ink and all the other materials which are used.


Gordon Knapman Fraser: Would that include machinery?


Jean Lesage: Press binding, leather, cloth, paper, stitching wire or threads, side stitching and gluing, all the materials that go into the making of magazines and newspapers.


Gordon Knapman Fraser: But not the machines themselves?


Jean Lesage: Those are already exempt.


Gordon Knapman Fraser: They are exempt?


Jean Lesage: Machinery is already exempt.


Gordon Knapman Fraser: All the machinery for the making of newsprint?


Jean Lesage: For the making of newspapers.


Gordon Knapman Fraser: For the making of newspapers; they are exempt.


Louis-René Beaudoin: We shall now deal with paragraph (d).


Ellen Louks Fairclough: May I quote this description, which reads:
Materials used exclusively in the production of magazines and literary papers unbound, regularly issued at stated intervals, not less frequently than four times yearly;
Does this include church bulletins issued weekly which carry no advertising matter at all?


Jean Lesage: Could we study the hon. member's question, and if it is convenient to her, I believe an answer could be given when we come to the bill. We shall try to examine it with the most liberal mind.


Ellen Louks Fairclough: May I say that if it does not include them the department should definitely consider it, because certainly they would fall within the category of that description. I know that certain of these church publications issued at regular intervals do carry advertising, but certainly it is carried only for the information of church members, and some carry no advertising whatever.


Louis-René Beaudoin: We shall now deal with paragraph (e) which deals with materials for use exclusively in the manufacture of goods enumerated in schedule III under the heading "foodstuffs".


James MacKerras Macdonnell: I want to make a few remarks about the sales tax, and I take it that this is my opportunity to do so. I shall be brief, but I want to put on record our protest that our representations regarding the sales tax, going back now for two years, have been entirely disregarded. I wish to recall to the mind of the committee the fact that the arguments which have been made on the sales tax have been amply proved by experience, namely, that it adds to the cost of living. We pointed that out two years ago, and it happened just exactly as was pointed out. I think it is now recognized that 68108-197
Excise Tax Act
these sales taxes are putting up the cost of living, and of course that bears most heavily on those with low incomes. That is all important this year when relief is being given to other people with more ample income, and nothing is done to the sales tax. I want to stress that. I am not going to labour it, but I want to make it perfectly clear that we feel very earnestly about it. We think a mistake was made. We think a reduction would be good and should have been made; we believe that that view will be much more commonly held among the Canadian people when they begin to realize the effect of this budget.
I cannot find schedule III. Where is schedule III?


Jean Lesage: It is page 35 and on.


Louis-René Beaudoin: We now come to paragraph (f), materials which are consumed or expended in the manufacture or production of goods.


Gordon Knapman Fraser: Will the minister say definitely what this covers?


Jean Lesage: I can give a few examples here of the goods which are covered. It has to do for example with yard goods, such as bolting cloth, used in milling operations; calcium chloride or other chemicals used as refrigerants by breweries, dairies or other manufacturers or producers in cooling equipment used directly in the manufacture of their products; washing compounds, detergents, also polishing cloth, waste, et cetera, used for cleaning machinery or apparatus, used directly in the process of manufacture or production of the product; wiping paper and solvents used by printers for cleaning printing plates, et cetera; steaming paper used in textile printing operations; dipping paper used in the manufacture of chocolates; paper and cloth used to make patterns. There is a long list. Has the hon. member a good idea of what it is, or should I go on?


Gordon Knapman Fraser: Will the list be given in the bill?


Jean Lesage: No, the definition is there. There will be a definition in the bill, and that will be the same as it is in the resolution. It is to exempt materials which are consumed or expended in the manufacture or production of goods. This involves two changes from the existing practice. First, previously only materials consumed in the process of manufacture of taxable goods have been exempt.


Gordon Knapman Fraser: That means used up?


Jean Lesage: Yes, used up entirely-disappeared. Materials which were not entirely consumed were taxed, even though they might have been partially used up or rendered of no further use in the process.

Excise Tax Act
For example, in the manufacture of soap certain acids are used, and when the process is completed part of those acids remains. This residue has been expended, but it has not been entirely consumed. Therefore in the past the acid has been taxed. Now the acid will be exempt because it is expended in the process of manufacture.
The second change is that the former exemption applied only where the finished product was taxable. The new exemption will be applicable even though the finished product is exempt.


Gordon Knapman Fraser: I believe I understand that.


Ellen Louks Fairclough: I should like to ask if a conditioner used in fuel oil to reduce sludge and gum, where that fuel oil is used in forging furnaces to produce goods, is exempt from sales tax. The oil itself is exempt, and the conditioner is used up completely in the process. The oil is used in the forging furnaces. The conditioner should also be exempt from sales tax.


Jean Lesage: Would that conditioner be used directly for the production of goods?


Ellen Louks Fairclough: Yes; as a matter of fact it goes into the manufacture. It is used to produce the goods, definitely; and in this instance the goods, when produced, are taxable. So that, while it is not a component part, nevertheless it is used. Paragraph (f) says-
Materials which are consumed or expended In the manufacture or production of goods;
This conditioner definitely is consumed, along with the fuel oil. It is certainly expended.


Jean Lesage: Is it expended in the direct manufacture of the goods? What goods do you mean?


Ellen Louks Fairclough: Various kinds of hardware. The explanation is that the fuel oil is used in forging furnaces to produce goods which subsequently are subject to sales tax. It is a conditioner which reduces the sludge and gum in the fuel oil, thus making more efficient operation, and increasing production.


Jean Lesage: Since this is an individual case perhaps it might be well if the hon. member would give me the information she has. I shall certainly have the officials look into the matter.


Ellen Louks Fairclough: I shall be glad to do that. However, my reason for bringing the matter up in the committee is that it has already been declared taxable, and it seems to me that it definitely falls within the description set out in resolution 3(f). Therefore I suggest some reconsideration should be given.

It does not seem sensible that you should say that materials consumed or expended in manufacture should be exempt, and then turn around and tax an article which might be classified as a supply, possibly, but one which nevertheless goes into the very fuel used to heat furnaces, and which really becomes an integral part of the operation.


Jean Lesage: I believe the difficulty comes from the fact that the act will contain the word "directly" in reference to the production of goods, and1 that this expression has not been repeated in the resolution. It could havei been there, of course. The fact is that it will have to be directly used in the manufacture and production of goods.
The important word in the amendment is the word "expended". The word "directly" will be in the act.


Ellen Louks Fairclough: This material is expended; that is the whole point in what I am saying. The parliamentary assistant used the example of acids used in the manufacture of soap, some of which remain after the soap is manufactured but which, nevertheless, are exempt from taxation. They certainly do not become a part of the finished product.


Jean Lesage: We will reconsider the matter, as I offered earlier. I would want to be familiar with all the implications of it.


Ellen Louks Fairclough: I shall be glad to supply the parliamentary assistant with the information I have.


Mr. Roberge:: Do I understand that these fuel conditioners are chemicals placed in with the oil to help combustion? We sell a lot of it in the gasoline stations, and to be used in oil furnaces. Is that the same composition?


Ellen Louks Fairclough: No, I do not think so.


Jean Lesage: I have to point out that, really, I do not know what we are talking about. I will have to reconsider the case submitted by the hon. member for Hamilton West. I cannot imagine what the precise case is, without having the facts.


James MacKerras Macdonnell: If the parliamentary assistant will allow me, I should like to raise a point which perhaps is somewhat different. I feel the arguments made by my colleague from Hamilton West are very hard to meet. The parliamentary assistant has pointed out that there are different words in the act. My point is that if we pass this resolution we are entitled to have the sense of it carried into the act. Therefore it seems to me that now is the time to consider whether these are proper words. After passing the resolutions we should not

be told, at some later time, that these words really were not quite what were intended. In other words, we should not be presented with an act which does not give effect to these resolutions.


Jean Lesage: I can only add that the words "expended" and "directly" have always been in the minds of those who drafted the resolutions and the bill. However, if it will satisfy my hon. friend I would be quite ready to ask my colleague the Minister of Public Works to move that the word "directly" be added after the word "expended".


Alphonse Fournier: I so move.


Some hon. Members:: Agreed.


Ellen Louks Fairclough: What does that add to the illustration given by the parliamentary assistant in regard to the acid in the manufacturing of soap?


Jean Lesage: These are used directly in the production.


Ellen Louks Fairclough: I must say I consider my case exactly the same.


Jean Lesage: I shall be glad to reconsider it.


Gordon Knapman Fraser: Will steel wool, sandpaper and things like that be exempt in connection with the manufacture of chairs and furniture?


Jean Lesage: According to my information, yes.


[Stage Direction]
Resolution agreed to.
4.	That there be imposed, levied and collected an excise tax of fifteen per cent on tires and tubes in whole or in part of rubber, to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
James MacKerras Macdonnell: I should like to read briefly from the Winnipeg Free Press of March 16:
Hon. Douglas Abbott, Minister of Finance, has announced the government's decision to make still another tax reduction. This change brought happy smiles to the faces of farmers.
By his announcement the minister made it clear that not only would a proposed 15 per cent excise tax on replacement tires and tubes for farm machinery be dropped, but he was going further and wiping out a 15 per cent tax which national revenue had been collecting on replacement tires and tubes for farmers' tractors. This represents a considerable saving for farmers across the country.
That is still the interpretation that the Winnipeg Free Press apparently placed upon a conversation which took place in this house cn March 3, to which I should like to refer. On that date the hon. member for The Battlefords asked the Minister of Finance the following question, and I quote from page 1559 of Hansard:
I should like to ask a question of the Minister cf Finance. In view of the confusion that has developed since the budget speech announcement
Excise Tax Act
about the application of the 15 per cent tax on replacement tires and tubes, could the Minister of Finance say whether the proposed changes to the Excise Tax Act will affect farmers?


Hon. Douglas Abbott (Minister of Finance):: I thank the hon. member for having given me notice of his question. A number of other members have spoken to me about this, and there does appear to be some confusion arising out of the general terms in which the resolution is phrased. The change proposed by the amendment to the 15 per cent tax on replacement tires and tubes will not impose any new tax on farmers. Tires and tubes when purchased for replacements for farm machinery, including tractors, for use on farms for farm purposes, will not be subject to the 15 per cent tax.


Mr. J. A. Charlton (Brant-Wentworth):: I should like to ask the minister a supplementary question. In view of the fact that I was most careful to get from the deputy minister the exact amendment to this section, may I ask when the change was made?
Then the minister made a rather surprising answer when one bears in mind what I have just read from the Winnipeg Free Press and which indicated that the Winnipeg Free Press certainly thought that a change had been made. The minister went on to say:
No change has been made. I pointed out that as usual the terms of the resolution are rather general, and when the bill is brought in it will be more specific. The proposed amendment is to cover a technical difficulty in the Excise Tax Act in connection with attachments to self-propelled vehicles to correct an oversight in the amendment of last year. It was not the intention when the resolution was proposed, nor is it intended, to impose a tax on replacements for attachments to these farm self-propelled vehicles. I am sure my hon. friend will be only too delighted to learn that.


Robert Fair: Will farm trucks and trailers be
exempted along with those the minister has mentioned?


Douglas Charles Abbott: The answer is no.
I should like to read quite briefly from a speech made by the hon. member for Lake Centre, as reported at page 2699 of Hansard of March 6, as follows:
The facts are that about eight or nine months ago the tariff board found that farmers were not liable for any tax on replacement tires and tubes. As soon as that was found out this government, the friend of the farmer, brought in a last moment amendment to the law, in June of last year, to provide for a 15 per cent tax; but they forgot to include tubes and tires on accessories attached. They have been charging the tax since illegally, and what has been done in this budget is to ratify what has been done-the taking from the western farmer and the Canadian farmer in general a 15 per cent tax on replacement tires and tubes on accessories connected to tractors.


Douglas Charles Abbott: If my hon. friend wants to be accurate, the tax has not been changed. He said we had been collecting it illegally, but he is mistaken.
I confess that I find myself in a very considerable state of confusion of mind, and I know that some other people have the same difficulties by reason of what has been said, added to the wording of the resolution. The resolution seems to be most specific. It reads:
That there be imposed, levied and collected an excise tax of fifteen per cent on tires and tubes in

Excise Tax Act
whole or In part of rubber, to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
Would the parliamentary assistant indicate whether the correspondent of the Winnipeg Free Press was right when he said that the announcement of the minister was to make still another tax reduction, and exactly where we find ourselves by reason of the wording here and the statements made by the minister.


Jean Lesage: I believe the best answer I can make to the hon. member for Greenwood is to give him the whole story behind the amendment. This paragraph 4 is designed to extend the 15 per cent tax on replacement tires and tubes so that it will apply to replacement tires and tubes to be used on trailers or other wheeled attachments for use in connection with self-propelled machines.
Prior to the amendment which was made last year to the wording of the provision imposing this tax, the provision read as follows:
(a) Tires in whole or in part of rubber for automotive vehicles of all kinds, including trailers or other wheeled attachments used in connection with any of the said vehicles . . . twenty-five per cent; (b) Inner tubes for use in any such tires . . . twenty-five per cent; Provided that the tax hereby imposed shall not apply to the goods mentioned herein when used exclusively for the original equipment of such automotive vehicles.
The excise tax administration had been ruling that self-propelled machines were "automotive vehicles". However, early in 1952 certain tariff board decisions indicated that self-propelled machines were not automotive vehicles. All this arises from decisions of the tariff board. Accordingly the law was amended last year to regularize the administrative oversight.
By an oversight the amendment was so worded that the tax would apply to the replacement tires and tubes for self-propelled machines but would not be applied to the replacement tires and tubes for self-propelled machine trailers and attachments.
The wording of the amended provision was:
(a) Tires in whole or in part of rubber for self-propelled machines or automotive vehicles of all kinds, including trailers or other wheeled attachments used in connection with any of the said
vehicles	fifteen
per cent; (b) Inner tubes for use in any such tires . . . fifteen per cent; the tax on the articles enumerated in paragraph (a) and (b) of this section does not apply to the goods mentioned therein when used exclusively for the original equipment of such self-propelled machines or automotive vehicles.
The purpose of the resolution now before the committee is therefore to correct the oversight in omitting the words "or self-propelled machines" after the words "the said vehicles"
[Mr. Macdonnell (Greenwood) .1
in the third line. When corrected the law will conform to the intention of the government when the amendment was made last year. As far as replacement tires and tubes for farm implements are concerned, the matter arose out of the worry of certain representatives of the farmers that the effect of the proposed amendment would be to tax something that was not meant to be taxed. What the minister said in the house was that it was not the intention of the government to impose any new tax on farmers. That was not the intention of the resolution and it was not meant that it should be put in the bill. The minister added that tires and tubes when purchased for replacements for farm machinery, including tractors for use on farms for farm purposes, will not be subject to the 15 per cent tax.
I do not have to comment on the article in the Winnipeg Free Press, which I did not read, and with the explanation I have given I think that the matter is crystal clear. There is no difficulty at all. I do not see why the hon. member for Greenwood wants to take the Minister of Finance to task and try to contend that there is some contradiction. There is no contradiction at all. It was never intended to tax farmers or farm machinery by this amendment. He said that consequently farmers could be reassured that tires and tubes when purchased for replacements for farm machinery, including tractors for use on farms for farm purposes, would not be subject to the 15 per cent tax.


Robert Fair: Would the parliamentary assistant tell us what "self-propelled" constitutes in the resolution?


Jean Lesage: I can give an example of self-propelled machinery: a tractor as distinct from a horse-drawn vehicle.


Robert Fair: Is it intended to cover trailers or self-propelled road machinery?


Jean Lesage: These are attachments to self-propelled machines. A trailer can be an attachment to an automotive vehicle like a motor car or an attachment to a self-propelled machine like a tractor.


Robert Fair: Then may I ask whether tires for a trailer used to haul grain and so forth off the farm will be taxed?


Jean Lesage: It is better to use the words of the act. Tires which are used exclusively for the original equipment will not be taxed but replacement tires and tubes for attachments which are not farm machinery will be taxed. A trailer is not farm machinery.


Robert Fair: Trailers are used to haul grain and carry other materials around farms. They

are used in exactly the same way as four-wheel wagons were when we were using horses.


Jean Lesage: It is not a machine and it is used for other purposes.


Robert Fair: Then, regardless of the minister's statement, you are going to tax farmers.


Jean Lesage: A farmer who has a trailer which can be used on the road to do other things than what are involved in the usual work of a farmer will of course be taxed. How could you differentiate? How could you administer the act? A farmer could go to his tire dealer and say: This is for my trailer. The hon. member for Battle River knows that the tires on most trailers can be used on cars. Thus the farmer could easily supply his neighbour, his brother, his sister or his father with tires for their cars. What would be the control? What a loophole!


Robert Fair: I think the parliamentary assistant does not know farmers. We do not do that kind of thing. I still contend that a trailer which is used to haul grain and for other purposes on the farm constitutes a farm machine. I am not suggesting that he should be allowed to use his trailer for hauling freight as a custom vehicle or anything of that kind, but when used solely on the farm, then I believe the tires and tubes should be duty free.


John Alpheus Charlton: I think the parliamentary assistant to the minister must realize that there is a difference between implement tires and car tires. There is a tire made specifically for farm implements.


Jean Lesage: I made that quite clear. I said that replacement tires and tubes for attachments to self-propelled machines and automotive equipment were free of tax if they were agricultural machines. I just said that a few moments ago. If they are agricultural machines they are free, but I said that a trailer is not considered to be a machine.


John Alpheus Charlton: If the parliamentary assistant would let me finish my statement I think he would understand what I am trying to get at. Ordinarily a farm trailer is not drawn at high speed and an implement tire is all that it is necessary to use. Am I making myself clear now? A man certainly would not go and buy a car tire, which will cost him twice as much money, for a farm trailer that is to be drawn at slow speed when under such conditions it is not necessary to use a car tire. If the man buys an implement tire for a trailer, will it be taxed?


Jean Lesage: A replacement tire for a trailer will be taxed.


John Alpheus Charlton: Well-
Excise Tax Act


Jean Lesage: May I finish my answer? I represent a farming constituency. I know the farmers in my riding. I visit them and I see that they have trailers, tractors and automobiles. Usually, as my hon. friend knows, they put old tires from their cars on their wagons and trailers. They even build their own wagons using the frames of automobiles.


John Alpheus Charlton: I did not suggest what they did do. I suggested what they could do. It is not necessary to have a car tire on a trailer. All I asked was, if a man goes and buys a new implement tire for a trailer is it taxable? I am referring to an implement tire, mind you, not a car tire.


Gordon Knapman Fraser: Which is different.


Jean Lesage: Mr. Chairman, my information from the trailer manufacturers is that they put high speed tires on trailers.


John Alpheus Charlton: Yes, in the case of a new
trailer, it comes equipped with high speed tires because they do not know how fast the man is going to drive that trailer. What I am asking is: If I had a trailer, or anyone else had a trailer on a farm, and wanted low speed tires on it-and naturally I would not put high speed tires on the trailer- would that implement tire be taxable? It is a different tire, in the case of tires for farm implements, manufactured for farm implements. It is a low speed tire.


Jean Lesage: Those representations will be considered. I can say that at the moment the test is not the tire; it is the kind of vehicle on which the tire is placed. The possibility of distinguishing between tires which are, as I understand it, made only for low speeds, will be carefully considered. It will be examined to see whether the kind of administrative difficulties which have prompted the government and administration to propose this amendment, and to exclude replacement tires and tubes for trailers, can be avoided by a new kind of test regarding the tires themselves instead of the vehicles on which they are placed.


Mr. Ross (Souris):: The parliamentary
assistant certainly leaves this thing in a very confusing manner right now.


Jean Lesage: Thank you.


James Arthur Ross: If you read section 4
it distinctly says:
That there be imposed, levied and collected an excise tax of fifteen per cent on tires and tubes in whole or in part of rubber, to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
We have all sorts of attachments now. There are hay balers with attachments, manure spreaders which are attachments,

Excise Tax Act
and all that sort of thing. As this paragraph reads, tires for those things would be taxable when replaced, would they not?


Jean Lesage: Hay loaders are considered
as farm machines.


Robert Fair: So is a trailer.


Jean Lesage: Well, Mr. Chairman, I said that I did not believe, and the administration did not believe, that a trailer could be considered as farm machinery because a trailer can be used for other purposes. A hay loader cannot be used except as a hay loader on a farm and it is farm machinery- and replacement tires and tubes are exempt.


James Arthur Ross: What I said was that a hay baler is and, certainly on the great majority of farms in this country, a trailer is considered to be a farm implement.


Jean Lesage: Tires and tubes for the hay
baler will be exempt because it is a farm machine, a farm implement.


James Arthur Ross: But that is not so for trailers.


Jean Lesage: Not for trailers; because the hon. member knows as well as I do that the trailer can be used in so many ways. Replacement tires and tubes for the car on the farm are not exempted. From time to time the car, and not only the car but the trailer, is used to bring eggs and things of that sort to market.


Victor Quelch: What about the tires for a
sprayer that is attached to a truck or engine for spraying weeds in a field? Those tires are the same size as car tires. The tires on a car fit a sprayer. Will those tires be duty free?


Jean Lesage: For a farm machine they are exempt.


Victor Quelch: It is very hard to tell
whether a trailer would be used on a farm or road but if a man goes to a machine agent and says, "I want two tires", then the agent will ask, "What do you want the tires for?" And if the farmer says they are for a sprayer, then I take it they will be duty free. If he says they are for a trailer they will be dutiable. It is going to leave a pretty wide margin for the agent, in deciding the purpose for which they are going to be used.


Jean Lesage: The farmer who buys tires
for a sprayer will have to give a certificate that they are for a sprayer.


John Alpheus Charlton: As I understand it, this section is to be left as it is now, but you are giving your word, as has the minister, that there shall be no tax on implement tires for
fMr. Ross (Souris).]
farm implements. Is that true? This section is not to be changed. Do I understand that?


Jean Lesage: Mr. Chairman, the section in the bill which will be introduced after this resolution has been adopted will be such that, and I repeat the words of the minister:
Tires and tubes when purchased for replacement for farm machinery, including tractors, for use on farms for farm purposes will not be subject to the 15 per cent tax.
I -cannot be any -clearer than that. This covers all farm machinery, including the tires and tubes for farm machinery, whether the farm machinery is a self-propelled automotive vehicle or an attachment to it, as long as the attachment is farm machinery.


John Alpheus Charlton: Mr. Chairman, it is suggested by the assistant that we should pass this as it is. Why cannot the minister come in and present the amendment right now?


Jean Lesage: Mr. Chairman, the minister, on the 3rd of March, said in the house what I am saying now.


James MacKerras Macdonnell: But we are
not passing what he said; we are passing this.


Alphonse Fournier: This is only the resolution. It is not the bill. There is a difference between the resolution and the bill.


Jean Lesage: Since I have been in the house, and I agree that mine has not been a very long experience, I have never heard the minister say that a resolution contained exactly what is going to be in the bill. Resolutions do not cover everything, as the hon. member for Greenwood knows. In a few minutes when we come to the income tax resolutions, they will not cover every change in the Income Tax Act. A few moments ago, the word "directly" was not in the resolution.
These resolutions are not texts of laws; they are just advance notice that such an amendment will be made to the act. It is on the principle of the amendment that a resolution is founded. The principle of this amendment is only to correct an error that was made because attachments to self-propelled machines were not included in the tax provisions.


Robert Fair: I think we will have to educate the parliamentary assistant, the minister, and perhaps some of the officials to advanced farming before we get this thing straightened out. Before the bill is brought in as law we should have it clearly understood that a trailer is a replacement for the old wagon we us-ed to use at a time when we were using horses on the farm.


Mr. Low:: I would like to ask the parliamentary assistant a question that has to do with the administration of this section. What we are discussing is the application of an excise tax of 15 per cent on:
Tires and tubes in whole or in part of rubber to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
Now, the excise tax is usually paid at the manufacturer's level.


Jean Lesage: Yes,


Solon Earl Low: When, these tires or tubes which are to be used for agricultural purposes come in and go to the retail outlet, how are you going to see that the consumers, the ultimate purchasers get the advantage of the tax reduction?


Jean Lesage: The consumer gives a certificate. He does not pay the excise tax, he pays the price less the excise tax.


Solon Earl Low: I understand that. But has the dealer not already paid the excise tax?


Jean Lesage: Yes. I am coming to that.


Solon Earl Low: That is fine.


Jean Lesage: There are many steps. The consumer gives a certificate. He is credited for the amount of the excise tax. He does not pay that. I suppose they have a price list or something like that. The consumer pays that price less the excise tax. The dealer reports to his wholesaler or to the manufacturer and he claims a credit for the excise tax. The manufacturer reports to the administration, sends the certificate and he is credited for the excise tax. That is the way it goes.


Solon Earl Low: I want to tell the parliamentary assistant that that is the way I thought it was but I was not quite sure. May I just suggest that this becomes an increasingly cumbersome administrative procedure. I will bring to the Minister of National Revenue some information which I think he ought to have. The fact is that it is a cumbersome administrative procedure which has discouraged a great number of dealers to the point where they will refuse to grant the privilege of tax rebate. I will cite for the minister an instance, and I am prepared to furnish him with the proof of what I say. This is similar to a situation which exists with respect to pumps. There are certain pumps that farmers cannot buy in this country, if they are for farm purposes, on which there can be claim for rebate of the customs tariff. Those pumps are made available to dealers in western Canada by wholesale firms in Winnipeg. I saw a letter just the other day from one of those wholesale distributors of those pumps to dealers of my
Excise Tax Act
area stating this:	"We are unprepared from
this date forward to grant you any rebate privilege because it has taken us too long to get any rebate from the government department." In fact, they said, "We have not been able to get any rebate thus far and for that reason we are quoting a price with tariff paid and we will not change it because of the fact that we are not able to get the refund."
I think the minister ought to look into that business. I am pointing this matter out now because I am satisfied that what the parliamentary assistant is putting before us today will eventually become the same kind of procedure that will take too long and will discourage dealers, and that they simply will not grant to the farmers the privilege of rebate of this tax.


James Joseph McCann: Mr. Chairman, I will admit immediately that there are some difficulties with reference to refunds. I myself have been conscious of that fact and as a result of it I have had an examination made. I just received the other day a report from the administrative section of the civil service commission. They have pointed out methods by which we could speed up the matter of refunds. At the present time all refunds are made from the central office here in Ottawa. We believe that it would be good administrative practice to allow port officers to make refunds where the amount is up to a certain level. Although there have been some difficulties and there has been more delay than we would have wished in making these refunds, I can say to the hon. member that the matter is now well in hand. We believe we shall be able to speed that matter up and that there will be no great inconvenience to anybody. If a man gives a certificate that he is exempt from the excise tax, that really goes in from the dealer to the tire manufacturer who has paid the tax, and when our inspectors go around they give them credit for that on the whole account of the month or the six months, whenever it may be.


Solon Earl Low: I appreciate the assurance that the minister has given, but I am wondering now what remedy the farmer in the country has if a dealer will not attempt to get the rebate for him, if he charges him the price with duty paid and refuses to undertake to get a refund because he had in the past some of the experiences I have mentioned. Is there any way of remedying the situation?


James Joseph McCann: The remedy is to go to
another dealer.


Solon Earl Low: The only trouble is that in several cases that I know of there is only

Excise Tax Act
one distributor of the particular product that I am talking about and it is extremely difficult to get it elsewhere. I would appeal to the minister to look into the situation and see whether there is not some way of bringing about a remedy for the purchaser or would-be purchaser of these items. If they are entitled to a tax rebate, they ought to get it and some administrative procedure ought to be adopted so that it may be possible for them to get it. In connection with tires, I am just afraid that we are getting ourselves into the same fix that we have been in with respect to some other items. I sincerely asked the question in order to try to work out a means by which the farmers could be assured that they could get their tax rebates.


James MacKerras Macdonnell: I am sorry to be so persistent, Mr. Chairman, but I am still bothered about this resolution. I listened to what the parliamentary assistant said and also to what the Minister of Public Works said about the relationship between resolutions and the following bills. I realize that you do not tell the whole story in the resolution and that you have a certain amount of latitude when it comes to the bill. But when the Minister of Finance tells us-and this is what we are asked to rely on-that the change proposed by the amendment will not impose any new tax on farmers, I think it is a rather funny way to get at that with an amendment which does impose a tax. Let me read it again, Mr. Chairman. I have had some experience with lawyers and I know the devious ways in which they sometimes do things. The better lawyers they are, often the more devious they are. But I never yet found even a lawyer who, when he meant DEF, was prepared to begin by saying ABC, the exact opposite; and that is what is going on here, I think. Let me read again what this amendment says and ask whether it is possible for us unless it can be rationalized better than it has yet been rationalized or at any rate more convincingly than has been done yet, to pass an amendment which says exactly the apposite to what we are told it means. If the parliamentary assistant will just allow me to do so, I will read it and if he can find in these words any suggestion of taking off taxes, I shall be grateful to him if he will explain it. Let me read the words again:
That there be imposed, levied and collected an excise tax of fifteen per cent on tires and tubes in whole or in part of rubber, to be used on trailers or other wheeled attachments used in connection with self-propelled machines.
Maybe he will tell me that the reason he gets around to the argument that it is going
!Mr. Low.]
to take off taxes is by reason of not mentioning certain things here, and that by implication they are to have the tax taken off instead of put on. But I suggest that at the very least it is an absolutely backhanded way of doing it. Unless the matter can be explained, at any rate so that I can understand it better, I do not think we should be asked to pass a resolution saying that taxes are put on in order to provide that they be taken off.


Jean Lesage: Mr. Chairman, I believe that I have given a full explanation of the wording of that resolution. It is to correct an error that was made last year when the amendment was brought forward. The amendment, as it was brought forward last year imposing an excise tax of 15 per cent on self-propelled machines, was introduced because the tariff board had decided that self-propelled machines were not automotive vehicles. That is the basis of the amendment of last year. The error made in the amendment of last year was to leave out the attachments to self-propelled machines. The principle of the amendment which is proposed this year under this form is to levy and collect the tax of 15 per cent on attachments, on trailers or other attachments used in connection with self-propelled machines. That is the principle, but there is an exception. This is a matter of opinion, Mr. Chairman, but I do not believe it is the practice in the resolution to mention all the exceptions that will be in the bill. The representatives of the farmers in this house want to be sure that there will not be any new tax imposed on farmers. All this trouble comes from the fact that the minister had to give the assurance that there would not be any new tax on farmers. This will be an exception to the principle which is laid down in resolution 4. I do not believe that the exceptions which will be provided for in the bill have to be mentioned in the resolution. That is a matter of opinion, but I again assure the hon. member for Greenwood that the principle which is in resolution 4 will be embodied in the bill, and that the exception which will be provided to the principle will cover the assurance given by the Minister of Finance the other day and by myself today. I do not believe that I can be any clearer than I have been, Mr. Chairman. I am sorry for the hon. member for Greenwood, but I do not see that I can add anything at this time.


James MacKerras Macdonnell: Can the
parliamentary assistant imagine that without this statement made by the Minister of Finance anyone could argue that this section would have the effect of taking a tax off?

He has told us that there is to be an exception. That seems to be an odd way to do things. The effect of this is that the thing which this is designed to do, when we come to the statute, is going to be contained in an exception. I do not want to be technical. But I am saying that we should not be asked to pass a resolution which by itself does not possibly have the effect, if I understand the assistant correctly, of doing what the minister says is going to be done. The minister says that we are going to have this reduction. I am not able to spell out of this section, and no one else has spelled out, how you can get a reduction out of words which say: "That there be imposed, levied and collected an excise tax of 15 per cent-". That is what it says.


The Deputy Chairman:: Shall resolution 4 carry?


James MacKerras Macdonnell: No.


Jean Lesage: Why?


James MacKerras Macdonnell: I want to be reasonable. I ask the parliamentary assistant if he will hold this over and consider whether he might have a resolution which means what we understand the minister intends to carry out. I think that is a reasonable request. I am certainly unable to see that this resolution is designed to carry that out. I do not see why we should have to vote white when we are told that the resolution is black.
The Depuiy Chairman: Shall the resolution carry?


Gordon Knapman Fraser: On division.


Donald Methuen Fleming: Is the parliamentary assistant going to say something?


Mr. Cardiff:: We have a right to know what this clause means. The other day the minister made a statement in the house that it would come off farm machinery, but you cannot tell by this resolution whether it is off or not. Good gracious alive! Surely we have a right to an explanation.


Donald Methuen Fleming: Has the hon. member for
Greenwood not offered a constructive suggestion with respect to the situation here? The situation is of the government's own creation, brought about by what is faulty draftsmanship of the resolution. There is the leader of the house, the ever-smiling Minister of Public Works. Why does he not rise to the occasion and bring in an amendment to this resolution to meet the point under discussion? The government has repudiated any thought of applying these words according to their plain meaning. There can be no room for doubt. There is no room for discussion about
Excise Tax Act
the meaning of these words; but the parliamentary assistant has said, following the statement made by the Minister of Finance a few days ago, that the proposed tax is not to be applied to farm vehicles, but you do not find that-


Jean Lesage: I am sorry, but I did not say that, Mr. Chairman. If the hon. member had been in the house from the beginning of this discussion I do not believe he would feel that he should say what he said, or he would use other terms, because I did not say what he said.


Donald Methuen Fleming: I did not hear all this
discussion because I had to divide my time between the house and the committee on external affairs, this afternoon. I hark back to what the minister said a fortnight ago. I will say this. What the minister said in the house as to his intent, with respect to this resolution, cannot be squared with the language of the resolution that is under discussion. Let us have in plain words such a resolution put forward now as will give effect to the intention that the government declares that it has with respect to it, because these words do not do that. Let us have something plain and understandable. There is no use going on discussing it on that basis now. Why is the matter not put over till this evening while we proceed with another resolution? Let the ever astute and ever agreeable Minister of Public Works rise to the occasion and bring in an acceptable amendment or a substitute resolution.


Alphonse Fournier: I do not often accept
invitations to speak, but at this stage of the discussion I think I should say just a word. The iassistant to the minister is moving this resolution which establishes a principle, and exceptions may be-


James MacKerras Macdonnell: A bad one.


Alphonse Fournier: And we may provide exceptions to that principle in the bill. If I understand it correctly, the Minister of Finance gave that assurance to the house. We are not spelling out the bill in this resolution. The bill will come before the house and the real discussion should be on the bill itself. This discussion has lasted nearly an hour. I really think that the explanation given by the assistant to the minister was quite reasonable. I cannot stop members of the opposition coming in and inviting me to speak on this, but I think my suggestion would be that if you pass the resolution the bill will come. This is not the end. It is just the resolution stage. We are going to pass this, and you have the assurance that there will be a bill following. The bill will probably be handled by the
3112

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minister, as has been the practice in the past, and then you can have a real discussion. Be in the house and follow the whole argument, and I think you can come to some agreement there.


Major James William Coldwell: I have listened to the arguments, and particularly the opinion expressed by the hon. member for Greenwood, as a lawyer to lawyers, on the necessity of having the thing in the manner in which it will really carry out the intent of the minister. The parliamentary assistant and the Minister of Public Works would be well advised to let this stand over, as requested by the hon. member for Greenwood, until tonight. It is ten minutes to six now, and nothing will be gained by prolonging this discussion, which looks as if it might be further prolonged. We might just as well let it stand over and see what can be done.


Jean Lesage: I have already had the
officials draft another resolution to replace this one for hon. members who are not satisfied, if they are so insistent. I did not believe it was necessary at all. Since they insist I shall try to find it.


Major James William Coldwell: You could have saved the
committee an hour's discussion.


Alphonse Fournier: I hope you do not
continue the discussion afterwards.


Mr. Casselman:: He let you down, too.


Alphonse Fournier: This is not the first
time I am let down.


James Joseph McCann: I move:
That paragraph 4 of the proposed resolution to amend the Excise Tax Act be deleted and the following substituted therefor:
''4. That section 13 of schedule 1 to the Excise Tax Act be repealed and the following substituted therefor:
13. Tires and Tubes:-
(a)	Tires in whole or in part of rubber for selfpropelled machines or automotive vehicles of all kinds, including trailers or other wheeled attachments used in connection with any of the said machines or vehicles	 fifteen per cent;
(b)	Inner tubes for use in any such tires ..
fifteen per cent;
the tax on the articles enumerated in paragraphs (a) and (b) of this section does not apply to the goods mentioned therein when used exclusively for the original equipment of such self-propelled machines, automotive vehicles, trailers or other wheeled attachments or when used exclusively for replacement purposes on machinery designed for and used only for farm purposes".
He said:	May I have just a word.
Had I been here I think I might have clarified the situation. There are different types of trailers. I would ask any man when he goes down to the central station in Ottawa to see how the baggage, express and the
[Mr. Fournier (Hull).j
like is moved. It is done with a self-propelled machine with a trailer behind it, on which there are tires and tubes.
According to the decision of the tariff board, they fall into a category that would make them exempt; and in order that that exemption should not apply to that type of vehicle this item had to be inserted. Anyone who has been in any big manufacturing establishment will have seen these vehicles. For instance, in lumber yards they have these lifters with automotive machines. They are used for moving lumber. The last ones I saw were in a distillery out in the west. It is a self-propelled automotive machine, with a trailer on it. Why should it be exempt from excise tax in respect of those tires?
But we do give an exemption to tires used on farms, as set out in the amendment. I think that explanation is satisfactory. The amendment contains the words:
. . . automotive vehicles, trailers or other wheeled attachments or when used exclusively for replacement purposes on machinery designed for and used only for farm purposes.
That is my conception of the necessity of putting this in here-that is, in order that the excise tax may be exigible on the type of machine used by the railway companies and in manufacturing processes, or in lumber yards, or dozens of other places.


Lewis Elston Cardiff: I take it that includes farm trailers used for drawing chop to town, and all that sort of thing.


Jean Lesage: I have discussed trailers three or four times. I have referred to replacement tires and tubes for trailers which are not considered as farm machinery, and which will be taxable, as they are now.


James MacKerras Macdonnell: I am in a
quandary. I do not know whether I should thank the parliamentary assistant or be indignant for trying to stuff down our throats something he knew we should not swallow. Perhaps he would let this stand until eight o'clock, because it is a very complicated matter.
I think now we have a resolution which attempts to say what is to be done, instead of what is not going to be done. I think we have made at least a step forward. I do not think the Minister of Public Works should try to stuff this down our throats^-


Alphonse Fournier: Now, now.


Jean Lesage: Let us accept the amendment, and move on.


James MacKerras Macdonnell: No.


William Alfred Robinson: Shall I call it six o'clock?


Alphonse Fournier: No.


Jean Lesage: The hon. member for Greenwood has had his way. I do not see why we should prolong this discussion.


Alphonse Fournier: Withdraw the
amendment.


Donald Methuen Fleming: Do not get contrary.


Agar Rodney Adamson: I wish to ask a question on paragraph 5.


Alphonse Fournier: Let us agree to paragraph 4, and go ahead.


William Alfred Robinson: I feel before any
further discussion takes place I should put the amendment moved by the Minister of National Revenue.


Donald Methuen Fleming: Read it.


Jean Lesage: The minister has read it.


James MacKerras Macdonnell: I would
remind the parliamentary assistant that he has had the advantage of seeing it for several hours, while we have had it only a few seconds. We should take time to make sure of it. Now that he has done what I am sure is a good job, we should make sure that it is a perfect job before we give final approval. I suggest resolution number 4 should stand, and that we go on to number 5.


Some hon. Members:: Six o'clock.


James MacKerras Macdonnell: It is actually one minute to six.


Agar Rodney Adamson: I have one question to ask.


Alphonse Fournier: Question.


William Alfred Robinson: Is the amendment carried?


Some hon. Members:: Carried.


James Arthur Ross: If a contractor who is not a farmer buys tires for a self-propelled tractor, as replacement tires, I presume they are taxed, are they not?


Jean Lesage: Yes, they are. I believe the hon. member for Souris has put his finger on the reason for the amendment we are bringing in. It is in line with what the Minister of National Revenue has just said. There is no difficulty about it, and I do not see why we need to spend so much time on it.


James Arthur Ross: The farmer must make a declaration that he is using those tires for farm purposes.


Jean Lesage: Yes.


James Arthur Ross: Why should not the same regulation apply in the case of a trailer, if he declares it is to be used solely for farm purposes.
Excise Tax Act


Jean Lesage: Because trailers are not used only for farm purposes.


James Arthur Ross: Some of the tractors are not, either.


Jean Lesage: Yes, mostly, if they are farm tractors. But that would not apply in the case of a trailer, because the trailer could be attached to the farmer's private car, and go on the road. That would be quite different. I am sure the hon. member for Souris recognizes the difference, and must understand why we would have administrative difficulties. He is too conversant with farming in general not to understand better than I do what administrative difficulties there would be for the Department of National Revenue if replacement tires and tubes for trailers were exempt.


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 paragraph 4 and the amendment moved by the Minister of National Revenue.


Gordon Knapman Fraser: This amendment reads:
(a) Tires in whole or in part of rubber for self-propelled machines or automotive vehicles of all kinds, including trailers or other wheeled attachments used in connection with any of the said machines or vehicles: fifteen per cent.
Would that include farm implements? At the bottom it says:
The tax on the articles enumerated in paragraphs (a) and (b) of this section does not apply to the goods mentioned therein when used exclusively for the original equipment of such self-propelled machines, automotive vehicles, trailers or other wheeled attachments or when used exclusively for replacement purposes on machinery designed for and used only for farm purposes.
That is definitely for farm purposes. A trailer could be used for farm purposes.


Jean Lesage: The words of the exception are:
*-or when used exclusively for replacement purposes on machinery designed for and used only for farm purposes.
A trailer is not machinery.


Gordon Knapman Fraser: Would a grader be included as farm machinery?


Jean Lesage: Not a road grader.


Gordon Knapman Fraser: For farm purposes. These are farm graders used to level off the ground.


Mr. Gauthier (Portneuf):: That would be a bulldozer.

Excise Tax Act


Gordon Knapman Fraser: It would be pulled behind a tractor. What about a snow blower used on a farm to clean around the barn?


Jean Lesage: I do not know of any snow plow which is designed exclusively for farm purposes or farm use.


Mr. Coyle:: I have a trailer that never goes off the farm. Would that come under this?


Jean Lesage: I do not believe that the trailer which my hon. friend owns could be considered a machine; it is a vehicle.


Charles Delmar Coyle: It is just a trailer.


Jean Lesage: I believe that would come under the general definition of vehicle.


Lewis Elston Cardiff: There is going to be some difficulty about this. The tires for a trailer or any farm machine are not suitable for speeding on the highway. They just cannot be used on a car because if you used them at any speed you would wear off the tread in a few moments. There is a great difference between a tire used for farm work and one used on the highway.


Jean Lesage: I will say again what I said this afternoon, that according to the proposed amendment the test of the exemption would not be on the tires and tubes themselves; it would be on the vehicles on which the tires and tubes are to be used. Following the representations made by my hon. friends this afternoon, I said that speedy consideration would be given to the possibility of applying the test to the tires and tubes. I am afraid that I cannot say any more at the moment. My hon. friends may rest assured that the speediest consideration will be given to their representations.


Donald Methuen Fleming: Will that consideration be given before the bill is submitted for final approval at this session or is that just an airy assurance of consideration at some time in the future?


Jean Lesage: The earliest consideration will be given to the matter, and that does not mean in a week or so; it means as soon as the officials can leave the room.


[Stage Direction]
Amendment agreed to.
Resolution as amended agreed to.
5.	That there be imposed, levied and collected an excise tax of fifteen per cent on camera lenses, except those sold for industrial or professional photographers' use.
Resolution agreed to.
6.	That there be imposed, levied and collected a sales tax of ten per cent and an excise tax of fifteen per cent on candy, chocolate and confectionery payable by persons, firms and corporations who package those goods for sale except where they are packaged by a retailer on his retail premises for sale therefrom to consumers.
Donald Methuen Fleming: Could the parliamentary
assistant give us some elucidation of this resolution?


Jean Lesage: Paragraph 6 of the resolution proposes a change in the application of the sales tax and the 15 per cent excise tax on candy, chocolate, and confectionery in order to remove an anomaly in the present law.
Previously, when a wholesaler or distributor bought these products in bulk quantities from the manufacturer, the 15 per cent tax and the sales tax have been levied on the manufacturer's price for the bulk candy. The wholesaler could then package the merchandise for retail sale.
On the other hand, if the manufacturer had packaged the goods and sold direct to the retailer, the sales tax and the 15 per cent excise tax would be based on a price which would include all the costs of packaging plus the trade mark-up. Therefore, the taxes on candy packaged by the manufacturer would be considerably more than the taxes paid on the same quantity of candy which was packaged by the middleman.
In order to remove this obvious unfairness, the resolution proposes that in these circumstances, instead of requiring the taxes to be paid by the manufacturer, the taxes will be payable by persons, firms or corporations who package these goods for sale, except when the packager is a retailer who packages on his premises for retail sale. That is the case of Laura Secord.


Donald Methuen Fleming: We are indebted to the parliamentary assistant for the explanation he has given, but I would suggest that there is something new involved here with respect to the application of the Excise Tax Act. As I understand, the whole basis of the act hitherto has been the levy of the tax in the first instance on the manufacturer or producer. In previous years some of us have pointed out that the effect of the application of the tax at the manufacturing or producer level has been to bring about a succession of mark-ups on the tax as the goods have passed from the hands of the manufacturer to the wholesaler, then to the jobber, then to the retailer and finally to the consumer. We have been told in reply to these arguments that not only did the present method have simplicity to commend it but administratively it assured that there would be both ease in collecting the tax and no escapes from it. I would point out that while the proposed change, in the circumstances mentioned by the parliamentary assistant, has fairness to commend it, nevertheless we may have to examine the possibility in future of applying

this new method of levying the tax not at the manufacturing or producer level but in the hands of the wholesaler, in other words, the next stage in the process by which goods move from the manufacturer originally into the hands of the consumer eventually.


Jean Lesage: It is not a precedent because we have the same thing in the case of cosmetics. It is section 80, paragraph 5(a), of the Excise Tax Act. The principle is that the excise tax is collected when the process of manufacture is deemed to have stopped. Packaging in the candy business and also in the cosmetic business, as these trades now operate, is such an important part of the process of manufacturing the article for delivery to the consumer that really it could be said that the manufacturing process stops at that level.


Donald Methuen Fleming: I think the explanation is a reasonable one-


Jean Lesage: I am doing my best.


Donald Methuen Fleming: -and I only hope that when the same reasoning is sought to be applied to other processes with respect to other commodities the same reasonableness may prevail one of these days.


Louis-René Beaudoin: We will now take up paragraph 7.


Gordon Knapman Fraser: This paragraph covers all the preceding ones in the resolution, and I should like to ask the parliamentary assistant a question with reference to 3(b), school and college year books. Does that mean only one book a year? Some colleges issue these books quarterly. Dealing with paragraph 7 and going back to 3(b), does the word "year" cover only one book a year or would they be permitted to publish three or four?


Jean Lesage: If they are published four times a year at least they are already exempt as magazines.


Gordon Knapman Fraser: Then they would be exempt, and this only covers one book that might be issued as a year book. I want to ask another question. Most college year books have half a dozen advertisements in them. Would that eliminate them from this provision?


Jean Lesage: No, Mr. Chairman. That is why year books come under a different section from other educational books.


Gordon Knapman Fraser: Then they are allowed to have some advertisements in their year books if they wish.


Jean Lesage: Yes.


Gordon Knapman Fraser: I wanted to make that clear because when we were on the particular item it was not mentioned.
Excise Tax Act


Mr. Green:: What consideration, if any, has the government given to the suggestion of the municipalities of Canada that purchases by municipalities should be exempt from the sales tax? This year there has been a widening of the type of goods which are exempt, and there is a very strong request for including purchases by municipalities in the exemptions. I need only point out to the parliamentary assistant that in the city of Vancouver a bridge is being built which is costing about $16J million and the dominion sales tax on the equipment going into that bridge amounts to between. $500,000 and $600,000. I think that is an unfair situation. I do not see why the dominion government should add to the cost of projects of that kind by this tax. I understand that purchases by provincial governments and even by boards established by provincial governments are exempt from the sales tax. Why would it not be possible to have a similar exemption for purchases by municipalities? I believe the tax is even imposed on goods which the municipality manufactures itself and does not sell.


Jean Lesage: Mr. Chairman, I did not raise a point of order because I know my hon. friend was busy before a committee this afternoon and could not be here. I can only mention what the Minister of Finance has said on the subject many times in the house, and that is still government policy. May I draw your attention, Mr. Chairman, to the fact that we are on paragraph 7 of the resolution while the sales tax is covered in paragraph 3 which we dealt with this afternoon. I do not want to be dragged into a lengthy discussion on the application of the sales tax to municipalities. We discussed the sales tax this afternoon, but in fairness to my hon. friend I wanted to let him make his representations. The only answer I can give at this moment is that on several occasions the Minister of Finance has told the house what the government policy is with respect to this matter, and when the bill is before the house, at which time both the Minister of Finance and my hon. friend will be in the house, I am sure that the minister will be ready to give any further explanation that the hon. member would, wish to have.


Howard Charles Green: I would point out that this particular resolution refers to all the preceding six resolutions.


Jean Lesage: I agree.


Howard Charles Green: For that reason I think I was in order in raising the point. However, if the parliamentary assistant prefers to have the minister deal with that question when
31X6

Excise Tax Act
the bill comes before the house, that is satisfactory to me. There is one other question, I should like to ask him having to do with the refunding of the sales tax on oil and gas furnaces and air conditioning units. An announcement was made some days ago that the tax would be refunded on any item sold since September, 1951, but in the Vancouver press I read reports that it is going to be impossible for the dealers to trace the people who bought these furnaces, and that it is unlikely that any attempt will be made on the part of the dealers to make these refunds. Has the government any plans in mind for the purpose of seeing that the purchasers of such articles get their refunds?


Jean Lesage: Mr. Chairman, of course this is a very special case arising not out of the budget resolutions but out of a recent decision of the tariff board. And I am sure that my hon. friend will realize that I was not fully briefed on this when I came into the house. However, I can tell him that according to the information I have the government will grant refunds to manufacturers for claims they make in accordance with the judgment of the tariff board.
As for claims of consumers to the dealers, and the dealers to the manufacturers, that is a matter for those people to settle among themselves. At first sight I cannot see how the government could very well enter into any discussions between those people. However, I can assure my hon. friend that consideration will be given to the matter and I will endeavour to give a satisfactory answer in a few days

a more complete answer on the subject which, as he will agree, does not arise out of the budget resolution.


Howard Charles Green: Would it be possible for the government or for the department to advertise the fact that these refunds are being made so that people who have bought these goods will have an opportunity to make a claim on the dealer from whom they purchased?


Jean Lesage: Mr. Chairman, I am told that the Department of National Revenue has communicated with manufacturers asking them to tell their dealers. Moreover, the judgment and the press release following the judgment have been publicized through the press and radio.


Louis-René Beaudoin: Shall the resolution as amended carry?


James MacKerras Macdonnell: No, Mr. Chairman.
As this is the last item under the Excise Tax Act, I wish to make a few very brief observations on the resolutions in general under this section. I wish to repeat what I

have said before-that we on this side complain that nothing more was done to relieve the payers of excise tax. We say that if the question of economy had been tackled with sufficient energy and urgency it would have been possible to do more. We feel that the excise tax puts a particular burden on young people who are setting up homes, because of the heavy incidence of taxation on household utensils.
I will say again what I said this afternoon about the sales tax. Our complaint is that the relief given has not been extended to those who need it most; and I reiterate also the fact that these taxes are, of course, most inflationary and they shove up the cost of living.


Louis-René Beaudoin: Shall the resolution carry?


Some hon. Members:: Carried.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
That it is expedient to introduce a measure to amend the Income Tax Act and to provide, amongst other things:
1.	That for the 1954 and subsequent taxation years the graduated rates of tax at present applicable to income of individuals be reduced by substituting therefor the following graduated rates of tax: (a) 15 per cent of the amount taxable if the amount taxable does not exceed $1,000; (b) $150 plus 17 per cent of the amount by which the amount taxable exceeds $1,000 if the amount taxable exceeds $1,000 and does not exceed $2,000; (c) $320 plus 19 per cent of the amount by which the amount taxable exceeds $2,000 if the amount taxable exceeds $2,000 and does not exceed $4,000; (d) $700 plus 22 per cent of the amount by which the amount taxable exceeds $4,000 if the amount taxable exceeds $4,000 and does not exceed $6,000; (e) $1,140 plus 26 per cent of the amount by which the amount taxable exceeds $6,000 if the amount taxable exceeds $6,000 and does not exceed $8,000;	(f)
$1,660 plus 30 per cent of the amount by which the amount taxable exceeds $8,000 if the amount taxable exceeds $8,000 and does not exceed $10,000; (g) $2,260 plus 35 per cent of the amount by which the amount taxable exceeds $10,000 if the amount taxable exceeds $10,000 and does not exceed $12,000;
(h)	$2,960 plus 40 per cent of the amount by which the amount taxable exceeds $12,000 if the amount taxable exceeds $12,000 and does not exceed $15,000;
(i)	$4,160 plus 45 per cent of the amount by which the amount taxable exceeds $15,000 if the amount taxable exceeds $15,000 and does not exceed $25,000;
(j)	$8,660 plus 50 per cent of the amount by which the amount taxable exceeds $25,000 if the amount taxable exceeds $25,000 and does not exceed $40,000;
(k)	$16,160 plus 55 per cent of the amount by which the amount taxable exceeds $60,000 if the amount taxable exceeds $40,000 and does not exceed $60,000;
(l)	$27,160 plus 60 per cent of the amount by which the amount taxable exceeds $60,000 if the amount taxable exceeds $60,000 and does not exceed $90,000; (m) $45,160 plus 65 per cent of the amount by which the amount taxable exceeds $90,000 if the amount taxable exceeds $90,000 and does not exceed $125,000; (n) $67,910 plus 70 per cent of the amount by which the amount taxable exceeds $125,000 if the amount taxable exceeds $125,000 and does not exceed $225,000; (o) $137,910 plus 75 per cent of the

amount by which the amount taxable exceeds $225,000 if the amount taxable exceeds $225,000 and does not exceed $400,000; (p) $269,160 plus 80 per cent of the amount by which the amount taxable exceeds $400,000 if the amount taxable exceeds $400,000.
2.	That for the 1953 taxation year the graduated rates of tax applicable to income of individuals be the average of the present graduated rates and the rates set out in paragraph 1.
3.	That with respect to income of corporations earned on and after January 1, 1953, for the present rate of tax of 20 per cent on the first $10,000 of taxable income and 50 per cent on taxable income in excess of $10,000 there be substituted the rate of 18 per cent on the first $20,000 of taxable income and 47 per cent on taxable income in excess of $20,000.
4.	That for the 1953 and subsequent taxation years the 10 per cent deduction from tax at present allowed in respect of dividends received from a taxable corporation by individuals resident in Canada be increased to 20 per cent.
5.	That the deduction from tax equal to 5 per cent of the taxable income of corporations earned in a prescribed province be increased to 7 per cent of taxable income earned in the province on or after January 1, 1953, by corporations that are not subject to certain special provincial taxes.
6. That for the 1953 and subsequent taxation years the deductions at present allowed in computing taxable income of individuals in respect of medical expenses that exceed 4 per cent of income of the individual be allowed in respect of medical expenses that exceed 3 per cent of income of the individual.
7. That for the 1953 and subsequent taxation years the deductions in computing taxable income of individuals at present allowed in respect of dependent children under 21 years of age be allowed in respect of dependent children of the taxpayer over 21 years of age if they are attending a university.
8.	That for the 1946 and subsequent taxation years the provision that excludes expense allowances from income of a member of a provincial legislature be made applicable to expense allowances of elected members of the governing bodies of incorporated municipalities.
9.	That the special deduction from income allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of exploring or drilling for oil and natural gas in Canada, be allowed for expenses incurred in the calendar year 1956; and that in addition a similar deduction be allowed to corporations whose principal business is mining or exploring for minerals, for expenses of exploring or drilling for oil or natural gas in Canada incurred in the calendar years 1953 to 1956 inclusive.
10.	That the special deduction from income allowed to corporations whose principal business is mining or exploring for minerals, for expenses incurred in searching for minerals in Canada be allowed for expenses incurred in the calendar year 1956; and that in addition a similar deduction be allowed to taxpayers whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas or exploring or drilling for petroleum or natural gas, for expenses of searching for minerals in Canada incurred in the calendar years 1953 to 1956 inclusive.
11.	That the special deduction from income and taxes allowed to taxpayers whose principal busi-
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ness is production, refining or marketing of petroleum or drilling for petroleum, for expenses incurred in respect of deep-test oil wells be allowed to those taxpayers and to taxpayers whose principal business is mining or exploring for minerals, for expenses incurred in respect of deep-test oil wells in 1953 operations.
12.	That for the 1953 and subsequent taxation years a taxpayer whose principal business is production, refining or marketing of petroleum or petroleum products or exploring or drilling for petroleum or natural gas or mining or exploring for minerals and who, having entered into an agreement on or after January 1, 1953, to pay an amount, other than a rental or royalty, to a government to acquire the right to take oil, gas or minerals from land in Canada, has paid all or part of the amount and before a well or mine comes into production on the land surrenders the right without receiving consideration therefor or repayment of any part of the amount so paid, be allowed to deduct the amount so paid in computing income for the year in which the right is surrendered.
13.	That the exemption of income from metalliferous or industrial mineral mines for the first three years of production be extended to mines coming into production during the calendar year 1956.
Louis-René Beaudoin: Shall resolution. 1, subparagraphs (a) to (p) carry?


James MacKerras Macdonnell: Mr. Chairman, I also wish to make some general observations about the income tax resolutions. It is just four weeks tonight since we had the budget and there have been four weeks for the taxpayers of Canada to come to know what it amounted to in so far as their interests are concerned. I think they have learned a good deal.
I propose to put on reicord one or two extracts from the press, which has been doing some educating of the taxpayer in the last few weeks. I wish to read first a brief extract from Le Droit of February 23; that was just two days after the budget:
According to our own inquiry, taxpayers in the lower and middle brackets are convinced that the government did not do enough for the Canadian family. This appears to be true as far as we are concerned.
When taxpayers in the lower and middle brackets find out about the small income tax reduction they are getting, they will certainly not be pleased.
I also wish to put on record a quotation from the Calgary Herald of February 26, just a week after the budget. This is entitled "Is it Worth a Package of Smokes?"
Mr. Abbott's election budget is now receiving the "going-over" it deserves at the hands of the opposition critics and all of them appear to be united on at least one point; that the poorest taxpayers are getting the smallest break from smiling Doug.
The majority of Canada's taxpayers earn annually $3,000 or less. Yet a married man with two children who makes $3,000 a year will find that at the end of 1953 his income tax bill has only been reduced by a sum of four dollars or, as one opposition member put it, 33 cents a month. Having cut the cigarette tax at the same time, this will

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permit the average taxpayer to buy an extra package of cigarettes a month this year, thus increasing the revenue Mr. Abbott will get from the remaining taxes on smokes.
. . . the financial critic of the Progressive-Conservatives had it figured out that the fellow earning just $2,400 a year would receive "the magnificent relief of one dollar a year". We don't think this kind of dollar-a-year man will find much to cheer about in the Liberal budget. . .
As it now stands, the tax cut will be five and one-half per cent for the last six months of the year.
That is the year 1953. That means that the benefit will be received by the taxpayer in 1954.
Who knows what it will be for 1954? Under the "emergencies" of a 1954 budget, Canadians might never see the highly publicized eleven per cent cut in taxes.
I point out that the 11 per cent benefit will not be received until the year 1955.
And in the meantime, the taxpayer will be left in that confused state which benefits governments and elects politicians.
The government has, with this budget, done everything it could have done fust as easily in any one of the past four budgets, while at the same time it has done nothing constructive to economize. It has cut corners but not costs, and by its swift sealing off of any investigation into public administration (such as in defence) it is allowing what Mr. Macdonnell called "waste, extravagance and administrative inefficiency" to flourish at the public's expense.
It is an obvious thing, Mr. Speaker, to see that it is not a budget for the "man in the street", as the newspapers have put it. Our own attitude, as I have indicated, has not been disapproval of what has been done but disapproval of what has not been done. We say that what has been done could have been done and more could have been done too.
We believe that labour has taken this badly. We believe that the small taxpayer whose relief is so microscopic will not take it too well. We feel still more strongly about those who are not income tax payers and who get no benefit from it whatever.
As I say, we claim that other relief which could have been given them has not been given them.
In general, as we say, it has been a budget which has left out of consideration the mass of the people, a matter which they are very speedily waking up to realize.


Louis-René Beaudoin: Shall resolution No. 1 carry?


Mr. Thatcher:: Mr. Chairman, I should like to make a few general remarks on these resolutions at this time. Before I do so I should like to compliment the parliamentary assistant on the way he has put through the first three resolutions. I think he has performed his task well today. Having said that-


Jean Lesage: You are going to give it to me now.
[Mr. Macdonnell (Greenwood) .1


Wilbert Ross Thatcher: Having said that, I want to tell him I welcome the rate reductions in income tax which he is bringing forth in this resolution. But I also want to tell him, and through him the government, that in my opinion the tax reductions which these resolutions will give the average Canadian are completely inadequate, and so small as to be almost inconsequential.
The rate outs, theoretically, are to be 11 per cent. Actually, because they do not come into effect until July 1, they are 51 per cent.
Take the case of a married man with two children. After this legislation is passed, if he earns $2,400, as was pointed out by the hon. member for Greenwood, he is $1 better off. If he earns $2,500 he is $2 better off. If he earns $2,750, he is $5 better off. If he earns $3,000, he is $7 'better off. These income tax cuts are virtually meaningless to the overwhelming majority of the Canadian people. I have in my hand the latest publication put out by the Department of National Revenue. It is entitled "Taxation Statistics, 1952." It has to do with the year 1950. If any hon. member has that bulletin and wishes to turn to pages 79 and 82, he will find that 92-8 per cent of all taxpayers in Canada who paid income tax earned less than $5,000 for the year under discussion; 2,205,540 citizens paid an average tax of $123. Under this budget that huge number of people-I repeat, 92-8 per cent of all Canadian taxpayers- get an average tax relief of $6.75 each.
I think that the income tax cuts which this government is bringing into effect are little more than an empty gesture. They are of little value to most Canadians. Our citizens were weighed down with heavy income taxes before this budget was introduced, and they are still going to be weighed down by unnecessary and heavy income taxes after this resolution passes.
Government spokesmen like to tell us frequently that Canadian income taxes are the lowest in the world and that Canadian exemptions are the highest. I think the parliamentary assistant made this statement in his budget speech. He was speaking of the income tax in the United Kingdom, the United States and other places. Such a statement may be found at page 2394 of Hansard:
Those figures show that in comparable countries the level of exemptions is much below the level in Canada. I could give example after example of what the status of any taxpayer in any one of these countries would be. They show that any one of them will pay more income tax, more personal income tax, than any individual of comparable status and with the same earnings here in Canada.

And he went on to say:
-our rates of income tax here in Canada are the lowest in the world and our exemptions are the highest in the world.
I ask you to note those remarks, Mr. Chairman. I challenge the veracity of the statements; and as my authority for challenging their veracity I am going to use Mr. J. Harvey Perry who was, I believe, formerly a taxation expert in the Department of Finance. Mr. Perry is now, of course, working as research director for the Canadian Tax Foundation which is certainly a non-political organization. That particular gentleman published an article in the February issue of the Canadian Tax Journal, and this is what he had to say:
*-Canadian rates of tax are now lower than American . . . but that the privilege of income-splitting allowed to American married taxpayers gives them an advantage over comparable Canadian taxpayers despite the higher American rates.
That article was, of course, written before the current budget resolutions were tabled. I therefore phoned Dr. Eaton in the Department of Finance to get up-to-date Canadian figures for 1953. Those figures are extremely interesting. It is quite true that in some cases the Canadian rates are lower than are the American rates; but in other categories, when you compare Canadian and American tax figures, you find that the American taxes are lower than the Canadian taxes.


Jean Lesage: Over $8,000.


Wilbert Ross Thatcher: With the permission of the committee, Mr. Chairman, I should like to table a chart which is headed "1953 Personal Income Tax in Canada and U.S.A." It gives the annual incomes of eight different categories for people married with two children and married with four children. My source for the American figures is the Canadian Tax Journal, Mr. Perry's figures. My source for the Canadian figures is Dr. Eaton's department. I wonder, Mr. Chairman, if I may have the permission of the committee to table those figures. If not, I shall have to read them.


An hon. Member:: Go ahead.


Wilbert Ross Thatcher: I should like to put them on Hansard.


Some hon. Members:: Agreed.


Louis-René Beaudoin: Order. It is not that I do not want to ask the consent of the committee that this table be printed in Hansard that I do not at once do so. The reason is the limitation imposed by the rules with respect to debate in committee of ways and means. I know that, as a matter of practice, general discussion may take place when we call the first paragraph of the resolution. But on the
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other hand, the hon. member will realize that this is an amending resolution in certain particulars and that therefore his general remarks should be strictly related to the amendments contained in this resolution.


Wilbert Ross Thatcher: I assure you that they are, Mr. Chairman.


Louis-René Beaudoin: Even on an amending bill, if he looks at the ruling of Mr. Speaker Macdonald which appears at page 237, of Votes and Proceedings of November 14, 1949, he will find this. Before we go any further in this discussion perhaps I should quote this ruling:
The "business under consideration on the second reading of a bill is the principle of the bill.
I would ask hon. members to note that statement.
Members must accordingly confine themselves to a discussion of that principle and must refrain from introducing or referring to extraneous matters.
Referring to the amending bill, Mr. Speaker Macdonald goes on to say as follows:
-it is the principle of the amending bill, and not the principle of the act to be amended, which is the "business under consideration".
Further on he concludes:
It is not in order to discuss the principle of the Combines Investigation Act itself,-
Which was under discussion at the time.
-or to discuss clauses of that act, or other matters, not clearly related to the principles of the amending bill.
This is about the second reading of a bill. In committee of the whole, as he knows, standing order 58, paragraph 2, says that speeches must be strictly relevant to the item under discussion. It is because of this limitation imposed upon us by the rules that I would ask the hon. member to discuss more particularly the amendments that are contained in this resolution now before us and to refrain from putting on Hansard documents which may be good for the purpose of sustaining the argument he is putting forward but which are perhaps not quite relevant to the amendments now before us.


Wilbert Ross Thatcher: Thank you, Mr. Chairman. What I wish to do is this. On page 3 of this resolution certain Canadian income tax reductions are proposed. I wish to compare those to comparable American figures, and to suggest that the government would be well advised to bring in a resolution which will give the Canadian people greater reductions of income tax at this present time. If I cannot table the chart which I mentioned, I suppose I shall have to read the figures. It will take me only a moment or two.

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Some hon. Members:: Agreed.


Louis-René Beaudoin: Order. I was asking the hon. member's co-operation; but if he wishes me to ask for the unanimous consent of the committee, I will do so. Has the hon. member the consent of the committee to have printed in Hansard, interspersed in his remarks, the table which he has mentioned?


Some hon. Members:: Yes.


Some hon. Members:: No.


Jean Lesage: Of course I have no objection, Mr. Chairman. But I would ask if the hon. member would kindly send me a copy of the table.


Wilbert Ross Thatcher: Yes; I shall be pleased to do that.


Jean Lesage: I would appreciate it if he would let me have it immediately, because I have my own tables and I should like to compare the two.


Louis-René Beaudoin: Is it agreed?


Some hon. Members:: Agreed.


Some hon. Members:: No.


Jean Lesage: Yes, yes.


Louis-René Beaudoin: Agreed.


Wilbert Ross Thatcher: Thank you, Mr. Chairman. The table is as follows:
1953 PERSONAL INCOME TAXES IN CANADA AND U.S.A.
Annual Income	Married with 2 Children	Married with 4 Children	Canada	U.S.A.	Canada	U.S.A.$ 2 000	$ cts. 00	S cts. 00	$ cts. 00	S cts. 002,500 	32 00	00	00	003,000 	112 00	72 00	64 00	003 500 	196 00	171 00	144 00	004 000 	286 00	271 00	232 00	5 005 000 . 	484 00	466 20	422 00	199 8010 000 	1,696 00	1,527 00	1,612 00	1,232 0025 000 	8,113 00	6,584 00	7,970 00	6,080 00
As I said a moment ago, it is quite true that Canadian income tax figures for single people or for married people without children are higher in the United States than they are in Canada; but whether this government wants to admit it or not, and whether the parliamentary assistant wants to admit it or not, the fact is that the American federal income tax is lower than the Canadian tax for married people with a family.


Jean Lesage: Mr. Chairman, since I should like to understand this table and as there is not much information on it, I should like to ask the hon. member for Moose Jaw for a few details, if he will allow me to do so. Are the figures for Canada based on children of family allowance age?


Wilbert Ross Thatcher: Yes.


Jean Lesage: Were the U.S.A. figures prepared giving the advantage of the split privilege of joint returns?


Wilbert Ross Thatcher: The United States figures are found on page 80 of the February issue of the Canadian Tax Journal.


Jean Lesage: No; I should like to have an answer to my question. I have another question.


Mr. Graydon:: The hon. member for Moose Jaw has not a deputy minister over there to prompt him, either.


Wilbert Ross Thatcher: Perhaps the parliamentary assistant would let me continue. Then, if he can find something wrong with my figures, I challenge him to show it to me, because I got these figures from his own. department, and if they are wrong his deputy minister is the man who has made the mistake.


Jean Lesage: I have one more question. I do not contend there is any mistake. I have not examined them yet. Before I examine them I have to know under what conditions those figures were prepared. For instance, I should like to know if it was assumed for the purpose of computing United States tax that the taxpayer had taken advantage of the deduction of 10 per cent of income for charity purposes.


Wilbert Ross Thatcher: Well he may have, I do not know. I do not want to split hairs. I am taking this table which Mr. Perry said is a table with comparable Canadian and American figures, and I assume the parliamentary assistant thinks Mr. Perry ought to know what he is talking about, because he formerly worked in his department.
Take the case of a married man with two children. If he earns $2,500 a year, he pays $32 in Canada, but nothing in the United States. If he earns $3,000 a year he pays $112 in Canada and $72 in the United States. I remind you, Mr. Chairman, that in addition, in these Canadian figures the two per cent social security tax is not included. A married man with four children is in a similar position. If he earns $3,500 he pays $144 in Canada but nothing in the United States. If he earns $4,000 he pays $232 in Canada, $5 in the United States, and so it is all the way up and down, with the married man with two children and four children respectively. Therefore, despite the boasting of this government that the Canadian income tax all the way through is lower than elsewhere in the world, I suggest that these figures tonight show that in fact it is not always lower.


Jean Lesage: The hon. member did not take into account family allowances.


Wilbert Ross Thatcher: I knew the parliamentary assistant was going to come out with that. In the first place, family allowances should have nothing to do with income tax at all. We are talking a straight income tax comparison. But even if we take family allowances into account in some categories, according to the figures which were given me by Dr. Eaton's department, the Canadian income tax is higher than the comparable United States tax. For instance, a man earning $10,000-


Jean Lesage: That is right.


Wilbert Ross Thatcher: Just let me finish. Take the man earning $10,000 who has two children. If he gets family allowances, the Canadian tax he pays is $1,552. The United States figure is $1,527.


Jean Lesage: It is $1,528.
Income Tax Act


Wilbert Ross Thatcher: All right, there is a difference of one dollar between us. There are several other categories. Therefore, even in those cases, the Canadian tax in some instances is higher than the United States tax.
There are some features of the United States tax system that I think are better than the Canadian. Down there they allow $600 exemption for each child, as compared with $150 for a family allowance dependent child up here. Personally, I believe the government should give some consideration at this time, while these resolutions are before us, to increasing the exemption for children say to $400. That kind of assistance would be something that would help the people who actually need tax relief in this country. If the Canadian people felt that these high income taxes, which the parliamentary assistant is laying before us tonight, were absolutely necessary for the defence effort, I do not think they would object too much; but from the island of Newfoundland right through to British Columbia, a great many people are beginning to wonder whether or not they are getting value for their tax dollar, particularly in defence. There is a general feeling, as was mentioned by the hon. member for Greenwood, that if this government would meet the problem of waste and extravagance-


Jean Lesage: On a point of order.


Wilbert Ross Thatcher: -and do something, we might be able to get somewhere.


Jean Lesage: On a point of order, we are not on a general discussion of the budget. I was the one to give agreement to the hon. member having his table printed in Hansard. I am ready to hear whatever he has to say on income tax, but I am not prepared at this time to enter into a long discussion on national defence expenditures. There is a committee on defence expenditures. The estimates of the Minister of National Defence will come before the house. At this time I think we should consider the income tax amendments.


Mr. Stuart (Charlotte):: May I ask the hon. member a question?


Wilbert Ross Thatcher: Excuse me; may I answer the parliamentary assistant? Then the hon. member can go ahead and ask his question. The point I want to make is this. I believe that if certain expenditures could be eliminated the income tax rates could be lowered. The Minister of Finance and other ministers time and again, in parliament and out of parliament, have challenged opposition members to show specific instances of where money could be saved.

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Louis-René Beaudoin: Order. The function of the committee of ways and means is to impose taxes, not to discuss whether or not expenditures could be reduced in certain departments of government. The hon. member is getting far away from even a general discussion of this and of the resolutions having to do with income tax. He should not try to repeat his budget speech.


Wilbert Ross Thatcher: I assure you that I intend to do nothing of the kind.


Louis-René Beaudoin: The hon. member had
assured me once before.


Wilbert Ross Thatcher: Mr. Chairman, if you would be good enough to tell me how we are going to get income taxes down, if we are not permitted to suggest methods of saving money or cutting expenditures, I would welcome it.


Mr. Stick:: Reduce family allowances, as the hon. member advocated last year.


Louis-René Beaudoin: At this time, according to the rules, the only thing the hon. member can do is to provide for a different scheme of taxation which will not upset the balance of ways and means. I will agree with him that in practice it is almost impossible for a private member to do that, and that is why I have come to the conclusion that in the committee of ways and means it is hardly possible for any member to move an amendment. That being so, nevertheless it does not allow the hon. member to go outside the scope of the discussion permitted by the rules.


Wilbert Ross Thatcher: Thank you, Mr. Chairman. Some days ago the Minister of Finance mentioned some criticisms which I made of our income tax rates. I do not feel that he answered the criticisms which I made. Instead, he became very rude, very personal, very vindictive-


Alphonse Fournier: Mr. Chairman, on a real point of order; the debate on the budget was concluded. Three votes were taken. The hon. member cannot refer to that debate at this stage. I think you are right, Mr. Chairman, in keeping hon. members to the item under discussion. The hon. member cannot start the debate over again, even though he does not like the speech that the Minister of Finance made on that occasion.


Wilbert Ross Thatcher: I am not repeating the debate.


Some hon. Members:: Oh, no?


Mr. Maclnnis:: May I say a word on the point of order raised by the Minister of Public Works? The motion which was made on February 19, and which we debated for over three weeks, was for the Speaker to leave the chair for the house to go into

committee of ways and means. The debate on that occasion was not limited to matters in the budget. But I insist that we are now discussing matters that were in the budget, and we must be allowed to discuss them. We cannot go afield, as we did during the debate on the motion for the Speaker to leave the chair for the house to go into committee of ways and means; but we certainly must be allowed to discuss resolutions that arise from the speech by the Minister of Finance, because that is the essence of the budget.


Alphonse Fournier: I am not objecting to that at all. But I am looking at the resolution which is before the committee right now, and that resolution is concerned with the Income Tax Act. And if you read that, and will read also the standing order, you will find that you have got to limit the discussion to this resolution. Others have been disposed of by the committee.


Donald Methuen Fleming: There is one point I would like to answer in what the Minister of Public Works has just said. He said that the debate was concluded last Monday night. My submission is that this is the same debate. It is perfectly proper for any member in the committee of ways and means, under the present resolution, to refer to anything that was said in the budget debate.


Louis-René Beaudoin: Hon. members know, and I would like them to follow what I shall say- and I shall not be long-that on the motion for the Speaker to leave the chair for the house to go into committee of ways and means certain amendments are being moved. Now, the discussion normally should be relevant to the amendments that are being moved. But in practice the debate has tended to include all questions pertaining to the government's administration, generally.
Hon. members cannot say that, once they are in committee of ways and means on specific amending resolutions, we can debate all questions which were debated during the budget debate. I am sure that is not what the hon. member means.


Donald Methuen Fleming: No, that is not what I said.


Louis-René Beaudoin: Do I understand him to mean that whatever was allowable in the general discussion on the original motion that Mr. Speaker leave the chair for the house to go into committee of ways and means, having to do with income tax, is now allowable on this Income Tax Act amending resolution-that the same arguments can be advanced? I think that is what he meant.


Donald Methuen Fleming: Let me explain what I meant. I was answering the point made by the minister, that the debate on the motion that Mr. MARCH 19. 1953
Speaker do leave the chair had been concluded on Monday night. The minister said that ended it. My answer is that that is not so. Anything that is related to the resolution is perfectly proper to be brought forward, and the vote on the motion that the Speaker do leave the chair has not closed the debate. Reference can be made now in committee to anything said in the house in that debate, provided it is relevant to the subject matter of the present discussion.


Alphonse Fournier: But it goes further than that. The motion was not only that Mr. Speaker do leave the chair. Her Majesty's loyal opposition moved an amendment which contained four paragraphs; and there was also a subamendment moved concerning definite subjects. The house on three divisions decided on those questions. And once they have been decided by the house I do not think we can revive the debate.
There would be no end to the discussion if we did that. They were specific subjects amending the motion to go into committee. That is our objection.


Donald MacInnis: May I say just another word. I certainly do not contend that you can allow a discussion of everything that was discussed on the motion that Mr. Speaker do leave the chair. For instance, the hon. member for Burnaby-Richmond made a speech on pipe lines, which was perfectly in order at that time, in that part of the debate, but which certainly would not be in order now.
But I am contending that these resolutions which, in my opinion, are the essence of the budget speech made by the Minister of Finance, are an appropriate subject matter for debate. I do not know how wide a latitude the chairman should allow hon. members in answering statements made at that time. But I think, Mr. Chairman, you should err, if at all, by allowing considerable latitude on the subject, rather than by curtailing it too much.


Louis-René Beaudoin: I do not think we should consider that a general discussion of income tax here might be termed a revival of a debate already concluded, because some discussion on income tax has taken place in the budget debate. I think the starting point should be the standing order, and standing order 58 (2) is clear. It is clear that discus-ions in committee should be strictly relevant.
We have before us an amending resolution; therefore it should be strictly relevant to the amending resolution. Now, by practice, and by practice only, a general discussion has been allowed. We have always had certain
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difficulty between hon. members taking part in the debate and the chairman of the committee as to just how general that discussion should be. That is the point at issue at the moment.
In my opinion the discussion as entered upon by the hon. member for Moose Jaw is much more general than can be permissible under the rule. I think he should refrain from making comparisons or trying to offer a rebuttal to certain arguments presented during the budget debate, when it was stated that the income tax in Canada is lower than that in the United States or in other countries; because the hon. member must know that if I allow him to make a certain speech, I will have to allow other hon. members who would like to make similar speeches and advance similar arguments.
Discussions should be strictly relevant. As to how general it may be must be a matter of co-operation. Twice already I have asked the hon. member's co-operation, and I am going to ask for it again. I do hope that this time, in view of the rules and in view of what I have said, he will refrain from extending his remarks too much beyond the relevancy of the subject matter.


Wilbert Ross Thatcher: Of course I have no alternative, Mr. Chairman, but to bow to your ruling. But perhaps you would permit me to say I am surprised that every time an hon. member does want to make some suggestion in this house which might help to get the taxpayer's tax down a little bit, some parliamentary assistant or some minister, like the Minister of Public Works, takes exception.
I find such behaviour very strange indeed. However, if that is the case, I will find some other time in the debate to make a few suggestions to the Minister of Finance, to the Minister of Fisheries and to the Minister of Trade and Commerce. But I do say again that if this government would meet the problem of waste and extravagance-


Louis-René Beaudoin: We will soon be sitting in committee of supply.


Wilbert Ross Thatcher: So long as it is going to proceed with such abandon in spending money the way it has been doing, we will never have income taxes lowered. This government quite obviously and clearly has been in power too long.


Louis-René Beaudoin: Order. I do not think there would be much use in my asking the hon. member's co-operation the fourth or fifth time. I will ask him for the last time to make his speech relevant to the resolution before the committee.


Wilbert Ross Thatcher: All right, Mr. Chairman. This is the last time. And let me say this: The

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inadequate income tax reductions which this government has the audacity tonight to lay before parliament make it crystal clear that a new administration is needed in Ottawa.


Jean Lesage: I will not blow up.


An hon. Member:: Smile, Jean.


Jean Lesage: I will smile and there are a lot of reasons for doing it. I do not know why the hon. member for Moose Jaw gets so nervous. He knows very well that his party will never get into power in Canada in his lifetime.


Louis-René Beaudoin: I would ask the parliamentary assistant not to engage in remarks outside the resolution.


Jean Lesage: I am sorry, Mr. Chairman. The only thing I want to say is that I accept the hon. member's challenge and I have here a table including his own income range of from $8,000 to $10,000 a year.


An hon. Member:: Much more.


Wilbert Ross Thatcher: Getting personal again.


Jean Lesage: I have a table here which I think will provide an answer and I ask the agreement of the committee to place it on Hansard. This is a comparison of income taxes payable in Canada and the United States by a married taxpayer with two dependent children based on the 1953 effective rates. There are four columns. The first column shows the tax paid where the children are eligible for family allowances. The next column shows the net position. The next column shows the tax paid when the two children are not eligible for family allowances. The fourth column shows the tax paid in United States where no family allowances are paid.


Wilbert Ross Thatcher: Before the minister places his table on the record, may I say that family allowances do not enter into this resolution and therefore the comparison which he is attempting to make with the United States figure is not a fair one.


Louis-René Beaudoin: There seemed to foe some objection to the tabling of the document by the hon. member and I would indicate to the committee that the same objection could be taken to the tabling of this document. However, I am in the hands of the committee. Is there unanimous consent that this table shall be printed in Hansard?


Donald Methuen Fleming: Do the figures in the statement reflect income that is earned or is it investment income?


Jean Lesage: It is earned income up to $30,000. It is indicated here that in calculating the United States taxes it is assumed that the taxpayers take the optional standard deduction of 10 per cent of income up to a maximum of $1,000 in lieu of claiming deductions for charitable donations, medical expenses and so on. No corresponding deduction has been made in calculating the Canadian taxes shown, and Canadian taxpayers who could claim deductions for medical expenses or charitable donations would pay less tax than shown above. So there is that advantage over the United States. There are many Canadian taxpayers who take advantage of deductions for charitable donations and there will be many in 1953 who will take advantage of the provision of 3 per cent for medical expenses.


Gordon Knapman Fraser: Are you taking into account the sales tax of 10 per cent plus the 15 per cent excise tax which we have here?


Jean Lesage: I did not take those into account, and neither did the hon. member for Moose Jaw. Neither did I take into account the income taxes which United States, citizens in 29 states have to pay.


Wilbert Ross Thatcher: That has nothing to do with the federal income tax.


Jean Lesage: I was asked a question and I answered it. It will be shown that the Canadian taxpayer with two children receiving family allowances, as well as the taxpayer with two children, not receiving family allowances, has a better net position than his United States counterpart up to an income of from $8,000 to $10,000.


Donald MacInnis: Would the parliamentary assistant identify the table and state by whom it was prepared?


Jean Lesage: It was prepared by an officer of the Department of Finance and myself.


Gordon Graydon: The net position, is that they are paying too much in the way of taxes on both sides of the line.


Louis-René Beaudoin: Is it agreed that the table shall be printed in Hansard?


Some hon. Members:: Agreed.


Jean Lesage: The table is as follows:

Income Tax Act


COMPARISON OF INCOME TAXES PAYABLE IN CANADA AND UNITED STATES
[Stage Direction]
Married Taxpayer-Two Dependent Children 1953-effective rates
[Stage Direction]
Canada
United
States
Income
If two children are eligible for family allowances the parent receives payments amounting on the average to $144 per year
If two children are not eligible for family allowances
Tax Paid
Net position
Tax Paid
No family allowances are paid
Tax Paid
16	(2)
32	(4)
112	(14)
+ 144 + 126 -f 108 + 18
3.500
4.000.
5.000,
7.500
196	(24)
286	(34)
484	(54)
1,032	(60)
52 (24) 142 (34) 340 (54) 888 (60)
112 (14) 196 (24) 381 (44) 915 (60)
266
974
10,000.
20,000.
50,000
100,000
1,696
5,738
22,337
55,982
(60)
(60)
(60)
(60)
1,552	(60)	1,556	(60)5,594	(60)	5,500	(00)22,193	(60)	22,033	(60)55,838	(60)	55,628	(60)
1,528
4,620
20,428
55,282
Amounts in brackets for Canada are old age security tax payable in addition to income taxes shown.
In calculating the U.S.A. taxes, it is assumed that taxpayers take optional standard deduction of 10% of income up to a maximum of $1,000 in lieu of claiming deductions for charitable donations, medical expenses, etc. No corresponding deduction has been made in calculating the Canadian taxes shown and Canadian taxpayers who could claim deductions for medical expenses or charitable donations would pay less tax than shown above.
In calculating the U.S.A. taxes, it is assumed that taxpayers take advantage of the income splitting privilege on joint returns.
In the U.S.A., 29 states also levy individual income taxes.
In calculating the Canadian taxes, it has been assumed that where incomes are in excess of $30,000, that part of income which is in excess of $30,000 is from investments, but no account has been taken of the tax credit for dividends from Canadian corporations.
James MacKerras Macdonnell: I want to get into this too. I have a table taken from CCH Canadian Tax Reporter.


Louis-René Beaudoin: Is it agreed that this table shall be printed in Hansard'!


Some hon. Members:: Agreed.


Some hon. Members:: No.


Jean Lesage: I should like to ask the hon. member for Greenwood one of two questions. In the case of the Canadian taxpayer who is married with two children, are those children eligible for family allowances?


Mr. Lennard:: Yes.


Jean Lesage: Does that take into account the family allowances which he receives?


Frank Exton Lennard: Yes, it does.


Jean Lesage: I would like the hon. member for Greenwood to answer that.


James MacKerras Macdonnell: That is right.


Jean Lesage: That is right; it does not take into account the family allowances received? In the case of a Canadian taxpayer who is married with two children with an income of $2,500 a year, his tax is shown as $34. That does not take into account the fact that that man would receive $144 in the year for family allowances, making his net position $110 in pocket after paying his tax.


Gordon Graydon: They have social security in the United States.


James MacKerras Macdonnell: The table is as follows:

Income Tax Act


COMPARATIVE TABLE OF INCOME TAX PAID BY WAGE EARNERS CANADA AND U.S.A.
[Stage Direction]
Annual Income Bracket	Single	Married	Married with two children	Married with four children	Canada	U.S.A.	Canada	U.S.A.	Canada	U.S.A.	Canada	U.S.A.$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.$ 1,200 per year	34 00	109 00	0 00	0 00	0 00	0 00	0 00	0 00$ 2,000 per year	170 00	269 00	0 00	136 00	0 00	0 00	0 00	0 00$ 2,500 per year	260 00	369 00	85 00	236 00	34 00	0 00	0 80	0 00$ 3,000 per year	360 00	474 00	170 00	338 00	119 00	72 00	68 00	0 00$ 3,500 per year	470 00	585 00	265 00	438 00	208 00	171 00	153 00	0 00$ 4,000 per year	580 00	696 00	360 00	538 00	303 00	271 00	246 00	5 00$ 5,000 per year	800 00	911 40	580 00	732 60	514 00	466 20	448 00	199 80$10,000 per year	2,250 00	2,348 00	1,900 00	1,822 80	1,810 00	1,527 00	1,720 00	1,232 40$25,000 per year	9,250 00	10,280 00	8,750 00	7,088 00	8,600 00	6,584 00	8,450 00	6,080 00
For U.S. tax purposes, the "Annual Income Bracket" is adjusted gross income, i.e., income before exemptions and the "standard" deduction. U.S. tax on income up to 15,000 is taken from the Optional Tax Table. On figures of $5,800 and over, the standard deduction is used. Where applicable, the income splitting provisions are used.
Canadian figures from CCH Canadian Tax Reporter, 1953 rates (No. 10-901). Canadian figures assume dependent children are eligible for family allowances.
Solon Earl Low: I am not going to enter the competition of getting things on the record, but I do want to say something at this point about the Income Tax Act. I take it that this is the only time when a general discussion about the Income Tax Act can take place.


Louis-René Beaudoin: About the Income Tax Act amendments.


Solon Earl Low: Mr. Chairman, I have always understood that each year, when amendments are brought before the committee in the form of resolutions, that affords an opportunity for hon. members to bring to the attention of the minister and the house any difficulties they may think exist with respect to the administration of the Income Tax Act. I was hoping that I would be allowed to bring this before the committee because I think it is important that the committee know what is happening. I may be able to induce the minister or his assistant to bring in an amendment to the act to clarify this situation and to remedy what I think are grave injustices which are being perpetrated upon certain people in Canada as a consequence of the act as it now stands. I do not want to be out of order. I was under the impression that on the first item in the resolution we might discuss the Income Tax Act generally.


Louis-René Beaudoin: I do not want to curtail the discussion in any way, but it seems to me that the general discussion which has taken place by practice on the first paragraph of a resolution of this nature is interpreted differently by members of the house. Some really make general remarks that are relevant and not too lengthy but others make a speech which could be more appropriately made, for instance, on the first item of supply of the Department of National Revenue when the two sections, taxation and customs and excise, are discussed at full length. All the suggestions that the hon. member wishes to make with respect to amending the Income Tax Act could have been made during the budget debate. At this moment what he has before him are amendments put before the committee by the government. He may discuss the general effects of all these amending clauses, but I would say that such a scope is wide enough for the general discussion.


Solon Earl Low: This is not going to be a general discussion at all, and I promise you that I will be as brief and to the point as I can. This matter has to do very definitely with the application of these amendments that are being discussed right now, and I wanted to discuss a particular case of their application having to do with the interpretation of some of the assessments that may be made

under these amendments we are now discussing and in relation to section 31, subsection 1, of the Income War Tax Act. I hope the parliamentary assistant has that act before him. If he has not, I will send it over to him because I should like him to refer to it as I proceed to put the case before him briefly. Here is a farmer, Mr. Chairman, who is being assessed under these provisions we are discussing.


Louis-René Beaudoin: Order. The hon. member refers to assessment which is an administrative problem. Under the resolution we have before us the farmer to whom he has referred will have his taxes imposed. Methods of assessment, the difficulties that the farmer may encounter in filling out the form, and all such matters have always been discussed on the general discussion opening the study of the estimates of the Department of National Revenue and not on the Income Tax Act amendments in ways and means. I think I am on safe ground when I say that.


Solon Earl Low: I am not so sure, Mr. Chairman, that you are right at all. On a number of previous occasions I have definitely discussed similar things right at this stage. Here we are dealing with the Income Tax Act and amendments and what I want to put forward is that there is need for more amendments and a whole lot of them. This particular case that I want to discuss is right on the point, particularly now that the Minister of National Revenue is in his seat, because he is the man who exercised what is called, under section 31, subsection 1, of the Income War Tax Act, ministerial discretion. I would point out, Mr. Chairman, that this is the only chance we have to get over to the ministers certain problems with which we have to grapple in the field and which they can look after if we bring them to their attention. I would think that there is no other place where we can do it.


Louis-René Beaudoin: The first item of the
Department of National Revenue in supply.


Solon Earl Low: But, Mr. Chairman, may I point out with all due respect that here we are dealing with amendments to the Income Tax Act. I am satisfied that if I were to wait until the first item under the Department of National Revenue was called I would be ruled out of order and someone would say that should have been brought up when we were discussing income tax. I should like to get this thing clarified now in order that, before we get too far along, we may have something done about this particular type of case under the Income Tax Act, not under the Department of National Revenue but
Income Tax Act
under the Income Tax Act. Otherwise I do not see how in the world any amendments can be proposed. We are dealing with the Income Tax Act.


Louis-René Beaudoin: If, after discussion has taken place on the general administration item of the Department of National Revenue in committee of supply, the department should consider it necessary to introduce further amendments in accordance with suggestions that have been made, the committee of ways and means will still be in operation and any amendments can then be brought in, studied in committee of ways and means and incorporated in the act. I do not want to press the point. I think hon. members are impressed at this stage by the expose of the rules that I have made on two or three occasions since we started this discussion at eight o'clock, and I am quite sure that the hon. member will wish to simply make his point and not take advantage of the latitude given.


Solon Earl Low: Yes, Mr. Chairman. One of the first things I said was that I would stick strictly to the point and would not take very much time.


Jean Lesage: Let us try.


Solon Earl Low: I will guarantee that I will do so. I am going to refer particularly now to what I think is a misuse of the ministerial discretion provided for under section 31, subsection 1, of the Income War Tax Act. I will state the facts of an actual case and then I am going to ask the Minister of National Revenue and the parliamentary assistant to the Minister of Finance to see if they cannot do something about it. Here is a case of a husband and wife carrying on farming operations. The wife had saved some money before she was married and had purchased land which, after they were married, the two began to farm. She also paid the taxes on the property right up until 1952, I believe. The husband paid the operating expenses of the farm. The proceeds of the crops were divided one-third to the 'wife and the remainder to the husband. All of the income from the farming operations was taxed in the hands of the husband, the farmer, according to the ministerial discretion exercised by the minister under section 31, subsection 1, of the Income War Tax Act.


James Joseph McCann: That went out of operation in 1948.	<


Jean Lesage: The Income War Tax Act was replaced in 1948. We are dealing with the Income Tax Act.

Income Tax Act


Solon Earl Low: If the parliamentary assistant will contain himself for a moment, I will give him some more information.


Jean Lesage: I have never been in better humour.


Solon Earl Low: What I am discussing is a misuse of the ministerial discretion. I want to quote from the record of the case in which this man appealed and I will give his name. The farmer I am talking about is Walter Klam-zuski of the city of Drumheller, Alberta. Walter Klamzuski tried to appeal against the assessment of his taxes in the years 1946, 1947 and 1948 but I understand that the cases were not heard until 1952.


Jean Lesage: On a point of order, Mr. Chairman, I let the hon. member proceed to find out what he was going to talk about, but now he is taking a specific case involving an interpretation of the Income War Tax Act made a few years ago, a law which does not exist any more. We are in committee of ways and means to provide moneys for the administration of the country in the next financial year. If every hon. member of the house comes in with all the personal difficulties of his constituents and discusses them on these resolutions in committee of ways and means we will still be here next year and we will not have any election.
I know my friends will be disappointed-


Donald Methuen Fleming: Lucky for you.


Jean Lesage: So I will appeal to my hon. friend and ask him not to give the example to others, as the leader of a party in the house, of bringing forward individual cases regarding the application of the law-cases which have been brought in the past before tribunals. What we are dealing with is the levy of money for the next fiscal year. Are we going to levy that money? That is the only thing we have to deal with. I will read from Beauchesne's Parliamentary Rules and Forms, second edition, page 156, paragraph 525:
The committee of ways and means provides the public income raised by the imposition of taxation, and votes the resolutions which authorize the issue out of the consolidated fund of the sums required to meet the grants voted by the committee of supply.
That is the work of this committee and I believe that any grievance of the kind submitted by the hon. member, as has been suggested by the chairman, should be mentioned when we go into committee of supply on the estimates of the Minister of National Revenue, who is charged with the administration of the Income Tax Act at the present time.


Solon Earl Low: I just point out that I could have been finished a long while ago if they had just kept quiet and let me finish.


Jean Lesage: It is a bad example.


James Joseph McCann: May I ask the hon. gentleman if that is not the case that went to the income tax appeal board?


Solon Earl Low: Yes, it is; and a very, very bad injustice was done as a consequence.


James Joseph McCann: There is room for appeal to a higher court.


Solon Earl Low: If you can get $10,000 to-


William Alfred Robinson: Order. I understand that before I took the chair some doubt was expressed about the relevancy of the remarks which the hon. member for Peace River was making. I believe he was allowed to proceed on the understanding that he would attempt to be as relevant and as brief as possible. At the present time I cannot see that there is any relevancy whatsoever in remarks having relation to the delay in the hearing of income tax appeals by the income tax appeal board.
Therefore, I would ask the hon. member for Peace River to confine himself to the subject under discussion.


Solon Earl Low: Thank you, Mr. Chairman. I will accept your ruling and simply say that there will be opportunity before going into supply, and I will raise the question there. I would, however, just like to warn the Minister of National Revenue that I am going to bring this case up because it is typical of quite a number of cases that I know about, and this just happened to toe one in my constituency.


James Joseph McCann: It is part of the law.


Solon Earl Low: There is an injustice and I believe it ought to be looked at.


James Joseph McCann: So that the hon. gentleman will have time to think it over, I would refer him to section 21(4) of the Income Tax Act:
Where a husband and wife were partners in a business the income of one spouse from the business for a taxation year may, in the discretion of the minister, be deemed to belong to the other spouse.
It prevents them from being split.


Solon Earl Low: I have read that a great many times to find out just what it meant regarding the ministerial discretion.


William Alfred Robinson: Shall resolution 1 carry?


Gordon Knapman Fraser: I would just like to make a suggestion and ask a few questions here. I have noticed a number of times that in American papers refunds which are owing

to American taxpayers are advertised in the district or in the locality in which that taxpayer pays his income tax. They give the name of the taxpayer, his address and the amount of the tax. It is in small type but it is put in alphabetical order and is carried on two or three occasions.
In talking to one man who had a refund coming, he said that he would never have known it if it had not been for that practice. In Canada, we have a great number of refunds that have never been paid back to the people to whom they are owing. The tax has been taken out of the man's pay cheque; and as it is generally the company for which the man works that makes up the man's return, the man or woman perhaps does not know that a refund is due. Although the amounts may not be very great, I think it would be an excellent idea if the same thing were done in Canada-that is, that refunds be advertised.
Another matter is that there was a return in the name of the hon. member for Hamilton West in regard to compulsory savings for 1942-44, in the amount of $2,996,840. I think that the compulsory savings should also be advertised.


Jean Lesage: They are the ones that are advertised in the United States.


Gordon Knapman Fraser: I understand the others are too.


Jean Lesage: There is no refund, either in the United States or in Canada, paid to a taxpayer unless he has filed a return and claimed the refund for a tax paid that did not need to be paid. The advertising that is done in the United States covers the refundable portion of the tax that was paid during the war, according to information given to me by the income tax officials who are sitting in front of me.


Gordon Knapman Fraser: On the income tax forms covering incomes under $3,000, and over, it says, "Payment herewith". On returns coming in from factories in some cases there are overpayments. They constitute a claim without having to write in. Those people, however, do not know that they have money coming to them and I say they should be given the money which is rightfully theirs.


Jean Lesage: May I just say a word on that point?


Gordon Knapman Fraser: I have another matter.


Jean Lesage: Let us settle them one by one; it is easier. There cannot be any refund for overpaid income tax during a calendar year unless one claims it in filing his return. It is the same in the United States.
There has been a lot of advertising in Canada and in the United States, I believe, telling people they have to file a return every
Income Tax Act
year, either to tell the income tax people what the taxpayer must pay or to claim what they have paid beyond what they owed.


Gordon Knapman Fraser: In a case where a person has filed a return and perhaps moved from the locality-


Jean Lesage: They would have to move pretty quickly.


Gordon Knapman Fraser: Oh, no. You have been doing all right during the last year and they are coming out faster owing to the fact that you are getting close to an election and you want the amounts to be paid quickly. Before that it was different and you had refunds to some people which dated back some years.


Jean Lesage: There are some instances.


Gordon Knapman Fraser: I think the department should look into the matter and see if something can be done. I think it is a good idea; otherwise I would not have brought it up.
The next matter I would like to mention is that of the 1942 deferred tax. On December 30 letters were sent out saying:
You are probably aware that there is a deferred
tax liability against your future estate of $..
While this liability is not due at this time, it may be your wish not to have the said amount remain outstanding. If so, we shall be pleased to accept your cheque and clear your account in this regard.
Yours faithfully,


Jean Lesage: That is polite enough.


Gordon Knapman Fraser: Yes; it is polite enough. But these amounts are not due until the party dies. When the party, or the taxpayer, dies, the estate immediately is assessed 8 per cent on the amount due from the date of death. On the income tax form here, unpaid taxes bear an interest rate of 6 per cent. I think the 8 per cent is a little bit on the high side. Of course 6 per cent is also high. But in many instances it takes a long time to get the estate cleaned up. If the federal government and the provincial government hold up the estate, it takes months and months. That 8 per cent is piling up all the time. I personally feel that the 8 per cent should be dropped or lowered away down. Mr. Chairman, I will wait until the parliamentary assistant and his advisers are through with their conference before I proceed.
Some years ago -when this provision was brought in, I suggested to the then minister of finance, Mr. Ilsley, that those who owe on this deferred payment should be allowed to pay off in the same way as with an insurance company, according to their age.


Jean Lesage: Discount.


Gordon Knapman Fraser: That was done, but I understand it was allowed for only one year and that they obtained some $3 million that year.

Income Tax Act
The government must be losing money on those estates now because some of the people who have owed on their estates, while they are alive have spent their money in their last few years of life, perhaps paying off hospital bills for sickness, and one thing and another, and they die without a nickel. The government is therefore at a loss. Would it not be a good idea again to put into force some arrangement whereby these amounts could be paid off in order that the government could get them in so that they will not Be at a loss?


Jean Lesage: Mr. Chairman, while the hon. member was speaking-


Gordon Knapman Fraser: You were in conference.


Jean Lesage: I was listening interestedly with the officials who are around me now. It is understood that the government will consider the matter thoroughly. The Minister of Finance will no doubt be in a position to say a few words on it when we get to the bill.


Gordon Knapman Fraser: Thank you.


Winfield Chester Scott McLure: I think this is one time when we should be able to get some information. We all have these difficult situations such as the one referred to by the hon. member for Peace River. I myself have one.
A farmer wrote to me today. He is not only a farmer; he is both a farmer and a fisherman. He told me what his income has been from the land or from the small farm; it is some $1,800. Then he told me how much he had from the fishing, and the amount was something like $1,600 more. He fishes two months in the spring of the year and two months in the fall. He farms the little farm twelve months of the year. He has a dual capacity.
The question is this. Like all fishermen last year, he had a loss at the very beginning of the season. He had put out 630 traps and he lost 310 of them, I think it was. Those traps cost him $1,100. He cannot be liable for tax with the income that he has. If I were giving him a decision on my own, I would tell him right off that the first thing he should do is to replace his loss and forget about the revenue that came in from fishing or from any other source. But when you come back to the department, what is the department going to say? Are they going to allow that man to take care of the heavy loss he had or are they going to tax him on what they consider to be taxable income? That is what I want to know.


Jean Lesage: Mr. Chairman, that is a perfect example of an individual case and one on which I cannot be asked to render judgment.

That is not my job. That has to do with the interpretation of the act. I would have to have the man in front of me in order to ask him questions as to his expenses and his income. I could talk with him for three hours and then give him something of an opinion which might be wrong.


Winfield Chester Scott McLure: Where are we going to get the information?


Jean Lesage: Again, Mr. Chairman, I do not believe that this is the time or the place to deal with individual cases. I want to be agreeable with respect to the hon. member, and he knows that; but I cannot give him an answer to such a question.


Winfield Chester Scott McLure: All right.


Jean Lesage: It is impossible for me to do so. I am sure that the hon. member for Greenwood could not do so.


Winfield Chester Scott McLure: When I cannot get any
decision here for this man, it will be a case of giving my own decision. I will write to him tomorrow, if all is well, and I will go further. Surely he will not have to pay taxes.


Andrew Wesley Stuart: Mr. Chairman, I should like to ask the parliamentary assistant whether a case such as that which has just been brought to his attention could not be dealt with in this way. If a letter was written to the primary producers branch of the income tax department, would the information not be available to answer the questions that have been asked?


James Joseph McCann: Surely. He can get all that information at the Charlottetown office.


Frank Exton Lennard: To refer back to thecompara-tive table showing income tax in the United States and in Canada, may I ask if I was correct in my interpretation of the parliamentary assistant's remark when I understood him to state that a married man with children in Canada would receive a greater deduction from income tax than would his opposite number in the United States?


Jean Lesage: No. I know what the hon. member is referring to. He mentioned the matter not only tonight but also, I believe, two or three weeks ago. The exemption here in Canada for a single person is $1,000; for a single person in the United States the exemption is $600. For a married couple here in Canada it is $2,000; in the United States it is $1,200. For children in the United States, it is $600; in Canada it is $400. If the children are eligible for family allowance, it is $150 each.


Howard Charles Green: When the Minister of Finance made his budget speech he referred to the

new Canadian National pension plan. As reported at page 2129 of Hansard, he used these words:
Special provision will be made to alleviate the tax on refunds paid out as a result of reorganizations of pension plans. This will apply, of course, in the case of the Canadian National Railways pension plan reorganization which has been of interest to many hon. members.
I can find no resolution dealing with that, and I wonder whether the parliamentary assistant can explain the manner in which the difficulty is to be solved.


Jean Lesage: Quite a number of changes will be made in the act which do not involve a decrease in revenue, or very small decreases, and which are not dealt with in the resolutions, but are dealt with directly in the bill. The minister will be handling the bill. I do not want to pretend that I know everything. This is the first time I have presented these resolutions, and they are hard to study. As soon as these resolutions are finished I will do my homework on the bills. Therefore if the hon. member will be patient, on the bill he will have an explanation as to how the matter is to be settled, but I can tell him now-


Howard Charles Green: There is to be a provision in the bill to meet that situation?


Jean Lesage: Yes, of course, and not only that but on various matters which are not covered in the resolution.


William Alfred Robinson: We shall now deal with resolution No. 4, since there has been no discussion on resolutions 2 and 3.


Donald Methuen Fleming: This resolution is the one which is to raise from 10 per cent to 20 per cent the tax allowance in respect of income from dividends from Canadian corporations. I do' not suppose there is anybody in this house who will not be glad to see a reduction of taxes in some form or other. The whole question must necessarily be, in relation to a subject like this, whether the reduction is made in the right place. We all want to see every encouragement given to the development of Canadian enterprise, and no doubt a reduction of this kind will contribute to the increase of investment in the stocks of Canadian corporations. But, Mr. Chairman, let us look at it a little more broadly. There are others who have invested their money in *Canada. I am referring to persons who have purchased Dominion of Canada bonds. No provision whatever is made for exempting in this way any portion of that type of income.


Jean Lesage: There is no double taxation .there
Income Tax Act


Donald Methuen Fleming: While I appreciate the argument about double taxation-I used it myself in this house on more than one occasion-


Jean Lesage: That is right.


Donald Methuen Fleming: -I am putting forward a point of view with respect to investment income of another kind, namely, investment income from Dominion of Canada bonds. I do it with greater force because of the fact that Dominion of Canada bonds have substantially depreciated in the market since most of them were purchased. You recall that when Mr. Ilsley was minister of finance he had something to say to intending purchasers of Dominion of Canada bonds.


Jean Lesage: Mr. Chairman, I do not believe this is the time or the place to discuss the relative market value of Dominion of Canada bonds. It has no bearing at all on resolution No. 4, which reads:
That for the 1953 and subsequent taxation years the 10 per cent deduction from tax at present allowed in respect of dividends received from a taxable corporation by individuals resident in Canada be increased to 20 per cent.
That has nothing to do with the market value of Dominion of Canada bonds.


Donald Methuen Fleming: My hon. friend has not correctly anticipated what I was going to say. I made reference to the fact that these bonds were selling at a substantial discount now. My argument does not depend on that fact.


Jean Lesage: I thought it would, since you are so logical. I thought that was the premise.


Donald Methuen Fleming: I was wondering whether there would be any injustice in enlarging that portion of investment income which receives this preferred treatment, and I am arguing that something of that treatment might well be accorded to holders of Dominion of Canada bonds. On April 17, 1944, Mr. Ilsley said this to intending purchasers of Dominion of Canada bonds at that time:
I would like to say a word about the postwar market for victory bonds themselves, because investors are naturally interested in the liquidity of their securities and the price they can expect to get for them. In the normal course of events there will be some who will wish to sell their bonds after the war, and indeed one of the reasons we give for buying bonds now is that they will provide funds for purchases or investments after the war. It will be of the greatest importance that we maintain, indeed assure, a ready and stable market for all these millions of bonds that we have sold. We have now the monetary and financial machinery and we have developed the methods for accomplishing this and we will therefore be able to deal with any situation which may develop in a way which will keep faith with the millions of small investors who are supporting the savings program in this national emergency.

Income Tax Act
These were the words of Mr. Ilsley in 1944. I am not going to thresh old straw, Mr. Chairman. This subject of the shrinkage in market value of these bonds has been discussed before. The Minister of Finance has said that the government is not prepared to do anything about that. But I am asking my hon. friend whether something could not be done along the lines of what is proposed in paragraph 4 with respect to dividends from Canadian corporations. Why cannot some remedial steps be. taken in the case of the holders of Dominion of Canada bonds in similar fashion, Mr. Chairman? It seems to me that is one way in which some of these shrinkages and losses could be helped to be repaired in the case of those who have invested in Canada.


Jean Lesage: I do not believe that anything can be done under this resolution unless my hon. friend, not satisfied with this section which deals with the avoidance of double taxation, would seek to have those who receive interest from bonds on which there has been no tax paid, receive it tax free. Is that what he wants?


Donald Methuen Fleming: No; I did not say that the income from the bonds should be tax free. No, I am suggesting that something of the losses suffered by these people could be recouped to them if they were given some such treatment in respect of the interest on their bonds as is extended by this provision to income by way of dividends from Canadian corporations.


Jean Lesage: I understand that section 4 is intended to avoid double taxation, which has been urged many times in this house by the hon. member for Eglinton, as he said a few moments ago. If there was a provision for a tax credit of 10 per cent or 20 per cent on the interest received by holders of bonds of the Dominion of Canada, that would be a direct exemption from tax without any reason at all. We could not say in that case that it is because this money has already been taxed, as in the case of dividends. It would be a clear-cut special exemption for those who receive interest from bonds of the Dominion of Canada.


Donald Methuen Fleming: Would that not be a reasonable step to take in the circumstances to which I have referred?


Jean Lesage: I do not believe I have any judgment to give in this matter.


Donald Methuen Fleming: Particularly in the light of statements such as the one I read from Mr. Ilsley that was made at that time and on which many people relied.


Jean Lesage: We are dealing with a measure which tends to avoid to a greater 
extent, not completely, double taxation, and I have answered my hon. friend that what he proposes has nothing to do at all with double taxation.


Major James William Coldwell: I am not going to discuss Dominion of Canada bonds on this occasion, although I would like to make this one remark:	When these bonds were sold as
war bonds the hon. member for Melfort moved in this house, as many will recall, that the price should be guaranteed so that when-


Jean Lesage: It is guaranteed.


Major James William Coldwell: -those bonds were cashed in the holders would get 100 cents on the dollar-


Jean Lesage: It is guaranteed.


Major James William Coldwell: Just a minute-whenever they wanted to sell them. Many of these people are not holding them until maturity. They have to sell them.


Jean Lesage: They would not be bonds any more.


Major James William Coldwell: But what I wish to do is this; I wish to point out that the minister said this is to avoid double taxation.


Jean Lesage: To a certain extent.


Major James William Coldwell: I am not going into all I said during the budget debate, because I do not think reiteration does any good. But here we have a class of people who, I believe, as my hon. friend from Eglinton said a few moments ago, are being placed in a preferred position. These people may not work, they may not do a tap, and would pay no income tax even if they had incomes of $10,000 a year from stocks.
I am not going into all that, but I do not believe in preferred treatment for any group of citizens. I cannot find any other place to say what I want to say. There are cases in this country of men who are not receiving their incomes from stocks or bonds, but who are receiving it from their own labours.


Jean Lesage: You and I.


Major James William Coldwell: They are trying to earn their living in spite of handicaps. I want to bring this to the attention of the minister, although I know it is not covered in this particular income tax resolution. The point is this, that we have in this country people who, of necessity, must use automobiles going to and from their work. The expenses of operating those automobiles are not deducted.
Here we have a special concession to wealthy people. I have in mind one or two cases in that category. I have in my hand

a letter from an inspector of income tax who
says:
Unfortunately the income tax law as it stands does not permit the deduction of such an expense from income, and as an administrative body, this division has no alternative but to deny the deduction to all taxpayers including those people who are incapacitated and must rely upon suitable transportation to take them to their place of work.
Yet in respect of corporations, the managements of corporations and stock companies, and executive managers, can use automobiles to drive to and from work. It is part of their business, and part of their deduction. They can charge up the gasoline they use.
I repeat that I know this point is not covered in anything we have before us; but I do say this, that when we are considering deductions again I hope that this matter will be borne in mind. There are very few of these people in this country, and some of them are trying to earn a living under very difficult circumstances.
While many of us are in favour of granting pensions to incapacitated persons, I am not pressing that point now. But an incapacitated person who cannot walk to work should at least be granted the right to a deduction on account of expenditures he may make either for taxicabs or for travelling to and from work in his own motorcar. I suggest that is a plea worthy of consideration. I take this opportunity of making it.
As I say, I do not propose to go into the pros and cons of the matter, because I did so in the budget debate, and I can see no reason for reiterating what I said at that time.


Louis-René Beaudoin: Then, shall we pass on to resolution number 5? Is number 5 carried?


Donald Methuen Fleming: No; I should like to raise a question concerning this resolution. It provides for deductions in respect of certain provincial taxes as against the dominion tax. The reference is to corporations that are not subject to "certain special provincial taxes". Those are the concluding words in the resolution.
Would the parliamentary assistant enlarge upon what particular provincial taxes are referred to. It will be recalled that it was necessary last year to give some clarification of a similar provision in relation to certain forms of taxes levied in the province of Ontario under the corporation tax act of that province.
In other words there are some special kinds of taxes under that particular provincial statute. Some interpretation was necessary following the signing of the tax agreement last year between the dominion
Income Tax Act
and the government of Ontario. Will the parliamentary assistant enlarge upon the particular provincial taxes referred to here?


Jean Lesage: In the province of Quebec the following companies are not subject to the 7 per rent corporation income tax: Banks, insurance companies, tramway companies, railway companies, trust companies and mining companies. In lieu of these income taxes they pay some special, specific taxes. For instance, insurance companies pay 2 per cent of premiums received in respect of business transacted in Quebec.
This is a specific tax which is deductible for federal income tax purposes. So that the 7 per cent does not apply.


Donald Methuen Fleming: I wish to be clear that the deduction under the proposed resolution is going to be extended to corporations in Quebec which pay some of these special kinds of taxes levied on corporations which are not subject to the general corporation levy. Is that what the parliamentary assistant says?


Jean Lesage: They are getting them now. The special taxes are deductible. That is why the increase to 7 per cent does not apply to them. They are not paying any provincial corporate income tax in Quebec.


Donald Methuen Fleming: That is not what I am talking about. I am dealing with the corporations which are going to be affected by this proposed change. Are there any special provincial taxes applicable to corporations there, apart from the general corporation levy? I am asking that question in the light of the Ontario experience because as was found last year, in the light of legislation that was brought into question following the agreement entered into between the dominion and the province of Ontario, we had the case of corporations that were liable for taxes under the Ontario corporation tax act, but not for the ordinary flat levy.
There were certain special taxes, for example, on railways operating within the province. I wish to be quite clear that the benefits of this resolution are going to be broad enough to include corporations which are paying any form of provincial corporation taxes now.


Douglas Charles Abbott: This applies to the ordinary corporation which pays a corporation income tax. In Quebec, banks, insurance companies and so on pay corporation taxes-in the case of railway companies it is on a mileage basis, and in the case of banks it is on another basis. Those companies are now entitled to a 5 per cent tax credit by virtue of existing legislation. They will not be entitled to the extra 2 per cent under this year's legislation,

Income Tax Act
because they are not paying that corporation tax. But the ordinary commercial corporation will now be entitled to take credit for 7 per cent as against 5 per cent. And other taxes wh'ich have been treated in the past as an expense of doing business will continue to be so treated.


Donald Methuen Fleming: Are there any other cases than the two mentioned by the minister?


Douglas Charles Abbott: Those are the only ones I know of in Quebec.


Howard Charles Green: May I ask the minister about a new 10 per cent tax being levied by the provincial government in British Columbia on logging companies and mining companies? There has been some confusion as to whether or not that tax would be deductible from the dominion income tax.


Douglas Charles Abbott: I think I answered a question some time ago which was put by the hon. member for Comox-Alberni, that in the agreements with respect to the rental of corporation taxes entered into with the provinces there is an exception in connection with taxes imposed on mining and logging companies and the provinces continue free to impose taxes on those companies. My understanding is that that is what the present government in British Columbia proposes to do. They are imposing a tax on logging companies. These taxes can be imposed only with respect to logging profits as distinct from milling and manufacturing profits. In the case of the mining companies, they apply only to mining profits as distinct from milling profits.


Howard Charles Green: Will the amount of that tax be deductible from the dominion corporation tax?


Douglas Charles Abbott: No, but it can be deducted as an expense. Half of it will be borne by the taxpayer and roughly half will be at the expense of the federal treasury. It may be deducted as an expense of doing business.


Donald Methuen Fleming: In connection with the effective date, namely January 1, 1953, while I have not given serious thought to it it appears to me that in the case of a corporation whose fiscal year did not coincide with the calendar year it would have to be apportioned.


Douglas Charles Abbott: Yes.


[Stage Direction]
Resolution agreed to.
Progress reported.
Resolutions reported, read the second time and concurred in.

Douglas Charles Abbott: for leave to introduce Bill No. 225, to amend the Excise Tax Act.
Motion agreed to and bill read the first time.


EXCISE ACT, 1934
Douglas Charles Abbott: for leave to introduce Bill No. 226, to amend the Excise Act, 1934.
Motion agreed to and bill read the first time.


CUSTOMS TARIFF
Douglas Charles Abbott: for leave to introduce Bill No. 227, to amend the Customs Tariff.
Motion agreed to and bill read the first time.



BUSINESS OF THE HOUSE

Alphonse Fournier: I believe we can dispose of the resolutions concerning the Income Tax Act tomorrow in not too long a time. We would then move to set up the select committee on broadcasting as I believe hon. members are anxious to have that done. We would then take up Bill No. 44, to protect the coastal fisheries; then Bill No. 46, to amend the Merchant Seamen Compensation Act; Bill No. 143, to amend the Farm Improvement Loans Act; Bill No. 110, to establish the Historic Sites and Monuments Board of Canada; Bill No. 109, to authorize the grant of assistance to a province for the conservation of water resources. Some of these bills are of minor importance and perhaps we could get them through tomorrow.


[Stage Direction]
It being five minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, March 20, 1953