1958-07-10

REQUEST FOR CLARIFICATION OF JOINT PRESS STATEMENT

[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposiiion):: I should like to ask the Prime Minister a question arising out of the press statement issued in the name of himself and the President of the United States yesterday evening, which is as follows:
The Canadian and United States governments have given consideration to situations where the export policies and laws of the two countries may not be in complete harmony. It has been agreed that in these cases there will be full consultation between the two governments with a view to finding through appropriate procedures satisfactory solutions to concrete problems as they arise.
I should like to ask the Prime Minister whether he can clarify the meaning of those sentences, dealing with such an important matter, in the light of the statement issued by the Minister of Finance at the same time on the same subject which reads-


Mr. Fleming (Eglinion):: On a point of privilege, before my friend goes on I may say that I did not issue any press statement, so my friend should not be reading anything attributed to me under such a heading.


Lester Bowles Pearson: The statement was attributed to my hon. friend by the press officer appointed by the government to hold a press conference. The press officer said that the following statement had been issued by the Minister of Finance:
The intention is that Canadian law and Canadian law alone is to prevail over persons or corporations carrying on business in Canada.


Righi Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, it would not be appropriate today to go into any detail. At the conclusion of the consultations with the President of the United States a statement will be made, and I hope that can be done tomorrow. I do not intend to be drawn into any piecemeal discussion respecting any item that may have appeared in the press or with any press report whatever. The whole question will be dealt with at one time.
Suffice it to say this: that in the discussions that have up to the moment taken place, 57071-3-132
there has been a spirit of consideration shown for each other's problems that bodes well for the future, and in particular there has been nothing in the nature, if that is what is in the mind of my hon. friend, of suggesting to the President of the United States that in regard to a matter as important as trade we should make the proposition, as suggested by the Leader of the Opposition on more than one occasion, that unless trade relations were beneficial in so far as Canada is concerned, we should threaten to withdraw or diminish in any way our defence relationships with the United States.


Lester Bowles Pearson: On a question of privilege, the Prime Minister has attributed remarks to me which I have never made, and which he will never be able to quote as being made by me. He should either withdraw those remarks or substantiate them.


John George Diefenbaker: I have not the record here. I made a statement in the house the other day when I had the speech in question, and there was no suggestion of a denial on the part of my hon. friend at that time.


Mr. Speaker:: The Leader of the Opposition has stated in his place that he did not make such a statement. I am sure the Prime Minister will accept that statement, just as the Leader of the Opposition will accept the statement of the Minister of Finance that he did not issue a press release.


Mr. Hazen Argue (Assiniboia):: I wonder if I might ask the Prime Minister a supplementary question in this field. Will the government consider introducing in this house legislation that would require Canadian subsidiaries of United States companies to act in the export field in such a way as to bring advantage to Canada and not in accordance with the laws in some other country?


John George Diefenbaker: I do not think any
legislation to that effect would be helpful in any way. I am not going into the complexities of the situation that would be created as the result of legislation to that effect, but when the report is made tomorrow I am sure the hon. gentleman will agree that Canada's subsidiaries will not in any way be interfered with in so far as entering into contracts with other countries

Trade
is concerned in respect of those things which Canada does not consider strategic.


Hon. Paul Martin (Essex East):: In view of the importance of this matter, may I ask the Minister of Finance whether these words used by the press officer on behalf of the government of Canada represent the situation in so far as it is within the minister's knowledge? Mr. Nelson said:
I have an explanatory note here that might help, given to me by the Minister of Finance: The intention is that Canadian law and Canadian law alone is to prevail over persons or corporations carrying on business in Canada.
Q. That's the same thing as consultation?


Mr.   Nelson@: That's what they hope to achieve by it.
In view of the importance of this matter to my constituency and many others, will the Minister of Finance not clarify this matter at once?


Donald Methuen Fleming: Mr. Speaker, my hon. friend knows perfectly well that the only law that is binding upon Canadians when in Canada or corporations that are doing business in Canada, to the extent to which they are doing business in Canada lawfully, is the law of Canada.


Paul Joseph James Martin: That is right.


Donald Methuen Fleming: The question that arises here concerns the relations of Canadian subsidiaries to their parent corporations in the United States. My hon. friend knows well that that is a complex matter. I think he has heard the very proper suggestion by the Prime Minister that the matter should not be dealt with piecemeal, that a complicated question of that kind cannot be dealt with in justice in any piecemeal manner. I think my hon. friend would be the first to say that this matter should be dealt with in the manner proposed by the Prime Minister following the conclusion of his meetings with the President of the United States.


Paul Joseph James Martin: Will the Minister of Finance not agree with me that the Prime Minister's observations a few moments ago really represent what should be the situation from now on? But does the Minister of Finance not think that the statement which he authorized the press officer to make has complicated the situation, and is certainly not consistent with the statement he has just made in answer to my question?


Donald Methuen Fleming: Mr. Speaker, I am always happy to find myself in disagreement with my hon. friend.


John George Diefenbaker: Mr. Speaker, arising out of the question of privilege raised by the Leader of the Opposition, I would refer him to the comments he made on May 13, 1958 as recorded at page 25 of Hansard, which read as follows:
We must naturally protect our interests when they are prejudiced by United States policy. We must, for instance, make It quite clear that the United States cannot expect full and complete co-operation in continental defence, which is desirable, if she treats us unfairly in her tariff and trade policies.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Mr. Speaker, the Prime Minister has done what he said last night to the press, in connection with the speech of the President of the United States, he would never do. He said he would never take a sentence out of context and draw a conclusion from it. But apart from that, even taking the meaning which he gave to this sentence-and he should have gone on to quote my further remarks on this same page of Hansard-it does not conform to what he said a few moments ago.
Furthermore, I would like to ask the Prime Minister whether he disagrees with the particular sentence he has quoted.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Lucien Cardin (Richelieu-Vercheres):: I wish to direct a question to the Minister of Labour based on a news report in the Montreal Gazette of July 10 to the effect that a huge labour combine, led by the teamsters' and longshoremen's unions-both expelled from the A.F.L.-C.I.O.-started a new organization of dockers and truckers in Canada yesterday. Has the minister been in touch with these developments, and has he any information to give to the house on this important matter?


Hon. Michael Siarr (Minister of Labour):: Mr. Speaker, I have read news reports in the same way as has the hon. member. I must say that I have no comment at all to make on the situation.



P1CTOU, N.S.    PROSPECTIVE LAY-OFFS BY FERGUSON INDUSTRIES LIMITED

[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisla-Twillingate):: I should like to direct a question to the Minister of Labour, based on a statement by the president of Ferguson Industries Limited of Pictou, reported in the Halifax

Chronicle-Herald of July 8, that 400 employees will be out of work within a week because of lack of shipbuilding orders. What I wanted to ask the minister was whether he would make representations to the Minister of Transport, who is not here today, and to the Minister of National Defence with a view to seeing whether the government could not arrange for some orders for this well established firm.


Michael Starr: Mr. Speaker, I am sure the Minister of Transport and the other minister referred to will see the question asked by the hon. member for Bonavista-Twillingate in Hansard and will take it under consideration; nevertheless I will convey it to them also.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: May I ask the
Minister of Public Works if the government is giving consideration to the extension of the National Housing Act to cover loans on secondhand houses?


Hon. Howard C. Green (Minister of Public Works):: Mr. Speaker, the government is of course giving consideration to all possible improvements which would be made to the National Housing Act, but policy decisions would have to be duly announced.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. Alan Macnaughion (Mount Royal):: would like to ask the Minister of National Revenue whether he has yet decided upon a site for the proposed new C.B.C. building in Montreal.
Hon. George C. Nowlan (Minister of National
Revenue): No, Mr. Speaker; the Minister of National Revenue does not decide upon the site of proposed buildings for the Canadian Broadcasting Corporation in Montreal or elsewhere. Such decisions are made by the officials of the C.B.C. and, in so far as I know, no firm decision has yet been reached.


Alan Aylesworth Macnaughton: Mr. Speaker, may I ask a supplementary question. Would the minister state whether he has met with or has arranged to meet with any delegation making representations as to the site in Montreal or in the Montreal area?
57071-3-132i
Inquiries of the Ministry


Mr. Nowlan:: Mr. Speaker, I have met with so many delegations making representations on the Canadian Broadcasting Corporation that I am not in a position to answer definitely whether I have or have not met with any representative group from Montreal. I remember that about eight or ten months ago I met with several delegations from that city which had representations to make to me, but certainly I have not met with any representative group from the city of Montreal or the environs thereof within, say, the last six months.


Alan Aylesworth Macnaughton: May I ask a further supplementary question. Has the minister seen the press clipping from last night's Montreal Star wherein it was stated that he would be receiving a delegation from the city of Montreal today to discuss this very problem?


George Clyde Nowlan: I might say the paper to which my hon. friend refers is a very authoritative one; but whatever report may have been contained therein, I have not yet seen nor have I heard of any such delegation.



CANADIAN PACIFIC STEAMSHIPS


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, may I ask the Minister of Labour whether he could tell the house if the meeting which was expected to be held today between the seafarers international union and the C.P.R. was held or is to be held; and could he indicate the results, if any, of that meeting?


Michael Starr: The meeting, as scheduled, was held this morning and it is expected to be resumed at three o'clock. I am therefore unable to give to the hon. member the results of the meeting.


Frank Howard: I have a supplementary question to direct to the Minister of Labour with regard to his answer concerning the S.I.U. dispute with the C.P.R. Will the minister undertake to exert the greatest possible effort on his part to ensure that the parties concerned will continue to meet-


Some hon. Members:: Question.


Frank Howard: I am asking a questionkeeping in mind that it is not possible to resolve a dispute by settlement when the parties are not meeting?


Michael Starr: Ever since this strike began it has been the concern of the government-and we have demonstrated that by our efforts- to bring these parties together, and I assure

Inquiries of the Ministry all hon. members of this house that we will continue our efforts to keep the parties together until they are able to agree on a mutually acceptable solution to the problem.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, the hon. member for Vancouver East yesterday referred to a situation with respect to unemployment insurance in the city of Montreal in respect to which, as he put it, there had occurred strong criticism on the part of a judge regarding the provisions of the Unemployment Insurance Act which deprive a person of benefits if he obtains any casual employment.
I should inform the hon. member, Mr. Speaker, that there are no such provisions. A certain supplementary income is permitted and benefits are graded accordingly. For example, in the case of a person drawing $30 weekly he is permitted to earn up to $13, granting him a total of $43. A person drawing $21 is permitted to earn up to $8, giving him a total of $29. Benefits are not withdrawn; they are graded down according to the amount a person earns. The recipient must, of course, report these casual earnings.
I should inform the hon. member that the gentleman in question was taken to court not under the Unemployment Insurance Act but under a provision in the Criminal Code against misrepresentation. The charge was based on the fact that he had earned money which he had failed to declare while at the same time collecting unemployment insurance. Covering a period of three different weeks he had declared $12, while actual earnings were computed at $93. In addition he had collected $90 in unemployment insurance. In all he had collected $56 more than his entitlement.
As regards the third question, amendments to the act are now being considered and I hope they can be brought down this session.



THETFORD MINES


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I wish to refer to a question asked by the hon. member for Megantic on July 3. It was a question arising out of an earlier question directed to the Minister of Labour, as to whether or not any communication from the municipality of Thetford Mines relating to unemployment insurance or any other subject had been

received, and in particular whether the acting prime minister or the Prime Minister had received such a telegram. My answer is that there was a telegram received from the mayor of Thetford Mines with regard to extending the period of time of supplementary benefits under the Unemployment Insurance Act.



DOMINION-PROVINCIAL RELATIONS NEWFOUNDLAND  INQUIRY AS TO REPORT OI ROYAL COMMISSION ON REVISION OF TERMS OF UNION

[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I should like to ask the Prime Minister if the royal commission on the revision of the terms of union with Newfoundland has yet submitted its report to the government.


John George Diefenbaker: I think the hon. gentleman asked that question the other day.


John Whitney Pickersgill: No.


John George Diefenbaker: In any event, a copy in English has been submitted this day to the Governor General, and the report will be tabled as soon as we are ready to table it in both languages.


John Whitney Pickersgill: Does the Prime Minister anticipate that this will involve any material delay; because, as I think he knows, the government of Newfoundland is very anxious to get this report for certain reasons of which I think the right hon. gentleman is aware.


John George Diefenbaker: It is expected that it will be ready for tabling within 10 days. The printing bureau has a great deal of work to do, but we want to table it in both languages. I will take into consideration the suggestion of the hon. gentleman.


John Whitney Pickersgill: A supplementary question. In view of the particular nature of this report which, as the Prime Minister knows, was provided for in the constitution by an amendment to the British North America Act, is it the intention of the government, as a courtesy, to submit a copy in advance to the premier of Newfoundland?


John George Diefenbaker: As soon as the translation has been completed and before it is tabled in the house a copy will be forwarded to the premier of Newfoundland.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
John Richard Garland: I should like to direct a question to the Secretary of State. I wonder if he can yet give an answer to the question I asked on Tuesday?


Donald Methuen Fleming: I think the question should probably have been directed to the Minister of Finance as chairman of the treasury board, because this is a treasury board matter.
Under the terms and conditions of employment of prevailing rate employees, they are allowed, in addition to annual vacation, nine other holidays. Six of these are fixed: New Year's day, Good Friday, July 1, Labour day, Thanksgiving day and Christmas day. One of the others is designated by the deputy minister in each department and the remaining two are designated by the minister of each department. In general, one of the designated days is whatever day is selected as civic holiday in the area concerned.



DRUMHELLER


[Stage Direction]
On the orders of the day:
Louis-Joseph-Lucien Cardin: Mr. Speaker, I should like to direct a question to the Minister of Labour. Would the minister inform the house as to the seriousness of the coal mining situation in Drum-heller and what steps the government intends to take to relieve the unemployment problem in that important industry in Alberta?


Michael Starr: Well, Mr. Speaker, this matter does not come under the jurisdiction of my department. It is a matter of government policy. It has been brought to the attention of the government, and I am sure all hon. members of the government are aware of it. As hon. gentlemen know, the government at all times gives consideration to situations such as these as they arise in order to arrive at decisions which will assist in solving such problems.



ST. LAWRENCE SEAWAY INQUIRY AS TO COMPLETION OF ALL-CANADIAN ROUTE

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Prime Minister. Is the Prime Minister in a position to answer the question I asked on Monday concerning whether or not the
Inquiries of the Ministry government is giving consideration to the suggestion made by Premier Frost concerning the all-Canadian seaway?


John George Diefenbaker: Mr. Speaker, I have nothing to add to what I stated the other day.


Lionel Chevrier: A supplementary question, Mr. Speaker. When I asked the question on Monday the Prime Minister said he would take it as notice because it was too comprehensive to answer off the cuff. I took it as a matter of course that he would give an answer; but if what he has said today means that there is no answer, I shall have to be satisfied with that.


John George Diefenbaker: Mr. Speaker, the answer I gave the other day still applies as I said.



DEFICIENCY PAYMENTS


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I should like to direct a question to the Prime Minister. Could he say what consideration has been given to the whole question of deficiency payments? Can he say when a decision is likely to be made and whether it is likely to be favourable, in view of the serious crop prospects in western Canada?


John George Diefenbaker: Mr. Speaker, in this case, too, I have nothing to add to what has already been stated. The situation in the western provinces is known to the government. Immediate action is being taken in order to meet that problem in co-operation, I trust, with the governments of the provinces of Saskatchewan and Manitoba. When a decision is finally arrived at the Minister of Agriculture will place before this house the nature of those agreements to meet the immediate situation.
With respect to the general question of deficiency payments, the Minister of Trade and Commerce has been asked this question on several occasions and has stated, as I recall, that the whole problem of deficiency payments is receiving full consideration.


Hazen Robert Argue: Mr. Speaker, I wonder if I could ask a supplementary question because of the great interest in this question in western Canada. Can the Prime Minister say whether a decision will be made during the current session of parliament, in order that the correct appropriation may be passed by this house and the payments made?


John George Diefenbaker: Mr. Speaker, that too is a matter that will receive full consideration.

Inquiries of the Ministry



LIVESTOCK


[Stage Direction]
On the orders of the day:
Mr. W. M. Benidickson (Kanora-Rainy River):: Mr. Speaker, we have all noted that the minister of agriculture for Manitoba has had recent conversations with the federal Minister of Agriculture due to the emergency drought conditions in that area. I was wondering if the minister had any statement to make, and whether or not the conversations involved the possibility of importing fodder from the United States.


Hon. D. S. Harkness (Minister of Agriculture):: Mr. Speaker, the minister of agriculture for Manitoba, Hon. Errick Willis, was here yesterday and the day before. I had two or three conversations with him in connection with the drought situation in Manitoba, which I am glad to tell the house is now much less serious than it was about a week ago because of the rains that started there last Thursday which have now considerably lessened the possibility of a serious feed shortage in southern Manitoba. I might say that the minister of agriculture for Saskatchewan is here today. We had a long conference this morning and we will have another this afternoon. At these meetings with the provincial ministers of agriculture we have been canvassing the situation fairly thoroughly as to what the needs are likely to be and how those needs can best be met. As the Prime Minister indicated, I will have a statement to make to the house in that connection in due course.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. Jack Mclniosh (Swift Current-Maple Creek):: Mr. Speaker, I rise on a question of privilege. May I at this time ask the leader of the C.C.F. group a question relating to a report that appeared in a prairie newspaper?


Mr. Speaker:: Order.


John (Jack) McIntosh: I believe it concerns the whole house.


Mr. Speaker:: The hon. member can only ask a question of another member relating to a matter before the house under that member's responsibility. If it is a question of privilege and the hon. member will state it, the house will deal with it.


John (Jack) McIntosh: I am referring to a report which appeared in the Regina Leader-Post of June 30, and I would ask the leader of the

C.C.F. group whether he was misquoted or whether he actually made this statement.


Mr. Speaker:: Perhaps the hon. member could state his question of privilege first and then we will be able to see how far he will need to go to elaborate it. Is it a question of privilege affecting the hon. member himself?


John (Jack) McIntosh: It is a question of privilege. During a recent visit of the hon. member for Assiniboia to Saskatchewan he is reported to have said:
-he was glad to be away from the house to come back here and look "at some intelligent people."
The article continues:
Progressive Conservative candidates, no matter whether they were qualified or not, were elected. He admitted the P.C.'s had some able members in the house but there are "a lot I'm sure will take four years to learn where to hang their hats and coats."
I would ask you, Mr. Speaker, when members from Saskatchewan may reply to the hon. member for Assiniboia, or if the hon. member for Assiniboia will inform the house whether he actually made that statement. If he did I believe he owes an apology to the members of the house.


Mr. Speaker:: I am sure the hon. member is not looking for trouble. There was nothing in what he read which seemed to reflect in any way upon him. I think the hon. member for Assiniboia must have been referring to other members of the house.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, I wonder whether the Prime Minister would care to comment on the statement appearing in this morning's Gazette and attributed to the hon. member for Vancouver Centre, who is reported as having said in Paris yesterday that Canadian delegations visiting Russia are hand-picked, and while approved by the government are politically immature and naturally very biased.


John George Diefenbaker: The answer is, first, that I have not seen the report, and the answer to the general question is no.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Hon. W. M. Hamilton (Postmaster General):: Mr. Speaker, earlier this week the hon. member for Northumberland-Miramichi asked for

my comment on reports that the mail carrier staff in the town of Glace Bay, Nova Scotia, is to be reduced. There are 12 letter carriers in the town and the possibility of eliminating one of them is being considered. This is due to the fact that we find, after several checks, a number of them are working substantially less than the required 40 hours per week. A decision has not yet been made, but if it is decided to reduce the number of letter carriers every effort will be made to absorb the one released in the post office itself in Glace Bay or elsewhere.
I think in fairness I should also say that I was asked the same question by letter by the hon. member for Cape Breton South some time before it was posed in the house. I understand that the hon. member for Cape Breton South felt that he preferred to do it in that way and save the time of the other 264 members of the house.



FISHERIES


[Stage Direction]
On the orders of the day:
Hon. J. A. MacLean (Minister of Fisheries):: Mr. Speaker, on Monday the hon. member for Northumberland-Miramichi asked me if any representations had been received seeking a change in the New Brunswick fishing regulations to eliminate the two-week lift period for Atlantic salmon net fishing. Subsequent to his original inquiry on June 30, I received a telegram signed by the Mira-michi commercial salmon association and W. S. Loggie Company Limited requesting that the two-week lift period for Atlantic salmon net fishing be postponed for one week. In view of the short time available and the large area which would be affected by the change the request could not be met at the present time, though the whole proposal will be given every consideration before next year.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I have a question for the Minister of Justice of which I gave him notice. However, as he is not here, as the matter is rather important and because I get frequent inquiries I would address it to the appropriate minister from British Columbia. Has the minister anything to report to the house with respect to co-operative arrangements between the federal government and the
Estate Tax
government of British Columbia to deal effectively with the violence and the accompanying social problem which are of particular concern to the residents of the interior of British Columbia?


Howard Charles Green: Mr. Speaker, I shall be very glad to draw this question to the attention of the Minister of Justice.



WAYS AND MEANS

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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to replace the present Dominion Succession Duty Act, to provide that the tax on property passing or deemed to pass, on death, be computed by reference to the property comprising the estate of the deceased rather than the property contained in the bequests from the estate to the beneficiaries', and also to consolidate, revise and simplify the tax law.
William Moore Benidickson: Is the minister going to make a statement?


Donald Methuen Fleming: I really think, Mr. Chairman, there is no statement required on this particular resolution. I did refer to it in the course of the budget speech on June 17, at page 1245. The house will recall that a previous bill with a similar purpose was introduced at the last session. It was referred to in a statement I made on December 6, at page 2008 of Hansard, and again at the time of the debate on the resolution preceding the introduction of the bill on January 28 and 29 I made mention of the purposes and effect of the bill, at page 3944 of Hansard.
The legislation introduced at the last session was carried to the point of first reading following approval of the resolution. The house was not asked to give second reading to the bill at that session or to carry it farther. The declared purpose of the government was to provide the fullest opportunity for study of the bill, not only by members of the house but by the public generally, and in particular by professional organizations such as accountants, the legal profession and tax advisers who are particularly interested in legislation of this kind and whose views upon it were bound to be of great assistance.
In speaking on the measure in January I asked that such organizations, and indeed individuals as well, be good enough to make a thorough study of the bill and then submit to the government their criticisms and suggestions. In the course of the budget speech I made reference to the fact that the response to this appeal had been most gratifying. We did receive from a number of national organizations briefs and submissions, and we

Estate Tax
likewise received from individuals many letters containing comments upon the bill. These have been greatly appreciated, and they have been carefully studied and reviewed.
The bill which the present resolution asks leave to introduce is founded upon the bill of last session, but it contains a substantial number of changes. I think no good purpose would be served at this stage, indeed I doubt if it would be proper, to compare this bill with the bill that was introduced last session. It is not unlikely that hon. members will be curious to know about some of the features of this bill that have been changed from the bill introduced earlier.
This leads me to make this comment, Mr. Chairman. I think the consideration of the house will best be served if such questions are reserved until the bill has been introduced and distributed, because unquestionably many of the answers will be found in the terms of the bill itself. I do make the suggestion to the house, therefore, that if the resolution could now be passed the bill would be introduced at once. Indeed, if it meets with the approval of the committee, immediately upon approval of the present resolution I would move that the committee rise and report it, asking leave of course to sit later this day in order to continue the consideration of the other budget resolutions. After reporting the resolution the bill founded upon it could then be introduced, given first reading and distributed. In this way we could expedite the review of the bill by hon. members because they would see it that much sooner.
As I indicated in my budget speech, the intention of the government is to propose that following second reading this bill be referred to the standing committee on banking and commerce for further study and report. In the committee on banking and commerce the officials of the departments of finance and national revenue would be available and the committee would have the fullest opportunity of studying the bill in all its aspects.
There is nothing complicated about the terms of the resolution itself. It simply states:
That it is expedient to introduce a measure to replace the present Dominion Succession Duty Act, to provide that the tax on property passing or deemed to pass, on death, be computed by reference to the property comprising the estate of the deceased rather than the property contained in the bequests from the estate to the beneficiaries: and also to consolidate, revise and simplify the tax law.
In other words, Mr. Chairman, the effect of the proposed bill is to replace the dominion succession duty with an estate duty. As I said in speaking on the earlier bill last January, the estate tax proposed will bring
[Mr. Fleming (Eglinton).l
the Canadian practice in line with the kind of tax that has prevailed in the United Kingdom. It departs from the succession principle of the impost that is levied on estates of deceased persons and substitutes for it an estate tax, a tax that is levied with reference to the estate in aggregate without reference to particular successions, sometimes very numerous, that are either provided for by the will of the deceased or that occur under the provisions of the provincial statutes pertaining to devolution. In that respect, sir, the principle of the bill is similar to the principle of the bill introduced at the last session.
I think, therefore, if it meets with the approval of the committee, this resolution could be reported quickly. Then there will be the fullest opportunity for debate and discussion when hon. members have the bill before them. There will be an opportunity for debate on second reading, and then after reference to the committee on banking and commerce there will be ample opportunity for the study of the bill in all its aspects.


William Moore Benidickson: We are aware, Mr. Chairman, that this bill when presented will be before the banking and commerce committee. I can asure the minister that, from what I know of this group, the discussion therefor at this stage is not likely to be prolonged. On the other hand, a question of this kind, the terms of a resolution which reads-
That it is expedient to introduce a measure to replace the present Dominion Succession Duty Act, to provide that the tax on property passing or deemed to pass, on death, be computed by reference to the property comprising the estate of the deceased rather than the property contained in the bequests from the estate to the beneficiaries; and also to consolidate, revise and simplify the tax law.
I think is deserving of a little attention and discussion of principles at this stage. The first principle, of course, could be stated as the minister has indicated, namely that it probably involves tax reduction to the extent of $7 million.


Donald Methuen Fleming: Per annum.


William Moore Benidickson: Yes, per annum. But I would point out that this in itself is not of too much consequence in so far as the principle is concerned, in that this could be done just as effectively by revision of the present statute either by alteration in the rates or by increases in the exemptions.
We must all realize that as the minister has stated, we are making a move with respect to death duties from one principle to an entirely different one. We have had in the provinces since about 1892 a death duty taxation system that has been based on succession duty or in other words inheritance

tax, and we are moving to the estate tax practice which, as the minister says, is the form of taxation in death duties in the United Kingdom and in the United States.
However, I think we should have a full realization of the principles behind succession duty taxation on the beneficiaries. I would say that they are fixed under this principle probably on three bases. Firstly they vary according to the total duty value of the estate. Secondly they vary according to the value of the property passing to each beneficiary. Thirdly, there is variation depending upon the closeness of the relationship of the beneficiary to the decedent. Bill No. 248, which was given first reading on January 28, indicates that henceforth it is proposed that we shall take no account of the manner in which a person disposes of his wealth on death. Somebody might raise the question, why do we have death duties? It is true that in comparison with our total revenues, these receipts from our present succession duty act do not loom large. In the present budget I think the minister estimates revenues of about $65 million out of total revenues of $4,660 million. But I think the basic philosophy was very well stated in a recent bulletin of the tax foundation, when they said:
In countries like the United Kingdom and Canada where capital gains are not taxed, a system of death taxation ensures as well that the capital gains of a lifetime eventually make some contribution to the society that has helped to create them.
The foundation memo said also there is another merit in it in that a final reckoning of a person's lifetime earnings and savings brings to account tax dodgers who may have accumulated a certain amount of capital by evading their proper income tax liabilities during their lifetime. I think the minister would agree that this particular statute is helpful in that regard. But we must look at some of the other problems that are involved when we make a radical change such as that which is proposed. It may be that some of these can be described as merely transitional. There are certain practical difficulties. There may be a necessity on the part of many people to look carefully upon their present wills and many may feel obliged to revise them. It may mean that the experts in the legal and accounting studies in this field will find that their experiences are fairly well knocked into a cocked hat by reason of a new principle.
Then I think we must look carefully upon the peculiar situation that exists in the province of Quebec. In that province and in the province of Ontario the governments impose and collect their own succession duties. I am no expert in this field, of course, and I expect that some of my colleagues from 57071-3-133
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Quebec will speak on this point when the bill is presented and is before the house for debate on second reading; but I understand that in Quebec there is no court which will appoint an administrator, as would be the case in Ontario or other provinces, if the deceased has not done so. There is no court of probate there to which to apply as there is in Ontario and the other provinces.
Then I think we must concern ourselves with the question of whether or not there is merit in changing our form of death duty taxation without assurance that it has approval in principle by the two large provinces of Canada, which are the only ones that impose their own death duties.
Then when one relates estates tax to succession duty there is always the question raised as to whether or not we should, in favour of simplicity, allow certain elements of equity to be outweighed, based of course on the closeness of relationship to the deceased of the beneficiaries and also the question of ability to pay. Simplicity is emphasized always with respect to an estate tax. The minister placed that emphasis when he indicated that the tax principle was to be changed. I read that one of his principal advisers, whom both of us have complimented for his long service in the Department of Finance, had something to say on this matter. I refer to Dr. Eaton, who is about to leave the department. I noted that Dr. Eaton had an interesting comment to make with respect to this matter when he addressed a meeting of professionals in the field, namely lawyers and accountants. Dr. Eaton said this:
There are an infinite variety of settlements in the form of life interests with highly imaginative contingencies involving the government in calculating the mathematical probability of a wife remarrying and the odds that she will have children.
This, of course, involves the administration in a fair amount of difficulty. I note that under the bill as advanced last January we would have from now on one rate schedule instead of five. This indicates that there is certainly a direction toward simplicity. But I think the minister himself will agree that, particularly in the province of Quebec, we are still not going to remove ourselves, in administration or otherwise, from special circumstances that will still need the assessment or guessing just what the value would be of certain contingent interests.
When the minister spoke with respect to the forthcoming bill on December 6, 1957, as reported at page 2008 of Hansard, he said this:
-I point out that in every tax bracket the tax payable under the new law will be less than under the present Succession Duty Act.

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I have compared that language with what the minister said in his budget speech on June 17. He has qualified it a bit. As reported at page 1245 of Hansard of that late he said this:
In every tax bracket, however, . . . the revenue yield will ordinarily be less under the new bill-
I am sure that in the interval he has found, as I have by advice from some of the experts in the field such as trust companies and so on, that his first statement was not completely and universally true. There are instances, I believe, with respect to the bill presented in January where the tax even on relatively modest estates will be greater under the new proposal than under the old legislation.
I can think of a couple of illustrations. Take, for example, an estate of $100,000 under circumstances where a deceased wife whose husband is alive leaves one-quarter of the estate to each of her four dependent children. I believe that under the existing succession duty act the tax would be about $7,800 and under the new provisions, in accordance with the tables in Bill No. 248, there would be a substantial increase to $12,400. Then there is another illustration, again a modest estate of $100,000, where an unmarried woman leaves one-quarter of her estate to each of four sisters. In such a case the estate would find that it would have to pay several hundred dollars more in estate duty tax than would be the case under the present legislation.
I do not know, of course, until we see the bill whether there have been revisions in the schedules of taxing rates which will make the minister's proviso of December 6 true in all respects. There is, however, in the very nature of the estates tax a disadvantage which I think is receiving consideration, notably by women's groups in this country, and that is that the exemptions allowed by deduction of specific amounts from the total value of the estate are allowed whether or not the persons whose very existence gave rise to them are benefited. Thus an estate of a decedent survived by a widow will benefit by the exemption of $60,000; whether the estate is bequeathed to the widow or to a total stranger. This is indeed very different from the situation at the present time, where the rate of duty is determined not only by the amount passing but also by the closeness of the relationship, if any, of the beneficiary to the decedent.
Therefore from a purely philosophical and political standpoint I think this is perhaps the nub of the situation. It is true that the minister has spoken about increases in exemptions but I believe the $50,000 exemption was provided in 1948 and we would all agree that purchasing power has decreased 
considerably in the meantime. In this respect the Canada Trust bulletin of December, 1956 had this to say:
It has long been contended that the contribution made by a man's wife to his estate is equal to his own and accordingly she should be allowed to claim half his estate free of duty.
It is obvious that today a person must leave a considerably larger estate to provide for his wife and children than was necessary for a similar purpose when the $50,000 exclusion was provided in 1948. I believe where a property is settled in the United Kingdom-that is to say for example where a life interest is left to a widow-there would be no tax at all with respect to that interest, and I am told that in the United States there is a uniform specific exemption of $60,000.
We have all, I believe, received very interesting briefs in this respect from some of the very important national women's groups. I particularly have in mind a brief from the Canadian committee on the status of women which was received last month addressed to the Prime Minister. The president of this committee is a distinguished Ottawa lady, Mrs. G. D. Finlayson, and I would just like to quote from this brief as follows:
We point out to you, sir, that those married under community of property in the province of Quebec are taxed on only one-half of the family estate in the case of the death of one partner, which means that such estates, up to 5100,000, are not taxable. Should this justice not be extended to all marriage partnerships in Canada? Under the United States revenue act, a husband may bequeath to his wife one-half of his estate which is totally exempt from United States inheritance tax; it recognizes this principle of equality, as do many states of the union by their community property laws.
We have also recently received in this connection a brief from the Canadian federation of university women, the vice president of which organization would, I believe, be available to the committee. She is Mrs. Frank Flaherty, whose husband is one of the distinguished members of our press gallery. Then also there are the women's institutes who are important in Canada and have a very great interest in this problem. The minister did comply the other day with a motion I made asking that all of us who might serve on the committee which will study this bill be given an opportunity of seeing briefs of this kind, some of which we may not have had an opportunity to study, so that we might better inform ourselves in preparation for the sittings of the committee.
There is one other point I would like to make to the minister, which is that I hope the adoption of the new act will not be made the occasion for the government to bring within the scope of the act legitimate transactions which are not now taxed. The bill, of which we received the format at the time of

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the first reading in January, did move in that direction. Again, with respect to the arbitrary rules of valuation contained in Bill No. 248, some of these were completely new, and I do think they could very severely complicate the process of valuation and might also be unfair to the taxpayer.
Hon. members will have noted that Bill No. 248 made certain departures from an administrative point of view, in that there were new provisions contained therein respecting collection and investigation. Indeed, there were incorporated some of the privileges of the administration which, when the party of the Minister of Finance was in opposition, invoked a great deal of very severe criticism from the members of that party with respect to income tax. I have in mind such things as the authority to enter and take away the books and papers of a deceased person. I can particularly recall that some members from rural Ontario, including the hon. member for Brant-Haldimand and the hon. member for Middlesex West, were very vehement about this provision in the Income Tax Act. This right has now been transferred under the new administration, as a departure from previous procedure, into the proposed estates tax act.
These things, I am sure, will be given very earnest and careful consideration by the committee on banking and commerce and, as I say, we do not know at this stage to what extent the minister has acceded to some of the objections he has doubtless received since last January. I think we will all therefore look forward with interest to the introduction of the bill.


Hazen Robert Argue: This group sees a good deal of advantage in the proposals made and has no intention of delaying the proceedings at this time. We are quite happy to look at the bill as members of the banking and commerce committee, at which time it will be considered in greater detail. We think it is important that in any such law as that which we are now considering, small businesses should not necessarily have to be broken up when it is undesirable from a national point of view. We are hoping that these provisions will make it easier for such businesses to continue to operate in a number of instances when they would otherwise have to be broken up and disposed of upon the death of the owner.
There is one particular question I should like to ask the minister regarding the application of this proposal and it is this. Will this provision affect the revenues going to the provinces as a result of the agreements which have been signed for sharing taxes in this field? The minister said the result 57071-3-133J
of this proposal would be to reduce revenue by $7 million. I take it he meant revenue to the national treasury. I am wondering if it might mean a reduction of $7 million in the total revenue over the whole field. It would seem to me that the government should not be proposing by this measure something which would reduce the revenue to the provinces which have signed agreements with the federal government. I am not sure what the answer to this particular question is, and I should like the minister to comment upon it at an appropriate time.


Alan Aylesworth Macnaughton: Mr. Chairman, it is quite true that only now have we received, or will we receive, a copy of this bill and it is somewhat difficult, of course, to advance intelligent criticism until we have had the opportunity to study it thoroughly.
Nevertheless, as the Minister of Finance has said, we have had the advantage of having Bill No. 248 before us since December and there are a few things I should like to say about this subject, basing my remarks on Bill No. 248.
Of course the basic difference between the estates tax and succession duty as we have it now is that the estate tax will be levied against the estate, and the tax will be based on the size of the estate, whereas under the succession duty provisions the duty is levied against the recipients of the benefits and the tax is based on the size of the estate, on the amount of the benefit received by the beneficiaries and the relationship of the beneficiary to the deceased.
I admit that if the present bill goes through it will make it easy to estimate the amount of tax payable, and I am told the new rates will be progressive in character on the same principle that is embodied in the Income Tax Act. I am even told that the over-all rates may be lower. But while they may be lower today it is conceivable that within a few years they will rise in amount.
The break-down of the bill shows that part 1 deals with persons domiciled in Canada at the time of death. Under part 1 there are several subheadings such as (a) liability for tax (b) net value, aggregate of estate, (c) taxable estate (d) computation of tax-deductions, and (e) tax returns, assessment, payment and appeals. Part 2 deals with persons domiciled outside Canada at time of death, and part 3 deals with administration and method of valuing.
There are one or two things I should like to say on this section. The estate tax to be paid is on the taxable value of all property passing on the death of a person domiciled in Canada. Under the succession

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duty act no attempt has been made to tax real estate situate outside of Canada and owned by the deceased, and I think this new principle broadens the scope of property made subject to tax. I think it is worthy of investigation whether we want to go that far.
Under subheading (b) of part 1 we find the rules for computing the net value of the estate passing on death. According to section 4 we find that the value includes that of all property owned by the deceased, and also the value of certain other property; and the words "certain other property" are well worthy of investigation, to my mind. What could this other property be? First of all it could be a gift by trust or otherwise made within three years, if benefit had been reserved. Second, it could be property held jointly by the deceased and another person except such portion of such property as it can be established was contributed by the survivor from property other than that derived from the deceased.
As an example, a husband and wife have purchased a home; the wife contributes part of the money which she has received from the husband. She could have done something else with it; nevertheless she put the money into the purchase of this home. In that case she gets no benefit on her husband's death. On the other hand, if she paid in money she had earned herself she might be able to get some benefit.
Third, it could include the excess value of any property at the date of death over the consideration agreed to and actually paid during the deceased's lifetime for such property. As an example, there are two partners and one agrees to buy the other out on the death of the first. The increased value of the partnership is also included, and no provision is made for incentive.
Then under paragraph 4 it could include any property disposed of by any person, including an employer, on or after the death of the deceased, in recognition of services rendered by the deceased as an employee whether or not the person to whom the disposition was made held any legally enforceable right to such disposition. Thus, for example, if an employer desired to give one year's salary to the widow of an employee on the latter's death, she would have to pay double tax. The year's salary would be subject to income tax, and second it would be subject to estate tax, and I think this question should be considered very carefully.
Then under paragraph 5 it could include the proceeds of any life insurance policy payable to a company controlled by the deceased. Thus, for example, if someone owns 51 per cent of the stock of a company-and
[Mr. Macnaughton.J
we can assume he controls the company-and enters into a loan for business purposes of let us say $100,000 and, in order to guarantee eventual repayment of that loan, insurance is taken out; after the 51 per cent shareholder dies that $100,000 of insurance taken to secure the loan by the bank is deemed to be part of the estate. So again we have double taxation; first on the increase in the value of the company due to the addition of $100,000, and second when the $100,000 is added to the value of the estate, even though the estate did not receive that $100,000. These are new provisions, and I think they are grossly unfair.
Then under paragraph 6 the proceeds of any insurance payable to the spouse or child of the deceased, unless it can be shown that the premiums for such insurance had been paid from property other than property derived from the deceased, can also be included. The effect of this is that all third party insurance applied for and owned by a spouse or child is taxable as forming part of the estate unless it can be shown that the amount used to pay premiums came from a source other than the deceased. Now, if I desire to make a gift of money to my wife she can do anything with that money except buy insurance; but if she does buy insurance then the proceeds are taxed. It would appear that insurance is being discriminated against, yet life insurance is the one protection which so many people desire in order to have the ready cash to help pay these death duties.
Under subsection (c) on taxable value exemptions, I will not go over the figures which have been given-the basic exemption of $30,000, the $60,000 to a widow, infirm husband, child under 21, wholly dependent child over 21, plus $10,000 for each such child. There is a $15,000 exemption in cases where there is no spouse but there are dependent children, plus the basic exemption of $30,000. These exemptions are allowed even though the person because of whom the exemption is allowed receives no benefit from the deceased's estate. This concerns us very materially in the province of Quebec. I will not take the time of the house at this moment to discuss that point further, but it is a matter well worth looking into.
Section 9, of course, is subsection "d" concerning computation and deductions, sets out the table of rates. Under the succession duty act we calculate the value on the benefit to the beneficiaries, but under the proposed estates tax act it is the size of the net taxable estate which pays the duties.
Under subsection "e" concerning returns, assessment, payments and appeals there is a matter I would like to refer to in section 14. Under the present act the executor must

file tax returns within six months, and he must estimate the amount. We have no quarrel with that. However, under the proposed estates tax act the estate is liable for the tax and it must be paid within six months. Under the succession duty act the primary liability is not the executor's but rests on the beneficiary. We think the proposed arrangement is perhaps going a little too far.
Part 2 concerns persons domiciled outside of Canada and property owned in Canada by persons domiciled outside. There is a flat tax rate of 15 per cent which is charged. No allowances are made for debts or encumbrances, and there are no exemptions. I should like to ask the Minister of Finance about the case of a non-resident who owns real estate in Canada which is subject to a substantial mortgage. At the present time it is the equity interest of the real estate and not the value of the real estate which is subject to tax. Under the proposal submitted to the house today the real estate would be calculated at its total market value.
We come now to part 3 under the heading "Administration". The powers given under this part, to my way of thinking, are too great and go too far. It seems to me there has been an attempt to take the powers which have been incorporated in the Income Tax Act and apply them to the proposed estate tax act. My learned friend the hon. member for Kenora-Rainy River has already discussed this to some extent this afternoon and we will have more to say about it later.
Section 52 provides that in determining the value of any property no allowance or deduction shall be made for or on account of income tax. It is, of course, the Department of National Revenue which takes care of income tax and which, I presume, will administer the estates tax act. This section provides that if the Department of National Revenue levies income tax against certain property, such income tax cannot be deducted in arriving at the value of such property upon which the department levies estate tax. To my way of thinking this is most unreasonable and unfair, and shows no consideration by the tax collector for the rights and equities of the taxpayer.
Section 54 deals with shares in controlled companies. We can examine that question further at some future time. I suppose in general the estate tax principle is sound, and certainly the administration will be greatly simplified. Recognition of family ties is included in the higher exemptions allowed. Many uncertainties which exist under the succession duty act have been avoided and corrected. However, it seems to me that in
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attempting to plug every loophole the draftsmen have gone too far and have adversely affected the carrying on of normal business to which my friend the hon. member for Kenora-Rainy River referred.
The principle of valuation at date of death may result in tax being levied in many cases on value in excess of the realizable value, which seems unreasonable and unfair. Certainly adverse treatment is given to life insurance and discrimination is shown in regard to it as compared with other property. These are questions that will have to be carefully examined.
I have just a few words to say with regard to the system in the province of Quebec. This is an intricate subject, and I do not want to take the time of the house unduly in discussing it. Under the succession duty act in the province of Quebec certain customs and procedures have grown up and the people of that province have grown accustomed to the operation of the act, even though they may dislike it. In Quebec we have, as has Ontario, I presume, a system whereby relationship has a great deal to do with the payment of the tax, the relationship of first the wife, then the children, the collaterals and strangers.
We have always based ourselves on that close relationship which is part of the family concept. Many wills, trusts and other arrangements have been entered into on that basis with much thought and care, and now this is apparently to go by the board. Under the proposed estates tax act we have to determine how much there is in the estate, and then we pay the tax. The relationship does not count, and the wife is on the same basis as any stranger in relation to the estate. In fact the sole fact of there being a wife gives a $60,000 exemption.
As I mentioned earlier we are opposed to certain broad provisions which extend the collection principles of the Income Tax Act to the estates tax bill. It would perhaps be more difficult to collect money such as income which may be floating. When we are dealing with the capital of an estate there is not the same danger. In the case of capital it is usually either on deposit with the bank or, in the case of securities, registered or unregistered, they are usually in a safety deposit box. In the case of mortgages you cannot run away with them because they have to be transferred in a careful and legal manner. There is not the same urgency as under the Income Tax Act for these provisions with regard to collection.
Naturally if there is any danger of fraud the provisions should be reasonably strong and helpful; but we say the dangers of

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fraud in this connection are not nearly as great as they might be under the Income Tax Act. I think it is unfair to tax certain arrangements which are justified in order to reach others which are not justified. I do not know the number in the province of Quebec, but I presume there must be many contracts between fathers and sons for the sale of farms. A contract to sell a farm may be made for a 15-year period. In no sense is there any attempt to defraud the government. I say we should not deal with cases such as these as though we were dealing with criminals.
In summary, we are not against the estates tax principle. We point out that there are and there will be certain difficulties in dealing with the question in the provinces of Ontario and Quebec. I object to certain collection provisions. It is impossible to tell how efficient the bill is until we have seen its terms. We look forward to a careful examination of the terms proposed by the Minister of Finance in the committee to which this bill will be referred.


Mr. Creslohl:: Mr. Chairman, I just have one observation to make arising from the fear that perhaps the minister or his advisers possibly may have overlooked to some degree a situation peculiar to the province of Quebec. I hope, Mr. Chairman, you will allow me to make some reference to one of the provisions of the income tax resolution which is necessarily associated with succession duties.
I should like to point out that under paragraph 6 of the income tax resolution provision is made whereby a husband can transfer to his wife once in his lifetime a $10,000 interest in their common home or residence. If this provision is not carefully handled in the province of Quebec which, as you know, Mr. Chairman, is the only one of the ten provinces-


Donald Methuen Fleming: On a point of order, Mr. Chairman, I do not wish to interrupt the hon. member, but surely he is talking about paragraph 6 of the income tax resolution.


Leon David Crestohl: The minister is perfectly right.


Donald Methuen Fleming: What has that to do with the resolution now before the committee which is a resolution in relation to estate tax?


Leon David Crestohl: I did address myself to the chair and said that I must refer to one of the sections in the income tax resolution in order to associate my argument with the succession duty act. I think the minister missed that part of my statement.


Lionel Chevrier: He was preoccupied.


Leon David Crestohl: It is quite all right but I think if he hears my statement he may find it helpful rather than critical. A husband in the province of Quebec who desires to transfer a $10,000 interest to his wife under that section of the income tax resolution can certainly do so but under the laws of the province of Quebec where husband and wife are common as to property he cannot do it. In other words, we in the province of Quebec feel that because we are a community as to property province-I can see the minister is a little uneasy but he does not have to be.


Donald Methuen Fleming: I wish to proceed with the resolution before us. I do not wish to have disputes over points of order. With all respect to my hon. friend, up to this point he has not shown any relevancy to the matter of estate duty.


Leon David Crestohl: I certainly will.


Donald Methuen Fleming: I fully expect that my friend will be raising this question when we come to the sixth paragraph in the resolution respecting changes in the Income Tax Act.


Leon David Crestohl: But it might be too late then because the $10,000 under the system in the province of Quebec, where there is community as to property, will revert to the succession and that is why I want to tie it in. In the province of Quebec the husband and wife who are common as to property will lose the benefit of having such a transfer made. In that province no gift can be made by a husband to his wife who is common as to property. I have examined the matter rather carefully.
Let us assume that the husband does make a transfer of title to his wife. The wife may later be prejudiced in this way. When the husband dies the wife will not be the owner of a half interest in a $20,000 home because she will not have title to the $10,000 which her husband gave her under the Income Tax Act. Therefore the amount will revert right into the succession. As a result genuine prejudice is suffered there.
Let me put it in figures. Let us assume there is a $100,000 estate. If the wife had received what she thought was a gift of $10,000 from her husband under the Income Tax Act provision she would be left with a $90,000 estate because the estate would be depleted by the $10,000 which the husband had given to his wife. Assuming there are no children, the wife is entitled to a $60,000 exemption. There would then be an estate of $30,000. But if it is later found that the transfer of the gift to the wife, who is common as to property, is void there will be a $40,000

estate that will be taxable. I am simply pointing out to the minister that I think that matter will require very serious study.
If the peculiar situation in the province of Quebec with respect to husbands and wives who are common as to property has been given consideration, then the problem will be solved, but I simply rise to draw the minister's attention to the fact that there is that danger in the province of Quebec. Estates generally may be $10,000 greater. They cannot be any more because the gift cannot exceed $10,000 but the value of the estate may be $10,000 more when the deceased really thought he had given his wife a gift of $10,000 thus reducing his estate by that amount. That is the only observation I want to make to the minister.


Mr. Mcllraiih:: Does the minister want to deal with the point?


Donald Methuen Fleming: Not until everybody has finished speaking.


George James McIlraith: I regret that the minister did not see fit to make a fuller statement in introducing the resolution. I say that because in his budget speech when he tabled the resolution he set out the procedure he proposed to follow and pointed out that the resolution would afford the house an opportunity for debate on the general principles underlying the proposal.
My difficulty is this. Legislation on this subject was first proposed by the former government. After the election of June 10, 1957 a resolution and bill were introduced, the bill being presented for study by members of the House of Commons and the general public, a procedure that I think was quite appropriate in the circumstances. But we are now in the position that we are in the committee stage on the resolution preceding the new bill which we have not yet seen. The advantage of being in committee is that it is possible to ask the minister questions and to approve or reject the principle-I am quite sure it will be approved-of having a new bill brought forward for examination and action by the house.
However, we are left in the position that when the house adopts the resolution it will have approved a principle about which it has not been given information by the minister presenting the measure. If we treat the matter on the basis of the bill introduced last year, we then find ourselves discussing a bill that may or may not be the one coming before the house, but if we do not attempt to discuss that bill we lose our right to ask the minister questions until after we have approved the principle of the new estate tax
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bill and it has been presented for second reading and referred to the banking and commerce committee.
Therefore the fact that the minister has made such a brief statement leaves the house in a bit of difficulty. I should like to ask the minister if he would tell us at this stage whether or not there are any material changes in the principle affecting allowances for the amount of duty payable to the provinces because that would be an important departure in principle with respect to the financial arrangements.
There is also one point that bothers me considerably. The whole principle of the act now in force is based on a concept that I think members of the house and certainly former governments were very careful to preserve, namely the recognition of the family unit as the basic unit in our social structure.
Whatever weaknesses the years of experience with the former dominion succession duty act showed, and weaknesses were revealed over the years by administrative experience, I think all hon. members would agree that that principle of making special and advantageous provision for those persons to whom the decedent was obligated by reason of family relationships was a good principle. This principle was observed in the bill introduced last year to the extent that the amount of exemption allowed in any estate was increased where there was immediate family relationships, but that was departed from when they dealt with the rates of duty.
I think the minister at this stage would wish to clear up the point as to how far the bill he proposes to introduce when this resolution is passed preserves that principle, because that is a principle that should be dealt with at the resolution stage. I trust he will not mind me asking him to clarify that point at this stage. I believe that principle is really quite important, because the more one works and concerns oneself in the House of Commons with the issues that arise here from day to day, whether on this type of measure or a defence measure or whatever it may be, the more he is impressed with the fact that the type of struggle arising in the world today is concerned with this basic concept. All members will I am sure agree that we should concern ourselves with attempting to deal with our legislation in a way that will preserve and strengthen the family unit as the basis of our social structure.
I trust the minister will not mind my stressing the point a bit at this stage. I wonder if the minister would care to indicate any other changes in principle in

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the legislation he proposes to introduce. Perhaps I could give him an opportunity of dealing with these points before going farther, because it may not be necessary to go farther at this stage.


Donald Methuen Fleming: A few points have been made, Mr. Chairman, in the course of remarks by hon. members. Let me say, in the first place, that discussion of the terms of Bill No. 248 as introduced at the last session is not particularly profitable at this point until the house has the new bill before it. Of course, it will have ample opportunity of discussing the terms of the new bill on second reading, and again in committee. I said in my earlier remarks that a substantial number of changes have been introduced into this bill as compared with Bill No. 248 of the previous session.
The hon. member for Ottawa West has talked about the principle. Here we are dealing not with the bill on second reading where the principle is the matter upon which the house is called upon to decide; at this point, in committee of ways and means, with a resolution before the committee, the committee is not asked to pass on the terms of the bill in any respect. Therefore, Mr. Chairman, discussion of the terms that may or may not be in the bill is, I think, anticipatory at best and profitless under any circumstances because there will be a proper stage for discussion of those matters after hon. members have the terms of the bill before them.
The hon. member for Ottawa West said that the principle of the estate tax had been introduced by the former Liberal government-


George James McIlraith: No, I did not mean to convey that impression.


Donald Methuen Fleming: Then we are not
at cross-purposes. The bill had been worked on in the department before the change of government, but had not been introduced by my predecessor. However, the kind of bill that had been prepared, but had never been introduced, was a bill embodying the estate tax principle.


George James McIlraith: Just on that point, and before we leave it, the previous government had not approved that principle. The departmental people had been preparing a bill, and I do not believe the minister would want to leave the impression the previous government had dealt with the principle and approved of it.


Donald Methuen Fleming: I did not raise this point. My hon. friend raised it. I am simply putting the record straight with regard to

the part played by the former government in the matter. My statement stands in that regard.
The hon. member for Assiniboia raised a question in regard to the effect of the present measure on the fiscal revenues accruing to the provinces from the succession duty. This bill and the present Dominion Succession Duty Act have no terms in them bearing directly on this question at all. It is the Federal-Provincial Tax Sharing Arrangements Act which governs that question, and that statute does make provision for the proper allocation of the yields from the succession duty-I am paraphrasing the legislation-or in effect any substituted tax. When this new bill is enacted, and the new type of tax comes into effect, the yield from it will be dealt with in the light of the provisions of the tax-sharing agreements act in the same way as the yield from the present succession duty.
There will obviously be some slight diminution in the yield to the eight provinces which have rented the succession duty field to the federal government as a result of the reductions in the yield under this present estate tax as compared with the succession duty. Those reductions, in the case of any particular province, will not be particularly large when one has regard for the figures I have already given to the committee concerning the total diminution in the expected yield from this tax as compared with the yield under the present succession duty act.
Finally, Mr. Chairman, in regard to the procedure in the committee, to which the hon. member for Kenora-Rainy River referred, of course the briefs that were submitted by the national organizations will be available to the committee and the departmental officials will be there to discuss them. The bill will make clear to what extent the various submissions have been adopted in the bill and to what extent they have not been adopted, and of course the minister will be there to explain, if he can, why that course was followed and to defend the course that the government has taken in framing the legislation in the terms in which it will appear when the bill is introduced.


George James McIlraith: Perhaps I might not have succeeded in making myself clear to the Minister of Finance, and I regret that I did not. I was not intending to claim that the Liberal government had introduced a new bill replacing the Dominion Succession Duty Act. As I understood the situation, considerable work had been done on drafting a new bill to be introduced. It was stated by the Liberal government that they intended to introduce a new bill on this subject replacing the Dominion Succession Duty Act.

I am quite sure that he would want the record to be clear on that matter.


Donald Methuen Fleming: That is correct; and that bill which we found in the departmental files and which had been prepared by the former government is one that embodied the estate tax principle.


George James McIlraith: That is precisely the next point that I am coming to, Mr. Chairman. The minister now makes the statement that he found in the department's files a bill that had been prepared involving the estate tax principle. At that point I think it is only fair to hon. members to have them understand-and I am sure they will agree- that that bill was not before the cabinet for approval in principle at all. That was the work of departmental employees in preparing a bill for submission to their minister and for submission presumably by the minister to the cabinet and for introduction to parliament. By his remarks I would hope he does not mean to present the implication that the former government approved the estate tax principle because, as I understand the matter, it had not been fully dealt with. It may well be that they would have approved it. I am not suggesting that. However, I want to have the record straight as to what the position was.
In my remarks a few moments ago I was extremely careful to make it clear that I did not want to discuss the bill introduced by the minister last session, namely Bill No. 248. I thought the minister followed a commendable procedure in introducing that bill and in presenting it as he did for public examination and criticism or suggested amendment. I commend him for that procedure. But our difficulty today is that we can not discuss that bill and in my remarks I was careful not to discuss it. The resolution before the house-and may I say, Mr. Chairman, that we are back in the position of not having insisted on your reading it at the start of these proceedings; it is unfortunate that it was not read-is as follows:
Resolved, that it is expedient to introduce a measure to replace the present Dominion Succession Duty Act, to provide that the tax on property passing or deemed to pass, on death, be computed by reference to the property comprising the estate of the deceased rather than the property contained in the bequests from the estate to the beneficiaries; and also to consolidate, revise and simplify the tax law.
My point is this. The proceedings now before the house consist of the minister asking the house to approve or to decide that it is expedient to introduce this new measure doing away with an act that follows a certain principle of taxing property passing on death-whatever the virtues of the act-it
Estate Tax
was based on the principle of a high recognition of the family concept of social structure in this country. To replace it by a new estate tax which provides that the tax on property passing or deemed to pass on death be computed by reference to the property comprising the estate rather than the property contained in the bequests from the estate to the beneficiaries is now proposed by this resolution.
We are not asking for the details of the bill he proposes to introduce. But before we can intelligently decide whether or not it is expedient that he be enabled to introduce his bill I respectfully suggest that we are entitled to know the extent to which the new bill will depart from that principle and only the extent to which it does depart from it. I do not expect him to give the provisions of the bill at all. However, I say that before he can get approval of this resolution he ought properly to give us that bit of information.
It can be very simply given. We know what it is in Bill No. 248. I mentioned what it was in Bill No. 248. That bill retained it in part and departed from it in part. I should like to know what will happen in the legislation he proposes; because if this principle of taxation is changed, then that is the matter this house is passing on in debating this resolution.


Leon David Crestohl: I should like to ask the
minister, from the reading of this resolution, whether the intention is to tax all property which passes on death, whether the property is located in Canada or out of Canada and whether the property out of Canada was earned out of Canada. I should like to know whether it was the intention of the minister to include all that property which is not now as fully covered under the succession duty act as it would be under a new act.


Donald Methuen Fleming: My hon. friend's question relates to the terms of the bill rather than the terms of the resolution. I well appreciate the fact that individual members have individual questions which are of considerable interest to them with respect to what may be found in the bill. The hon. member for Ottawa West has indicated a matter in which he is particularly interested to know what the bill provides.


George James McIlraith: No, Mr. Chairman-


Donald Methuen Fleming: My friend the hon. member for Cartier is asking a question not about the terms of the resolution but about the terms contained in the bill to be introduced following adoption of the resolution. With respect, Mr. Chairman, I suggest that the way for hon. members to satisfy their

Estate Tax
legitimate interest in the terms of the bill is to pass the resolution and let us introduce the bill. They are not tying their hands in any way as to questions of principle. There will be opportunity afforded on second reading for discussion of the principle of the bill.


George James McIlraith: No questions can be asked then.


Donald Methuen Fleming: The resolution is in limited terms. All that the house is being asked to do by the resolution is to approve the introduction of a measure in the terms of the resolution. Beyond that, the questions obviously relate to the terms of the bill. With respect, Mr. Chairman, I suggest that that is not the function of the procedures provided by the rules of the house for consideration in committee of ways and means on the resolution at this stage. Those questions will all find their answers very readily in the terms of the bill when it is introduced.


George James McIlraith: I think I must pursue the point a bit further, Mr. Chairman. I am not interested at this stage in the terms of the bill. We will get those in due course. I am interested in the resolution which says:
That it is expedient to introduce a measure to replace the present Dominion Succession Duty Act, to provide that the tax on property passing or deemed to pass, on death, be computed by reference to the property comprising the estate of the deceased rather than the property contained in the bequests from the estate to the beneficiaries;-
And so on. So that there will be no doubt in the minister's mind about it, may I ask him this question about the language in the resolution, and I quote it:
-be computed by reference to the property comprising the estate of the deceased-
Does that language include a reference to the relationship of the beneficiaries or does it include only a reference to the amount of property passing? Surely there can be no doubt of the relevance of that question. I have read the language right from the resolution.


Donald Methuen Fleming: That question can only be answered by reference to the bill and not simply a general reference to it. It would mean a detailed reference to the terms of the bill. I ask my hon. friend to let us bring in the bill. He will have the complete answer to his question in the detailed terms of the bill.


George James McIlraith: The point is rather interesting, Mr. Chairman. The house is being asked to decide whether or not it is expedient that the minister be enabled to bring this bill before it, a taxing bill. In three or four sentences the resolution sets out exactly what they propose to do. We are entitled to have information about all the taxing aspects of it. We are entitled to have information as to

the words used and what he intends them to mean. It is quite true that we could get the bill and read it and determine the principle involved but at this stage I would point out that we cannot ask the minister any questions prior to debating second reading of the bill, and it is our right to ask the minister questions that is the whole purpose of this proceeding.


Leon David Crestohl: With great respect, I wish to point out to the minister that I was not asking for information as to what might be in the bill. I was asking for an interpretation of some words in the resolution, what do they mean: "Tax on property passing or deemed to pass". I want an interpretation, and this could influence my decision as to whether or not I was in favour of the general principle of a resolution of this kind. Is it intended to include property located or earned outside of Canada?
It is a simple matter of interpretation of language in the resolution. It speaks of property; does that mean all of the property of the deceased or all of the property of the deceased which is located in Canada?


Donald Methuen Fleming: My hon. friend is well acquainted with the provisions of the present Dominion Succession Duty Act which purports to tax the estate of a deceased person who had a Canadian domicile, wherever his property might be located, inside or outside of Canada. Obviously the measure the house is now being asked to permit us to introduce is one which will provide rules with reference to the determination of what is the taxable estate of a deceased person who had a Canadian domicile. The bill will have to provide, and does provide, as does the Dominion Succession Duty Act, for the taxation of property in Canada of persons who have died and who had a domicile outside of Canada. Any measure of this kind has to take into account both these cases, just as does the present Dominion Succession Duty Act. The resolution about which my hon. friend asks refers to property, and obviously a bill of this kind would be quite incomplete if it did not make provision for both these cases. This bill will do so.


Mr. Regier:: The minister will be surprised that I have some nice remarks to make about him for a change. I am very pleased to be able to congratulate the minister and the government upon the manner in which they are approaching, not only this problem but one or two other problems.
We had for too long a government which had made up its mind to follow a certain course of action and regardless of the reaction of the Canadian people to its proposals insisted on not allowing any amendments

along the way. I have in mind particularly the present government's proposal to introduce a bill providing for the humane slaughter of animals and this bill dealing with estate tax. The intention of the government was announced during the last parliament and the government waited for public reaction to make itself felt and I feel that this is a particularly progressive move under our democratic system.


William Moore Benidickson: That is not new. What about the Criminal Code and other big measures?


Erhart Regier: I am not saying the former government never did this, but in the main its attitude was that it had all the answers and the general public had to depend for its salvation on the wisdom of the boys in the back room. I hope in the years ahead we will see the adoption of similar procedures in many other measures.
I noted with appreciation the answer of the minister to the hon. member for Assi-niboia. Unless I misunderstood the minister the provincial revenues have to pay a part of the $7 milllion loss of revenue which the federal government anticipates. In other words, the amount of money available to the provinces under the tax rental sharing agreements will be slightly reduced. I wonder if the government is able to inform us as to approximately how much of the anticipated $7 decline in revenue will have to be borne by the provinces in the form of reduced payments to them and, if he has the information available, I would like a breakdown by provinces. The actual breakdown could be left for the meeting of the banking and commerce committee. However, out of the $7 million, is the minister able to indicate how large a burden will be borne by the provinces?


Donald Methuen Fleming: Not precisely. The figure of $7 million is an estimate. The Federal-Provincial Tax-Sharing Arrangements Act provides for the sharing of the yield from the succession duty on the basis of 50 per cent going to the province concerned. My hon. friend will recall there is a different situation respecting the provinces of Ontario and Quebec, which provinces still collect their own succession duty and, so far as we know, will continue to do so. I am afraid it is not possible, therefore, to give to my hon. friend anything which could purport to be an accurate estimate and I am certainly not in a position to do so at the present time.


Erhart Regier: It is about half?


Donald Methuen Fleming: That fifty per cent would apply with respect to the eight provinces, but I would have to have more information concerning the present figures on
Estate Tax
the accruals in Ontario and Quebec and the effect of the deductions permitted under the present succession duty act before attempting to make a comparison or to carry the figures further than I have already done.


Hazen Robert Argue: I think the statement of the minister that part of the $7 million will be an expense to the provinces, because of action taken by the federal government, is a very disturbing one, and that it puts the provinces in a very difficult position to have a certain level of revenue assured to them at a time they sign a tax-sharing agreement and then to have that revenue reduced as a result of subsequent action by the federal government.
I feel this is a very bad principle which if carried too far, would lead to a worsening of federal-provincial relations.
In my belief, the principle applying, as I understand it, under the act to income tax agreements, whereby if the federal government reduces income tax the revenue to the provinces is nevertheless guaranteed, is the right one. I have the acts in front of me and I am certainly in favour of the provision but this is a very bad practice and a very bad principle, I would think, where the federal government is taking an action- albeit a very popular action in the minds of the public-as a result of which the provinces bear half the cost. I would hope, therefore, that in the future in agreements with respect to the sharing of taxes the provinces' income will be assured and if the federal government decides, on its own volition, to reduce the general level of taxes that there would be taken subsequent federal action to maintain the revenues of the provinces. I think this is a very reasonable suggestion because of the well-known fact that the federal government collects the bulk of the taxation revenue in this country. I believe it is something like 70 cents out of each taxation dollar.
We shall have something further to say on this point when the minister has more detailed information but I might say to him that, as far as the result of this move is concerned, we feel it is a very serious matter and that steps should be taken to maintain the revenues of the provincial governments, particularly at a time when there is a general economic recession and provincial revenues, in some cases at any rate, are likely to fall very considerably.


Donald Methuen Fleming: Mr. Chairman, the hon. member has, I think, completely overlooked the fact that the stabilization principle, as written into the Federal-Provincial TaxSharing Arrangements Act, applies to the yield from succession duty as well as personal income tax and corporation tax. In the

Estate Tax
second place, the parliament of Canada could not at the time of entering into a tax-sharing arrangements act bind itself to make no change in the future in either the nature of the succession duty or the rates, any more than it could bind itself for the five-year period with respect to the provisions for the rates applied under the Income Tax Act. The legislation embodied in the tax-sharing agreements act takes that quite plainly into account in recognizing that the 50 per cent portion to which the provinces are to be entitled in the event of renting the succession duty field to the federal government is the yield from the succession duty or from any substitute tax in the field of impositions in the case of death.


Leon David Crestohl: After the minister's various explanations I am now satisfied with the resolution, and some of the questions I had in my mind have been answered. But I should like to ask him what is the purpose of the words "and also to consolidate, revise and simplify the tax law". If we are now discussing a resolution by which we are doing away with the old law and introducing a brand new law, what is there left to consolidate, revise and simplify? There is no old law and no old regulations. There may have been a great many which required consolidation or revision, but since we are doing away with them, what is the purpose of the words I have quoted? I like to rely on the rule of ordinary interpretation, that some meaning should be given to language rather than no meaning. What is the meaning of these additional words?


Donald Methuen Fleming: I think the hon. member on reflection will realize that the proposed measure cannot and should not repeal the succession duty act. That act must still continue in effect to govern the taxation of estates of all persons dying up to the date on which the new act is proclaimed to come into force, and the provisions of the old act must be continued until the assessment of all the estates governed by the old act has been completed for all purposes.
Some of the provisions of the Dominion Sucession Duty Act, as indeed some of the provisions of the proposed new bill, relate in particular to the extent and nature of the tax. They are the sections which embody, in the case of the present act, the succession duty principle and, in the case of the new bill, the estate tax principle. In both cases besides these essential provisions of either bill there must be a number of other provisions dealing with questions such as enforcement, collection, administration, and many other things which will readily occur to the hon. member, which must be written into any measure of

this kind whether it is based upon the succession duty principle or the estate tax principle. In the clauses of the new bill there will be provisions of that kind and they will have application to estates which are governed by the new bill. But the present act will continue to apply in all respects to the estates of persons dying up to the date on which the new act comes into effect.


William Moore Benidickson: I wonder whether the Minister of Finance has read the answer given by his assistant deputy minister for taxation to the last question raised by the hon. member for Cartier, in the address to which I referred in my remarks? Dr. Eaton, in that address, put it this way-he quoted, of course, the resolution which was introduced prior to the first reading of the bill last session, and the resolution presented to us today is in the same wording-when he told a gathering of lawyers, as reported in the Canadian Tax Journal:
This resolution seems to imply that the simplification job is confined to "those provisions of the present act that continue to be appropriate". Actually, of course, the main simplification follows from the major operation itself, the hysterectomy which removed from the law the principle which with such fertility gave birth to so many problem children.


Hazen Robert Argue: Mr. Chairman, before the resolution goes through, I have in front of me an act entitled the Federal-Provincial Taxsharing Agreements Act, 1956, and subsection 2 of section 3 outlines what has to be done if there is any change in the federal government's rates of succession duty. I know the minister is very much aware of this section, which reads in part:
Where from time to time by reason of a change in the rates of tax or in personal exemptions or allowances for dependants as defined in the regulations, the effective rate of individual income tax or of succession duty differs from the corresponding effective rate applicable-
And then certain dates are listed-
-the minister shall alter the standard individual rate or the standard succession duty rate, or both, as the case may be, in relation to the corresponding effective rate, so that the ratio of the new standard rate to the former standard rate varies inversely with the ratio of the new effective rate to the former effective rate.
I take that section to mean that if the rates are changed under the succession duty act so as to lower by this means the amount of money which is paid to the provinces, there is compensation made as a result of this section in order to maintain the payments to the provinces. However, if there is a change in the act itself and a new act, another type of act, is substituted, then this provision does not apply. Certainly, on the minister's own statement, one of the results of what is now being done will be to reduce revenues to

provinces which have tax-sharing agreements with the federal government, and again I protest this result. I suggest to the minister that an appropriate amendment should be made in the bill to maintain the revenues of the provinces which have signed tax-sharing agreements.


[Stage Direction]
Resolution agreed to.
Resolution reported and concurred in.

Donald Methuen Fleming: for leave to introduce Bill No. C-37, respecting the taxation of estates.
Motion agreed to and bill read the first time.



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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, among other things:
1.	That amounts paid alter June 17, 1958, for drugs and medicines which have been prescribed by a medical practitioner and recorded by a licensed pharmacist be included in the medical expenses that are deductible in computing taxable income.
2.	That amounts paid after June 17, 1958, for eyeglasses, artificial eyes, laboratory or other diagnostic services or transportation to or from a hospital by ambulance be included in the medical expenses that are deductible in computing taxable income.
3.	That for 1958 and subsequent taxation years the maximum amount deductible by corporations for contributions to charitable organizations be increased from 5% of income to 10% of income.
4.	That the rate of interest payable to taxpayers on overpayments of tax for 1958 and subsequent taxation years be increased from 2% to 3%.
5.	That the two year period within which a taxpayer may apply for a refund of an overpayment of tax for a taxation year be increased to four years from the end of the taxation year.
6.	That for 1958 and subsequent taxation years a gift to the spouse of a donor of real property to be used by the donor and the spouse as their home, or a gift to a child of the donor of farm real property to be used in farming operations carried on by the child, or by the child and the donor, shall be exempt from gift tax to the extent of $10,000, provided that no such exemption shall apply more than once during the lifetime of the donor.
7.	That the amount by which any gift tax paid on a gift made within three years prior to death exceeds any succession duty or estate tax subsequently imposed in respect of a death after June 17, 1958, on that gift under any act of the parliament of Canada will be refunded.
8.	That with effect after June 17, 1958, the exemption from the tax on income of non-resident persons now granted in respect of dividends paid by a non-resident-owned investment corporation be changed so as to apply only in respect of dividends paid after the time when the corporation has paid out dividends which in the aggregate equal the undistributed earnings accumulated by the corporation in years when it was not a non-resident-owned investment corporation.
William Moore Benidickson: Mr. Chairman, has the minister any amendments in contemplation?
Income Tax Act


Donald Methuen Fleming: Mr. Chairman, there is a slight amendment in the first paragraph of the present resolution. I feel it might facilitate the orderly discussion of the present resolutions, if it were agreeable to the committee, if we were to take up the resolution paragraph by paragraph. We have before us just the one resolution to amend the Income Tax Act. The eight paragraphs that follow are all part of one resolution. If it meets with the approval of the committee I am sure it would contribute to orderly discussion if we were to proceed paragraph by paragraph. If it meets with your approval, Mr. Chairman, I will now speak to the first paragraph to which there is an amendment.


William Moore Benidickson: Mr. Chairman, I had a few remarks to make but I thought if there were any amendments to be made to the resolutions we would at least have the dinner recess during which to think about them. Apart from that, I will go on with the general remarks I had in mind.


The Chairman:: Is it agreeable to the committee that the resolution before us be taken paragraph by paragraph?


George James McIlraith: Not yet, Mr. Chairman. Does the minister propose to make a general statement before adopting the procedure of taking the resolution paragraph by paragraph?


Donald Methuen Fleming: No, sir.


William Moore Benidickson: Well then, Mr. Chairman, as the committee knows we are now in the second stage of our budget procedure, having concluded an eight-day debate. At this point I propose to be consistent with the stand I took in the past that remarks must be related to the statute the resolution refers to, namely the Income Tax Act. When one realizes that we are considering in the committee of ways and means resolutions which only affect either personal income tax or corporation income tax to the extent of $1 million for each category in fields that involve the raising of revenue in excess of $3 billion, one must conclude that some of the attempts to dub the budget in general have now proven true and appropriate and the ones that probably appeal to me most after the event, and I think particularly in relation to this statute, are such appellations as the "hope to God" budget-


Donald Methuen Fleming: Mr. Chairman, I rise on a point of order. It is obvious that my hon. friend is about to embark on a discussion of the budget in general. In accordance with the rules of the house we have had an eight-day debate on the budget.

Income Tax Act
The budget has been adopted and what is now before the committee is a resolution in these words:
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, among other things:-
Then are set out eight paragraphs indicating specifically in each case an amendment to the act. The rules of the house set an eight-day limit on the duration of the budget debate for a purpose. Surely the plainest way to undo the effect of the rules of the house is to allow in committee of ways and means another budget debate. My hon. friend has gone far enough already to have indicated quite clearly that he wants to discuss the budget-


William Moore Benidickson: Not at all, Mr. Chairman.


Donald Methuen Fleming: My hon. friend started out by calling the budget by various names.


Hazen Robert Argue: Why not call the resolution by the same names?


Donald Methuen Fleming: Whatever may be said about my hon. friend's appellations of the budget in the proper place, which is obviously in the house, it is clear that the house has passed that stage of discussion and we now have a resolution before us. The debate should now proceed with due regard and be relevant to the terms of the resolutions before us and this should not be made the occasion of another budget debate.


Lester Bowles Pearson: Mr. Chairman, apparently the minister does not desire to make any general remarks himself on this resolution which covers the whole question of the income tax aspect of the budget. He prefers as is his right-although I suggest it is not normal practice-to discuss the resolution paragraph by paragraph. My friend the hon. member for Kenora-Rainy River, as is his right, wished to make general observations covering the whole income tax aspect of the budget which is now covered by this resolution. I suggest that he is entirely in order in following that course.


William Moore Benidickson: Mr. Chairman, not only do I feel that I am in order but I have taken the care to read very carefully the debates that have taken place at this stage in the last three years since the rules were amended and I recall very definitely that from time to time my hon. friends when they were on this side of the house did attempt to question the balance of ways and means and the likelihood of there being a surplus or deficit and matters of that kind and the Chairman very properly called them to order. But in all of those debates on the resolution stage I find that there

has been no restriction whatsoever, if one refers not only to the items that are in the resolutions but also to subjects that one might expect to have found treated in the resolution and were not. That is what I had in mind when I introduced my remarks and said that with respect to the changes in the income tax aspect there seems to have been what might be described as "cross your fingers" type of planning with respect to income tax because only $1 million is contemplated in this resolution as a reduction in personal income tax and $1 million on corporation income tax.
This brings me to express the surprise that many people not only in the house but in the country will have with the recommendations the minister is advancing here. We all recall what a great champion he was for tax reductions. We are faced today with this very minimal performance and I feel I have every reason and every right to present to the committee at this stage what I believe is the very changed appearance in my hon. friend the Minister of Finance and even in his leader because they certainly appear to be very dry-eyed today with respect to the taxpayer.
Before I proceed may I say that I will not be the only one in this house who regrets that the hon. member for Carleton is not able to officially sit beside the Minister of Finance. I felt that when he spoke so eloquently in the budget debate on June 20 he was certainly preaching for a call or a recall but it does not seem that so far the whistle has been provided. However, it was indeed a very effective speech. The only criticism that I would make of it was that following the first two speakers, including myself, it was so obviously a prefabricated speech and so well prepared that it could be understood why it did not fit-


Joseph Pierre Albert Sévigny: Order. I regret to interrupt the hon. member but actually at this time we cannot go back to the budget debate.


William Moore Benidickson: I will conclude my sentence and say that it did not fit the arguments he was attempting to knock down.


Donald Methuen Fleming: The Chairman is on his feet.


Joseph Pierre Albert Sévigny: Order. I wish to carry on with my statement. At present we are discussing a resolution affecting the Income Tax Act. We can talk about it in general terms provided the discussion bears on the items appearing in the resolution, some eight clauses which will eventually be dealt with one by one. I must bring to the attention of the

committee standing order 59, paragraph 2 of which reads as follows:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
Therefore I would ask the hon. member to confine his remarks strictly to the items being discussed at present and not refer to :he budget debate.


William Moore Benidickson: I am referring to the Income Tax Act, with some digression, of course, with respect to the hon. member for Carleton. It is my purpose to confine my remarks to the whole Income Tax Act. That, I think, is the standard practice and privilege. It certainly was the practice of my hon. friends.


Donald Methuen Fleming: Not at all.


William Moore Benidickson: Indeed it was, sir. I have checked very recently my hon. friend's own remarks, those of the present Prime Minister and those of the hon. member for Greenwood and others in the last three years in their opening speeches on the budget resolution with respect to income tax, and my words will certainly be confirmed if my hon. friend will also check.


Donald Methuen Fleming: Mr. Chairman, if the hon. member is making an observation on the point of order that you have raised, I think this is the situation. In times past ministers of finance have at this stage taken objection to any digression from the terms of the resolution or matters related to the resolution so as to be relevant to the terms of the resolution. I think that is the rule fairly stated. In previous sessions when hon. members have sought to take advantage of the calling of a new resolution to embark upon a general discussion, to reopen the budget debate or to make observations that they wished they had made during the budget debate and things of that kind, the chairman has ruled them out of order. With respect, Mr. Chairman, if my friend is now assuming to discuss any matters affecting the Income Tax Act regardless of the terms of the resolution before the house he is clearly serving notice that he is going to embark on a course that is strictly out of order. I submit to you, sir, that the rule you have read governs the present situation and that my friend should confine his remarks to the resolution, that is to say, matters contained in the resolution or matters related by relevancy to those that are contained in the resolution.


William Moore Benidickson: Mr. Chairman, I reiterate that never in the last three years has objection been taken by previous ministers of finance if the discussion was related to the
Income Tax Act
act which the resolution now before us indicates is to be amended. There has always been an opportunity to refer at this stage, not only to the particular paragraphs in the resolution before the committee but to certain aspects of the resolution or additions to it that could very well be included.
As the minister himself has said, this is one resolution with several paragraphs. I think that any member has every right to indicate that the resolution is incomplete, that one would have expected certain other items to be included in the paragraphs of the resolution. It is to that point that I propose to address myself in all confidence that I am following the usual procedure even more carefully than my predecessors did as critics in recent years when they were on this side of the house.
As my first point I would say that I think everybody was very surprised, having regard to the forthright position taken by the minister in times past, that there was nothing in the resolution to indicate a change in the present personal income tax exemptions. My hon. friend has been very zealous in the past in this respect. I recall that in 1956 he wasted no time at all in indicating that the government should be giving consideration to this very thing in that year. In fact, in the debate on the speech from the throne on January 24, 1956, at page 474 of Hansard-


Donald Methuen Fleming: On the point of order, Mr. Chairman. I hope we can iron out this difference now for the benefit of discussion in the house. No one wishes to be raising points of order all the time but it seems to me that this matter needs to be clarified from the chair and that my friend should be asked to confine himself to what is relevant and proper to discuss at this point. My friend is proposing to enter a field which was properly discussed in the debate on the budget, but there is nothing in the resolution now before us that relates to the subject of exemptions. My friend is not now alluding to what has been said even this year, even in previous discussions in committee of ways and means on budget resolutions. He is going back now to the debate on the speech from the throne a couple of years ago. I thought he was relating his remarks to the point of order.
It will be remembered, Mr. Chairman, that remarks concerning exemptions have been relevant on some of these other occasions because there were resolutions affecting exemptions. For instance, a year ago there was a change in exemptions. A flat exemption of $100 was provided in lieu of charitable donations, union dues, etc. at the

Income Tax Act
option of the income taxpayer. But, Mr. Chairman, if my friend is asserting a right to discuss anything that is in the Income Tax Act regardless of whether there is any reference to it in the present resolution, then he is asserting a right to discuss almost every subject under the sun because there are few acts as broad in their scope as the Income Tax Act. It is obvious that we are going to be here a long time if my friend is going to enjoy that measure of unrestricted freedom of debate.


Lester Bowles Pearson: Mr. Chairman-


Joseph Pierre Albert Sévigny: Once again I must bring to the attention of the members that it is my duty to ask for the co-operation of hon. members in respecting the standing orders of the house. On the matter of relevancy standing order 59 (2) is quite clear. It reads:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
We have before us a resolution dealing with certain changes in the Income Tax Act and at present hon. members must speak only on the items contained in the resolution. In my opinion it is out of order to speak about anything else not contained in this resolution. With regard to exemptions under the Income Tax Act, I must also bring to the hon. member's attention the fact that on June 26 an amendment proposed by Mr. Argue and seconded by Mr. Herridge was negatived.
This amendment actually read as follows:
This house further regrets that the government contemplates no action at this session to recognize the loss of purchasing power to the majority of Canadian citizens because of the lowered value of the dollar as related to consumer goods and prices, by amending the Income Tax Act so as to raise the amount of permissible income to single and married persons without taxation.
This amendment was negatived on June 26, and consequently it is out of order to discuss exemptions now.


Lester Bowles Pearson: May I say a word on the
point with which you have been dealing. As the minister has pointed out to us, the debate on the budget covered the whole field of fiscal policy. We are dealing with a resolution now which covers one important aspect of policy on the Income Tax Act. This resolution reads:
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide, among other things:
Then there are eight paragraphs which follow. It has always been considered in order, on a resolution of this kind, to discuss not only the specific terms of the resolution but the inadequacy of the terms of the measure which is contemplated in the resolution.

I suggest that if that were ruled out of order that would be a limitation on debate in this house in respect of the resolution, which certainly has not been imposed while I have been in the house. I respectfully call this consideration to your attention.


Leon David Crestohl: On the point of order, may
I ask why we try to avoid giving interpretation to the words "among other things", to which my leader has called attention. This resolution introduces a measure to amend the Income Tax Act, not only in respect of these eight items but in respect of other things. I respectfully submit, Mr. Chairman, that as long as we are debating a resolution with respect to the Income Tax Act we should be permitted to deal with the other things that might be introduced. Earlier today when I tried to make some reference to the Income Tax Act when we were debating the Dominion Succession Duty Act I was called to order by the minister.
I respectfully submit that we are now discussing the Income Tax Act and I do not believe standing order No. 59 interferes with a discussion of other things relative to income tax. I respectfully submit that the words "among other things" are in the resolution and you must give them some meaning, some latitude, rather than trying to confine the debate within certain limits. We do not want to discuss the question of closure again.


Hazen Robert Argue: The terms of this resolution,
Mr. Chairman, are very broad. It has been the custom in this house, whenever a resolution as broad as this one has opened up a certain act for amendment, to give members a good deal of latitude in the remarks that they make. Otherwise discussion is stifled and the will of the house is difficult to obtain. I think the minister has a point in that if a member stood up and claimed the right to spend all of his 30 minutes discussing an increase in income tax exemptions, which is not included in the resolution, it could be considered that he was out of order. But surely when the resolution is, in many respects, aimed at reducing income tax in certain ways, it should be in order for members to say that included in this resolution there should have been other provisions. So far as the decision of the house in the last session is concerned and its effect on the debate at this time, I would point out with great respect that the decision of the house on a motion of substance in one session cannot bind the house in a subsequent session. Therefore any decision of the house in reversing that motion has no effect whatever today.
I do not know what the intentions of the official opposition may be, but I think if the

minister would not jump in so quickly with points of order he would save himself and the committee a great deal of time. I feel that the reasonable and sensible thing to do is to give the hon. member for Kenora-Rainy River an opportunity to complete his remarks. I imagine that he is going to stay within the general framework of this resolution.


Joseph Pierre Albert Sévigny: First of all, I wish to correct the hon. member for Assiniboia. The motion to which I referred was not made at the last session but during this session on June 26. Actually, there were eight days of debate on the budget during which hon. members were given a great deal of latitude to express their views generally on the Income Tax Act. We are at the moment discussing one particular resolution, and it is my duty to ask hon. members to try to stay as close as possible to the items which are relevant to this resolution. It is, of course, permissible for an hon. member to point out the inadequacies of this resolution. However, hon. members will surely understand that it would not be permissible for hon. members to cover the complete Income Tax Act.
It is my duty at the moment to ask hon. members to stay as close as possible to the relevant items under discussion. I, therefore, ask for their co-operation with respect to this particular matter. It is not my desire to call the hon. member for Kenora-Rainy River to order on each matter he discusses. It would be appreciated if he stayed as close as possible to the items now under discussion.


William Moore Benidickson: I think you have given a ruling that is in accordance with our past practice. In the first place, at this stage one has not unlimited time. One is only provided with 30 minutes, and certainly one could not cover the whole of the Income Tax Act. In that respect, as you have ruled, one has the privilege, on a resolution of this kind, of referring to certain inadequacies. I was suggesting that this resolution is all the more inadequate because of certain expectations that had been aroused, not only in the minds of hon. members but of the general public, by the new Minister of Finance who was introducing this resolution.
I was about to indicate that he has pointed out in past days that not only did he believe that income tax exemptions should be raised from $1,000 to $1,500 for single people, but from $2,000 to $3,000 for married people.


Donald Methuen Fleming: My friend is going right ahead to do the very thing you have ruled should not be done. The house has expressed itself on the very point to which my hon. friend insists on referring, the subject of exemptions. On June 26 the house divided
Income Tax Act
on an amendment to the main motion referring specifically to exemptions, and you will find the amendment in Votes and Proceedings, page 191. The amendment introduced by the hon. member for Assiniboia reads as follows:
This house further regrets that the government contemplates no action at this session to recognize the loss of purchasing power to the majority of Canadian citizens because of the lowered value of the dollar as related to consumer goods and prices, by amending the Income Tax Act so as to raise the amount of permissible income to single and married persons without taxation.
This last clause refers to exemptions and nothing else, Mr. Chairman. The house, in the division that occurred on June 26, which is recorded on pages 191 and 192 of Votes and Proceedings, negatived that motion. With respect I suggest that that negatives that matter and precludes discussion by the committee at this present session of parliament.


William Moore Benidickson: Mr. Chairman, suppose I, without prejudice, yield on that particular point. In the few minutes that are available to me I could discuss some other inadequacies which I shall proceed to. I want to refer to some other expectations that I think all of us would have expected to find in the first budget of a new administration by the Progressive Conservative party.
One of the things that I think is regrettable is that there was no reference in the resolution to the Income Tax Act being amended with respect to accelerated depreciation at this particular time of decline in our economy. There was circulation of a questionnaire among the business men of Canada or the business firms of Canada by the tax foundation not long ago and they replied that, next to a reduction in taxes itself, the form of tax relief they thought would be most helpful to the economy would be to give a capital cost allowance on an accelerated basis under present conditions. I wanted to point out to the house that this relief was in fact provided in the last budget in Great Britain. There was a 25 per cent increase with respect to capital cost allowances in the coming years, and particularly at the present time, to encourage new investment and to be a perk-up to the economy. We see nothing of that kind in the resolution in front of us.
I do not know whether the minister proposes to have a public review of the act we are discussing. However, we all know that when he sat on this side of the house that was one of the things that he consistently and persistently advocated. We thought that there might be in these resolutions something to indicate that the Income Tax Act was going to be amended to take care

Income Tax Act
of much that we have heard about giving Canadians opportunities equal to those of foreign investors in developing the country's natural resources. In the past we have heard much about overdeduction of taxes at source. We see nothing in the resolution with respect to that matter. My hon. friend may say that some of these things can be taken care of simply in regulations. But I would have thought that in the resolution that we have pertaining to the Income Tax Act, if Canadians could have some hopes of his carrying out some of the suggestions and promises that he has made in the past, we would have had by now some notice about it.
I found very recently that in the United Kingdom-and I referred to their budget a moment ago-some steps had been taken with respect to foreign investment. I am told that since 1947 profits paid by foreign-controlled concerns in the United Kingdom to their parent companies have been treated as undistributed profits and taxed at only 3 per cent. A wholly-owned subsidiary of a Canadian concern that had been paying the standard British corporation tax of 42.5 per cent plus the 3 per cent profits tax from the last budget of last spring would henceforth be subject to a tax of 52.5 per cent. I do not know whether or not the minister is giving consideration to that matter; but certainly up to now we have had no reference to it.
The colleagues of the Minister of Finance have urged repeatedly in this house that depreciation should be doubled. We are all the more surprised that something of this nature has not been done. In addition to that, we have had the Gordon report and the commission have made reference to certain changes in the Income Tax Act that they thought would be helpful to Canadian industry vis-a-vis foreign investment. We see nothing about that matter in the resolution now before us or in anything that we have had from the minister in the debate that took place previously.
We would have thought that we could have some confidence in expecting these things all the more when we heard about the platform of the Conservative party. When they had their last national convention in 1956 we read in the Ottawa Journal that the present hon. member for Calgary South, won his case at that convention when he called for an amendment to provide tax concessions for Canadian oil and gas operators equal to those obtained by United States operators from the United States government. We see nothing with respect to this matter in the budget resolution that we have before us. I believe the convention at that time went on record

as saying that they proposed to encourage national research by a more favourable tax climate. We read nothing about that matter in the budget resolutions nor is there anything from the other side to date in that respect.
The minister has indicated that this bill amending the Income Tax Act will probably be a substantial one. He was kind enough to tell me privately that it perhaps is the largest amending bill that the committee will have had before it for some time. I have no doubt that he will follow the practice of his predecessors and when presenting a bill of that consequence and intricacy, make it possible, not only for members of the house to be able to study its provisions but also the public. There is great advantage in not proceeding too quickly to second reading with respect to a mammoth bill of that kind because it is desirable that the public at large have an opportunity to learn of its provisions.


Donald Methuen Fleming: I may assure my hon. friend that it is the intention to allow a sufficient period between first and second readings of the bill to afford hon. members as well as the interested public an opportunity to study the provisions of the bill.


William Moore Benidickson: We have a great number of new members. I think the house should be informed that there are some items which were referred to in the minister's budget speech-and which were, of course, given publicity in the press-but as to which we see no reference in the resolution before us. That is not contrary to custom by any means, Mr. Chairman. But one of these items is referred to at page 1243 of the minister's address. I refer to deductions for support of a dependent upon order of a court such as the family court. I am told it is not in the resolution because that is something possibly can be done by regulation or by amendment to the bill that we shall have coming before us.
Similarly, we see nothing in the resolutions before us with respect to working wives dividend incomes being allowed as a deduction for their husbands. That too is probably something that we are going to find in the bill when it is presented to us. Another item which received a fair amount of attention, and to which we find no reference in the resolution before us, was the reference to oil and gas producers being allowed a deduction for bonus payments in respect of exploration reservations. In my opinion, that certainly is something that even an amendment to the bill is not required for. It probably is subject to regulation.


Donald Methuen Fleming: Oh, yes. An amendment to the act would be required for that purpose and the provision is contained in the bill.


William Moore Benidickson: Mr. Chairman, there are others who, I have no doubt, have some general observations to make and I am not going to address myself to even the particular item in paragraphs Nos. 1 and 2 dealing with medical expenses but I hope to do so later.


Mr. McMillan:: Mr. Chairman, I am interested in the proposed changes in the Income Tax Act. Some of these changes I think are good. Others are minor. But none of them come up to the expectations we had when we read the minister's former speeches.
I will try to stick very closely to the act.
I remember when the former minister of finance was making a speech about two years ago he paid some tribute to the former prime minister and the present Minister of Finance said that the whole reason for that speech was to praise the former prime minister. He quoted Lord Lyttleton to the effect that there is no weapon that slays its victims so surely as well aimed praise.
I agree with the present minister's quotation. No one can deny that his praise was well aimed at the end of his baby budget speech. Yet he has survived. I do not think, however, in these budgetary resolutions that he has changed the position he previously held. The previous speaker referred to the resolution and I will try to deal with this matter item by item. Clause 1 has to do with the 3 per cent floor-


The Deputy Chairman:: May I ask the hon.
member if he wishes to speak generally or is the house now ready to go down paragraph by paragraph?


William Hector McMillan: Generally. I recall that a previous resolution was introduced to this house recommending the removal of the
3	per cent floor in relation to the deductibility of medical expenses for income tax purposes and on that occasion the present Minister of Finance said the positions of the various parties in the house were well known and that so far as Her Majesty's loyal opposition was concerned its position was unchanged and that the opposition would support the resolution. He went on at considerable length to argue that medical expenses should be deducted, not only in respect to the amount in excess of 3 per cent of the taxable income, and at that time he gave the history of this legislation. He stated that the floor had been 5 per cent and after some years had been reduced to
4	per cent and then to 3 per cent, and I
Income Tax Act
know the hon. member for Hamilton West spoke at the same time in favour of the allowing of full medical expenses. Other hon. members who are now sitting on the treasury benches also supported the hon. lady's view, some of them including such expenses as transportation costs, nurses in the home, the conveying of patients from one point to another and many other expenses.
Paragraph 1 provides that amounts paid after June 17, 1958 for drugs and medicines which have been prescribed in writing by a medical practitioner be included in the medical expenses that are deductible in computing taxable income. I know of five or six drugs which are included in this category at the present time and I note that the bill provides for the inclusion of all drugs on prescription. In recent years new drugs, including particularly the broad spectrum of antibiotics, have been very expensive. In fact they cost from 50 cents to 75 cents a tablet, and a doctor does not need to give a prescription for many such tablets to make the bill run to $10 to $15. Many of our people, particularly those in the low income groups, cannot afford to pay these high prices.
Unfortunately this amendment does not help such people. It helps those in the middle and upper income groups. In my opinion it is just as necessary for low income groups to be provided with these special drugs, and I think the minister would be well advised to consider bringing down the cost of drugs, which he could do in a very simple way by eliminating the sales tax on drugs.


Paul Joseph James Martin: They could be regarded as a necessity of life.


William Hector McMillan: Yes, I think such drugs are just as necessary as food in some cases because when there is a severe infection it is very necessary to have supplies of such antibiotics in order to save life.
The former minister of finance gave a $100 exemption to all those who did not have exemptions equalling that amount under charitable donations and medical expenses, and I am told that well over half our people came within this category. I notice that drugs must be prescribed in writing and I do know that a number of the non-narcotic drugs are prescribed over the telephone and that certain patients get repeat prescriptions several times during a year. I would like to ask the Minister of Finance whether in each case where drugs are purchased there must be a prescription and whether in the case of narcotic drugs the prescription would need to be

Income Tax Act
made in duplicate, since under our federal legislation the druggist must keep on file a copy of each prescription.
I know this would add very much to the extent of our bookkeeping systems. Those of us concerned with the field of medicine already have many forms to fill out and of course the druggists certainly have a great deal of bookkeeping of this nature. It would also add to the administrative responsibilities of the Department of National Revenue and we do not want to have too many new civil servants. We know that the Department of Finance, for instance, already has about 70 new employees this year-


Donald Methuen Fleming: That is not true.


William Hector McMillan: How many are there?


Donald Methuen Fleming: I told you so two
weeks ago.


William Hector McMillan: It may be only 69.


Donald Methuen Fleming: That is not true either.


William Hector McMillan: It is right up there somewhere. This is the sort of thing about which the present Minister of Finance spoke when he complained of the wastefulness and extravagance in the various departments of government.
Paragraph 2 includes laboratory and other diagnostic services and I am just wondering how this might work out. At present some of these services are included in hospital and medical bills. If you pay a Blue Cross premium and you have a medical bill, say of $200, that $200 is considered as the amount allowable for deduction for income tax purposes.
Now, under the new Hospital Insurance and Diagnostic Services Act, the federal government will pay roughly one-half of the cost of treatment in our hospitals. It will pay one-half of the costs of the diagnostic and laboratory services in some provinces, but the other half would be paid by the patient himself in some provinces, or by some special tax levied in the provinces. I should like to ask the Minister of Finance what allowance would be made in future. Would the full hospital bill be allowed for deduction at present, or just the amount which a particular patient contributes by way of a premium? This is going to vary in the different provinces, and unless something is done you will have people in different parts of Canada paying on a different basis as far as income tax goes. Under paragraph 3, I think the government is providing:
That for 1958 and subsequent taxation years the maximum amount deductible by corporations for

contributions to charitable organizations be increased from 5 per cent of income to 10 per cent of income.


Donald Methuen Fleming: If the hon. member would permit, I should like to suggest again, that it would contribute to an orderly discussion in committee if we approached this subject paragraph by paragraph. The hon. member, as I understood it, was making some general remarks but his remarks have all related to the first paragraph, and now he is going on to make remarks which relate to the third paragraph. I am saying the hon. member will have full opportunity to make his comments, but I suggest this should be done in an orderly way, the sections being discussed seriatim in the order in which they appear so that all hon. members who may wish to speak on a particular subject can do so during one period of time. Otherwise, we are bound to have a very discursive and disorderly discussion ranging over eight widely different matters which are mentioned in the eight different paragraphs.


William Moore Benidickson: I recall that in past years, after the general discussion had been concluded, there was universal agreement in the committee to proceed in that way. May I say to the minister, however, that in this particular case it happens that the hon. member for Welland, who is well informed on these matters, is anxious to speak on these subjects because instead of giving medical treatment, as is his usual practice, he will have to submit to medical treatment tomorrow and will not be free to make his remarks unless he can continue now.


William Hector McMillan: I acquiesce to the minister's request.


Erhart Regier: Mr. Chairman, so many points of order have been raised that it is a little hard to know what is in order or not. We, of course, intend to support the resolution. The resolution is a most necessary one, and the principle is a good one.
The resolution seems to be in line with what was promised by the Prime Minister as reported in the Ottawa Journal of May 22, 1957, when he said the Conservative party would cut unnecessary taxation to promote production which would help meet the threat of inflation. Nowadays we might amend that to read: "to cut unnecessary taxation which would promote production which would help to relieve unemployment". However, that is another matter.
Then the Prime Minister added that last year the government had over-taxed the Canadian people by $500 million, and with this I come to the main theme of the remarks

I intend to make on this resolution, in that in our opinion the concession, welcome as it may be, is entirely inadequate. Not only is it inadequate, it falls far short of the pledge which was given the taxpayers of Canada.
On May 23, 1957, the Prime Minister claimed, as reported in the Vancouver Sun, that every Canadian man, woman and child had had their pockets picked by $30. This resolution is certainly not going to help that situation very much, and I am sure that the pockets of the taxpayers are going to continue to be picked. On May 24, 1957, the same hon. gentleman is reported to have said over a C.B.C. radio broadcast: "We will put an end to excessive over-taxation." Well, it is our opinion that this resolution, taken in its entirety, falls far short in its provisions of what is needed to relieve the people from over-taxation, and this is especially important at this moment when the time is overdue for the average people of Canada to be relieved of some of the burden of taxation in order that they may be able to buy more goods and hence provide more employment in Canada. I have in mind, for instance, the section of the resolution dealing with medical expenses.
While we welcome the extra concessions that are being made, we have over the years advocated the removal of the 3 per cent floor which presently exists, and if some bold and substantial measure of relief had been intended, that proposal might well have been given greater attention. I feel that with regard to medical expenses the act at the present time is needlessly cluttered up; one may deduct such medical expenses as exceed 3 per cent of net income, but one may not deduct such expenses as are in excess of a certain percentage of income. And then, if a person has no receipts at all he may deduct $100 for medical and charitable expenses, and so on. I, for one, would like to see all medical expenses for which receipts can be produced eligible for deduction. In this respect the resolution falls far short of expectations.
I know the house has voted on exemptions for single and married people, so I may not bring in my recommendations with regard to that; there will be another opportunity of doing so. However, the allowance for dependents falls far short of being realistic when considered in relation to present day cost of living. I believe no one in this committee would claim that a dependent child between the ages of 16 and 18, for instance, can be educated, clothed and looked after on an allowance of $500 a year, and I believe it is high time, especially in the light of higher education fees, that a substantial increase should be granted in this direction.
Income Tax Act
The minister spoke at some length with regard to the principle involved in raising the percentage of income which may be deducted in respect of contributions for charitable purposes. We agree that the needs of our institutions have risen with the years and the measure he has taken-


Charles Edward Rea: Order. If the hon.
member is going to talk on individual paragraphs I would ask him to withhold some of his remarks until the committee decides to deal with this resolution paragraph by paragraph.


Erhart Regier: It was not my intention to go into detail in my discussion of the individual subject. I meant only to survey these questions in order to show the inadequacy of the resolution as a whole. I certainly hope that this particular clause is not a reflection of the government's approach to the needs of education in Canada and especially the needs of higher education because it would be a sad day indeed if our educational institutions should have to rely for their continued successful operation and expansion on the proposed amendment to the Income Tax Act.
We regret very much that the government, among other things, has not seen fit to have listed a change in the social security tax that is presently paid under the Income Tax Act. At the present time a man having a taxable income of $3,000 pays $60 as a maximum in the form of a social security tax and the man having an income of $100,000 also pays a like amount. I feel that the minister might well have compensated the loss of revenue the government is sustaining by abolishing that maximum in order that people would pay into the social security tax fund according to their ability to pay.
In the main, we welcome the resolution. However, we must at this time remind the minister that it falls far, far short of what the people of this country had been led to believe they might expect and this takes on particular significance at this time when people require additional purchasing power to meet rising costs.


Charles Edward Rea: Is the committee now prepared to discuss this resolution paragraph by paragraph?


Some hon. Members:: Agreed.


Charles Edward Rea: Shall we now discuss paragraph one?


Donald Methuen Fleming: Mr. Chairman, I have an amendment to paragraph No. 1 which I shall ask one of my colleagues to introduce. The resolution at present contemplates in this paragraph that after the effective date amounts paid for drugs and medicines which

Income Tax Act
have been prescribed in writing by a medical practitioner may be included in the medical expenses that are deductible in computing taxable income. This matter has been reviewed and I should like to indicate that the proposed amendment is intended to provide that if drugs have been prescribed by a medical practitioner and recorded by a licensed pharmacist they may be included in the medical expenses that are deductible in computing taxable income. I would ask my colleague, the Minister of National Health and Welfare, to move that amendment.


Charles Edward Rea: It has been moved by Mr. Monteith (Perth) and seconded by Mr. Macdonnell:
That paragraph 1 of the income tax resolution be amended by deleting the words "in writing" and by adding the words "and recorded by a licensed pharmacist" immediately after the words medical practitioner in line 2 thereof.
The paragraph as amended will read:
That amounts paid after June 17, 1958, for drugs and medicines which have been prescribed by a medical practitioner and recorded by a licensed pharmacist be included in the medical expenses that are deductible in computing taxable income.
Shall the amendment carry?


William Hector McMillan: Mr. Chairman, I take it that in no case is it necessary for the prescription, as such, to be sent in?


Donald Methuen Fleming: The prescription would be available for examination on the premises of the druggist, Mr. Chairman, and that would suffice.


William Hector McMillan: But what about prescriptions for non-narcotic drugs that are simply phoned in?


Donald Methuen Fleming: Those prescriptions must be recorded. I mean by that that they are in practice, so this will come clearly within the terms of the amendment.


Erhart Regier: What evidence will be required of the individual taxpayer that expenditures have in fact been made, a receipt from the pharmacist or what?


Donald Methuen Fleming: Yes, the receipt from the pharmacist under which he will have recorded the prescription.


Alan Aylesworth Macnaughton: That must be in writing, of course? There must be a written prescription recorded in the pharmacist's book?


William Hector McMillan: Mr. Chairman, I should like to ask the minister if every prescription must be recorded? For instance, a great many prescriptions are filled a dozen times or more on the basis of the original prescription. Would each prescription have to be included for each lot of medicine?


Donald Methuen Fleming: I take it that my hon. friend in his question is referring back to some of the designated drugs. With regard to those I may say that insulin, vitamin B12 and injectible liver extract are at present prescribed by a physician initially but it is usual for patients using those drugs to obtain them from their pharmacists without further reference to the initial prescription. Patients using those drugs know their dosage schedules and delays in obtaining requirements could, in some cases, prove fatal. It is intended that the amendment deal with these in such a way that receipts showing purchases of these three drugs need not have a prescription file number.


Lionel Chevrier: Mr. Chairman, when I first heard the amendment read I thought it made it easier to abide by the terms of paragraph one but now as I read it I think it makes it more difficult because what is necessary now in order to meet the terms of the first paragraph is that there must be a prescription by a medical practitioner and a recording by a licensed pharmacist. The two conditions must be there before the claim could be made, is that not right?


Donald Methuen Fleming: Yes; but you see, we are easing the requirement of the original resolution -because we are deleting the words "in writing" as applied to a prescription given by a medical practitioner. That takes care of the problem raised by the hon. member for Welland of the repeat order and the phone call.


Leon David Crestohl: Mr. Chairman, the person
requiring the prescription has no control over the druggist with regard to his recording it. He will enter a drugstore, present a prescription, receive it and leave and what the druggist does with respect to recording the prescription is something over which the customer has no control. It may not be recorded. The druggist may be careless or he may lose the prescription. The proposed amendment exposes the prospective user of that prescription to some difficulty. He may have a receipt but there may be no record of it in the drugstore through no fault of his own but through the fault of the druggist.


Donald Methuen Fleming: It is obvious that if the individual in question wishes to claim the expenditure as a deduction by way of medical expenses he will have to be in a position to produce a receipt. Obviously when he makes a purchase he will have to see to it that what the law requires is done, both on his own part in obtaining a receipt and on the part of the druggist in recording it. That is only fair. I am quite sure my hon. friend does not expect the Department of National

Revenue to supply proof in these cases. The taxpayer will have to see to it that he preserves his receipts as he now does with respect to his other receipts that he intends to use for medical deductions.


Leon David Crestohl: The minister is perfectly right. I go along with that. The taxpayer will go in and buy and will get a receipt and go home, but from that moment he loses control over what transpires with the prescription behind the counter and in the druggist's office. He cannot go in there and watch to make sure that his prescription is recorded.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Joseph Pierre Albert Sévigny: When the committee adjourned at six o'clock we were discussing an amendment to paragraph 1 which reads as follows:
That paragraph 1 of the income tax resolution be amended by deleting the words "in writing" and by adding the words "and recorded by a licensed pharmacist" immediately after the words medical practitioner in line 2 thereof.
As amended will read:
That amounts paid after June 17, 1958, for drugs and medicines which have been prescribed by a medical practitioner and recorded by a licensed pharmacist be included in the medical expenses that are deductible in computing taxable income.
Shall the amendment carry?


Donald Methuen Fleming: Perhaps I should say just a word in reply to the question put by the hon. member for Cartier at six o'clock. The case he put, Mr. Chairman, is covered by the fact that the pharmacist has the record, for he must by law, keep a record of the sale. I think that is the complete answer to my hon. friend's question. He must do so as a matter of law.
I might add that this resolution and the amendment have been discussed with both the Department of National Health and Welfare and representatives of the Canadian pharmacists association. The amendment accords with the views that have been expressed by both of these sources.


William Hector McMillan: I should like to know the mechanism that will be used under this amended section to claim the cost of drugs as a deduction. Must you send in the druggist's receipt plus the prescription?


Donald Methuen Fleming: The taxpayer does not send in the prescription to the Department of National Revenue when he files his income tax return. He sends in his receipt,
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just as he does in connection with other elements in his claim for medical deduction, his receipt for the doctor's account, for the hospital account and others. He simply sends in his receipts, and the receipts will bear a reference to the prescription which is filed with the druggist.


William Hector McMillan: If the drugs were ordered from the druggist by telephone, and the druggist made a note that they were ordered by telephone would the receipts given under those conditions be considered valid by the department?


Donald Methuen Fleming: Yes, if the drugs in that case were, in fact, prescribed by the medical practitioner and were recorded by a licensed pharmacist, the cost of the drugs in that case would be treated as allowable medical deductions.


Joseph Pierre Albert Sévigny: Shall the amendment carry?


[Stage Direction]
Amendment agreed to.
Lionel Chevrier: Shall the clause as amended carry?


Donald Methuen Fleming: I take it, Mr. Chairman, you have put the amendment first. We are not adopting the paragraphs individually. As I understand it, there is only one resolution before the committee and there is only one motion for adoption of the resolution which will be put after we have gone through the eight paragraphs. An amendment at any time would have to be put.


Lionel Chevrier: If I understand the discussion aright, the amendment has now carried. It is the intention to dispose of this resolution clause by clause, so the amendment having carried is the clause still open for discussion?


Donald Methuen Fleming: Probably my friend did not hear the discussion this afternoon. There is only one resolution before the committee. This one resolution has eight paragraphs to it. It was agreed this afternoon that in the interests of orderly discussion the paragraphs should be called seriatim and the discussion in each case would necessarily be relevant to the particular paragraph. At the conclusion, one motion would be put for adoption of the resolution as amended.
Amendments, of course, could be introduced to any paragraph at any time. I take it that if there is no further discussion sought on paragraph 1, then the chairman would now be calling paragraph 2.


William Moore Benidickson: I was under a misapprehension. I thought probably the amendment was being put to regularize the paragraph. I should like to ask a few more questions on item No. 1.

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Donald Methuen Fleming: As amended.


William Moore Benidickson: As amended. Could the minister indicate to us just what he estimates will be the cost to the treasury of both paragraph 1 and paragraph 2?


Donald Methuen Fleming: From $4 million to $5 million.


William Moore Benidickson: In a full fiscal year?


Donald Methuen Fleming: In a full fiscal year.


Leon David Crestohl: If we do, finally dispose of paragraph 1, we automatically go on to paragraph 2 and so on to paragraph 8, and take one vote. Does that leave the door open, while we are at paragraph 5, for someone to revert to paragraph 1 if he so desires?


Donald Methuen Fleming: I take it that would mean chaos in our proceedings. What was agreed upon this afternoon, in the general interests of orderly discussion, was that each paragraph would be called seriatim. If there is no further discussion, then the chairman will proceed to call the next paragraph. The discussion on the previous paragraph would then have been exhausted and closed.


Leon David Crestohl: I agree with you on that. I was just asking for clarification of the procedure.


Joseph Pierre Albert Sévigny: Is there further discussion on paragraph 1?


William Moore Benidickson: Yes. I was interested in hearing the remarks of the hon. member for Welland. I thought they were well taken. I am sure that he knows his suggestion with respect to the elimination of sales tax on drugs was last month endorsed by a very important organization, the national council of women.


Donald Methuen Fleming: With respect, Mr. Chairman, we are not discussing the sales tax now. We are discussing the amendment to the Income Tax Act, and the sales tax on drugs is surely not relevant.


William Moore Benidickson: That is correct, but my next point was going to be that any concession that might be made from the point of view of foregoing revenue might be better done this way because, as the hon. member for Welland indicated, there are a great number of people who are not taxpayers. Those, of course, are the more poorly off people of the country. This measure does not provide them with any benefit so far as their expenditures for drugs are concerned. I may be one year out of date but I have here readily available the 1956 tax statistics, and I think they have reference to the 1954 tax returns. There one
will find that the taxable returns were 3,410,160 and the non-taxable returns were 1,393,250. In addition to that, of course, a number of people are not even called upon to put in a return. I just wanted to commend the hon. member for Welland for his remarks. He, of course, referred to the fact that he too was surprised that this resolution had not gone further. I find that at least on a number of occasions in recent years the Minister of Finance associated himself with his party in indicating in his vote in this house that he felt the floor itself should be removed. I refer to the vote on January 30, 1956; the vote on February 14, 1955; and the vote on January 18, 1954.


Donald Methuen Fleming: With the exception of that last date my hon. friend voted against the proposal on each occasion and his party did so also.


William Moore Benidickson: My hon. friend may be talking about consistency but I am simply pointing out to him that we expected some consistency from him when he on three occasions indicated to the public at large this was something about which he felt vehemently and on those occasions voted that the floor be removed. As the hon. member for Welland has indicated, either that procedure or the elimination of the sales tax would be more beneficial than the resolution we have before us tonight.


Mr. Mitchell:: Mr. Chairman, I am concerned about part of this resolution. I believe the minister will know what I am speaking about as I have already drawn the matter to his attention. I refer to the wording of this resolution which has to do with the deduction of medication for income tax purposes. I spoke about the matter previously. I should like to draw to the attention of the minister and his department that the resolution, as it is worded, says "prescribed in writing" or words to that effect.


Donald Methuen Fleming: Mr. Chairman, I do not know whether my hon. friend has just come into the chamber. I may tell him that the resolution has been amended. I think the amendment fully covers the point my hon. friend has in mind.


David Rodger Mitchell: I thank the minister. That is all that I was concerned about.


Joseph Pierre Albert Sévigny: Is there any further discussion on paragraph 1?


Some hon. Members:: Carried.


Joseph Pierre Albert Sévigny: Shall we proceed to paragraph 2?


Some hon. Members:: Agreed.


William Hector McMillan: In connection with paragraph 2 I have a question. When the Hospital Insurance and Diagnostic Services Act is in operation, as it is now in parts of Canada, I should like to know what part of the hospital bill will be deductible in respect of income tax.


Donald Methuen Fleming: The entire bill, just as at present. The statute to which my hon. friend has referred has not changed the situation, and the Income Tax Act is not being amended in that respect. The position is just the same as if today the taxpayer's hospital account was paid by his insurance company.


William Hector McMillan: Then it means that they would get the part that the federal government pays, Vhich is roughly 50 per cent of the treatment in the general hospital. They will be able to deduct that part in respect of their income tax.


Donald Methuen Fleming: That is not what I said, Mr. Chairman. I said that the hospital account would be admissible just as at present if it were paid by an insurance company. There is no change in the position in that respect. I am not saying what the situation might be or what the new situation brought about by the act may call for later on. But as things stand now, no change is made in the law in that respect.


William Hector McMillan: That act is in operation now in certain provinces in Canada. I should like to know what will happen in connection with taxpayers making claims in those provinces, and whether the total hospital bill would be presented or just the part that was not paid by the dominion government.


Donald Methuen Fleming: Whatever the account is, as rendered to the taxpayer, and is paid. Under the provisions of the new act, whatever that hospital account is it is treated just as is the hospital account today that is paid on behalf of the taxpayer by his insurance company. I cannot put it any more clearly than that.


William Hector McMillan: Suppose no account is
rendered to the patient in hospital and his bill is paid half by the federal government and the other half by the provincial government where the money is raised say by a sales tax?


Donald Methuen Fleming: In order to have the benefit of a deduction he must be in a position to produce a receipted hospital account.


William Moore Benidickson: And it must be more than 3 per cent of his income.


Donald Methuen Fleming: Yes. But what I mean is that in order to qualify at all, he
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must be able to produce a receipted hospital account in the case put by my hon. friend. It is not everybody who will be under the scheme in any of the provinces in which the new systems come into effect on July 1. What the method will be in any particular province I would not be prepared to say now, or as to the practice of the hospital; but if he produces a receipted hospital account, a bona fide account duly receipted, then it will qualify as a medical expense.


William Hector McMillan: That would therefore mean that in certain provinces where he pays a premium, he might pay half his hospital account; and in another province where the province is contributing the whole thing he would be presented with no hospital account. Hence people in different provinces would be treated differently.


Donald Methuen Fleming: There is no province now of which I am aware that is paying the entire cost. Those provinces that had hospital insurance schemes are the ones that are coming in now under the provisions of the new act with effect from July 1.


William Moore Benidickson: In the province of British Columbia, where I believe the hospital scheme is paid for in large part by a retail sales tax of 5% levied by the province, is it possible for a resident to submit his hospital bills if he requires hospitalization in the course of the year and it appears worth while in that these bills with the other medical bills, go beyond 3 per cent of his income.


Donald Methuen Fleming: It is not the method of the payment of the premium under the provincial scheme that governs whether the hospital account is a deductible medical expense. It is whether the hospital renders an account and the taxpayer is in a position to produce a receipted account. In that particular case the yield from the sales tax, of course, is turned over to those responsible for operating the hospital scheme. But that is not the determining factor in relation to the test of eligibility of the account to rank as a medical expense.


William Moore Benidickson: I do not quite understand my hon. friend. Let us consider the situation that has existed up until now in the province of Ontario where I think probably 75 per cent of the wage earners are now enrolled in Blue Cross.
Blue Cross is an organization supported by premiums which more or less equal the outgo in respect of all accounts presented to Blue Cross by the hospitals. It has been my understanding that an individual has never been able to render to the Department of National Revenue for deduction from income

Income Tax Act
tax the cost as a medical expense his premium, but if he does require hospitalization the hospital does not render him an account and he does not have to pay anything. But he can go, to the hospital and ask for a statement of what the charges would have been had he not been insured, and it is that statement which is submitted to the Department of National Revenue. This was why I raised the query with respect to British Columbia where there is no exact fixed premium but there is of course the retail sales tax which is supposed to support the hospitals in that province, or has been supposed to do so up until now.


Donald Methuen Fleming: At the risk of repetition, may I say that it is the receipted account which is the prerequisite, indeed the test of eligibility for an account to rank as a medical expense. It is not the premium, however collected or however paid, which is the determining factor. Indeed for this purpose it is not relevant. It is the receipted account of the hospital that governs the decision.


Leon David Crestohl: I would like to refer to the language of this paragraph which refers to transportation to or from a hospital by ambulance which may be included under medical expenses. Perhaps the minister may be able to give some clarification on this point having regard to the following situations which might arise. One can easily conceive, for example, that someone in, say Seven Islands has an accident and must be rushed to hospital by plane. A plane is not necessarily an ambulance but it could perhaps be called an ambulance for this purpose. Secondly, there may be a case where a plane would have to go to a place such as Sudbury on the instructions of the doctor treating a patient there in order to transport the patient to Montreal for treatment. Even though such a patient is not transported by ambulance such a conveyance might be called an ambulance in this case also. Then there is a third possibility, where a person has to be rushed to hospital and there is no ambulance, as such, available.
Would the transportation in each of the three cases to which I have referred be covered?


Donald Methuen Fleming: The answer in all three cases is no.


Hazen Robert Argue: May I ask the minister what would be the position in a case where there is a regular air ambulance service as there is in the province from which I come? Such service, as the minister well knows, has saved a great many lives. It is a standard service and has been in operation for more than ten years. There is a registered nurse on the

plane at all times and all the facilities are available which would be available in an ambulance, including those for the administration of oxygen when necessary.
It seems to me that in such an instance an air ambulance service is just as much an ambulance service as it would be if it were on four wheels on the ground. I would think the minister would not wish to place the federal government in the position where it would deny the cost of a service which is, and for some time past has been, largely although not wholly subsidized by the provincial government. The person who is being transported is charged a flat fee, which varies in one or two minor ways but is in the neighbourhood of $25 to $35. After the air ambulance lands at the airporj a regular ambulance, the automobile variety, picks up the patient and takes him to the hospital.
The cost of the automobile ambulance is a few dollars less than the $25 to $35 charge for the air ambulance service but in view of the fact that this air service is a regular one-it is very definitely an ambulance- assisting in the saving of many, many lives,
I feel the minister should favourably consider this request.


Donald Methuen Fleming: It is not possible for me to give a categorical answer to my hon. friend, but I think in many instances an airplane could not in any sense be regarded as an ambulance. If, however, such an airplane is equipped and used for no other purpose than the transportation of the sick, maimed or injured, then I would think the Department of National Revenue would be disposed to look favourably on such a case, provided it were properly substantiated. I emphasize, however, that the plane must be confined with respect to its equipment and use to that purpose and to no other.


Hazen Robert Argue: Emergency situations might arise which would cause the plane to be used perhaps once or twice a year for some other purpose but this is a regular service and the plane at least 99 times out of 100 is used for the purposes of transportation of patients only. The plane will not take off unless a doctor has ordered the plane to pick up a patient at some outlying point and unless that doctor already has available a bed in the hospital for such patient. I would therefore think such a proposition would be on all fours with one concerning any other ambulance service.


Donald Methuen Fleming: If those are the circumstances I think the Department of National Revenue would rule such a plane to be an ambulance.


Hazen Robert Argue: I thank the minister very much for his answer. I see he has been in consultation with the Minister of National Revenue who probably knows that this is a regular service on a province-wide basis. I believe anyone receiving a bill from the Saskatchewan air ambulance service, on the face of it, has a bona fide claim under this paragraph.


Leon David Crestohl: I am wondering if the
minister's negative answer to the three questions I put to him is altogether in fulfilment of the spirit prompting this legislation, especially if the legislation is indeed intended to offer relief from stress caused by illness. The language used is "transportation to or from a hospital". It does not speak of transportation within any limits, and if it was intended to restrict the coverage to certain areas the wording should be
within a radius of 50 miles from a hospital" or "20 miles" or some other distance.
Since the proposed legislation does not specify a limit to the distance over which an invalid may be transported then I think the minister should perhaps reconsider his answer. One can easily conceive that even an automobile ambulance might have to transport a patient over a distance of 300 or 500 miles. Would such a case be covered?
I do not see that any citizen who finds it impossible to obtain an ambulance, in the sense that we understand the word-fully equipped and on four wheels-should be prejudiced in any way by this lack of transportation, or because no roads are available.
I do not think such a citizen should suffer because the only means of transport is by air, and I think the minister might give some consideration to the merit of allowing the deduction to a person who has to be transported to hospital in this way.


Donald Methuen Fleming: I can assure the hon. member that the minister has a big and sympathetic heart with regard to these considerations, and I only wish he had spoken as forcefully when he was sitting on this side of the house in support of a proposal to offer some relief to those who incur expenditure through being transported to or from hospitals. This is the first time in the history of Canadian income tax legislation that any legislative proposal has been put before parliament for permitting any form of transportation expense to be included as a deduction for income tax purposes. This is the first time.
We cannot include every form of transportation; the difficulties of administration and enforcement would be almost insuperable if this provision were thrown wide open. If expenditure on, say, taxis were to be
57071-3-134J
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allowed I do not know how you would effectively enforce the act, because who is going to check all these cases? We considered all aspects of the matter and came to the conclusion that limitation of the vehicle was the only effective means of fair and adequate enforcement of the regulations by the officers of the Department of National Revenue, It will be the nature of the vehicle used to transport the patient to and from hospital which will determine whether the expenditure qualifies under this provision.


Herbert Wilfred Herridge: Having listened carefully to the minister's answers to repeated questions I do want to say that he has deeply failed on this occasion to use the English language with his usual exactitude. When we want to find out the meaning of the words which the minister uses in his eloquent and vehement speeches we are in the habit of referring to dictionaries in order to get his meaning, and the same is true when it comes to an act. If you want to understand an act you look in a dictionary. I have looked in a dictionary to find out the meaning of the word "ambulance", and the dictionary describes it as "a conveyance for sick and wounded persons". So unless there is a further definition added, I am convinced that if someone challenged a case before the courts the judge would have to refer to the Oxford dictionary or to some accepted dictionary in order to find out the meaning of the word. I think the word used here is far too broad, and that without further definition it would create misunderstanding.
In addition, I cannot see why the allowance should be confined to ambulances of a certain type, because we have so many instances in this country where it is not possible to get the normal type of ambulance when sickness or accidents occur. I am glad to see that the Minister of National Revenue has his ears cocked my way. The hon. member for Cartier has mentioned one such instance. In the area from which I come we often have to use water taxis or launches in order to convey injured persons over long stretches of water to hospitals. Surely, a person who has to incur considerable expense in this way should be in the same position as one who takes an ambulance' for a mile or two in a city. In addition, we have such a thing as horse ambulances because roads are often not good enough to-enable us to get out men who have been injured and, on other occasions, I remember that pack and saddle horses have been used to get men to hospital from mountain tops.
I suggest, then, that the term now used is far too broad and that the minister's replies

Income Tax Act
are not related to the dictionary definition o 1 the word "ambulance". I think he is in for a lot of trouble unless he adds some interpretation to the legislation. In addition, I want to emphasize that I cannot see the fairness of confining this to cases where a particular type of ambulance is used, mostly over paved roads and for short distances, while the people who live in the backwoods, the people who work in the mines and mills and woods and who produce a great deal of the natural wealth which keeps the wheels of industry in this country turning are unfairly dealt with.


Mr. Habel:: I am fully in agreement with the remarks which have been made by the hon. member for Kootenay West. In the district in which I live we have a very good hospital and we have very good doctors. However, on many occasions a doctor will be unable to perform an operation and patients have to be sent to Toronto. In such cases patients are sent on doctor's orders and they have to travel either by train or by air. It is a very costly trip, representing a journey of 575 miles, and if this act is intended to give relief to the taxpayers it seems to me it should apply to transportation of this kind as well, unless the minister wants to make a big impression with a little concession.


Mr. Granger:: Mr. Chairman, in Newfoundland and in many parts of northern Newfoundland and Labrador the air ambulance is the only kind of ambulance there is, and the government of Newfoundland has purchased suitable aircraft for use in taking patients to hospital in an emergency. Despite the existence of these official air ambulances it is necessary at times to use planes and helicopters which are normally engaged on other work. I should like to think that people transported in such aircraft being used as ambulances will come within the provisions of the act.


Leon David Crestohl: I am quite sure the minister knows that there are hundreds of villages in Canada where there are no ambulances at all. An invalid might have to be transported from one village to a neighbouring village, a little larger, where there is some hospital service. A citizen who hires a taxi or who rents an automobile, or a conveyance of some kind, and who has to spend a certain sum of money should surely be entitled to deduct that expenditure even though, strictly speaking, he did not use a vehicle with a red cross on it marked with the word "ambulance". I think that is the intention of this amendment. The intention is to confer a benefit on people so that they may have certain advantages
[Mr. Herridge.l
with respect to medical expenses being deducted, and it should not be so restricted as to apply in practice only to people who live in cities where ambulances are available; it should confer an equal benefit on all Canadian citizens.


Donald Methuen Fleming: Mr. Chairman, I have already explained to my hon. friend why, after very careful consideration, it was found not possible to extend this benefit more widely. The difficulties of enforcement were found to be insuperable. If the committee wants that point met and if the objection is going to be pressed it may be that my hon. friends will just talk the taxpayer out of getting this opportunity to have a deduction with respect to expenditures made on ambulances because I can assure the hon. gentleman that this and the other questions he has raised were very carefully considered and the difficulties in the way of enforcement were found to be insuperable.


Mr. Carter:: Mr. Chairman, I can tell the minister that as far as my riding is concerned there is no ambulance. In order for a person in a remote area to get to a hospital he must hire a taxi and travel anywhere from 80 to 100 miles or he must hire a boat and travel 50 or 60 miles at considerable expense. No one in my riding can benefit from this proposal. I do not think we should put on our statute books legislation that discriminates between one taxpayer and another. We should treat all taxpayers alike.


Leon David Crestohl: Mr. Chairman, I should like to point something out to the minister with which I think he will agree. In paragraph No. 1 the minister was ingenious enough to find a method of designating what medical expenses can be deducted. He placed, as it were, an identity card upon those drugs which can be deducted when he established that they must be procured by prescription from a physician. I believe a means of identification could be found in the present instance, too. If the law were to read that the vehicle was deemed necessary by a duly qualified practitioner and that it was required for an emergency and should therefore be a deductible expense, that would be a means of identifying it.


Donald Methuen Fleming: All I can suggest to my hon. friend, Mr. Chairman, is that he give us a chance to work this proposal out on the present basis. In time we will see what we can do. We started out to try to help the taxpayer by this means. We have gone as far as we can see the possibility of effective enforcement in the measure before us. All I can suggest in the face of that is that we are trying to help the taxpayer who incurs

expense in being transported to a hospital. I urge hon. gentlemen opposite to give it a trial and provide an opportunity for the department to work with it and we will see what can be done. That is all I can suggest to my hon. friends under the present circumstances.


Leon David Crestohl: That is fair enough.


William Moore Benidickson: Mr. Chairman, we all commend the minister for taking this forward step with respect to transportation for the sick but may I point out that it is not unusual at this stage in the discussion of budget resolutions for the Minister of Finance to be impressed with a suggestion receiving support from hon. members all across the house and the administration reconsiders the bill. This suggestion certainly has an appeal to me on the basis of its reasonableness. It is not at all unusual to amend a proposed bill on the floor. I think the minister could go one step further than just saying, "Let us examine it in another year." Between now and second reading of the bill I believe that he and his officials could examine this proposal and bring in a measure that is considerably more likely to equate the situation for all people across Canada.


Donald Methuen Fleming: Mr. Chairman, if the suggestion were new I should have no hesitation at all in acceding to my hon. friend's proposal but I repeat that it is not new. We considered this matter in all its ramifications very carefully and, I might add, at very great length. Here we have gone as far as we can see the effective limits of enforcement. I do not think I can do more than suggest what I suggested to hon. members earlier in reply to the last remarks of my friend the hon. member for Cartier.


Chesley William Carter: Mr. Chairman, could I offer another suggestion to the minister. When he calculated the amount that this measure would cost the treasury he must have had in mind some average figure representing the cost of an ambulance, perhaps $15 or $20. Why not put a similar limit on with respect to deductibility and let everyone who incurs expenses benefit to that extent?


Donald Methuen Fleming: Mr. Chairman,
that does not overcome the problem of enforcement in regard to somebody who takes a taxi ride. You cannot enforce a provision that is related to a taxi ride; that is just the difficulty.


Chesley William Carter: But surely the hospital
authorities could certify the expenditure?


Donald Methuen Fleming: The hospital does not pay the taxi driver.
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William Moore Benidickson: Mr. Chairman, could I put this question to the minister. Would it be on a par with past practice if the doctor added the cost of transportation to his bill and rendered it to the patient in the same way as in the past we know that doctors have provided drugs and added the cost to their bill? Such expenditures were recognized for tax deduction by the taxation division of the Department of National Revenue.


Donald Methuen Fleming: I am afraid it is not analagous to the cost of a prescription for which I argued for many a long year and with respect to which my hon. friend and those associated with him would not accede.


William Moore Benidickson: My hon. friend knows that the former administration took a very careful look at the question of drugs and because of the argument that drugs were an important item of medical expenditure it deliberately lowered the floor from 5 per cent to 4 per cent stating at the time that it was doing so for the purpose of recognizing that about 1 per cent of medical expenditures of this nature on average were for drugs. Also the then administration made it clear that in doing so the administration was saving the taxpayer a lot of money by not having officials examine small accounts and conduct correspondence about them.


Mr. Nasserden:: Mr. Chairman, I like the way this particular paragraph reads just as it is and I think it should remain in this form because when you take a ride in an ambulance you have more than transportation, you also receive medical attention. I should like to see the word "licensed" inserted before the word "ambulance" in this paragraph. As hon. gentlemen probably know, we have a very good hospital plan in the province of Saskatchewan.


Some hon. Members:: Hear, hear.


Edward Nasserden: I expected this would draw applause and particularly from hon. members of the C.C.F. group and those from Saskatchewan. We are all proud of the plan we have there. We also have a splendid air ambulance service which will go into any part of the province. May I suggest to those hon. members who have been wondering what they can do in their part of the country and how they could benefit under the terms of this measure that they should perhaps try to establish an air ambulance service in their areas as well.


Mr. Peters:: Maybe a good C.C.F. government would be a solution.

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Edward Nasserden: The people of the province of Saskatchewan wanted it and we do not think the C.C.F. should claim all the credit for it.


William Arnold Peters: It is the only province that has it.


Edward Nasserden: I should like to see it left as it is and I know that the people of Saskatchewan will welcome it as just one more forward step taken by this government for the benefit of Canadians.


Mr. Fisher:: Mr. Chairman, I wonder if in considering this the minister and his officials really did consider the back areas of the country where there are vast distances to cover. It is all right for the minister to say that there are difficulties involved in keeping track of taxi fares but that is not a satisfactory answer. The country in northern and northwestern Ontario and other parts of Canada has been famous for its mercy flights. Hundreds of families have been assisted in bringing out people from distant parts who require urgent medical attention. In all common sense I cannot see why this sort of flight which is made at a tremendous expense to the patient or his parents could not be checked and certified by a doctor or hospital authority. The provision before us may be all very fine for the people in Crest-wood Heights but it does not do anything for people in places along the northshore area or in the bush country.


Leon David Crestohl: Where is Crestwood Heights?


Douglas Mason Fisher: It is a figment of some sociologist's imagination. It is in North Toronto not very far from where the minister comes. As a matter of fact, a very interesting book has been written about it and you might get more of an idea, Mr. Chairman, about the background of the hon. member for Eglinton if you had a look at it. That is getting away from the point. This matter should be gone into more thoroughly and a more attractive answer or reason given than the one the minister presented.


William Hector McMillan: If I may go back to hospital charges I should like to ask one question. Suppose a person now goes to a hospital in Ontario and is covered by Blue Cross. If he has a bill of $300 Blue Cross will pay the bill and the patient will get the receipt. Suppose the same thing happens after January 1 next when the Ontario hospital insurance scheme comes into effect. Will the department accept a receipt in full for $300 or will they only accept a receipt for about $150 because the federal government will be paying about half the hospital bill? Suppose we take Saskatchewan where there are no direct contributions
IMr. Peters.]
in the form of premiums. What would the department accept there in the case of a patient with the same number of hospital days, the same services and the same charge? Would they get their $300 just the same?


Donald Methuen Fleming: I must point out that this matter was fully discussed and I answered that question as fully and as adequately as I can when my hon. friend asked it four or five times half an hour ago. I point out also that the question does not arise under the present paragraph at all. If my hon. friend is not content with the answer I gave him earlier then I think it is a case where probably he can communicate with the Department of National Revenue. It is something which does not arise out of these amendments at all.


William Moore Benidickson: I do not begrudge at all to the minister credit for the improvements made under clause 2 of the resolution. I note with pleasure that eyeglasses are one of the expenditures that from now on may be included if a person's total expenditures exceed three per cent of his income. But looking at it in a practical way I think that people are going to have to break a lot of eyeglasses for this to mean very much. The hon. member for Welland indicated that he thought that perhaps 50 per cent of the taxpayers would get no benefit from this section because they would be benefiting under the standard $100 exemption made available last year in Mr. Harris' budget.
I would go further and ask whether the minister would quarrel with an estimate I have in my mind that the percentage of taxpayers with less than $100 claimed for such deductions in the past and who would thus utilize the standard exemption would not be 50 per cent but nearer to 70 per cent. I notice that the Minister of National Revenue, the minister's colleague in these budget matters, is sitting next to the minister. From reading the newspapers a lot of people think that the exemption with respect to eyeglasses means that the total cost of the eyeglasses will come off their income tax bill. That, of course, is not the case. Their income tax rate would be what would determine what portion they would save on the total cost of the glasses.
In the first income taxable range the tax rate is 15 per cent so in that case they would only save 15 per cent of the cost of the glasses. It has come to the attention of all of us, that during the time the Minister of National Revenue has assumed duties of tax collection, that in Vancouver, as we were sorry to learn, something in the nature of a kickback system has been in operation involving the purchase of glasses. As I recall

the circumstances the kickback to the doctors was unknown to the purchasers of glasses and amounted to anywhere from 25 per cent to 33i per cent of the cost of the glasses.
Therefore I say that while there might be a 15 per cent saving for somebody whose total expenditures were over three per cent of his income, nevertheless it would only apply to 30 per cent of our total taxpayers. If the Minister of National Revenue can assure us he is looking into this situation on a nationwide basis I think that is probably the best thing we can do for most people who are obliged to buy glasses.


George Clyde Nowlan: I think the hon. member can accept my assurance in that respect, that the matter is being fully investigated across Canada.


Leon David Crestohl: Could the minister tell us whether the cost of earphones for people who are hard of hearing is deductible?


Donald Methuen Fleming: They are already allowed under the act and have been for some time.


Joseph Pierre Albert Sévigny: Clause 3.


Alan Aylesworth Macnaughton: I am particularly happy that under this clause the minister has increased the exemption for contributions to charitable organizations from five per cent to ten per cent. He himself referred to the great need of universities and colleges for additional money. We all know that with the increasing need for additional classroom space, equipment, more money for salaries for professors and so on, this can be a very helpful provision. I should like to ask the minister one or two questions. In his budget address he said, as found on page 1244 of Hansard of June 17:
-far too many corporations do not come close to taking advantage of the present five per cent limit; but I am glad to say that many corporations do take their responsibilities in these matters seriously.	,
He was making the point that under this provision private Canadian corporations can make greater contributions to universities and colleges. That is particularly important in the province of Quebec where in effect government gifts without strings attached are, I think we can assume, not altogether popular at the moment. Therefore private enterprise will have to make up the difference to meet the tremendous needs of colleges and universities in the immediate future.
My first question is: Has the minister any figures or is he able to give us any percentage of Canadian corporations which do contribute under this provision? Second, would the minister tell us what "charitable organizations" means? Can he define it? I am well
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aware that section 62 (1) (e) of the act defines it to a certain degree but would the term "charitable organizations" apply to charitable trusts, non-profit corporations, low cost housing corporations, provincial governments and Canadian municipalities. I also understand that the 1957 amendment permitted the excess of donations over five per cent, now ten per cent, to be deducted the following year. Does this still remain in force?


Donald Methuen Fleming: On the first point, Mr. Chairman, according to the statistics for the last year available, 1956, corporations contributed in round figures $32 million to charitable organizations within the meaning of the Income Tax Act, and that was one per cent of their income. On the average they have not been contributing up to the five per cent. Some have, and encouragement is being given, we hope, by the proposed amendment to all corporations to contribute more generously to the support of charitable organizations.
On the second point, there is no change brought about by the proposed amendment in the definition of "charitable organizations" under section 62 (1) (e) of the act.
On the third point, the matter of carrying forward, the answer is yes, the carry-forward still obtains.


Mr. Caron:: During his budget speech the minister said that the increase from 5 per cent to 10 per cent was given especially to help education. If I recall well, he said that evening that educational institutions were counting too much on the government and private corporations had to do their share. I see by the wording of the amendment that the exemption for contributions to charitable organizations by corporations is to be increased from 5 per cent to 10 per cent. If it was the intention of the minister that this money should go for education, why did he not make special provision for a 10 per cent deduction for contributions to education and a 5 per cent deduction for other charitable purposes?


Donald Methuen Fleming: I made a special plea to corporations to give support to education through universities for a particular reason, but I did not suggest that the purpose for which the act now recognizes a deduction should be confined to gifts to universities. I did indicate in my budget speech that the deduction would apply in the case of gifts to charitable organizations. The one change this resolution would make in the act would be to change the one figure, the figure 5 to the figure 10.
Hon. members are aware that strong efforts have been made, in the last several years

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particularly, to put before corporations a plea that they recognize their responsibility in a special degree in connection with university education, and particularly corporations engaged in technical pursuits. A strong plea has been made to them by many enterprises of a philanthropic nature to assist in education. I think that while this amendment does not attempt to narrow in any way the definition of charitable organizations under the act, nevertheless there is reason to hope that corporations will look with particular favour on the plea that they support, through charitable donations in their normal budgets, university education.
There are obvious reasons. Corporations are not subject in the same way as individuals to pleas for support for ordinary church or religious works, and many corporations do not feel disposed to contribute, as individuals do, to the support of church and religious organizations but those corporations will, nevertheless, respond to an appeal to contribute to the assistance of university education.


Leon David Crestohl: If I understood the minister correctly, I believe he said that the corporations of our country have contributed but one per cent towards these charitable institutions.


Donald Methuen Fleming: It is not a good enough record.


Leon David Crestohl: I was going to say that that certainly is not very commendable. In other words, they had a latitude of an additional four per cent of which they did not take advantage.


Donald Methuen Fleming: Many of them did not.


Leon David Crestohl: I am speaking of the average. I am wondering whether the addition of five per cent would merely widen the margin of deficiency, of neglect or carelessness or avoidance of responsibility. I am wondering whether or not that would give them much encouragement because, in my judgment, they are extremely delinquent in complying with the possibilities.
What I say may be a bit drastic, Mr. Chairman, but I am wondering whether or not the law could not be changed to compel corporations to take full advantage of that exemption. If, for example, a tax were imposed on corporation profits to the extent of five per cent-I will not go as high as the ten per cent which the minister suggests-the revenue from that tax could be used to create a fund to be distributed amongst educational and charitable institutions. In other words, we could compel corporations of this country to take advantage of the possible exemption.


Donald Methuen Fleming: I think my hon. friend will agree with me that the penalty imposed on corporations by the law today for not contributing up to the permissible percentage to charitable organizations is pretty heavy. It is 47 per cent, and that is a very stiff kind of penalty to impose. I think my hon. friend will agree with me on that.


Leon David Crestohl: That is the perfect answer.


Donald Methuen Fleming: In the second
place, I think the increase from five per cent to 10 per cent in the permissible percentage will have the effect for which he and I are arguing. In the first place, there are some corporations that do today contribute up to the full permissible five per cent, and would contribute more if the law permitted them to do so without penalty. In those cases, certainly there will be more generous contributions in view of the proposed increase from five per cent to ten per cent. But in addition, I think in the case of those corporations which have not been contributing hitherto up to the full permissible five per cent there will now be greater consciousness of the opportunity that is given to them and the social responsibility that goes with it. It may well be that some corporations have fought shy of some charitable appeals on the theory that they might, somehow or other, at the end of the year be crowding their five per cent. They will not be quite so apprehensive in the late months of the year of crowding ten per cent. I have some hope that more corporations, and I tried to put it rather strongly in the budget speech, will now recognize their social responsibilities in this respect.


Alan Aylesworth Macnaughton: It might be just as well to point out that before we force corporations to contribute up to five per cent or ten per cent we should make sure that they have profits of five per cent or ten per cent.


William Moore Benidickson: Since 1941 there has been a standard spread between the allowable charitable deduction with respect to individuals of 10 per cent and corporations at five per cent. I was wondering why, when he was raising the maximum deduction in case of corporations, he did not see fit to do likewise also in the case of individuals. The minister in his remarks indicated that he felt individuals had appeals for religious and local charitable donations that were not so regularly accepted by corporations. 1 suggest to him that perhaps the individual has both, he has the appeal for capital requirements for educational institutions as well as the steady annual religious and local type of appeals that are made.


Donald Methuen Fleming: I do not think that under the present circumstances one could depart from the historical, biblical conception of the tithe. I understand that was always the basis of the 10 per cent figure applied to charitable donations under the act for individuals. In the case of corporations, we are simply bringing them up on a level with the position of the individual. The tithing principle is recognized now by the act with respect to all taxpayers, whether individual or corporations.
On the second point, I may tell my hon. friend that while it may be that there are more types of charitable appeals to individuals than to corporations, the record again of the average figure for the individual is not as impressive as perhaps most of us in this house would wish.
In the year 1956 the total of charitable donations of individuals reported in income tax returns was $248 million which happens to be 2 per cent of the income of the individuals.


William Moore Benidickson: What is the corporation record?


Donald Methuen Fleming: The corporation record in that year was one per cent of income.


Mr. Denis:: In his budget speech the minister said that the majority of corporations did not use the 5 per cent already admissible for exemption. How can he expect that they are going to use the 10 per cent that is to be exempted?


Donald Methuen Fleming: I endeavoured to answer that question when it was asked by hon. members opposite. I do not think I can usefully add to what I have already said. If they do not use it, they will pay in tax 47 per cent of what they have not chosen to contribute to charity up to 10 per cent of income.


William Moore Benidickson: Perhaps I could simply suggest to my hon. friend that I think he has indicated agreement with the development of the last administration in allowing a little bit of averaging. But the averaging is for a relatively short period, from one year to the next. As time goes on I think he may find that too many taxpayers are not giving adequately, either on the personal side or the corporation side, for fear that their income for the coming year is not ascertained. It might be to the benefit of all society if the averaging period were extended to perhaps two years or three years or something like that and they were then less cautious and gave more generously.


Chesley William Carter: I wonder whether the minister could tell the house just how many firms 57071-3-135
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or corporations have contributed the full 5 per cent or what per cent of the corporations have contributed fully?


Donald Methuen Fleming: There are no available statistics on that point, I am informed.


Erhart Regier: We realize very well the urgent need of our institutions, especially in the field of education, for additional resources at this time. I do not want to do anything that is going to make contributions to them any less, either the contributions of individuals or the contributions of corporations, however, as I indicated before the dinner recess, I sincerely hope that this is not an approach that is going to be used, or a major approach even, to the very urgent problem being faced by our higher institutions of learning. I am all in favour of individuals exercising charity. However, I am a little bit leery when a huge corporation professes to do so because there is not very much heart in that type of a gift. It is a fairly coldblooded proposition when a huge corporation makes a donation to a charitable organization; and very often that definitely is the case when it makes a donation to a higher institute of learning. We had the evil practice beginning in the province of British Columbia whereby the local grants are based on the amount of money the university is able to raise by way of donations. I should hate to see the day come when the federal government begins to institute any taxation system whereby they will make any payment to education dependent upon the payment being made by huge corporations.
When these corporations make these grants, especially in the scientific field, to our higher institutions of learning they are not acting entirely from unselfish motives. Therefore the expression "charitable organizations" mentioned in the resolution begins to lose a little bit of its real validity. These organizations will make their grants to universities and will attach riders to the grants and make them conditional upon the money donated being used for specific purposes at the university. That leaves the whole field of research open to some very serious questioning.
For many long years now we have taken rather great pride in the liberty attached to our educational institutions. While I am willing to admit that an individual making a donation to a university-I think this can be fairly said-is not able, even if he wished to do so, to exercise any undue influence upon that university, however, when a university is brought into the position where it is obliged to rely for any large share of its revenue upon the contributions of huge corporations, *-and they are becoming larger every year-

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then some of the liberty that we value so highly in the field of education begins to fly out the window.
There is another questionable angle to this resolution and it is this. It places those responsible for education in a position where they are obliged to go from door to door among the corporations and in effect ask for hand-outs. I greatly regret the situation of which I learned when not so long ago I met one of the most intelligent heads of one of our most progressive universities returning from New York. What had he been doing in New York? He had been spending a week in New York approaching these United States corporations having large subsidiaries in Canada, and he was appealing to them for funds for his university. He was a man chosen to head the affairs of the university. Yet because of the conditions existing he had been placed in a position where he was a beggar on behalf of the university rather than the able administrator supplying the intelligent leadership which he was able to supply and for which purpose he had been appointed in the first place.
While I am not in opposition to the resolution at this time I think the wiser approach for the good of education is not to take the approach the minister took when he introduced this matter in his budget speech. I think the wiser approach is this. If these corporations are making more than the shareholders must have, if they are making more money than they require, then the money should be collected from them by way of taxation by various levels of government and the government can hand that money over to those institutions of learning thereby assuring the continuing liberty of our schools of learning.
We just have to look south of the 49th parallel to see what can happen. All Canadians interested in the field of education are expressing growing concern at how one institution after another south of the border is beginning to become subject to the huge corporations upon whose generosity they must rely for their continued existence. We do not wish that to happen in our Dominion of Canada. I hope the minister will hold some consultations with responsible educators in Canada-I do not mean only scientists but men really in the field of education-upon the long-range possibilities of some of the implications of the government encouraging corporations to make their donations to schools of higher learning rather than the government taking this money from the corporations and the government remaining in charge of our schools of learning.


Mr. Macdonnell:: I wish to make a comment or two on this matter, Mr. Chairman. I 
have had something to do with universities, their needs for money and their collection of money from corporations. It seems to me that the hon. member for Burnaby-Coquitlam has insisted on bringing into this discussion a measure of suspicion of all kinds of dark doings which are going to be let loose if this exemption is increased in the case of corporations.


Erhart Regier: That is your interpretation.


James MacKerras Macdonnell: I have had some experience in these matters and while there may be cases where corporations try to exercise an influence and perhaps, in rare cases, undue influence, I would also point out that there are a great many corporations who give money and give it gladly and leave it to, we hope, the wise decisions of the university boards as to its use. It seems to me that to cavil at these concessions made to corporations who do not subscribe is utterly unnecessary and that we should give our blessing to this provision.


Leon David Crestohl: I wonder whether I might, with great respect, make a suggestion to the minister. I believe we are all agreed that it would be well for the educational and charitable institutions of the country and for the people generally if all corporations could in some manner be induced to take full advantage of the law and to pay to these worthy institutions the full 5 per cent, now 10 per cent, of their earnings. Would the minister consider at the end of each year tabling in this -house a list of those Canadian corporations who have taken full advantage of the law and another list of those who have not done so? I think the country is entitled to know-


An hon. Member:: How about individuals?


Leon David Crestohl: Well, we could include individuals too, if you like, but we are discussing a special law at this moment with respect to corporations. I do not object to individuals being treated in a like manner and I would in fact support such a resolution. However, I believe most individuals do take advantage of this provision, right up to the hilt, and I believe the Minister of National Revenue and the Minister of Finance will agree that it is unlikely that any individual does not do so. Therefore the hon. member might reflect upon his observation and he may realize that these things could be improved upon.
I	hope the minister will consider the tabling of two such lists concerning corporations operating under federal charters in Canada. We want to know which of those organizations are discharging their responsibilities to the charitable and educational institutions of our country and which are not.


Donald Methuen Fleming: No, I could not recommend such a course, which would mean not only a departure from but a complete violation of the principle of secrecy as applied to income tax returns.
In principle, I do not think that is the way to bring about the desired result; I think we must depend upon the good judgment of the people, and the element of compulsion is not, in my opinion, a desirable one to be introduced by this house. We might deplore the fact that many corporations do not measure up to what my hon. friend and I regard as their proper social responsibilities, but in time, as the result of education, we trust there will be a better response, to which we hope this present change will contribute.


Charles Edward Rea: Is there any further discussion on the paragraph or shall we proceed to the fourth paragraph?


Some hon. Members:: Agreed.


William Moore Benidickson: Mr. Chairman, I noticed with considerable interest the other day, after this resolution was presented to the house, that a tax commentator in the Financial Post had this to say:
The amendment apparently ignores the effect of the exchequer court decision in the case of Subsidiaries Holding Co. Ltd. v. the Queen in which it was held that a taxpayer may not enforce payment of a refund refused by the department-even if the refusal is not legally justifiable on the merits of the case.
The extension of time will be of no use to taxpayers faced with a departmental refusal to pay.
I see that this refers to the next paragraph, and I will reserve that question for the moment, but on the fourth paragraph I have another question to raise.
Am I right in thinking that the self-employed person is obligated to pay a quarterly amount in respect of tax and, if not, there is a penalty of interest imposed upon him? I read a newspaper statement the other day to the effect that the employed person whose wages are deducted at source is under a considerable disadvantage, and it was pointed out that if a self-employed person had put aside for his own use the amount of tax that would otherwise be deducted monthly he would save, at the end of the year, in the case of a man earning $4,000 per annum, at 3 per cent, interest $5.64 if he was a married man, and $9.85 if he was single man. This would constitute an advantage to that extent over the man whose tax was deducted at source each month and a question, of course, arises with respect to the fact that no interest is allowed on advance payments of income tax. I would like to ask, therefore, if it is true that a selfemployed person does not have to present 57071-3-1354
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his tax return or pay his tax liability until the April 30 after the year in which the income was earned.


Donald Methuen Fleming: He is obliged to make quarterly instalment payments, and I think my hon. friend will find the answer to his question in section 54 of the act.


Mr. Robichaud:: Could the minister inform the house of the amount paid by the department last year as interest on over-payments of tax, that is to say, for the last fiscal year?


Donald Methuen Fleming: Those figures are
not available, Mr. Chairman.


Hédard-J. Robichaud: Would the minister explain why they are not available? If the rate was 2 per cent and the government wants to increase it to 3 per cent, there must be a reason for so doing and something must have been paid.


Donald Methuen Fleming: Yes, of course, and the reason is obvious. The government wishes to be a little more generous to the taxpayer to whom the refund is payable, but the fiscal year closed on March 31, which was three and a half months ago, and the figures have not been compiled, so they are simply not available.


Hédard-J. Robichaud: Could the minister give the figure for the year ending March 31, 1957, which was two years ago?


Donald Methuen Fleming: The department does not segregate those figures.


Hédard-J. Robichaud: Mr. Chairman, there must be a reason for this. The minister has just stated that the government wants to be more generous to the taxpayer and 1 think this committee has a right to know how much money was paid during the last fiscal year for which the figures are available. We should be told what difference it would make to the treasury and how much more money would be involved. Are we being asked to vote blindly on a flat statement?


Donald Methuen Fleming: My friend may not approve of the fact but, nevertheless, the figures are not available. No statistical records have been taken of the precise amount paid by way of interest on refunds under the existing law.


Alexis Pierre Caron: Is this not a poor way to deal with these matters, Mr. Chairman?


Donald Methuen Fleming: Might I remind my hon. friend that if the former government had seen fit to amend the law so as to provide for such records we would have those figures today. We have, however, only

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been in office for a year and we cannot be responsible for failures under the law before that time.


Alexis Pierre Caron: Every time the minister seems to be in a jam he goes back over the last -22 years.


George Clyde Nowlan: We are only going back to last year.


Alexis Pierre Caron: If there was anything wrong during the administration of the past 22 years why do you not try to correct it today. I think we have the right to know.


Mr. Ricard:: We are correcting things; they cannot all be done in one year. Give us time.


Alexis Pierre Caron: We have a right to know. I hear the hon. member for St. Hyacinthe-Bagot squeaking away as always. We hear all the time about giving the baby Castoria if he cries; we hear it on the radio, we read it in the newspapers and so on. If he waits a little while I will give him some Castoria.
What I want to know at the present time is whether or not it is the intention of the minister to try to change this situation so that we may get these figures with respect to what the government is paying back in interest to those who have paid their taxes in advance or overpaid their taxes.


Donald Methuen Fleming: Only those who are entitled to a refund will receive any interest in these cases, and then subject to determined conditions. This is not the case of the man who has paid in advance but of the man who is entitled to a refund, and it is the view of the government that when a man has paid more than he was legitimately obliged to pay, the 2 per cent interest on the refund to which he was entitled and which has prevailed for many years is inadequate, and that that rate of interest should be increased in favour of the taxpayer from 2 per cent to 3 per cent.
I do not lay down the rules for statistical compilation of the government or of the former government; it was not the practice under the former government to take off a statistical record, segregating what the
2	per cent rate involved in cost to the treasury. So while the hon. member may regret that the figure is not available I can only inform him that the figure is not available and that the present government is not responsible for the fact that it is not available.
The purpose of this clause is to increase in favour of the taxpayer from 2 per cent to
3	per cent the interest to which he is entitled on a refund under conditions prescribed for the purpose. And the interest is calculated

from the latest of three dates; first, the date when the overpayment arises; second, the date on or before which the return was required to be filed; and third, the date when the return was actually filed; and the interest runs to the day on which the overpayment of the tax is refunded.


Hédard-J. Robichaud: The minister or his department must have made some estimate of what it would mean to the treasury to increase this interest rate from 2 per cent to 3 per cent. It must mean that a certain sum of money would not be available to the treasury. There must be an estimate somewhere.


Azellus Denis: Has the minister not got any idea? Is it $50 or $500?


Donald Methuen Fleming: There are many occasions on which a precise estimate of cost to the treasury with respect to a particular change in the tax law cannot be arrived at, and this is a case in which there has been no precise estimate, and in which no attempt has been made to arrive at a precise estimate. It is a measure which is put forward because it is considered to offer more justice to the taxpayer.


Chesley William Carter: May I ask if this rise in the interest rate is an indication of an expected rise in the interest rate generally?


Donald Methuen Fleming: No. It will not have escaped the attention of the hon. member that it remains for a government which has had the satisfaction of seeing interest rates brought down substantially since it came to office to propose this increase in the interest rate on refunds due to the taxpayer.


Azellus Denis: Is it the intention of the minister to fix a date after which it will assume responsibility for his own administration? The Minister of Finance refers to what the former government did. Is he going to set an ultimate date after which he will assume his own responsibility?


Donald Methuen Fleming: I think that is a subject for a private chat between the hon. gentleman and myself.


Alexis Pierre Caron: The minister tells us that he has no estimate of what this increase will cost the treasury. Did he not ask his officers what this additional one per cent would mean? If the minister never got around to this, why did he not make the figure 4 per cent, or why did he not increase the rate to 5 per cent? It would not mean anything, because there is nothing to show the cost.


Donald Methuen Fleming: I think if we were to increase it to that extent even the hon.

member would be overpaying his tax in order to obtain a high rate of interest on his return.


Alexis Pierre Caron: What is the rate charged to those who are late in paying.


Donald Methuen Fleming: I thought the
hon. member was well aware of that. It is well known. It is 6 per cent.


Alexis Pierre Caron: Why not make it 6 per cent for refund?


Donald Methuen Fleming: Because the 6 per cent is in the nature of a penalty.


Alexis Pierre Caron: The government should be
penalized because sometimes, when they overpay, it is because the amount has been poorly calculated in the department.


Donald Methuen Fleming: I am deeply impressed by the hon. member's keen desire to see the present government penalized, but he was here for quite a few years and he never suggested that the previous government should be penalized in this way.


Alexis Pierre Caron: There is something the minister will have to learn. From now on we are dealing with the future and not with the past.


Azellus Denis: Would the minister not hold Sir John A. Macdonald responsible?


William Moore Benidickson: Mr. Chairman, I think there is a close relationship between overpayment as described in this paragraph and a subject in which the minister himself has always taken an interest, and that is overdeduction. I am not criticizing the administration, but I wonder if it would not be appropriate at this time for some statistics to be given, if they are available, to indicate the extent to which it is proving necessary to make refunds to people who have their taxes deducted at source. We might have some figures as to the amount of money so refunded in recent years and the number of taxpayers entitled to refunds each year.


Donald Methuen Fleming: May I suggest that is a proper question to ask the Minister of National Revenue when his estimates are before the committee of supply?


Edward Nasserden: Before we pass on from the question which has been brought up by hon. members to my right I think it would be a good thing if the minister would indicate if this government intends to change the policy which has been in effect for a number of years so that in future we may have an accounting of how much is involved, because it seems to me there should be an accounting
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figure somewhere to show what it represents. It seems to me it is time there was a change in the way this is done.


Erhart Regier: I am concerned about who it is who receives this interest rate. I have never heard of individuals receiving interest out of the government. Must the money lie on deposit, for years before a taxpayer is eligible to be paid any interest? I believe there are hundreds of thousands of Canadians who are eligible for some manner of refund at the end of the tax year. Is this 2 per cent regularly added to the refund or must there be a certain minimum amount? Under what conditions is any interest paid?


Donald Methuen Fleming: The fact that the hon. member has not heard of many cases is I think a tribute to the efforts of the Department of National Revenue to make these refunds before April 30, and I think it is not amiss to pay tribute to my colleague the Minister of National Revenue for the efforts which are being made in this respect.


Erhart Regier: In other words, if I understand the minister aright, there is no interest payable on money before April 30. It is only payable on money left after that date.


Alexis Pierre Caron: I hope the Minister of National Revenue will not say it should have been asked on the resolution on income tax.


William Moore Benidickson: Would the minister care to explain the intention of paragraph 5.


Donald Methuen Fleming: I thought paragraph 5 was obvious.


William Moore Benidickson: I think it should be on the record, that is all.


Donald Methuen Fleming: It is very obvious at the present time that any application on the part of a taxpayer for a refund in respect of overpayment must be made within two years from the end of the taxation year in question. Cases have arisen where the taxpayer, following the expiration of the two-year period, has found some mistake. It may be that he made a mistake in his own return or, for some reason or other, he considers he has overpaid and wishes to apply for a refund. Under the present law the only way to deal with such a case is for the governor in council to permit an ex-gratia payment to be made, and that is not the way in which these cases should be handled. Therefore it is proposed that the period be now extended from two to four years within which a taxpayer may apply for a refund.


Alexis Pierre Caron: Does the minister have any figure to show what it would cost the treasury to extend it for an additional two years?

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Donald Methuen Fleming: It is quite obvious, Mr. Chairman, that Solomon himself could not give a figure on that because these are cases that are unknown at the present time. There may be cases that will arise where, after the two-year period, the taxpayer will discover he has a claim to a refund and will make it, but those cases are not known at the present time.


Leon David Crestohl: Does the minister not know that Solomon was a pretty good accountant himself? He was able to count up to 1,000, at least.


Donald Methuen Fleming: I always understood that Solomon lost count after 600.


Mr. Hees:: He just lost interest after 600.


Charles Edward Rea: Shall we proceed to a discussion of paragraph No. 6?


Alexis Pierre Caron: Mr. Chairman, I see in this paragraph that a gift to a spouse of real property can qualify for exemption from payment of gift tax. In the province of Quebec we have a marriage contract which has to be signed before the marriage. Would that be included in that? In other provinces you can sign a marriage contract or give a gift after the marriage but in the province of Quebec marriage contracts have to be signed before the marriage takes place. I would like to have some clarification of that point.


Donald Methuen Fleming: The nub of the
problem would be the effective date, not of the contract but of the gift. This provides for a gift between spouses.


Alexis Pierre Caron: But it is a gift by contract. If a man were to give a gift of $10,000 in real property to his wife before the marriage will that be included?


John Whitney Pickersgill: His wife? Before the
marriage?


Alexis Pierre Caron: His wife-to-be. Assume they are to be married in two days.


Donald Methuen Fleming: I think my hon. friend is assuming there will be no slip twixt the cup and the lip; but I do not know that the law in all those cases can assume that the intended marriage is going to be carried out. The resolution contemplates a gift from one spouse to another.


Alan Aylesworth Macnaughton: Paragraph 6 is a good example of how the tax drafters have considered only English common law and not Quebec civil law. In the province of Quebec the question of gifts between husbands and wives is regulated, as hon. members know, fey the civil code. In order to give a gift to your, wife you must specify it in the marriage contract which, as was pointed out by my

friend the hon. member for Hull, has to be signed before the marriage. If the minister is prepared to give an exemption of $10,000 to people living in English-speaking provinces, why would he not consider giving an exemption of $10,000 on gifts made between husbands and wives and allow the province of Quebec to participate in this general provision because transfers of property between husband and wife-I was going to say are not well known, but in fact they are not even permitted in Quebec as I understand they are in English-speaking provinces?
While I am on my feet, I have a few questions to ask with regard to paragraph six. I note that the paragraph refers to gifts of real property. Does this apply to a gift of cash to buy real property, cash per se and cash to forgive indebtedness arising from the previous purchase of real property?
I also ask this question. If you claim an exemption of $10,000 once on account of a gift of a house between husband and wife, can you also claim a second exemption for the gift of a farm to your son?
Another question arises. Let us assume that I claim only $5,000 of my $10,000 exemption. Can I come later and claim the balance of $5,000? Can I in effect make two gifts up to the extent of $10,000?


Donald Methuen Fleming: Taking my hon. friend's points seriatim, in the first place if it is permissible under the laws of Quebec, the competent draftsman my hon. friend is would seek to provide that the gift which is ante-nuptial in effect, would take effect on the marriage. In that case if the gift were one of real property it would obviously come within the scope of the present resolution.
I believe the next question my friend asked was whether cash could be substituted for a gift of real estate and the answer is no. The law at the present time permits a gift of $4,000 per annum, but the purpose of this provision is to create more security in the Canadian home for the spouse and, of course, particularly for the wife. That is the whole purpose of the clause.
My hon. friend asked about the possibility of two gifts, a gift to the spouse and then, if the property should happen to be a farm property, a gift to the son. The answer is that there is one gift permitted and only one of $10,000 in value. My hon. friend realizes that this is in addition, of course, to the present permissible gift of $4,000 per annum.


Leon David Crestohl: During the course of the afternoon I referred to a subject and perhaps I gave the minister a bit of a running start because it is dealt with in this paragraph. In the very best of faith there is an

oversight in this paragraph in so far as the citizens of the province of Quebec are concerned. Perhaps I discussed this subject this afternoon under a heading which may have made me slightly out of order and ' I would like to repeat my remarks now and ask the minister to examine the question.
Husbands and wives in Quebec who have no ante-nuptial contracts are considered to be common as to property. That is the law of the province. In fact, Quebec is the only province in the whole of Canada with that peculiarity in its law. Consequently a husband in that province who is common as to property with his wife-I am not concerned about the separation as to property at the moment-is prevented under this paragraph from taking advantage of giving a gift to his wife as contemplated by this clause.
I can visualize the following situation. A husband who is common as to property in Quebec might wish to give or pass to his wife $10,000 ownership in the home which they occupy, and I use that figure because that is the restriction under this paragraph. Property cannot be conveyed in Quebec, as it can in other provinces, unless it is done by notarial deed. The husband and wife must go to a notary to have such a deed drawn up. A notary who is ethical and who knows his law will promptly say to him, "Under article 1265 of the civil code of the province of Quebec you cannot make a gift to your wife."
Assuming a notary were to draw up such a deed and the husband died later, the succession duty assessors who are very able and knowledgeable gentlemen, in assessing the estate must find that the gift which the husband gave to his wife is completely void and the $10,000 would revert to the estate.
I am to give an example. A husband who is worth $100,000 ostensibly gives his wife under this section a gift of a $10,000 interest in the home. When he dies the value of his estate should then be $90,000 because he has parted with $10,000 by a legal gift to his wife under this section. Assuming there are no children, she is entitled to an exemption of $60,000 leaving a taxable estate of $30,000. But in assessing the estate the inspectors will find the flaw in this gift. It is a gift that is void. It is not even voidable. It is void ab initio. Consequently there is an estate of $40,000 on which succession duties .must be paid.
As I said this afternoon, I think that some provision should be made to allow husbands or wives in the province of Quebec who are common as to property to' benefit from this form of gift. I have discussed the matter with lawyers who are perhaps more familiar
Income Tax Act
with the civil law than I am and they have confirmed the suspicion that this clause will not afford the same benefit and have the same force and effect in the province of Quebec as elsewhere. Therefore I suggest to the minister that perhaps between now and the bringing down of the bill he might give this matter very careful consideration. Perhaps some means can be devised to allow the province of Quebec to enjoy the fullest advantages of this section in the same way as the other provinces of Canada.


Donald Methuen Fleming: Even according
to my hon. friend's contention, it is not this section which denies the benefit to the Quebec spouse. According to his argument it is the law of Quebec-


Leon David Crestohl: Correct.


Donald Methuen Fleming: -so he should
not say it is this provision which denies benefit to the Quebec spouse. I want to point out to him that the spouse in Quebec, as between whom and his spouse there is community of property, does not need this clause. There is community of property between them and they therefore share ownership of the family home. There is a situation which does not exist in the other provinces, and surely my hon. friend is not going to deny the opportunity, so far as tax legislation can do it, to extend the benefit of community of property to spouses in the other provinces in respect of the family home.


Leon David Crestohl: The fact does remain though that it is intended under this section to allow a husband to make a gift to his wife free of gift tax. That can happen without any difficulty in any of the other provinces of Canada. The husband can make a gift to his wife free of gift tax. Under the laws of the province of Quebec this is not possible under this section.


Alan Aylesworth Macnaughton: What we are saying in effect is that the gift tax provisions should allow the husband to pay $10,000 to his wife under his marriage contract free of gift tax. That is what we want.


Donald Methuen Fleming: I did not catch
that.


Alan Aylesworth Macnaughton: We are asking that the law should be amended to allow a husband who has a marriage contract in the province of Quebec to pay $10,000 to his wife free of gift tax.


Donald Methuen Fleming: This provision is not intended to be a duplication of the present provision with regard to the $4,000 per annum which a husband may give to his Wife. That

Income Tax Act
stands. This is intended to create security for the wife in the ownership of the family home. It is related directly to the family home and that is the purpose of it. It does not relate to cash gifts at all. It permits a gift of an interest in the home.


Alexis Pierre Caron: In the province of Quebec husbands are not allowed to give gifts to wives or wives to husbands. How will we do it? They can do it up to 48 hours before they sign the marriage contract. Would they be exempted from gift tax? If not, I think it is a case of discrimination against the laws of the province of Quebec which are not the same as in the rest of Canada. We still have the Napoleon code.


Donald Methuen Fleming: This provision, which has much to commend it, is available to anybody in Canada once parliament enacts it. If it is my hon. friend's opinion that the law of Quebec prevents some spouses there from deriving benefit from this provision, I think in all fairness that should not be pleaded as a reason for denying this benefit to spouses in other provinces, particularly when it is a fact that those spouses in Quebec as between whom community of property exists already have similar benefits.


Alexis Pierre Caron: Would it not be possible to
amend clause 6 to provide that gifts given under the marriage contract which is signed a few hours or a day before the marriage will be considered as gifts given to a spouse and be exempt from gift tax? That is what we want. We do not want to stop others from benefiting but we want those in the province of Quebec to be able to have this benefit.


George Clyde Nowlan: The hon. member is speaking about the province of Quebec where under certain circumstances they have community of property. From what I have seen in my limited practice, and I am sure others in English-speaking provinces have seen it too, a husband will deed a property to his wife as joint tenant. Perhaps they build a home when the husband retires and they create a joint tenancy. Then the husband dies and in the course of events it is suddenly found that there is a gift tax because the property is owned by the husband and the wife had not put any money into it. Time and time again complications have arisen because of the gift tax and gift tax assessments. It is to avoid cases such as that that this section is designed. It refers to the home of the husband and wife.
I think you will all agree that when they start out early in life the husband buys a home. That is all right. But later on they retire and he may build or buy another home. The probabilities of life expectancy being what they are, the chances are that he will
pass on before his wife and the husband may create a joint tenancy. But then complications may arise because of the gift tax. This section is designed largely, so far as husbands and wives are concerned, to overcome that difficulty and that difficulty only. There is also, of course, the feature of encouraging a father to turn over his farm property to his son and thus avoid payment of gift tax as has happened so often in the past. It is remedial legislation.


Leon David Crestohl: I do not doubt at all the
lofty and desirable intentions of this section of the law but I am a little apprehensive whether or not it delivers that which it seems to deliver so far as husbands and wives in the province of Quebec are concerned. If it does and if the minister is satisfied that it does then we want him to convince us. I appreciate the lofty intentions which motivated the section. I agree with it and accept it but, as I said, I am very doubtful whether or not, in so far as the province of Quebec is concerned, it will be as effective, useful and helpful as the minister has just said it will be in other provinces.


Donald Methuen Fleming: Give us a chance to put it to work and let us see then whether my friend's misgivings or our hopes are justified.


Leon David Crestohl: Perhaps the minister could get a legal opinion in the course of the next few days in order to assure the house that the section will deliver that which he thinks it will deliver. Perhaps he could get a legal opinion from the Department of Justice or the Minister of Justice. We would like to have a legal opinion.


Charles Edward Rea: Are we finished with paragraph 6?


Leon David Crestohl: No. I call it ten o'clock.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the leader of the house what the business will be for tomorrow?


Howard Charles Green: Tomorrow we shall continue with these income tax resolutions, and then take the estimates of the Department of Agriculture.


Lionel Chevrier: Can the leader say what the business will be on Monday?


Howard Charles Green: On Monday we intend to move to go into supply.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.

[Stage Direction]
The following answer, deposited with the Clerk of the house, is printed in the official report of debates pursuant to standing order 39:

Mr. Carter: 1.	How much money has been paid into the
Question
unemployment insurance fund per month since June, 1957?
2.	How much has been paid out of the fund each month since June, 1957?
3.	What is the balance remaining in the fund at the present time?
Answer by: Hon. Michael Starr (Minister of Labour):
1.	Amount of money paid into the unemployment insurance fund by months since June, 1957-
Contributions
1957	Employer and employee	Government	Fines and penalties	Interest	TotalJune	
July	
August	
September	
October	
November	
December	$ 15,021,623.50 .. 17,247,401.41 .. 15,760,354.64 .. 16,101,864.73 .. 16,720,914.67 .. 16,035,563.50 .. 16,190,473.26	2,943,617.85 3,447,485.65 3,195,337.52 3,191,741.24 3,376,830.41 3,205,299.47 3,238,501.82	3,023.47 3,615.10 2,988.77 3,153.24 3,957.70 4,800.64 5,042.57	2,272,289.40 2,372,308.15 2,408,448.32 2,358,987.61 2,755,656.23 2,356,477.86 2,502,808.78	$ 20,240,554.22 23,070,810.31 21,367,129.25 21,655,746.82 22,857,359.01 21,602,141.47 21,936,826.431958	January	
February	
March	
April	
May	.. 16,765,637.75 .. 15,017,782.63 .. 17,243,276.06 .. 11,950,979.55 .. 16,116,253.92	3,353,733.35 3,002,326.52 3,440,303.75 2,397,510.10 2,955,870.97	4,078,44 3,845.89 5,110.04 4,240.56	2,057,941.15 889,689.98 1,318,846.46 1,203,929.51 1,503.542,73	22,181,390.69 18,913,645.02 22,007,536.31 15,552.419.16 20,579.908.182.	Amount of money paid out of the fund by months since June, 1957-
Benefit Payments
1957	Ordinary	Seasonal	Total$	$	$June	
July	
August	
September	
14,330,727.76 	
13,776,646.25 	
13,010,710.45 	
13,786,969.73 	
16,305,464.48	l	14,330,727.76 13,776,646.25 13,010,710.45 13,786,969.73 16,305,464.48November	
December	1958	
18,961,516.48 	
29,060,050.04	2,847,773.23	18,961,516.48 31,907,823.27January	
February	
March	
April	
May	
48,526,541.35 	
48,032,551.48 	
52,571,778,86 	
45,721,656.28 	
34,344,023.72	12,207,552.96 15,251,442.56 19,782,724.35 20,927,988.44 17,282,627.00	60,734,094.31 63,283,994.04 72,354,503.21 66.649.644.72 51.626.650.723.	Balance in the fund at May 31, 1958-$662,056,156.77,
Friday, July 11, 1958