1983-03-11

STATEMENTS PURSUANT TO S.O. 21


Mr. Jean Lapierre (Shefford):: Madam Speaker, there is no question that young people are suffering most under the impact of these difficult economic times. Family problems are aggravated by the recession, they are faced with financial problems if they wish to continue their studies, jobs are scarce and when they do manage to get a job, young people are first to be laid off when companies cut back on personnel. At a time when traditional models are being questioned, a time of enormous technological change, a time when serious doubts are being voiced as to the effectiveness of our academic, religious and political institutions, young people are being asked to become part of a society that feels insecure about the future, that jealously guards its past and its vested interests and fails to measure up to the hopes and aspirations of this new generation.
Madam Speaker, I demand that a direct and frank approach be taken to the problems of this new generation. Unfortunately, pressure exercised in a haphazard sort of way has not achieved the expected results, and I would urge the Government to use the throne speech to give the youth issue the emphasis it deserves.
I am very pleased with the step taken by the Government of Quebec this week. It is perhaps not much more than a gesture for the time being, but it is a step in the right direction. I hope that young people in other provinces will also urge their governments to increase their awareness of their concerns, and that our Government will realize at last that the present situation needs more than band-aid solutions and window dressing.


INCOME TAX
Mr. Dave Nickerson (Western Arctic):: Madam Speaker, a couple of weeks ago we had the spectacle of the Minister
responsible for the status of women proposing an end to the spousal income tax exemption, and today we are told that the Minister of National Health and Welfare (Miss Begin) has approved a report recommending that child tax exemptions be abolished.
The Canadian income tax system has always treated the family as a basic unit, and contained the important fundamental concept that a family be able to retain a proportion of its income safe from the tax gatherer's greedy grasp, a proportion needed to sustain the basic necessities of life.
This fair and equitable concept is now under attack by the Liberal Government. There is no telling how far it might go. Presumably the next in line to go will be the exemption for the elderly and pensioners.
Parliament must insist that the Minister of Finance (Mr. Lalonde) retain the family unit concept within the Income Tax Act and reject out of hand the harebrained schemes of the Minister responsible for the status of women and of the Minister of National Health and Welfare.


EXTERNAL AFFAIRS
Mr. Jim Manly (Cowichan-Malahat-The Islands):: Madam Speaker, this past week Pope John Paul II's tour of Central America drew world attention to the violence and poverty which afflict that part of the world. Of particular concern to Canadians must be the genocidal war being waged against Indian people by the Guatemalan Government of President Rios Montt.
In the past year thousands of Indian civilians have been killed by the Guatemalan army. Entire villages have been destroyed and hundreds of thousands of Indian people have become refugees, either in their own country or in Mexico. Ail Canadians must join in condemning this brutality, but we must move beyond condemnation.
In addition to an international program of refugee aid, Canada should negotiate with Mexico for international inspection of the deplorable conditions of Guatemalan Indian refugee camps in Mexico.
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March 11, 1983
Finally, I call on the Secretary of State for External Affairs (Mr. MacEachen) to investigate reports that Israeli military personnel have been involved with the Guatemalan army as advisers. Canada can no longer condone in silence this eradication of the Indian people of Guatemala.


THE ADMINISTRATION
Mr. Marcel Ostiguy (Saint-Hyacinthe-Bagot):: Madam Speaker, I was very pleased to see that the Quebec Government is now taking a more realistic view, according to a statement by a Quebec Minister that was reported in the press. After five years of ignoring the Canadian Government, the Government of Quebec has now realized, and it has said so, that since the Liberals came to power in Ottawa, Quebec had never had so many economic spinoffs, and in his very positive statement, the Minister acknowledged that the federal Members from Quebec were constantly fighting for their province, and he also acknowledged that Bill 101 must be amended to respect the rights of the anglophone community in Quebec and the various ethnic communities that have their own place in our belle province.
Madam Speaker, 1 earnestly hope that the Minister's statement will go beyond mere words and that the Province of Quebec will take action to further the interests of all Quebecers and consequently of all Canadians in this country.


SCOTIA COAL SYNFUELS PROJECT
Hon. Perrin Beatty (Wellington-Dufferin-Simcoe):: Madam Speaker, yesterday the Minister responsible for the Cape Breton Development Corporation tabled in this House a one and a half inch thick pile of documents which he said related to Devco's involvement in the Scotia Coal Synfuels Project. And what has this shower of paper, that includes 101 pages of academic papers and magazine articles, and 111 pages of requests for proposals and draft legal documents, been meant to accomplish? Obfuscation of the highest order, that is what. A classic cover up is now under way and the Table of this Chamber is being used as a stage for the performance.
How else can one explain the actions of the Devco Minister who, on the pretence of tabling accurate documentation of the Corporation's involvement in the Scotia Coal project, provides not one single piece of correspondence written to its developer? Can you imagine that, Madam Speaker? Devco enters into an industrial consortium with Alastair Gillespie, agrees to invest
up to $300,000 of public money, and never wrote him a single letter. As well, Devco never corresponded once with the Department of Energy, without whose funding the whole scheme would not have materialized in the first place.
It is also hard to believe that since legal counsel for the Energy Department saw fit to write Devco in August, 1981, to request signatures on various documents, no one else ever saw fit to communicate with Devco on the matter previously. Maybe it was Mr. Gillespie who set this pattern of non-letter writing, for of the 315 pages of documents tabled yesterday there is only one piece of correspondence from him to Devco. And this pattern of doing things orally seems to have been picked up within the Corporation as well, for only five internal memoranda are present, four of which are to the president.


AGRICULTURE
Mr. Vic Althouse (Humboldt-Lake Centre):: Madam
Speaker, on Wednesday, Allan Wilford, the Director of the Canadian Farm Survival Association, was arrested and jailed on a charge related to a penny auction. This penny auction was held to help a young farmer who was losing his equipment to a bailiff, a scene which is becoming all too frequent.
There is a crisis in farm finance spreading across the country that will see many, many more young farmers and their families out on the road. This House must act, and act now, to protect and help these people. We need the food they produce. We need the communities they sustain. We owe them a second chance. We owe them a break until markets turn around or until we can get some decent legislation on the books to improve their incomes.
Allan Wilford is on a hunger strike until this House deals with Bill C-653, an Act to amend the Farmers' Creditors Arrangement Act, or an acceptable substitute. This is a dramatic gesture by a determined young farmer who is leading a group of producers facing the ugly possibility of being refused credit which would enable them to buy and plant their crops this spring.
I urge the Government to relent and give this Bill a chance for speedy passage in the House. We owe it to the farmers of Canada. We owe it to our future.

[ Translation]


TRANSPORT
Mr. Andre Maltais (Manicouagan):: Madam Speaker, yesterday, a newspaper in Quebec City headlined a story that the Iron Ore Company of Canada was opposed to the Pointe-



March 11, 1983

Noire project at Sept-iles. Considering the problems being experienced on the North Shore at the present time, needless to say there is grave concern in this area, regarding a project that is very important to its development and diversification. Considering the fact that the information was given by management of Iron Ore and that up to now-and I checked this- Iron Ore had never expressed any negative views regarding the development of the Pointe-Noire project, I would like to ask the Minister of Transport who is here in the House (Mr. Pepin) to get in touch with the President of Iron Ore in order to shed some light on the issue, because it is important that the Government be able to take major economic measures so that the North Shore will no longer depend solely on the large multinationals.


INDIAN AFFAIRS
Mr. Stan Schellenberger (Wetaskiwin):: Madam Speaker, Patrick Johnston's newly released report entitled "Native Children and The Child Welfare System" demands that renewed attention be given to the plight of native children in our country's child welfare system. It has been clear for some time that, due to a jurisdictional dispute between the Provinces and the federal Government, native children in need of care are left in a legal limbo. Although Indians are the exclusive jurisdiction of the federal Government, child welfare falls within the jurisdiction of the Provinces. Thus, the quality of social services provided to native children varies from Province to Province. The only similarity between the various systems is that everyone agrees that all systems are inadequate and that services provided are well below the level of services provided to non-native children.
Currently the direction being taken by the federal Government seems to be that of encouraging tripartite agreements signed by the federal Government, the Provinces, and Indian organizations in the Provinces involved. Although this serves as a good example to improve the quality of services provided to native children, it avoids resolution of the jurisdictional problem as it pertains to Indian children.
Witnesses appearing before the Special Committee on Indian Self-Government have repeatedly expressed their concern about the inadequacy of the Indian child welfare system. Particularly alarming is the knowledge that Indian children taken into care are rarely placed in Indian homes, thus their cultural ties are irreparably severed. The first step toward rectifying the situation that now exists would be the creation of a federal Indian child welfare act.


Madam Speaker:: Order.
OraI Questions



ORAL QUESTION PERIOD


Hon. James A. McGrath (St. John's East):: Madam Speaker, in the absence of the Minister of Employment and Immigration who, I might add, is absent for the second month when unemployment figures have come out, which to me is a most eloquent expression of his contempt for the problems of the unemployed, I will direct my question to the Minister of Finance.
Given the unemployment figures today which show an increase in the seasonally adjusted rate to 1.5 million, the greatest human tragedy to hit this country since the Great Depression, and given the human dimension of these figures and the potential for tragedy, what does he intend to do on behalf of the Government to address this problem which is now of an urgent and critical nature?


Hon. Marc Lalonde (Minister of Finance):: Madam Speaker, as a matter of fact I addressed that question yesterday. The Hon. Member will have noticed that, in spite of an increase in the adjusted figure from 12.4 per cent to 12.5 per cent, there has been a slight decline in the total number of unemployed. For the third month in a row there has been a stabilization and an increase in employment creation. After having seen a decline in employment for many consecutive months, these figures have gone up for the last three months and tend to indicate that there is, indeed, a recovery taking place in the economy.
As Hon. Members know, we have up to $2 billion of job creation programs in operation. I am addressing this whole issue in preparation of my budget. I indicated that unemployment is indeed a top priority for me in the budget. I would hope the budgetary measures that I will announce will stimulate and support recovery and help decrease the number of unemployed.


LOSS OF JOBS IN MANUFACTURING SECTOR
James Aloysius McGrath: Madam Speaker, last month, while the real rate was up considerably and the adjusted rate was down slightly, the Minister drew some satisfaction from that when he replied to this question. Now, he cannot have it both ways, but that is what the Minister is attempting to do.
Where is this economic recovery that he keeps talking about? For example, when we look at the manufacturing sector, since this recession started we have lost 305,000 jobs. We are down 181,000 jobs in a year, and down 14,000 jobs in a month. Where is the recovery that he keeps talking about?
When one considers that the long-term unemployed have increased by 98.6 per cent in a year, that means a 98.6 per cent increase in the rate of those who are unemployed for three

March 11, 1983
Oral Questions
months or more. That is disgraceful. Where is the recovery? Where is the Minister's response to this tragedy?


Marc Lalonde: Madam Speaker, indeed, I would invite the Hon. Member to look at events that are taking place in the economy at the present time. He knows, for instance, that General Motors has called back 8,500 workers recently. He knows that in Sudbury the mines are recalling several thousand people back to work. He knows that prices have been firming up in the lumber industry and the orders have been increasing. He knows that in the housing industry the units on an annual basis have increased to
165,000,	which is a very large increase compared to last year. He knows that the price of nickel, for instance, has firmed up quite considerably over the last short while. So, there are encouraging signs.
We must recognize that the recovery will take place only gradually, not only in Canada but in the rest of the world as well. We cannot pull up the whole world by our own bootstraps. This is a recovery which must take place in all the industrialized countries.
We are encouraged by signs of what is happening in the United States, too. We indeed hope that the recovery will be faster than the one we had anticipated before. I hope, as I said, that my budget will contain measures which will stimulate the recovery further.


REQUEST FOR GOVERNMENT MEASURES
James Aloysius McGrath: Madam Speaker, all I know is that there are two million people unemployed today. All I know is that there are 100,000 exhaustees of unemployment insurance benefits every month. All I know is that the rate of unemployment among heads of families has risen 52 per cent over the year. That is what I know.
What I want to ask the Minister, who really must take some responsibility for this situation, is whether he will at least bring in measures he has planned for his budget which we probably will not receive until later this spring? Will he at least bring in some of those measures now which would at least indicate to the House and to the country that the Government recognizes that there is a sense of urgency and tragedy here?


Marc Lalonde: Madam Speaker, one method of helping the Canadian unemployed in a very fast way would be to pass the Income Tax Act amendments which are now before the House.


Some Hon. Members:: Oh, oh!


Some Hon. Members:: Hear, hear!


Marc Lalonde: The delay which is being created by the Conservative Opposition will delay $6 billion worth of refunds to Canadian citizens, to taxpayers who, with that injection of
funds, could spend money and create jobs in the manufacturing sector and in all areas. Therefore, I hope we will receive more co-operation from the Opposition concerning the Income Tax Act and we will not face a situation where we will not be able to mail refunds as early as we-


Mr. Kempling:: How many jobs will that create, Marc?


Marc Lalonde: -would have liked, because the Opposition will have delayed the passing of the Income Tax Act. I would also invite the Opposition to support the Government with regard to the western rail transportation reorganization-


James Aloysius McGrath: That's disgraceful!


Marc Lalonde: -which will mean $800 million of additional investment by the railways this fiscal year in the West, and which will provide benefits all across the country, including the Maritimes. These are a few steps which the Opposition could take immediately to help things along.


Miss MacDonald:: Madam Speaker, the Minister's response indicates a disgraceful lack of concern for the ongoing human tragedy which these unemployment figures represent.


Some Hon. Members:: Hear, hear!


Mr. Pepin:: You said that last week.


UNEMPLOYMENT AMONG WOMEN HEADS OF FAMILIES
Flora Isabel MacDonald: Madam Speaker, I want to bring a fact to the attention of the Minister of Finance. Among single parent families headed by women, unemployment rates have risen 61 per cent in the past year. This is the very group, comprising families headed by single parents who are mothers, where poverty is hitting hardest. Their children are suffering.
Has the Minister designed any job creation programs, either for the immediate situation or even for his budget, which are specially targeted toward this particular group of families in the same way as the NEED Program was targeted toward a special group?


An Hon. Member:: We thought you wanted the private sector to look after everything.


Mr. Remi Bujold (Parliamentary Secretary to Minister of Employment and Immigration):: Madam Speaker, the problem just raised by the Member for Kingston and the Islands is indeed a very serious one, and action has been taken by the Department of Employment and Immigration.
I would like to point out to the Hon. Member that the Occupational Training Act contains specific criteria according to which women who are the family's main support will receive priority for training. Furthermore, existing job creation programs include special programs for women, such as the Community Development Program and the Community
March 11, 1983

Services programs, which are submitted by women. We also have extension programs for women across the country.
Madam Speaker, I must say that at the Department of Employment and Immigration, we are very much aware of the problems affecting this group. We have programs that are tailored to their needs, and we are doing everything in our power to respond to these needs.


INQUIRY RESPECTING GOVERNMENT PLANS
Flora Isabel MacDonald: Madam Speaker, I ask about a group that are hard hit in this society. The Minister of Finance refuses to answer; the Minister of Employment and Immigration does not even show up.
I want to ask about a group who last year had jobs and this year do not have jobs and the result is that some of them are paying 60 per cent of their income for housing. That means there is very little left for food.
Does the Minister know that hospitals are reporting a dramatic increase in the number of cases of infants who are being referred to them as a result of the use of watered-down baby formula? That is what is happening out there with people who do not have jobs. That is what is happening when a group of unemployed-


Madam Speaker:: Order, please. Does the Hon. Member really think it is reasonable to go on that way before asking a question?


Mr. Nielsen:: She did ask a question.


Flora Isabel MacDonald: Indeed it is, Madam Speaker. When these people are-


Some Hon. Members:: Oh, oh!


Madam Speaker:: Order, order. I can understand the Hon. Member's indignation, but this is Question Period. It is meant to have a very brisk exchange between Members of the Opposition and the Government, and it must remain that way.


Flora Isabel MacDonald: What I want to find out, Madam Speaker, is, given the particular needs of this particular group, does the Government have any job plans whatsoever to assist them?
[ Translation]


Joseph Roger Rémi Bujold: Madam Speaker, I would like to point out that through various job creation programs, in 1982-83 more than 120,000 women were able to find work as a result of measures taken by the Government. Furthermore, as a result of programs initiated in 1982-83 and which now exist throughout the country, nearly 60,000 women are now employed.
Oral Questions
This means, Madam Speaker, that through its various programs, the Department of Employment and Immigration is helping Canadians to cope with the severe economic conditions existing at the present time, within the limits of its budget. We therefore urge all parties concerned, including the Opposition, women's groups throughout the country and all those who are interested in these programs, to co-operate with us in finding ways to improve them and maximize their effectiveness in assisting people in need.


James Aloysius McGrath: Band-aid.


REQUEST FOR EXTENSION OF UNEMPLOYMENT INSURANCE BENEFITS
Hon. Edward Broadbent (Oshawa):: Madam Speaker, I have a question for the Minister of Finance on the same subject. It is clear from the answer we have heard today that the Government has no new program in terms of providing jobs for the unemployed.


Mr. Baker (Nepean-Carleton):: It does not even care.


John Edward Broadbent: My question concerns another form of assistance where perhaps the Government might show some sensitivity. There are now, as of today's figures, more than 305,000 men and women in Canada who have been unemployed for more than a year. What that means is that their Unemployment Insurance benefits have run out. What that also means is that the dignity that they have had from having a job and having an income is progressively fading away from their existence, with all the human impact that means for their families.
Given the needs of these 305,000 people who would like to have a job, but the Government is not going to provide that, will the Government at least show some social compassion as well as economic sense and agree to extend Unemployment Insurance benefits for these people?


Some Hon. Members:: Hear, hear!


Marc Lalonde: Madam Speaker, the Hon. Leader of the New Democratic Party said that there were no new job creation programs. I would remind him that this year, the Government has already allocated over $2 billion for job creation, and the programs are already on stream. The point is not whether we should create new programs and add more and more, but to make sure that the funds allocated by the Federal Government are there and that Canadians can have access to and benefit from these programs as soon as possible. The Minister of Employment and Immigration is consulting regularly with his provincial counterparts to make sure the programs will be available to Canadians.


John Edward Broadbent: Answer the question!

March 11, 1983
Oral Questions


Marc Lalonde: The Hon. Leader of the New Democratic Party wants me to answer his question. It would be easier if he stopped providing erroneous preambles to his questions. He should therefore not be surprised if I take the time to respond to the erroneous claims his preambles contain.
As far as his question is concerned, I can inform the Hon. Member that this year, the Canadian Government is funding half of the increase in unemployment insurance benefits to assist those who are working at the present time, and that it has made substantial contributions to the Unemployment Insurance Fund. There are therefore no plans for a program to extend unemployment insurance benefits.


REQUEST FOR GOVERNMENT ACTION
John Edward Broadbent: Madam Speaker, 1 did not get the last few words of what the Minister had to say. If I heard him correctly, he did not deal with the question at all, which was a call for an extension of the benefits for people who are unemployed and would at least like to have the dignity that can come from some money to spend, when they have an unemployment situation which is not their fault.
I ask the Minister this question quite seriously. He referred to a finance Bill that is before the House. He knows this Bill contains within it loopholes that will enable Canadians earning 5100,000 a year not to pay one penny in income tax. He knows that the Government has looked after Mr. Gillespie, Mr. Pitfield, and a whole series of its friends.


Madam Speaker:: Order.


John Edward Broadbent: When will it do something about extending the benefits for the unemployed?


Madam Speaker:: Order.


Marc Lalonde: Madam Speaker, until now, I felt the Hon. Leader of the New Democratic Party had a certain sense of dignity and respect for the truth and the individual. I am sorry that he should resort to the gutter tactics commonly displayed by the Leader of the Progressive Conservative Party in this House.
I can inform the Hon. Member that the additional funds we shall be able to release will be allocated for the purpose of creating jobs, either directly or through the private sector, and I believe that our first priority should not be to extend unemployment insurance benefits but to use the funds we have to create the jobs Canadians need. Extending unemployment insurance benefits is not going to help us solve the unemployment problem in this country, but creating jobs will. In the forthcoming budget, the first priority I see would be to create activities that will provide jobs for Canadians instead of just increasing social benefits.


RAILWAYS
John Edward Broadbent: Madam Speaker, I do not think the Minister is the proper person to give others a lecture on honour, and I will leave it at that.


Some Hon. Members:: Hear, hear!


Some Hon. Members:: Oh, oh!


John Edward Broadbent: I have a question concerning the Minister's home Province of Quebec. As he knows, this Province has had a great increase in unemployment, according to today's figures. In fact the largest increase is in the Province of Quebec. He also knows that the situation is bad in the City of Montreal.
Is the Minister aware that one of the results of the proposal brought in by his colleague, the Minister of Transport, to change the Crow rate, will be that grain farmers on the Prairies within a few years will be able to export their grain through New Orleans at a lower rate than out of the Port of Montreal? Today the Port of Montreal relies very heavily on the grain trade. If this disastrous proposal is followed up, we will have more unemployment instead of more jobs in the City of Montreal. If the Minister is aware of this, will he take steps to ensure that the Minister of Transport gets that terrible proposal away from the House of Commons?


Jean-Luc Pepin: Madam Speaker, on this particular point I was shocked by what I read this morning, that my hon. friend has found a way to agree with both the protests against the initiatives in the West and the East, for completely different reasons. I know that a certain category of people walk on the street. However, they usually walk on only one side of the street. My hon. friend has managed to walk on both sides of the street at the same time.


Walter David Baker: He also wants to walk on water.


Jean-Luc Pepin: The concept of a movement away from the Canadian ports to United States ports is one at which my officials are looking. Up to now they have said that it is a creation of unsophisticated minds. We are looking at it. At the moment there is no possibility of it. Should there be a possibility of that ever happening, the Government will obviously intervene to prevent it.


LABOUR CONDITIONS UNEMPLOYMENT AMONG YOUNG PEOPLE
Mr. Tom McMillan (Hillsborough):: Madam Speaker, my question is directed to the Minister of Finance. Statistics Canada figures today reveal that over 600,000 Canadians between the ages of 15 and 24 are without jobs. That is a 21 per cent unemployment rate among our youth, a whopping 9
March 11, 1983

per cent above the national average. In view of the human tragedy that those statistics document, is the Minister contemplating for his upcoming budget a major program targeted at youth unemployment so as to lift a whole generation of Canadians out of abject poverty?


Marc Lalonde: Madam Speaker, I will take the question of the Hon. Member as a representation. I have indicated that the question of youth unemployment is indeed very serious and critical. It is difficult to envisage a situation where our young people are unemployed, and not able to enter into the job market for an extended period of time. Personally, I find this a tragic situation. It is certainly uppermost in my mind.
As to specific measures, the Hon. Member will have noticed, for example, that I have already announced $50 million of additional money for student employment this summer, up from $120 million to $170 million. These are measures I have taken even before the budget is announced so that students will at least benefit from these additional sums during the course of the summer. As to whether additional steps are going to be taken, I invite my friend to wait for the budget.


REQUEST FOR INTRODUCTION OF WAGE SUBSIDY PROGRAM
Thomas Michael McMillan: Madam Speaker, my supplementary question is also to the Minister of Finance. The programs to which the Minister has made reference are merely band-aids. What the young people want are permanent jobs, not make-shift jobs to carry them over for a few days. In light of that, I would ask the Minister this. In the upcoming budget will the Minister give serious consideration to introducing either a wage subsidy program, such as that which has proven so successful in Prince Edward Island and New Brunswick or, as an alternative, a refundable employment tax credit program, both of which would be designed to create permanent, lasting jobs, rather than make-shift jobs of the kind the Government has relied on to date?


Marc Lalonde: Madam Speaker, if we are talking about the student summer employment program, it is of course aimed at students and part-time jobs. It is aimed at helping students find work during the course of the summer. Obviously my friend is also addressing the other major issue of permanent employment for young people. I have received representations from Members on this side of the House, and outside, concerning the suggestion he is making. I will consider them.


REQUEST FOR INVESTMENT IN YOUTH
Mr. Jack Shields (Athabasca):: Madam Speaker, I would like to address my question to the Minister of Finance. As my colleague pointed out, there are three-quarters of a million young people unemployed. Many of them have invested 15 to 20 years of their lives to educate themselves so that they can enter the workforce and pursue the careers they worked so hard to attain. Recently three cases came to my attention of
Ora! Questions
educated young people who are ready to proceed with their careers. They became so depressed and despondent, they took their own lives.


Madam Speaker:: Order. Does the Hon. Member have a question? If not, I will not allow him to continue. He must ask a question.


Jack Wendele Shields: Does the Minister plan to allocate another $1.5 billion to Dome and Gulf to proceed with the development of natural resources in the North, or is he prepared to invest $1.5 billion in our young people and thereby avoid tragedy for those families of young people who commit suicide because they cannot face the reality of not having a job?


Marc Lalonde: Madam Speaker, I am surprised to hear this kind of intervention from the Hon. Member who is usually complaining that we do not allocate enough funds to the energy area. It is especially surprising coming from an Hon. Member who represents an area which has benefited from significant Government support for large energy projects. I want to tell him that any investment which is taking place by the private sector, whether it is in the Beaufort Sea, the Arctic, the Prairies, or the eastern Provinces, is work which is creating jobs for Canadians.
I would like also to remind him, as I have indicated before, that the Government has allocated around $2 billion for job creation programs during this year. That is a very substantial amount of money indeed which the Government is spending directly to create jobs. At the same time there are numerous programs and activities which help the private sector to create jobs for Canadians, because the private sector is going to be the main employer and we want it to remain so.


Erik Nielsen: That is why the kids are committing suicide.


Jack Wendele Shields: Madam Speaker, comparing the price of energy to the price of life will not be of much consolation to the families who have lost bright young people because they could not face the reality of not having a job.


REQUEST THAT YOUTH ENTREPRENEURSHIP FUND BE CREATED
Jack Wendele Shields: Madam Speaker, I would like to ask the Minister of Finance if he would consider allocating $1.5 billion in his upcoming budget to create a situation where a fund would be available for young people in order that they could borrow from that fund to go into private entrepreneurship or to create a business which would employ young people who are energetic and ready to work, and who need this kind of impetus. This would be a real investment in young people-


Madam Speaker:: Order. Order, please.


Marc Lalonde: Madam Speaker, I will take the question of the Hon. Member as a representation and as a suggestion which I will examine, but I would

March 11, 1983
Oral Questions
also invite the Conservatives to stop talking out of both sides of their mouths, suggesting large programs of additional expenditures and, at the same time, taking the time of this Elouse in attacking the deficit of the Government. So make up your minds, fellows, please.


HUMAN RIGHTS
Mr. Bob Ogle (Saskatoon East):: Madam Speaker, I had intended to ask my question of the Secretary of State for External Affairs. He is not here, so I will direct my question to the Minister of State for External Relations. Last week, as the Minister is aware, at the Human Rights Commission in Geneva a resolution prepared by Canada was put forth about human rights violations in El Salvador. It began with a weak resolution, but then became stronger. Would the Minister tell the House why Canada did not get that resolution into debate and why Canada did not vote on the Mexican resolution, which was a strong, clear resolution?


Hon. Charles Lapointe (Minister of State (External Relations)):: Madam Speaker, I am very pleased that the Hon. Member should ask this question, because I share his frustration and disappointment at not having been able to express, in the form of a consensus resolution which Canada had submitted, our grave concern with respect to the human rights situation in El Salvador. To provide some background, Madam Speaker-and I may add that the Hon. Member has followed this issue very closely-three weeks ago, we submitted a draft resolution to the Human Rights Commission, a resolution that we were able to improve thanks to the advice of the Hon. Member and other Canadians who are concerned about the human rights issue. We established a broad consensus among other delegations to the Human Rights Commission in Geneva, but unfortunately, when the time came to vote on the resolution-the Hon. Member is probably aware of this- certain tactical procedures prevented a vote being taken on the Canadian resolution, and we were then faced with the Mexican resolution.
As for the Hon. Member's question, namely, why we did not vote on the Mexican resolution Madam Speaker, it was because we felt that the human rights issue is so important that the United Nations Human Rights Commission was not the appropriate forum for taking position with a political impact. In our view it was preferable to make an appeal on humanitarian grounds to condemn the obstruction of full protection of human rights. That is why we abstained from voting on this resolution.


UNITED STATES MILITARY AID TO EL SALVADOR
Robert Joseph Ogle: Madam Speaker, I am sorry to say that I feel the Government did not move because of an almost emotional problem. The matter is serious, and I do believe it is extremely political.
The President of the United States this past week indicated he is planning to ask for another $120 million for military aid to El Salvador. This is a place where war has gone on for three years. The Holy Father, the Pope, has asked for negotiations and for dialogue to stop the fighting. What is the Government of Canada going to do in relation to the United States, and its President, in terms of protest?
[ Translation]


Charles Lapointe: Madam Speaker, the Canadian position on military aid to El Salvador is quite clear. The Hon. Member is aware that in one paragraph of the consensus resolution we submitted to the Human Rights Commission in Geneva, we clearly indicated that we were recommending non-intervention in the internal affairs of El Salvador and immediate suspension of all arms supplies and any other kind of military aid. That is the official position of the Canadian Government, and, Madam Speaker, I should be happy to repeat that position to the American Government, through the usual diplomatic channels.


AGRICULTURE
Walter David Baker: Madam Speaker, my question is directed to the Minister of Finance and it relates to the desire of the Farm Survival Association, the agricultural community generally in the country, and Members of Parliament on both sides of this House, to deal with Bill C-653, which is an amendment to the Farmers' Creditors Arrangement Act and stands in the name of the Hon. Member for Lambton-Middlesex. Has the Government taken a position with respect to that Bill? If it has, would the Minister inform us whether or not the Government favours the principle of the Bill? If it does favour the principle of the Bill, would the Minister inform us when it will be introduced, on the understanding that there is a willingness on both sides for that Bill to be introduced and dealt with?


Marc Lalonde: Madam Speaker, we have already indicated that, indeed, we are very proud that an Hon. Member on this side of the House has brought forward a Bill of this nature. We, indeed, support the principle of the Bill. We are discussing with the Hon. Member at the present time the implications of the various aspects of this Bill and, when these discussions are concluded, the House Leader
March 11, 1983

will be very pleased to inform the Elouse what steps will be taken.


STATUS OF LEGISLATION IN GOVERNMENT PLANS
Walter David Baker: Madam Speaker, may I assume from the answer given to me by the Minister of Finance that the Government has now dropped the proposal put yesterday by the Government House Leader that this Bill was somehow linked to passage of other legislation which is in the mind of the Government, or as put by the Minister of Agriculture, that approval of this Bill depends on the House agreeing to approve Canagrex? Is the Government now saying that this Bill stands on its own, that the Government is going to be dealing with this Bill and with respect to the principles of this Bill, and that the Minister will be informing the House within a very few days about its decision on the Bill?


Marc Lalonde: No, Madam Speaker, I have nothing to add to what the House Leader said yesterday. What the House Leader said yesterday stands.


Erik Nielsen: You just did a moment ago.


Marc Lalonde: What I had indicated is that Goverment Members were having discussions with the Hon. Member who put forward the Bill, and once the discussions were concluded the House Leader would come to the House and indicate what conclusions we have reached. That is all there is.


CANADIAN WHEAT BOARD
Mr. S. J. Korchinski (Mackenzie):: Madam Speaker, my question is directed to the Minister of Transport who answers for the Wheat Board. The previous Minister of Transport, the Hon. Otto Lang, initiated a practice whereby prices for grains were announced prior to the start of seeding operations. Since farmers are now planning their seeding operations, does the Wheat Board intend to indicate the price at which the grain will be sold in the following year, or will the farmers have to take a chance and find out later?


Jean-Luc Pepin: Madam Speaker, I have been in the House for a number of years and I know that there is no set pattern for these announcements. They vary from year to year. I have seen Ministers coming out in favour of one approach at one time, and then changing their approach later. I will consult with the Minister in charge of the Wheat Board and I will inform the Hon. Member and the House as soon as possible as to what he intends to do this year.


REQUEST FOR ASSURANCE ON PRICES
Stanley James Korchinski: Madam Speaker, in view of the fact that the Canadian Wheat Board has indicated no final payment can be expected for this year's crop, since
Oral Questions
world market prices are depressed again, since the Minister's plan for western transportation is dependent upon the money that farmers will be receiving, and if he has any hope of passing that proposal the farmers must know where their money is going to come from, will he assure farmers that the initial prices they receive will be at least the same as they are getting presently for their grain, even though they do not expect a final payment next year?


Jean-Luc Pepin: Madam Speaker, I do not intend to instruct my hon. friend on the meaning of initial payments. They vary from year to year depending on the grain situation at any particular time. However, I must say that I welcome his approach to reassuring western farmers. I welcome the implication, at least, in what he says, that the Bill on the western rail initiative should be introduced in this House as soon as we can. I am trying to convince my critics on the other side that it would be a very good idea to do so soon in order to bring about as much certainty as we can in this area of the Canadian economy.


AGRICULTURE
Mr. G. M. Gurbin (Bruce-Grey):: Madam Speaker, my question is for the Minister of Finance and is supplementary to the question posed by my colleague from Nepean-Carleton. The Minister will know that farm bankruptcies are continuing at record rates and that, over the last year, there have been a number of representations on this issue to the Government. Is the Minister aware that a young Canadian farmer is now in jail and on a hunger strike, and will stay on that hunger strike until there is a Government response which deals with this crisis in family farms?


Marc Lalonde: Yes, Madam Speaker.


PLANNED DEMONSTRATION ON PARLIAMENT HILL
Gary Michael Gurbin: Madam Speaker, I would like to indicate to the Minister of Finance that on Monday, March 14, there will be several hundred people here demonstrating in support of that farmer because they know full well that they have been led on, for the last year at least, by broken Liberal promises of legislation and other assistance to farmers. Is the Minister aware that this demonstration will occur, and is he prepared to respond so that not only will these demonstrators not create additional problems for themselves and the Government, but so that this young farmer will not be forced to continue on a hunger strike which may in fact affect his health?

March 11, 1983
Oral Questions


Mr. Marcel Dionne (Parliamentary Secretary to Minister of Agriculture):: Madam Speaker, it will be a pleasure to answer the Elon. Member's question. Actually, I am rather surprised at the ignorance of some Members of the Opposition with respect to what the Department of Agriculture has done in assisting producers who are in serious financial difficulty. When the budget was brought down on June 28, it was announced that producers in financial difficulty would have access to $100 million per year. This year, since the program has been very popular, the Minister announced that an additional $30 million would be earmarked for this purpose, and more recently, a further $20 million was made available, which means that producers who are in serious financial difficulty will have access to another $ 150 million which will be used in providing relief from high interest rates. This year, the Farm Credit Corporation's rate was changed three times. Those who are in financial difficulty will be borrowing at 9 'A per cent. I think people should know these facts.
Madam Speaker, I would like to draw the attention of the Elouse to another program. Through the Farm Credit Corporation, it will be possible to refinance loans every ten years instead of every thirty years. Furthermore, I think we should realize that in this country, there are tens of thousands of egg, milk, poultry and grain producers who are very satisfied with their present financial situation.


BRANCH PLANT EXPORT CONTROLS-REQUEST THAT STUDIES BE TABLED
Mr. Lome Nystrom (Yorkton-Melville):: Madam Speaker, my question is directed to the Acting Prime Minister in the absence of the Minister of International Trade. During the last two days I have asked questions about confidential documents from the 1960s in which senior Government officials said that up to 75 per cent of our branch plants were prohibited from exporting around the world. In response the Minister of Trade said that I am studying ancient history.
Well, Madam Speaker, this morning I have a Cabinet document from July 3, 1980, where the sponsoring Minister is the Hon. Herb Gray, Minister of Indusry, Trade and Commerce. The thrust of this document is the same, that many of our branch plants are still operating under export controls and inhibitions. They are saying the same thing here as they said in the documents in the 1960s. Many other studies are also referred to in this document regarding controls on export performance of branch plants. Will the Acting Prime Minister make a commitment to table all the studies referred to in this document concerning export controls which are placed on our branch plants?


Jean-Luc Pepin: Madam Speaker, I do not know about all the documents referred to, but I have a bit of experience having been Minister of Industry, Trade and Commerce for the best part of four years. That experience taught me that, indeed, some branch plants of American firms and others in Canada were not exporting as much as they should have. Indeed, there were instances where they were not exporting at all. The name of the game throughout the years has been to try to convince, cajole at times, these companies and sometimes help them financially-sure, there is nothing wrong with that. There has been a process of great accentuation of exports from American branch plants in Canada. That is part of the progress we have seen in Canada over the years.


Mr. Chretien:: That is why they are in Oshawa.


Jean-Luc Pepin: That is why they are all over the place now. That situation in Canada, particularly the development of the product mandate approach, has been one of the main features of the evolution of the Canadian economy in recent years. So why rehash the past?


John Edward Broadbent: 1980 is not exactly ancient history.


Lorne Edmund Nystrom: Madam Speaker, I am not exactly rehashing the past. This Cabinet document is dated July 3, 1980.


Marc Lalonde: What are you doing with stolen documents?


Lorne Edmund Nystrom: They say on page 47 of the document "the Foreign Investment Review Act as it now stands is seen as an inadequate tool".


Joseph Jacques Jean Chrétien: Where is the honour? That is a stolen document.


FOREIGN INVESTMENT REVIEW AGENCY
Lorne Edmund Nystrom: Madam Speaker, these are the major problems facing our branch plants, and FIRA as it stands today is not adequate, so why did the Cabinet turn down the recommendations made by Herb Gray in 1980? Why has the Cabinet not acted on the 1980 campaign promise and the commitment in the Throne Speech of 1980 to strengthen FIRA? Why has the Government not acted over all these years, in light of all this evidence from the 1960s, 1970s, and now the 1980s?


Some Hon. Members:: Hear, hear!


Jean-Luc Pepin: Madam Speaker, I have given a couple of indications of the progress which has been made. Now we have FIRA which can decide in each particular case if a certain project is in the Canadian interest. One of the features, one of the criteria of the Act is the intent of a particular applicant to export.
March 11, 1983


Mr. Deans:: Do we ever enforce the requirements? No.


Jean-Luc Pepin: I am quite sure that occasionally you have cases-life is never as simple as the NDP sees it.


Some Hon. Members:: Oh, oh!


Jean-Luc Pepin: You have cases where-


John Edward Broadbent: It is as miserable as the Liberals make it.


Jean-Luc Pepin: -FIRA and the Ministers have to decide if it is in the Canadian interest to accept a foreign-owned company in Canada which has no particular export program.


Lorne Edmund Nystrom: Answer the question.


Jean-Luc Pepin: Then the FIRA people and the Minister responsible may say on balance it is better to have it in Canada, because it will give employment, than not to have it at all. "To govern is to choose".


Madam Speaker:: Order, please. The Hon. Member for Burin-St. George's.


FISHERIES
Mr. Roger Simmons (Burin-St. George's):: Madam Speaker, my question is for my good friend, the Minister of Fisheries, and it relates to the latest CBC outrage in putting a film crew abroad the Sea Shepherd. They have done some outrageous things in their day, but this has to take the cake. I ask the Minister what his or his Department's view is on this issue, and what action he has taken to have this crew taken off the Sea Shepherd and get them doing something productive? Perhaps he can get them a fishing licence or something, anything, that would get them away from spending taxpayers' money on this useless and completely insulting exercise.


Some Hon. Members:: Agreed.


James Aloysius McGrath: Shame.


Hon. Pierre De Bane (Minister of Fisheries and Oceans):: Madam Speaker, I hear that the sentiments of outrage expressed by the Hon. Member are also shared on all sides of the House. The House has expressed its unanimous support for our sealers through two resolutions. Then to have the CBC today play into the hands of those people, who just want to attract the media, by having one of their reporters and camera crews on one of those boats, the sole purpose of which is to attract the media as the Hon. Member says, is really totally insensitive.


James Aloysius McGrath: Outrageous.
Petitions


Pierre De Bané: And outrageous, as the Hon. Member for St. John's East says. I hope the CBC will listen to the unanimous point of view of the House and stop giving publicity to a group of people who collect money from the general public to wine and dine, and then threaten to ram into the boats of the sealers, while actually they manage to collide on the first ice and then spend their money on booze or drinks to attract the media. It is totally outrageous.


Some Hon. Members:: Hear, hear!


PETITIONS
Madam Speaker:: I have the honour to inform the House that the petition presented by the Hon. Member for Laval (Mr. Roy) on Thursday, March 10, 1983 meets the requirements of the Standing Orders as to form.



ROUTINE PROCEEDINGS


Jack Wendele Shields: Madam Speaker, I have the duty to present a petition on behalf of a number of my constituents in the riding of Athabasca. The purpose of the petition, signed by 35 residents of Glendon, Alberta, is to register their opposition to any interference in the affairs of churches or voluntary organizations by the Government. In particular, they oppose any action or legislation that might empower the courts or any governmental body to force churches or voluntary organizations to retain in their employ or membership those whose homosexual, heterosexual or other moral or ethical activities, characters or lifestyles are contrary to the beliefs held by the said churches or organizations.
The nature of this petition is to request that Parliament not approve Bill C-10 or any successor or like Bill and, if approving it in spite of this petition, to make first the necessary amendments to determine that no such interference in the affairs of churches or voluntary organizations be permitted.
The petitioners hope that in Madam Speaker's examination of this petition you will find the petition in order, sense the urgency of their plea, and that you might use the discretionary powers vested in your office to allow discussion and referral of

March 11, 1983
Income Tax
this petition to the Standing Committee on Justice and Legal Affairs at the earliest possible moment.


QUESTIONS ON THE ORDER PAPER
[Stage Direction]
(Questions answered orally are indicated by an asterisk.)
Mr. David Smith (Parliamentary Secretary to President of the Privy Council):: Madam Speaker, the following question will be answered today: No. 4,710.


Mr. Deans: Did Mack Canada Inc. receive funds from government programs to assist the building and expansion of its plant in Oakville, Ontario and, if so (a) what were such funds (b) under what terms and conditions were the funds granted?


Hon. Ed Lumley (Minister of Industry, Trade and Commerce and Minister of Regional Economic Expansion):: In so
far as the Departments of Industry, Trade and Commerce and Regional Economic Expansion are concerned:
No assistance under any of the ITC or DREE industrial assistance programs has been provided to Mack Canada Ltd. to assist the building and expansion of its Oakville plant.
[ Translation]


Madam Speaker:: The question mentioned by the Parliamentary Secretary has been answered.


David P. Smith: I ask, Madam Speaker, that the remaining questions be allowed to stand.


Madam Speaker:: Shall the remaining questions be allowed to stand?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed from Thursday, March 10, 1983, consideration in Committee of Bill C-139, to amend the statute law relating to income tax (No. 2)-Mr. Lalonde- Mr. Francis in the chair.
The Chairman:: Order. When the Committee rose on Thursday, March 10, 1983, Clause 1 was under consideration and the Minister of State for Finance had the floor.
On Clause 1-Value of Benefits


Mr. Anguish:: Mr. Chairman, I rise on a point of order concerning the very complex nature of Bill C-139. Researchers have brought to my attention-and I concur with them-that in a legal sense there is incorrect nomenclature in the Bill. It is confusing to begin with, but if the references made therein are wrong, the people who have to translate the passage of the Bill into the Act will not know whether the references are made to the Act or to the Bill. They will have a very difficult time deciphering what has gone on when the Bill passes through the House of Commons.
For example, I refer Hon. Members to page 52, about two-thirds of the way down the page, where Subclause (17) of Clause 12 reads:
Subsection (8) is applicable with respect to transfers occurring after November 12, 1981.
Is that reference to Subsection (8) a Subsection of the Act, which would be the correct nomenclature, or does it really mean Subclause (8) which would refer to the Bill? I would submit that it should actually read Subclause (8), but it does not; it reads "Subsection (8)", which is actually a reference to the Act itself. Am I correct in that understanding? If so, I would point out that there is an inconsistency throughout the Bill.
Next I draw the attention of Hon. Members to page 47 of Bill C-139, again about two-thirds of the way down the page, where adjacent to "(6)" there is a reference made to Subsection 20(8) of the said Act. Then on page 48 there is a reference under Subclause (8) to Subsection 20(14) of the said Act.
Returning to the item on page 52 to which I drew Hon. Members' attention, it either refers to Subclause (8) of Clause 12 of the Bill or Subsection (8) of Section 20 of the Income Tax Act. Therefore, it becomes very unclear what the Bill refers to when it uses the word "Subsection". The Bill seems to be littered with a number of apparent inconsistencies.
If Hon. Members will direct their attention to page 52a, the bottom line thereof, they will see a reference wherein the Subsection and Subclause are clearly distinguished, as substantiated by the reference to Subclause (4) of Clause 11 of the Bill. This would refer us back to page 37 where we find Clause 11(4), which reads:
Section 18 of the said Act is further amended by adding thereto, immediately after subsection (3) thereof, the following subsections:
The Bill goes on from there. I am concerned with the word "Subclause." It should be used consistently with reference to a Bill of this House.


Walter David Baker: You are right.
March 11, 1983


Douglas Keith Anguish: The word "Subsection" should refer explicitly to the Income Tax Act. There are many inconsistencies throughout Bill C-139 which make it very confusing whether the reference is to the Bill or to the Income Tax Act, not only for Members of the House, but also for those who have to translate the information once the Bill passes through the House.
If I am correct in the observations I have made, what are we going to do to clear up this very apparent inconsistency in Bill C-139?


Mr. Cosgrove:: Mr. Chairman, I understand that we are continuing consideration of Clause 1 of the Bill before us. We have dealt with a number of Sections, none of which it seems to me were referenced by the Hon. Member who has just spoken. He did begin by making reference to Clause 17. My submission to the Chair and to Hon. Members is that we really cannot, under the pretext of one Hon. Member's interpretation of the Section, move from one Section to another. For example, the Hon. Member indicated the problem was interpersed throughout the Bill. The only way in which we can deal with this item is to deal with it in the context of the matter before Hon. Members. If the matter affects Clause 1, which we are in the middle of considering, that is the only reasonable way we can attempt to come to grips with the objections, suggestions or interpretations of Hon. Members on any aspect of the Bill. Otherwise, it would become hopeless to cope with.
On the thrust of the argument made by the Hon. Member for The Battlefords-Meadow Lake, I would appreciate having the observations in writing. I am told the Department of Justice has recommended a different way of numbering and a different way to describe. It is new, but that is recent advice from the Department. I would like the opportunity of giving the Hon. Member the Department's view on that. However, I think it ought not to interfere with the regular business of this Committee.


Cyril Lloyd Francis: I wonder if the Chair could observe that the Bill is drafted with reference to legislation, in which case the references are in terms of Sections. For purposes of consideration in the House, we refer to Clauses. Is this the source of confusion for the Hon. Member?


Douglas Keith Anguish: No, Mr. Chairman, that is not the source of confusion. I disagree with the Minister, with all due respect, but I believe we should get this problem clarified and cleared up before we proceed with this Bill because it could very well be wasted time. In some cases within Bill C-139, references are made in the Bill to delete or go back to a Subsection. Since the word "Subsection" is used throughout Bill C-139 instead of "Subclause", it is very confusing whether or not the references are to the Bill itself.


Cyril Lloyd Francis: I would draw the Hon. Member's attention to the fact that the draft before us relates to existing Statutes. It is a practice of the House to refer to Statutes by Section, whereas with consideration by the House, the practice is to
Income Tax
refer to Clauses. It appears that is the point which the Hon. Member has not fundamentally grasped.


Mr. Blenkarn:: Mr. Chairman, I think the Hon. Member may well have a point but it is a very confusing one. He has gone through a number of pages and mentioned a number of Sections. The ones he has mentioned I cannot find any quick fault with, but he may well be right. In any event, what he has said by way of representation today has undoubtedly been taken down in Hansard and we will be able to go over the matter in precise detail.
We are presently dealing with Clause 1 of the Bill with respect to automobile standby charges and two or three other matters. I do not believe there are any of the types of things of which the Hon. Member is speaking in Clause 1. Therefore, we could proceed with Clause 1. I think, though, that what the Hon. Member has raised is important, and if in fact what he has raised is the case, then it could be that a good many parts of this Bill are incomprehensible to everyone, including people in the legal drafting business, and obviously the House cannot deal with it.


Douglas Keith Anguish: That is why it should be cleared up now.


Donald Alex Blenkarn: We all know that the Income Tax Act is incomprehensible anyway, but if it is so incomprehensible that it cannot be put together in an Act that some persons can read, then the incomprehensibility goes beyond the ability of the House to deal with it. However, that matter can be dealt with at the next sitting after other Members have had a chance to understand what the Hon. Member has been saying. Therefore, I suggest we follow the Minister's advice and proceed with Clause 1 regarding the automobile standby charges. I cannot see that any of the concerns which the Hon. Member for The Battlefords-Meadow Lake raises as concerns are within the ambit of Clause 1.


Douglas Keith Anguish: Mr. Chairman, I could agree to that and will not unduly delay the business of the House any longer if you can provide me with the assurance that at the next sitting of the Committee of the Whole dealing with Bill C-139 we will, in fact, deal with this problem that I have brought up today. If I can have the assurance of the House and the Chairman that we will do that, I will not delay the discussions any longer.


Paul James Cosgrove: Mr. Chairman, I thought I had indicated it would be my intention to try to understand the objection more fully, which I think is the Chair's interpretation of the objection, have the officials look at it and prepare a response for the Hon. Member. When we come to the first Section in which it would be pertinent, if we are still not in agreement I think that would be the appropriate time to deal with it.


Cyril Lloyd Francis: Is that agreeable to the Hon. Member for The Battlefords-Meadow Lake?


Douglas Keith Anguish: Yes, Mr. Chairman.


Cyril Lloyd Francis: The Hon. Member for Calgary West.


Mr. Hawkes:: Mr. Chairman, are we on Clause 1 now?

March 11, 1983
Income Tax


Cyril Lloyd Francis: Yes, we are on Clause 1.


Frederick James (Jim) Hawkes: Mr. Chairman, after our discussion yesterday, is the Minister prepared to delete the Clause?


Paul James Cosgrove: No, Mr. Chairman.


Frederick James (Jim) Hawkes: The view on this side of the House is that it is a bad Clause because it is unfair, Mr. Chairman. People in similar circumstances are treated very differently under this Clause. It is basically unfair. Does the Minister share the view that the Clause is unfair?


Mr. Fisher:: Mr. Chairman, we had a considerable amount of debate on this yesterday and under no circumstance was the Hon. Member able to show that this Clause is unfair. In fact, I would challenge the Hon. Member now to spend a little time and show us where his claim is justified. We stressed yesterday that this Clause in the Bill is based on principles of fairness and should be promoted because of those principles. I challenge him to show otherwise.


Frederick James (Jim) Hawkes: We will be happy to. It may take the rest of the day to give about 1,002 examples, but we will do that.
Our other view is that the Clause is unenforceable and thus brings the whole tax system into disrepute. Does the Minister share the view that it is, in reality, an unenforceable Clause and therefore likely to bring the whole tax system into disrepute?


Douglas Glenn Fisher: I do not think this Clause is unenforceable. The Hon. Member knows, or should know after yesterday's debate, that we have had over 12 years' experience with this particular tax measure. If the Hon. Member does not know that, he should not be wasting the time of the House.


Frederick James (Jim) Hawkes: Can the Minister indicate to the House whether or not it is the responsibility of the employer or the employee to report the presumed benefit to income?


Douglas Glenn Fisher: It is both. Again, the Hon. Member should know that because the practice has not changed from the one established over the last 12 years. The Hon. Member should check with his accountants and his constituents. He will find that they know how to do this because they have had plenty of experience with it.


Frederick James (Jim) Hawkes: Can the Minister indicate to the House what the penalties are to the employer and what the penalties are to the employee in the tax law for failing to report?


Douglas Glenn Fisher: There are normal penalties and interest payments that are made by all taxpayers when it is found that they have done things improperly or have done things with malice.


Frederick James (Jim) Hawkes: Normal penalties? Failure to report this benefit as income is failure to report income under the tax Act? If someone fails to report that income, are they potentially liable to a jail sentence?


Douglas Glenn Fisher: The requirements here are the same as they are for all measures. The penalties will range from small financial penalties and small amounts of financial interest, all the way up to severe penalties and jail sentences if there is a gross abuse of the law.
However, I suggest again to the Hon. Member that is picking a very extreme example here. It would be much better for him to check any specific cases either with his accountant or National Revenue.


Frederick James (Jim) Hawkes: According to the Income Tax Act of Canada, if I use a company-owned vehicle to drive from my home to my place of work, is that personal use or business use?


Douglas Glenn Fisher: It is personal use.


Frederick James (Jim) Hawkes: If I stop and see a customer on the way, is that personal use or business use?


Douglas Glenn Fisher: I suggest that the taxpayer would have to review his circumstances. We seem to feel here that it would probably be business use, but it would be something where the taxpayer would be well advised to consider reviewing the circumstances in the specific instance.


Frederick James (Jim) Hawkes: Suppose that I work for an employer who has no garage facilities and I happen to have garage facilities at my home, given the nature of Canadian winters. If I provide my garage facilities to my employer in wintertime free of charge and therefore have to drive the vehicle from the garage to work in the morning so it is available for work, is that personal use or business use?


Douglas Glenn Fisher: The practice has not changed over the past 12 years. Let us establish that. The Hon. Member is asking questions, the answers to which he should already know. He should be able to advise his constituents on these events because none of this has been changed by the current Bill. There is no change. If the Hon. Member cannot do that, then he does not understand the Act as it previously existed.


Frederick James (Jim) Hawkes: I suggest to the Hon. Member that there is anywhere between a 300 per cent and a 1,000 per cent increase in this tax. It makes it much more important with respect to revenue and it makes it much more important to the taxpayer. That 2 per cent rate is a 100 per cent increase in the time of six and five, but the addition of operating costs makes that potential increase enormous, depending upon whether one has a lemon.
Is it presently the common practice of the Government of Canada for Cabinet Ministers to be picked up at their home and driven to the office?


Douglas Glenn Fisher: I can quote for the Hon. Member a policy document which is circular No. 1978-16, dated April 16, 1978, which indicates that if any Cabinet Minister uses his vehicle for personal use, he pays the standby charge. Such personal
March 11, 1983

use includes being picked up at his home and driven to his office. Therefore, the individual Cabinet Minister is liable for payment of the standby charge in the same way that any business person would be.


Frederick James (Jim) Hawkes: If the Prime Minister of Canada has an automobile which is worth approximately $100,000, I presume that because he is picked up at home and brought to work, the 2 per cent standby charge would be based on that $100,000 automobile?


Paul James Cosgrove: Mr. Chairman, I assume that the same rules would apply to the vehicle and the situation for the Leader of Her Majesty's Loyal Opposition, as well as to others who have vehicles provided by an employer who happens to be a Government, whether federal, provincial or municipal.


Frederick James (Jim) Hawkes: If the chauffeur keeps that automobile at home and brings it to the Prime Minister's residence, he is going from home to the place of business. The chauffeur then has to use the 2 per cent standby charge on the value of that $ 100,000 automobile, is that correct?


Paul James Cosgrove: My last answer would apply as well. The same thing would apply to the Leader of Her Majesty's Loyal Opposition, possibly with some modification of the role of the Prime Minister under some circumstances where, for example, he would be accompanied by security and police personnel, and it is viewed that his travelling at any time and at any place would be public business.


Frederick James (Jim) Hawkes: The question concerns the tax liability of the chauffeurs who serve Cabinet Ministers. When they bring the vehicle from their home to the Cabinet Minister's place of residence, that must be construed, according to what we have heard earlier today, as personal use for travelling from home to the place of business. Are the chauffeurs who serve the Cabinet of Canada required to take that into income?


Douglas Glenn Fisher: Again, this is a case for a specific interpretation and examination by Revenue Canada. For example, if the chauffeur is required to drive from his home to pick up the Minister or any other passenger in the line of business and the car is only used in that capacity, then it would obviously be defined as business use, just as it would be defined as business use if a salesman went from his home to a customer's premises as his first stop of the day.
Let us bear in mind that the Hon. Member is again picking very extreme examples. He is picking examples that are best handled by specific examinations by Revenue Canada. The chauffeur or the salesman, or any other business person, is well advised simply to check with Revenue Canada to determine whether the activity is acceptable or not in a specific instance. If there is no personal benefit, then there will be no tax liability. If it is business use or employment-related use, there will be no tax liability.


Frederick James (Jim) Hawkes: I came to the House with the mistaken impression that it was the business of Parliamentarians to
Income Tax
decide how people should be taxed. Repeatedly, the Government is telling us that it is the business of bureaucrats to decide how people should be taxed. I suggest to Government Members that it is a violation of the basic principle for the existence of the House.
I will come back to a very simple question. Are all the chauffer-driven limousines serving the Cabinet of Canada worth the same amount of money, or does the value of those chauffeur-driven limousines vary? Are some more expensive than others?


Douglas Glenn Fisher: I must apologize, Mr. Chairman, but I missed the last part of the Hon. Member's question. If he would be good enough to repeat it, I will try to answer it.


Frederick James (Jim) Hawkes: It is a simple question. Are all the chauffeur-driven limousines serving the Cabinet of Canada of the same value or are some more expensive than others?


Paul James Cosgrove: I suppose that question is the same as asking whether all the chauffeur-driven limousines of the Government of Alberta are worth the same amount, or whether all the chauffeur-driven limousines of the Government of British Columbia are worth the same amount, or whether all of the chauffeur-driven limousines of the Government of New Brunswick are treated the same, or whether all of the chauffeur-driven limousines of the Government of the Greater Montreal district are treated the same, or whether the chauffeur-driven limousines of all of the Government of the Municipality of Metropolitan Toronto are the same, or whether the chauffeur-driven limousines of all the-


Frederick James (Jim) Hawkes: I rise on a point of order, Mr. Chairman. I think I have a "yes". That is all I need. I would like to ask another question.


Douglas Glenn Fisher: I rise on a point of order. I believe it is standard practice in Committee that only one person has the floor at one time, and it is not up to the Hon. Member to determine when the Minister has finished.


Cyril Lloyd Francis: The Minister of State for Finance has the floor. As far as I know, he has not completed his answer.


Some Hon. Members:: Filibuster!


Paul James Cosgrove: No, I have not, Mr. Chairman. Quite frankly, it would take me a month to go into the specific cases involving approximately 10,000 situations calling for chauffeur-retained limousines across the country. Quite frankly, I do not think that that is a useful exercise for the House to pursue, whether this happens to be a situation involving the Government of Canada or any other Government or organization which employs chauffeur-driven limousines in the country.


Frederick James (Jim) Hawkes: Mr. Chairman, I was first challenged to give a concrete example of unfairness.


Douglas Glenn Fisher: You haven't done it yet.

March 11, 1983
Income Tax


Frederick James (Jim) Hawkes: "You haven't done it yet", he says.


Douglas Glenn Fisher: That's right.


Frederick James (Jim) Hawkes: Consider this example. We have, say, 100 chauffeurs in the world. Let us assume for one minute that their take-home pay is exactly the same, $15,000 a year. Let us also assume that all of them use their limousines for personal use over a distance of 12,000 kilometres a year. Do they all pay the same amount of tax? The answer is clearly "no".


Douglas Glenn Fisher: You're missing the point.


Frederick James (Jim) Hawkes: The tax they pay is based on the value of the limousines which their employers require them to drive. If someone gets stuck with the job of driving the Prime Minister of Canada in a limousine worth $120,000, the tax bill is a great deal different from that of someone whose employer requires him to drive a Toyota.


Douglas Glenn Fisher: This is ludicrous.


Frederick James (Jim) Hawkes: This is not ludicrous. This the first example of fairness or the lack of it. To return to the answer started by the Minister the other day, he was telling us about his car troubles as a Minister of the Crown and the fact that he had a lemon. One of the characteristics of a lemon is that it requires a great deal of money to be spent on maintenance. The poor chauffeur who must drive a car which is frequently in a garage must pay 24 per cent of those maintenance charges because someone bought him a lemon and makes him drive it. Someone who bought a good car which requires no maintenance pays no tax. That is the first example of unfairness. I challenge the Minister to tell me that that is not unfair.


Douglas Glenn Fisher: Mr. Chairman, it is obviously the choice of the individual whether he wants to drive the car for personal use at all. That is all. There is no unfairness in that. I would assume that even the Hon. Member opposite could make that decision for himself. He either wants to or does not want to drive it for personal use. If he decides to drive it for personal use, of his own free will, then he does so knowing the tax consequences. Therefore, if he has a Cadillac and his neighbour, another chauffeur, has a Toyota, in both cases they decide for themselves, as reasonable adults, whether they will take advantage of their cars for personal use. From that point on they do so knowing the cost, because they are reasonable adults and can figure it out for themselves. The Government has made it very clear: in both cases, it is 2 per cent per month. That is the line. The choice is the taxpayer's choice. There is no one forcing that taxpayer to drive that car for personal use. The examples chosen by the Hon. Member avoid that fact.
As a footnote, I would add that I doubt anyone is tooling around town on personal business in a $120,000 limousine of the kind which belongs to the Prime Minister. I simply do not think that is reasonable.


Frederick James (Jim) Hawkes: Mr. Chairman, can the Minister or the Parliamentary Secretary explain to the House how, on January
1 of any given year, I am to know exactly what the maintenance costs will be on my vehicle over the 12 months ahead in order to make this intelligent decision?


Douglas Glenn Fisher: Mr. Chairman, one obviously cannot make that decision because one does not know whether the car will break down or operate smoothly for the year. There can be estimates based on experience with any vehicle. But again, the individual taxpayer makes the choice concerning personal use, whether he can calculate the operating costs in advance or not. Just as the Hon. Member has paid for the personal use of his car in after-tax dollars, so we are asking people with company-supplied cars to pay for personal use in after-tax dollars. That is all.
The Hon. Member opposite takes his after-tax dollars and uses them to buy insurance and gasoline, to carry out repairs and for maintenance of all sorts. Equally, if a salesman wants to use a company-owned car for personal use, then that salesman pays for the personal use in after-tax dollars. There is nothing more uncomplicated or fair than that. The Hon. Member can make it complicated, but he is the only one who believes his own examples.


Donald Alex Blenkarn: Oh ?


Frederick James (Jim) Hawkes: I find it incredible that the Government consistently fails to recognize the difference between the goal and the reality of a piece of legislation. The first issue I raised with the Government today was whether or not this is a fair tax, whether it affects all Canadians in similar circumstances in similar ways.
Let me give two further examples. Let us assume that over a year 10 per cent or 12,000 kilometres of 120,000 kilometres driven by a chauffeur in a company car are for personal use. Someone else working for a company drives a car 24,000 kilometres and 12,000 of those are for personal use. With regard to the 120,000 kilometres driven in one company car, 108,000 are driven on company business. The operating costs of that car will be enormously more than the one which is driven 24,000 kilometres. The chauffeur who drives an automobile which is in worse shape and breaks down faster pays more tax than the one with the better automobile, although they both drive the same 12,000 kilometres. Tell me how that is fair.


Douglas Glenn Fisher: It is the same answer. It is the taxpayer's personal choice to drive those 12,000 kilometres. If the taxpayer chooses to do so, then the taxpayer derives a personal benefit and pays tax on it. He does so as a reasonable adult with the full knowledge of the likely liabilities which will be involved at the tax end.


Frederick James (Jim) Hawkes: Suppose that a Minister of the Crown says to his chauffeur: "There is no parking at my house; therefore, I want you to take the car home every evening and bring it back every morning". Does that chauffeur have any choice other than to give up the job? Are you not making them liable for tax the minute the employer tells them they have to do that?
March 11, 1983


Douglas Glenn Fisher: Mr. Chairman, again that is a very extreme, hypothetical example but in my opinion that would be an employment-related activity and the Hon. Member's favoured chauffeur would not be liable for tax because it would be a condition of his job that he do this. Again, it is not a matter of personal benefit because the individual involved is, number one, enhancing his business-related activities rather than his personal activities and, number two, does not have that element of choice. I would think that if those two conditions prevail, then the taxpayer is not liable.


Cyril Lloyd Francis: The Chair hesitates to interrupt the Hon. Member for Calgary West but he has had a period of 20 minutes. In Committee of the Whole, he can rise again after another speaker has spoken.


Mr. Fennell:: Mr. Chairman, carrying on that same line of questioning, I would like to broaden it out from just Ministers and Government officials and talk about executives. Concerning this question of the assumption of a chauffeur having to pay for the cost to go home and back, in the old days the chauffeur used to live in the residence of his employer. That was the traditional way. That does not occur now because people want to live in their own homes. Let me give an example. If a chauffeur drives a Minister to the airport and then drives home, does the Parliamentary Secretary consider that personal expenditure?


Douglas Glenn Fisher: Mr. Chairman, I am sorry but I am not going to get into the business of advising chauffeurs, whether their bosses be Ministers or business people or whoever. I think we are carrying the thing to an extreme here.
I would remind the Hon. Member of the simple principle that, if there is a personal benefit rather than an employment-related benefit, then we will ask the taxpayer to pay tax on that personal benefit. It is plain and simple.


Thomas Scott Fennell: Mr. Chairman, this is going to work out that it will be a personal benefit for Ministers and senior executives but it is going to hit the little salesmen. He is the one who is really being hurt. The Hon. Member talks about the 2 per cent on the car. What about the cost of that chauffeur who drives people around for their personal business? What about that cost, because that is about twice the price of the cost of the car. Is that being taken into consideration?


Douglas Glenn Fisher: Mr. Chairman, under the guidelines directing Ministers' use of their cars, I can tell the Hon. Member exactly that the guidelines say that a Minister to whom a car is made available for his personal as well as his official use shall pay to his Department the minimum monthly standby charge provided under Section 6(2) of the Income Tax Act. That is plain and simple. The Ministers are doing exactly what every business person does.
In reply to the Hon. Member's question, if there is an operating expense that is attributable to the vehicle by the
Income Tax
employer, then that operating expense is prorated over the personal use of the vehicle.


Thomas Scott Fennell: Mr. Chairman, could the Parliamentary Secretary tell me exactly what that standby expense is for a chauffeur of a Minister or a corporation, I do not care which?


Douglas Glenn Fisher: Mr. Chairman, as I understand it the cost is simply prorated in. If the operating costs can be assigned to a vehicle and prorated out over the personal use as well as the business use, then that is what is considered to be the benefit here.


Thomas Scott Fennell: Mr. Chairman, I have another question. Executives today build in a work function within their cars. They have computers, telephones and so on, so that as they travel from home to work they are always on call. Does the Parliamentary Secretary consider that personal or business use?


Douglas Glenn Fisher: Mr. Chairman, again the principle is that if there is an employment-related benefit, if the employer or the business involved benefit from the use of the vehicle, then it is not personal use. The case that the Hon. Member has raised would probably be subject to interpretation. If the computer were there and the telephones were there and the reading lamps were there but never used, or there was no demonstrable benefit for the company, then the taxpayer might have to consider that to be personal use even though all the equipment appears to point in the other direction.


Thomas Scott Fennell: Mr. Chairman, I would like the Parliamentary Secretary to tell me how this is going to be checked out. How will the Department know what the executive or the Minister is doing in his car? How is it going to come up with a reasoning on this one?


Douglas Glenn Fisher: Mr. Chairman, there is no mystery to this whatsoever because, as I explained to the Hon. Member previously, the Department has had 12 years' experience deciding these questions. There is nothing new in the regulations; there are no new wrinkles and no new interpretations included in this Act that will affect those rulings. So the Hon. Member simply has to look at the existing body of experience and that will give him a reasonable guide on these interpretations.


Thomas Scott Fennell: Mr. Chairman, really what I am trying to get to is the difference between the way they are treating executives and Ministers and the way they are treating the average salesman who has to hustle his butt around this country to sell our products. That is what I am talking about.
I would like to ask the Parliamentary Secretary, if a salesman puts in an Osborne computer and does all his sales reports within his car, and if he puts a telephone in his car so that he can be reached by his office at all times, and he is reached between his home and his office, would that be considered a personal expense?


Paul James Cosgrove: In English or in French?

March II, 1983
Income Tax


Douglas Glenn Fisher: Mr. Chairman, again those are things that have been worked out over the years. I would like to indicate to the Elon. Member that the exception made for automobile salesmen is the one clear-cut case where people take their vehicles home and benefit their businesses by doing so. Because it is the one clear-cut case, it is given a clear status in the Act. All the other cases have developed over the years as matters of interpretation and discussion between the taxpayer and Revenue Canada, and if the taxpayer can show that the business is benefiting, that productive activity is resulting from his use of the vehicle, then that will be tax exempt. If the taxpayer cannot demonstrate that, if he finds, because of his recordkeeping or because of inadequate proof, that the car is considered personal, then he will pay tax.


Thomas Scott Fennell: Mr. Chairman, I am going to recommend to all the salesmen in my riding, and I was not talking about automobile salesmen, to turn their car into a work station and that would solve their problem, although it may be a bit expensive. Does the Parliamentary Secretary appreciate the damage he is doing to leasing companies in this country?


Douglas Glenn Fisher: Mr. Chairman, I suggest to the Hon. Member that if salesmen in his area turn their cars into work stations, then they will possibly become much more productive, the Hon. Member will have done a real service to the wealth and productivity of his riding, and all of us will be grateful and thank him for it. On the other hand, if he is urging people simply to find phony ways to get around the law, then they may not come back and thank him for that later on. 1 would urge him to be a little careful in the emphasis that he places on all of these matters.
I received a letter from a book publishing salesman who indicated that, because of the weight of books and samples that he had to carry around, he could not really be expected to use the vehile for personal use. He said that every time he wanted to put his family into the car he had to unload all of these heavy books, so he never used the car for personal use. I was happy to write back to him and tell him that if he did not use the car for personal use he did not have to pay tax-a very straightforward equation.
The Hon. Member has also asked whether I am aware of the damage being done to leasing companies. I would be happy to hear more specifically from him on that.


Thomas Scott Fennell: Mr. Chairman, every leasing company in the leasing association has written to the Minister, and I have copies. It has been proven that their revenue has decreased. Furthermore, the damage which has been done to the automobile industry is that where a salesman normally turned his car in every two years because of the number of miles that he puts on it, he is now extending that to three or four years. That is having a direct impact. In fact, last month retail sales were down 8 per cent because of this law. Does he realize the impact that will have on the industry?


Douglas Glenn Fisher: Mr. Chairman, I do not have the exact figures. I presume this argument was raised 12 years ago when the standby charges were first introduced. I will look at those figures, if it is useful for the Hon. Member. I do recall that the question of extended leases was raised in my presence during discussions with car dealers. They indicated to me the extensions of those leases were happening prior to November, 1981, that in recent experience leases were being extended from 24 to 30 or 36-month periods. They said to me at that time that that phenomenon was not one that first appeared in November, 1981, but was one that developed over a period of time.


Thomas Scott Fennell: Mr. Chairman, the Parliamentary Secretary did not answer my question on the automobile sector. That is what concerns me most. I want to ask one further question. Does he realize that currently salesmen who work on commission have commissions far less this year than they have had for many years previously? They are getting a double jolt from reduced income and increased taxes.


Douglas Glenn Fisher: Mr. Chairman, now we are getting to the core of the problem. The Hon. Member should recognize that the salesmen he is describing will solve their problems simply by not using their cars for personal benefit. If they look at the cost involved, they will find that it is probably still the cheapest way they can conceivably obtain a car. It is a fair way. It is done with after-tax dollars. Presumably it is an acceptable way between the employer and the employee for the employee to use the car for personal benefit.
Everybody gets a fair shake because other taxpayers can look at such an arrangement and be confident that theirs is fair as well. I suggest that the salesman he has described has the choice of using the car personally or not; and, second, if he chooses to use the car for personal benefit, it is still probably the cheapest way to get such a vehicle.


Thomas Scott Fennell: Mr. Chairman, obviously the Parliamentary Secretary and his colleagues have never been in sales. They do not have to sell, only create Government expenditures. They do not know what selling is. Otherwise, we would be in a lot better position than we are today.
I believe this Bill will hurt salesmen. The bank executive has a car at his disposal to drive back and forth any time he wants. Is the Government going to set up a special federal police force to check on these people, to follow them and find out where they are going in order to find out how the car is being used?


Douglas Glenn Fisher: Mr. Chairman, in 1968 I started a career in sales. I own a sales-oriented company. I continue to be a salesman today, although not quite so actively or persuasively here as I have been in other cases. I understand what salesmen have to go through, which is one reason why I am not particularly enamoured of the line of thought that the Hon. Member has put forward.
Salesmen are not stupid people. They understand the requirements they are supposed to go through, requirements
March 11, 1983

which they have faced since 1971. They are very manageable requirements; I know that. When I make comments about personal use of a vehicle and the expense involved, I speak from personal experience. That is the way I purchased my car or enjoyed the use of my car. I urge the Hon. Member not to get too extreme, at least in my case, because I might be able to offer him some contrary examples based on my own experience.
I do not think we need a great, big federal police force because we ask the taxpayers to report on their own. These taxpayers know, as they have found over the past 12 years, that there are established ways to keep receipts and records and to do their own accounting which will satisfy Revenue Canada.


Thomas Scott Fennell: Mr. Chairman, I would like to ask the Parliamentary Secretary another question. He tells me he was a salesman.


Douglas Glenn Fisher: I still am.


Thomas Scott Fennell: He is trying to sell himself. This is obviously totally different from what he did before. We need to have quality in the profession. As a Member of that profession, can the Parliamentary Secretary advise this Committee whether it would be better for a salesman to buy his own car and receive a mileage allowance from his employer, or to accept a car from the employer?


Douglas Glenn Fisher: Mr. Chairman, the Hon. Member is quite right; the success of a sales campaign depends on the quality of the product. In my particular case it has been going downhill a little and it worries me greatly!
The Hon. Member asked me whether it would be better to get a car and take mileage or get a company car and pay the tax on the personal benefit. That is obviously the choice of the individual. In either case, if he gets a mileage payment from his company that is tax-free because it is a reimbursement for business-related use. If he gets a company car and uses it in business, that is tax-free because it is business-related. He buys his own vehicle with after-tax dollars. He paid tax for the personal use. With the company car, the benefit is assigned to his income and he pays tax, so again he has personal use of the car with after-tax dollars. It is up to the individual salesman. It is not up to Parliament to advise people on that kind of decision.


Thomas Scott Fennell: Mr. Chairman, this is an important point. There are salesmen who will be interested in this. Is there a limit put in by the Government on the amount per kilometre that they receive?


Douglas Glenn Fisher: No, Mr. Chairman, but it must be backed with proper record-keeping and receipts and be seen as a reasonable exercise, not as some inventive exercise which Revenue Canada may view as simply a way of circumventing the measure.
Income Tax


Thomas Scott Fennell: Mr. Chairman, the Parliamentary Secretary and his Government seem to know a lot more about the cost of running a car than the average citizen.


Paul James Cosgrove: Or you.


Thomas Scott Fennell: Yes, I acknowledge that. Would it not be wise to put a limit on the price per kilometre for city and highway driving? I can see a scenario where they could use a price per city mile and the car be driven in the country all the time. In effect, the salesman would pay for his own personal use out of the excessive amount allowed per kilometre. Let me add something else. I feel that even the amount the House of Commons permits us is excessive.


Douglas Glenn Fisher: Mr. Chairman, I do not think I would agree with what the Hon. Member has suggested, although it is presented in a constructive way. It would lead us into the kind of trap which the Hon. Member for Calgary West suggested where you get gross unfairness because somebody is in the country, somebody is in the city, somebody is out West, somebody is in the East, somebody is in a high-cost area and somebody else in a low-cost area. The Government would have to work out all kinds of zones, complex mileage allowances and so on. We cannot get into that. It would add horribly to the complexity of the problem.
I want the Hon. Member to bear in mind that we are dealing here with a system that is well established. People know what to expect. People have an idea of the reasonable limits within which they can operate and be accepted without trouble by the tax Department. I ask him to bear that in mind rather than coming to grips with a lot of complexities.


Cyril Lloyd Francis: Order, please. It being one o'clock, it is my duty to rise, report progress and request leave to consider the Bill later this day.
Progress reported.


The Deputy Chairman:: It being one o'clock, 1 do now leave the Chair until two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
The House resumed consideration in Committee of Bill C-139, to amend the statute law relating to income tax (No. 2.)-Mr. Lalonde-Mr. Blaker in the chair.
Roderick Blaker: When the Committee adjourned at 1 p.m., the Hon. Member for Ontario had the floor. In his absence the Chair will recognize the Hon. Member for Mississauga South.
On Clause 1-Value of Benefits

March 11, 1983
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Donald Alex Blenkarn: Mr. Chairman, I would like to ask the Minister two or three questions and then move an amendment. Does the Minister not agree that if a person was to buy an automobile four years ago for $10,000, under the provisions of these rules, assuming he used the car the maximum amount for personal use, the personal use cost to him would be $2,400 a year and would remain $2,400 a year, no matter how old the car got or how little value the car really had?


Paul James Cosgrove: Mr. Chairman, assuming that he is using it to the optimum, yes, the Elon. Member has accurately and I believe fairly interpreted the provision.


Donald Alex Blenkarn: So that the effect is that as the car gets older and is worth less and less, the standby charge, which forms part of the taxable income of the employee, remains the same. If a car was bought four years ago and was worth $10,000, it would be worth about $2,200 or $2,400 on the market today, yet the standby charge could conceivably be in excess of the value of the car. Is that correct?


Paul James Cosgrove: Mr. Chairman, the Hon. Member is using a general principle and making the assumption that cars four or five years old are not as good as a new car. It is well known, of course, that some vehicles are not as reliable for the first while as a car which is broken in for a period of time. That is well known, Mr. Chairman, by Hon. Members because we know that the maintenance and repair deals which are offered by vendors of new vehicles are all designed to serve the first 12-month period. It also assumes, Mr. Chairman, that the vehicle four or five years old is not as reliable as when it comes off the assembly line. I would think that some cars, like some Hon. Members opposite, improve with age.


Donald Alex Blenkarn: I would agree that the Hon. Members opposite the Minister have improved with age much more than he has. However, he has also pointed out the fact that as cars become older, they probably have greater maintenance costs. I remind him that the maintenance cost is also a taxable benefit to the employee. As the car gets older and becomes worth less money, the standby cost in relation to the value of the car becomes greater and greater and the maintenance cost becomes greater and greater and the taxable benefit becomes greater and greater, despite the fact that the fair value gets less and less. Therefore, I move, seconded by the Hon. Member for Ontario:
That Subclause 1(3) of Bill C-139 be amended by striking out line 41 on page 2 and substituting the following:
"amount in respect of its cost amount to the"


Roderick Blaker: Order, please. I think the Hon. Member will know, as I indicated when we began the proceedings, that the Hon. Minister has already put an amendment to the House. We cannot have two amendments on the floor at the same time.


Mr. Pinard:: Resign.


Paul James Cosgrove: That is not a bad idea either. Mr. Chairman, we have with the consent of the Committee dealt with numerous Clauses and amendments on one vote. With the consent of all Members, Mr. Chairman, and for the purpose of discussion, which appears to be the only reason for the amendment thus far, I would be prepared to accept the proposal that it be considered on the floor for discussion.


Donald Alex Blenkarn: Mr. Chairman, on the point of order that you raised, I think you must appreciate that we have passed the Minister's amendments by agreement. We are now dealing with the Clause as amended. The effect of what we did earlier was to agree to the passage of the Minister's amendments because we agreed that the Bill would then be debated on the basis that the Minister's amendments were incorporated and agreed by all sides as being valid amendments, accepted by all sides. So we are now dealing with the Clause as amended by the Minister.


Roderick Blaker: Let the Chair review momentarily where we are, at this point, procedurally. I will not go back to the original motion or point of order made by the Hon. Member for Simcoe North; the House is familiar with those.
Yesterday Hon. Members agreed to discuss together a number of Clauses and Subclauses. On several occasions I indicated to the House that we would refer to that group of Clauses and Subclauses by simply mentioning Clause 4. That has been dealt with and those Clauses and Subclauses and the Minister's amendments have been carried. Late yesterday afternoon the Committee reverted to Clause 1. I understand that this morning, or perhaps late yesterday afternoon, but in either event not at a time when I was in the chair, the Hon. Minister proposed an amendment to Clause 1(3). My understanding is that that is the current status and that the amendment to Clause 1(3) is now before the Committee for debate.


Donald Alex Blenkarn: No.


Roderick Blaker: Apparently I am misinformed.


Donald Alex Blenkarn: Mr. Chairman, the effect of what we have been doing is this. When we commence debate on a Clause the Minister produces his amendment, which he moves and we agree to. But when we start the debate, we are debating the amended Clauses instead of the amendments to the Clauses, because we have agreed to accept the Minister's amendments on the basis they are technical amendments. So far that has been the case. If the Minister had produced a substantive amendment, we would not have accepted it, but he has cleared those amendments with our side so we have accepted them as technical amendments. The House has accepted the amendments. So what we are doing is debating Clause 1 as amended by the Minister and accepted by this House. The amendment that 1 now propose is a further amendment, so the House will then be dealing with an amendment to Clause 1.


Roderick Blaker: That is fine. For the sake of the record, may I indicate to the Hon. Member that the Table has not been informed of that in the usual manner. Apparently this
March 11, 1983

is an agreement which has perhaps been referred to in debate, but in any event I think I would have to put before the Committee now the proposal that the amendment proposed by the Minister of State for Finance to Clause 1(3) has been deemed to be accepted and accordingly Clause 1 stands amended. Is that the situation? Is that agreed?


Paul James Cosgrove: Mr. Chairman, with respect, you used the singular-the "amendment" by the Minister. In fact, there were two amendments.


Roderick Blaker: I have a second one which I understood had not been moved. We will now take it that both amendments put forth by the Minister of State for Finance are deemed to have been accepted and adopted by the Committee. Is that agreed?


Some Hon. Members:: Agreed.


Roderick Blaker: Agreed. Accordingly, the Hon. Member for Mississauga South is in good order and the Chair finds his proposed amendment to be acceptable procedurally; so we can carry on debate in that regard.


Donald Alex Blenkarn: Mr. Chairman, the effect of the amendment is to adopt the same type of attitude which was taken in the Senate Committee studying the proposed provisions of the Income Tax Act. The Senate in its wisdom felt that when the standby charge related to the value of an automobile, it should not relate to the original cost but to the cost as it goes down, is altered or changed over the life of the vehicle. The effect of our amendment would be to provide, if the car was worth only $2,500, a standby charge of 2 per cent of that amount per month. If it was worth $5,000, it would be 2 per cent of that amount per month, and so on.
There is no reason, in the concept of fairness, why the standby charge should remain constant through the life of the vehicle when the value of the vehicle to the owner, the value to the employer and indeed the value of the vehicle on the market, has gone down and down and down. We could have the terrible situation that if a company was not doing too well and could not afford to replace its salesman's car, the salesman would be driving around in an older, progressively rustier, beat-up car but would be stuck paying the same standby charge as was paid when the car was brand-new. That is a disgraceful situation in terms of fairness. If the whole question of the taxation of standby charges is to be fair to the people of Canada, then surely it should be fair in relation to the progressively lesser value of the car as it gets older.
Why does the Minister think that the proposal in the Bill at present is fair and the amendment should not be carried? In any sense of fairness the amendment makes sense.


Paul James Cosgrove: Mr. Chairman, as I indicated, the question of valuation is a difficult one especially when dealing with motor vehicles. I submit in seriousness to all Members that motor vehicles are of different value, work better at different times
Income Tax
and follow no average or common pattern in so far as performance is concerned, even when two vehicles come off the assembly line one after another.
For that reason the proposal of the Hon. Member for Mississauga South was not adopted by the Government. I say this notwithstanding the fact that we have submissions from the Senate Committee. Mind you, that recommendation was not paralleled in the recommendation of the House of Commons Standing Committee on Finance, Trade and Economic Affairs. We think that in fairness to Canadian motorists and those people who are affected by, and want to take advantage of, the use of vehicles for personal reasons while in the employment of companies offering these benefits, rather than a year-by-year valuation we should take the average valuation for the vehicle over its life.
What the Hon. Member is doing in this amendment, as he has done in every amendment he placed before us, is to invite greater complexity and paper work. This offends the very thing for which they criticize the Government, that is, for not properly administering the application of this Section.
Could we imagine the situation if every taxpayer, every driver of automobiles, had in addition to keeping track of their mileage to put a year-by-year valuation on their vehicles, taking into account all of the matters affecting it?


Donald Alex Blenkarn: No problem.


Paul James Cosgrove: I hear the Hon. Member saying "no problem".


Donald Alex Blenkarn: The Blue Book tells us the value every year.


Paul James Cosgrove: He is blowing hot and cold. On the one hand he tells us that the Section as it is now is too complicated and too difficult for taxpayers to understand or manage. Yet he invites us to go through what is the most complicated and variable process of all valuation processes, that is, to put a valuation on a used motor vehicle.
I know the Hon. Member is a practising solicitor and that he has had experience in the settlement of motor vehicle claims. He knows the difficulties surrounding the valuation of motor vehicles in such suits. He knows that it is virtually impossible on a unit-by-unit or vehicle-by-vehicle basis to arrive at a valuation which is agreeable to any two people.


Donald Alex Blenkarn: That is just absolute nonsense.


Paul James Cosgrove: The Section as it is takes the average value and breaks it down over the life of the vehicle.


Donald Alex Blenkarn: No, it does not.


Paul James Cosgrove: It is not taken year by year. If the Hon. Member were really serious in his proposal and expected to achieve the same revenues under the Section, I presume he would have no quarrel with the amount of revenue expected from the first year the standby charge would be in effect. We would probably have to increase the charge from 2 per cent to something higher, because 2 per cent is based upon the value

March 11, 1983
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of the vehicle, not the average value. As he indicated, in the first year there may not be the expenses which there may be in the fifth year.
Therefore, he would not only have to amend the Clauses which he referred to in order to achieve the desirable revenues, which his Party has indicated is acceptable in principle, but he would have to make further amendments to the Clause. In effect, what he is proposing is an administrative monstrosity. It would be an imposition upon the owner of a vehicle who would have to come up with that valuation, demonstrate it and prove it to the officials of National Revenue as he prepared his returns each year.


Donald Alex Blenkarn: The amendment as filed does not refer to fair market value. It refers to the undepreciated capital cost of the vehicle. If the Minister knows anything about the way people carry automobiles on their books, he should realize that the cost is the undepreciated capital cost. What we want is to have the depreciation, as it goes on on a capital cost basis every year, be the cost on which the standby charge is calculated. It is very simple because the capital cost of the vehicle must be determined by every employer every year in the normal course of business. We are not putting the employer through any additional work. We are not complicating the matter. All we are doing is bringing some fairness into the situation.
With respect to the Minister's statement concerning the complications of this Act, he is quite right. If we had our way, we would throw most of it out for that reason. But unfortunately, the House and the people of Canada will be stuck with this Act. If you have to be stuck with it, you might as well have a little fairness brought into it. The way it is now it is totally unfair.
This whole proposal was brought to the people of Canada on the basis of increasing fairness, yet the Minister wants to be unfair. He even wants to be so unfair as to say there are revenue considerations and, therefore, he would have to increase the standby charge because he has to get all the revenue he can. He is not interested in fairness. He is interested in taxing people, employers and employees who happen to have company cars. That is what he wants to do.
What we want to do is to bring some fairness to this Section. We are saying to the Minister that the standby charge should be calculated on the basis of the capital cost of the vehicle on an annual basis to the employer. That is all. In other words, you should not pay a standby charge higher than the cost of the vehicle to the employer. That strikes me as eminently fair. But the Minister goes on to say that you cannot figure out the cost and the value of the vehicles. Presumably people could cheat. Is it not very easy to do that?
In Toronto the Minister knows that there are Blue Book values of almost every car produced anywhere in the world. The Minister knows that car values are determined all the time. He knows that provincial Governments collect the sales taxes and if someone tries to claim a car at less than fair market value originally, or less than its value as it depreciates.
and it is sold as a used car to try to avoid payment of tax based on value, then it is not very long before a revenue officer is around to collect the correct amount of tax. Therefore, the arguments put by the Minister are nonsense.
The Minister then referred to the standing committee that examined the matter. Let us talk about that and let me read from the standing committee's report. On page 8 of this report, we find:
Some have suggested that the proposed imputed benefit seemed high considering that almost the full value of the company-owned car is imputed to the user over four years. This observation overlooks the higher repair and maintenance costs that are covered by the standby charge and which generally increase with the age of the car.
That statement is in the committee report because when the committee went over the previous Ways and Means motion, the use benefit-in other words, the cost of operating the vehicle-was not to be included as a cost to the employee. But the Department in its desire to up taxes decided not to charge the employee the standby charge. The Department decided to do one thing further and add in the maintenance cost of the car attributable to personal use. In other words, the Department dramatically increased the burden on employees using company-owned vehicles. The standing committee looked at the matter. That is the reason the standing committee did not come up with the firm direction to have some sort of amortization of capital cost in determining standby charges.
The very purpose of that objection to Clause 1, when the standing committee considered this matter of maintenance costs, repair costs, licence fees, insurance costs, was that these costs were not to be attributed to employees. Now they are to be attributed to employees. That is why the standby charge should be organized in relation to the value of the vehicle and not to the original invoice purchase price.


Paul James Cosgrove: Mr. Chairman, I can only assume that when the Hon. Member referred to capital cost as being the basis for the calculation of the charge, he really meant undepreciated capital cost. That is the basis of the unamended Section. I think he meant undepreciated capital cost.
I make reference to that because the minority view of the Hon. Member, as a member of the standing committee, was not reflected in a recommendation to the Government, no doubt in part because his amendment and his view was not well thought out. The basis for his argument is that the value should be on undepreciated capital cost. That provision in the Act is a concept which applies only in certain circumstances. It would not apply as a general rule across the whole spectrum of people who conceivably would be subject to the tax, as has been the case since 1971 and is being amended.
The Hon. Member, who is attempting to assist the Government with his amendment to come up with what he perceives to be a fair method for taxation, really has proposed a way that will not work and is defective. What about the fleet situation? Firms, even though they have fleets, conceivably may not be taking capital cost allowance. It is an interesting idea but it is one that is only a partial formula and is grossly
March 11, 1983

unfair to those people who cannot take advantage of fleets. The small-businessman, for instance.
We know that the majority of people who are affected by this provision do not take advantage-


Thomas Scott Fennell: They do.


Paul James Cosgrove: The Hon. Member, with respect, has an interesting thought. It was rejected by the committee, and the Government, of course, for the reasons I have given, could not accept it. It is a defective formula. It is an unjust formula. It is a most unfair and inequitable proposal for a formula.


Roderick Blaker: Before I recognize the Hon. Member for Burlington, may I point out to the Committee that from time to time Hon. Members appear to be coming to some agreements among themselves as to how they want to proceed. I now have an amendment proposed by the Hon. Member for Mississauga South. It regrettably proposes to amend a Clause prior to one already accepted by the House. In the normal course it is out of order. I am assuming there is unanimous consent to go back in order to amend Clause 1(3). I think perhaps Hon. Members, either while they are on their feet or passing by the Table, could advise the Chair about some of these agreements that have been reached. It would certainly make life easier for your obedient servant!


William James Kempling: Mr. Chairman, I have a few questions for the Minister on which I need some clarification. I think what has annoyed most of the people involved with a leased vehicle is that the lease is already in effect and they have no way of backdating it or making an adjustment to it. In effect, what the Government is doing with this provision in Bill C-139 is reaching back to 1982 and placing an additional tax on the individual who is using the vehicle.
I think that is the key point of the whole debate. The Minister is reaching back a year into 1982's income and saying that the Government will impose an extra tax on an individual by reason of this provision in Bill C-139. That is the nub of the whole issue.
A number of people who have corresponded with me have proposed that the implementation of this tax be delayed until the 1983 taxation year in order to allow those who have committed themselves to a lease to make an adjustment. That is one of the matters that I would like to comment on. Why can this not be done with some more reason, and in this particular case dealing with personal use of vehicles, make the change effective in the taxation year 1983?
I think that would cause the whole matter to move more expeditiously. It would then appear to those involved that there is some justice. People can then make the adjustment to their income with their employer or make whatever other adjustments they wish in the handling of the automobile if this was implemented for the taxation year 1983. Has the Minister considered that? If we move an amendment to that effect, would he look upon it favourably?
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Paul James Cosgrove: Mr. Chairman, indeed, we have considered that request because it is one that has been made by a number of individuals and representatives of various trade organizations that have been interested in this Clause.
I would have to remind the Hon. Member for Burlington that this provision in the Act is one that has been in place since 1971. It does not come as a surprise to fleet owners or anyone else who has been affected by the charge. Indeed, business people have been conducting their affairs under this tax provision for a number of years; it does not come out of the blue. The proposed amendment is to change the rate of tax that is levied.
I gave the rationale for the Government moving to change that rate in 1981, bearing in mind the costs and other changes in the economy since 1971.
I would further point out that this is not a retroactive proposal by the Government. This was a proposal introduced in November of 1981 which was to be effective in 1982. Therefore, rather than retroactive, it is prospective.
With respect to a delay until 1983, I do understand the representations that have been made about forgetting 1982 and beginning to talk about this measure for 1983. I am told by officials, however, that two separate publications were made available by Revenue Canada in their supplement to the 1981 employers and trustees guide as well as a special release through an interpretation bulletin IT-470 which was issued early in 1982 and which brought these changes to the attention of the business community in the normal course that has been followed for the last 10 years.
Although we are sympathetic to those people who would obviously like some time to rearrange their business decisions and their budgets-of course, they would like another year to prepare for that-the Government, however, has adopted the position that the announcement of the intention to change two months before it was to happen, which was in late 1981, was adequate notice for people to conduct their affairs in 1982. I have been told by a number of chartered accountant firms that most people have in fact done that. It was not particularly complicated. It was merely a matter of changing the amounts in a practice that they had already been carrying out under the 1971 law.


William James Kempling: Mr. Chairman, the Minister does not really answer the question at all. We are used to that, from him at any rate.
I want to read to the Minister a portion of a letter that I received. It is from the sales manager of a company who, besides supervising a number of salesmen, must arrange for the leasing of about 40 cars. In his letter he says: "The Bill does not seem to take into account the individuals who do not use the company car for private use or, as in my own case, use it infrequently". This man has his tax form now. He said: "I have been taxed on a taxable income under this new Bill of $2,834. I have an income tax rate of 27 per cent. This is costing me $765." He went on to say that upon checking the mileage of his car, the total mileage in kilometres was 24,752,

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of which he has calculated his private mileage to be 1,660 kilometres. He said: "Based on this calculation, it is costing me 46 cents a kilometre for the private use of this car".
His point was to ask why he would incur that sort of expense because he could drive a taxi cheaper than that. He goes on to say that he is responsible for leasing these cars and the lease is based on a two-year term based on 80,000 kilometres, 40,000 kilometres a year or 24,000 miles, which is about average. Most companies do not encourage the employee to use the car for personal use because it attracts an overcharge from the leasing company if they go beyond the agreed mileage.
What am I to answer to this constituent whose taxable income under the new Bill is an additional $2,834? It will personally cost him $765 on his return. That comes down to 46 cents a kilometre. Where is the equity and rationale behind that?


Paul James Cosgrove: Mr. Chairman, I thought 1 had a quick answer for the Hon. Member. Although I do not have the letter in hand, if the Hon. Member for Burlington reviews the first sentence that he read, the writer began by saying that he did not use the car for personal use.


William James Kempling: Or used it infrequently.


Paul James Cosgrove: If he does not use the car for personal use, he is not subject to the tax.


William James Kempling: He said 1,660 kilometres is what he used it for.


Paul James Cosgrove: That gets down to the question, again, of definition. "No" to me means zero. I do not know how I would qualify 16,000 kilometres. Certainly there is the exemption for personal use up to 12,000 kilometres. That provides a proportionate deduction. If the writer is unaware, I would be curious to know whether he is knowledgeable that the prorated reduction up to 12,000 kilometres has been taken in previous filings with the Department.


William James Kempling: I have talked to the gentleman. It is my understanding that he is in charge of leasing 40 vehicles. I am sure that he would be knowledgeable as to whether this has been checked through with his company's administration and auditors. Perhaps the difficulty is with the lack of information coming from the Department to explain this. At any rate, I will pass the Minister's comments on to him and, in fact, I will send him a transcript of this discussion so that he will have an understanding of it.
This business of personal use of cars seems to revolve around whether or not the employee is using a company car for personal use when he drives it back and forth from his home to his office or from his home to his business sales territory. Let me ask the Minister this question: If an employee is supplied a company car to conduct his business and he has a private car of his own and says that he does not use the company car for private business, what sort of document or statement would the taxpayer have to present to satisfy the Department of National Revenue that the car supplied to him by his company is not
being used for personal use? What sort of a document would be acceptable?


Paul James Cosgrove: It would appear, from the preamble to the Hon. Member's question, that he intends to make a transcript of these proceedings available to individuals who have written to him. In effect, he is asking for advice to give to his constituents as to how they should file or conduct their tax returns.
First, because the Minister of State for Finance, of course, is not the Minister responsible for the administration of returns, I would be reluctant to give a definitive answer. I also suspect that the Minister of National Revenue, bearing in mind the fact that the Hon. Member for Burlington has asked for specific, individual advice, would probably invite a person asking that kind of specific and detailed question to attempt first to gain assistance through the local office of Revenue Canada. Finally, if that is not to his satisfaction, then I assume the Minister would probably consider individual cases and attempt to be helpful. However, I do not think that 1 should really give my advice this afternoon concerning such a situation.


William James Kempling: The Minister is saying that he would give an answer in the House, but does not explain how to apply the advice to a practical situation. He went into this mumbo-jumbo about being the Minister of State for Finance, saying that the Minister of National Revenue must rule on it and that the local office must become involved. Therefore, one cannot rely on any answer which the Minister gives.
Let me ask the Minister another question. Let us consider a situation where an employee is supplied with a company automobile. He drives his own car to the company premises, picks up a company automobile and drives it for a day or longer, comes back and picks up his own private automobile and drives it home. He has been using a company automobile but has not been driving it for personal purposes. The Minister would, I think, agree that that would entirely be company use of the automobile with no personal use involved. Would I be right in assuming that?


Paul James Cosgrove: Mr. Chairman, I do not mean to be argumentative or unresponsive, but I am sure Hon. Members fully appreciate the years of experience which the Hon. Member for Burlington has had in this House. He has enjoyed responsibility as Whip for Her Majesty's Loyal Opposition. He is well aware that the practice of the House concerning the area of ministerial responsibility, particularly in Committee of the Whole when various Ministers are before the House, is that questions germane to a particular Minister are asked. Those which are the responsibility of some other Minister are not really germane to the discussion.
I think he is being very unfair when he raises a question which is obviously the responsibility of some other Ministry and directs it to myself or to my officials, who could only guess
March 11, 1983

or try to be helpful. First, it is improper and I think the Hon. Member knows that. He is being very unfair. I do not think he is really advancing the legislation before us, especially at a time when the legislation is so important. Many Canadians are waiting for this Bill to be passed and looking for refunds.


Donald Alex Blenkarn: You're not going to pay them, anyway.


Paul James Cosgrove: I do not think he should take the time of the House dealing with questions which should be directed to some other Minister.


William James Kempling: Mr. Chairman, I find this to be incredible. Here we have a Minister who is responsible for seeing the passage of the Bill through the House. We have stacks of letters from people asking us to interpret the Act that we are passing. We ask the Minister a question and he sloughs it off on to another Minister and says that I am being unfair.
What I am trying to establish is this. If an employee is supplied with a company car, he drives his own car to the company premises, picks up the company car and then drives it around on the business of the company, and then drives his own car back home, that is not personal use of the automobile.
The next obvious question is: If he takes the company car and drives it home on the weekend after doing company business all week, and he drives his own car on the weekend, what sort of documentation will the Minister or the Government require? Surely the Minister can give us some indication of what sort of documentation he must have in order to say that the employee did not use the car for personal use even though he drove it home after his business that week. That is what I am trying to establish. That is done, I might say, by thousands of people around the country, salesmen who work out of their homes for companies which may be based in Vancouver, Halifax or Montreal.
I received one letter from a fellow who asked: "Why should I drive that company car at 46 cents a kilometre when I have two other cars at home?" However, on this T-4 slip, additional taxable income of $2,834 was shown. That is what I am trying to establish. I am not playing games or anything else; I am just trying to get some straight answers from the Minister so that I can answer some questions which have been asked of me in letters.


Paul James Cosgrove: Mr. Chairman, I have already answered the last question of the Hon. Member and, I thought, to his satisfaction. I stated something to the effect that I do not believe the person who wrote the specific letter would accurately understand the Act and was probably entitled to a rebate. I thought the Hon. Member had acknowledged that that was the problem of the person who had written to him and indicated that it might be useful in his response.
The second question dealt with the practice concerning required documentation. Obviously, if the person who feels that he has been unjustly treated by the Department has been filing for a number of years, the answer to that person would be that there is nothing under the Act or in the Bill before us,
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which we have spent the last half hour discussing, which bears any relation at all to the questions raised by the Hon. Member. How many times does the Government have to state that the impact of the Section before us does not relate to administration but, rather, to increasing the amount of the levy?


William James Kempling: The Minister, if I may say so, has a Teflon mind; nothing sticks to it.


Douglas Keith Anguish: Mr. Chairman, I would like to ask the Parliamentary Secretary to turn to page 5 of Bill C-139. Line 7 states: "Subsection (6) is applicable after 1981". Is Subsection (6) found in Bill C-139 or in the Income Tax Act?


Paul James Cosgrove: Officials indicate, Mr. Chairman, that it does refer to Bill C-139. I believe that may be an example similar to the difficulty raised by the Hon. Member earlier today on a point of order. It states: "Subsection 6(9) of the Act is repealed and the following substituted therefor". I believe that the explanation of the Chair with regard to the point of order raised by the Hon. Member earlier today is the Government's response to his point of order.


Douglas Keith Anguish: No, Mr. Chairman, I would disagree. There are inconsistencies throughout the Bill. I was asking for clarification, in particular with respect to Clause 1 of the Bill before the House. However, it certainly does not deal with the objections I made this morning. I am quite anxious that those be dealt with when we come to consideration of the Clauses of the Bill and once the Minister's officials have had a chance to study the objections I raised earlier this morning in Committee of the Whole.
I asked a similar question of the Minister with regard to page 5. At line 3 it reads, "Subsections 1 to 4 are applicable to . .. ". Could he tell me whether those Subsections apply to the Bill or to the Income Tax Act?


Paul James Cosgrove: That is Bill C-139 as well.


Mr. Lewis:: Mr. Chairman, I have a couple of questions that I would like to put to the Minister with respect to the Act, and what the Government is trying to do. I just wanted to make sure that we are certain what we are driving at.
I understood earlier that the Minister said that if an employee drives from home to office, that is personal use. If the employee makes a business call on the way, that is business. I would like to ask the Minister whether, if an employee drives a company car and leaves it at the office, in an effort to make sure that the company vehicle is used only for his or her business driving and not for personal use, then receives a call before leaving in the morning and has to go on a business call, that would be business or personal use of one's own car.


Paul James Cosgrove: Mr. Chairman, I would have to repeat my earlier observation that the administration of the Act and the questions dealing with this application are matters that fall under the administering Revenue Canada officials. There is

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nothing in this section before us that has anything to do with the administration. We have changed the percentage of the formula for the standby charge. If the questions raised by the House Leader of the Opposition had been genuine questions, or questions that troubled him when the Act was introduced in December of last year, he might easily have inquired of Revenue Canada what the answer was to this particular problem that is posed today.
I doubt, Mr. Chairman, whether it really is a problem because, as I have indicated, Revenue Canada has been administering this Act since 1971. There is a body of decisions by Revenue Canada, they are available and it is the Department that should be consulted. The Hon. Member's questions have nothing to do with the legislation before us. I would urge Hon. Members once again, because there are some six million Canadian families looking for passage of this Bill for refunds of money that would assist them in a very difficult economic time-


Roderick Blaker: The Hon. Member for Mississauga South rises on a point of order.


Donald Alex Blenkarn: Mr. Chairman, the Minister keeps raising the fact that people are looking for refunds. The fact is that the Government has no intention of paying the refunds until April 30, because it does not have to pay interest until after April 30.
Secondly, the fact is that we are proceeding with this Bill as quickly as we can, and those kinds of nonsense claims by the Minister-


Roderick Blaker: Order, please. The Parliamentary Secretary is rising on a point of order.


Douglas Glenn Fisher: Mr. Chairman, we have seen this two or three times, where Members on the other side have used these sorts of false points of order in order to take the floor away from the Minister. I must object to that. That was a point of debate, it was not a point of order, and it was done to cut off the Minister's answer. I object to this procedure that they are so rude to follow.


Roderick Blaker: The Parliamentary Secretary will realize that the Chair cannot really determine whether a point of order qualifies as such until it has at least heard some part of it.
The Hon. Member for Simcoe North is rising on a point of order.


Philip Derek Lewis: Mr. Chairman, I ask the Minister, since he seems to feel that it should be the Department of National Revenue people who are here-


Roderick Blaker: Order, please. The Hon. Member rose on a point of order. That is not a point of order.


Philip Derek Lewis: No, it is a question. I thought you had dismissed that point of order.


Roderick Blaker: I now have to recognize the Parliamentary Secretary on a fresh point of order.


Douglas Glenn Fisher: Again I rise on a point of order, Mr. Chairman. In my earlier comments I was reflecting on the behaviour of the Opposition, and I realize your difficulty.


Roderick Blaker: I should indicate, after that flurry, that I believe the Minister of State for Finance did not complete his remarks. I recognize the Minister of State for Finance.


Paul James Cosgrove: Mr. Chairman, I was trying to appeal to the civility and compassion of all Members in the House. If the position of the Progressive Conservative Party is as reflected by the statement of the Hon. Member for Winnipeg-Assini-boine yesterday that the Party is in agreement with the principle of taxing this benefit and they have some difficulties with some aspects of it, please let us deal with that-


Frederick James (Jim) Hawkes: That would help.


Paul James Cosgrove: -but do not deal with items that have nothing at all to do with the Bill in front of us. This Bill is so important to so many Canadians; let us not fool around.


Philip Derek Lewis: Mr. Chairman, since the Minister has introduced this in debate, I wonder if he will tell us whether, under Section 151(2) of the Act, the Government is not required to assess returns submitted and, if there is a finding that there is a refund due, to send that refund back to the taxpayer forthwith.
While the Minister is on his feet, would he point out to us what would happen if this Act is not passed by, let us say, June, July or August? Is the Minister saying to all Canadians that if the Act is not passed there will not be any refunds whatsoever? Is that the position of the Government, no Act no refunds? I point out that this may not be all that relevant under this Clause, but he introduced it.


Paul James Cosgrove: On the contrary, Mr. Chairman, I did not introduce it. I was commenting on the filibustering and fooling around and the capriciousness of the questions of the Hon. Members opposite for the last three hours in Committee. That is what I was commenting on.
In answer to the last question by the House Leader for the Official Opposition, the Government is following the same practice that Governments have followed, in the processing of income tax legislation before this House and the handling of income tax returns and refunds, for the last 12 years in Canada. This includes the Government of the Conservative Party in 1979.


Philip Derek Lewis: Mr. Chairman, my next question obviously flows from the Minister's answer, too. We are dealing with the budget of the lately departed Finance Minister which was brought down in November, 1981. Since we are dealing with the November, 1981 budget which is now being brought into
March 1 1, 1983

law, could the Minister explain how any refunds at all could have been issued in 1982 for 1981 taxes?


Paul James Cosgrove: Mr. Chairman, if the Hon. Member had been in the House when I answered the question of the Hon. Member for Burlington, the provisions of the budget introduced in 1981 were prospective to 1982. The refunds for 1981 were under the existing law.


Philip Derek Lewis: I see. Mr. Chairman, the Minister has alluded to the length of time that this is taking. He will know that in 1979 when the Liberals were on this side of the House they spent four days in the Committee of the Whole on their own tax Bill.
I would like to go back to that question, if I may. Is the Minister saying that none of the provisions in the November, 1981 budget which was brought forward by the lately departed dear Finance Minister had anything to do with 1981? How were the refunds issued last year? Were they issued in error or were they not issued in accordance with Section 151(2) of the Act which requires the Government to assess the returns and to mail out the refunds in accordance with the law?


Paul James Cosgrove: They were issued, Mr. Chairman, in accordance with the practice of the law and with the practice of Government, including the Conservative Government, which was in the middle of a budgetary process when an election was called in the fall of 1979.


Philip Derek Lewis: Mr. Chairman, I take it that the Minister has now admitted to the Committee that it is practice to assess returns and issue refunds. Any comment by the Minister or anybody in Government that refunds have to wait for the passage of this Bill is absolutely specious and false. Is the silence of the Government an admission of guilt? We are at a loss. We have just suggested to the Government-


Douglas Glenn Fisher: Let us vote. We do not have to hold it up anymore. If you are at a loss, let us vote.


Philip Derek Lewis: Mr. Chairman, is the Minister not admitting that it is the practice of every Government, Conservative and Liberal, to assess the returns, deliver the refunds, and we do not have to wait for the passage of this Bill?


Paul James Cosgrove: The assessment referred to is the assessment under the Act. The Act in question is the one before us.


Donald Alex Blenkarn: No, it is not.


Paul James Cosgrove: I will not fall into the trap not only of not talking about the Act or anything related to the Act, but now of countering the spacious arguments of the Hon. Member-


An Hon. Member:: Specious.


Paul James Cosgrove: -specious, and spacious as well, by the House Leader of the Conservative Opposition.
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Philip Derek Lewis: Mr. Chairman, may I just inquire of the Government if this is perhaps a printing error where it says "Bill C-139, an Act to amend the Statute Law Relating to Income Tax."


Paul James Cosgrove: No.


Philip Derek Lewis: In fact, there is an Act in place already and we are just amending it.


Paul James Cosgrove: The Act is before the House.


Philip Derek Lewis: No, I would submit the Bill is before the House.
The Act is already passed. Is that correct?


Paul James Cosgrove: The Bill is before the House which, when passed, will be the Act, and I hope they get their act together so that we can get refunds out to Canadians and stop fooling around.


Philip Derek Lewis: Mr. Chairman, the Bill is before the House. I would ask the Minister whether it is true that the Bill is before the House and when it is passed, the Act, as amended by the Bill, will be the law.


Paul James Cosgrove: Mr. Chairman, the Act here, with respect, is the poor act by the House Leader of the Conservative Party.


Philip Derek Lewis: I will let that go. I would ask the Minister if all Cabinet Ministers pay the same standby charge for personal use of an automobile provided by the Crown. For example, would a Cabinet Minister driving a blue Lincoln Continental, license No. TWE-275, pay the same as any other ordinary Cabinet Minister?


Douglas Glenn Fisher: Mr. Chairman, let us be quite clear here. We answered all these questions this morning. Whether it be Conservative Cabinet Ministers and their Lincolns or us, more modest Liberals in our little economy cars, everybody pays the standby charge, the 2 per cent standby charge on personal use. I read that out this morning for the Hon. Member.


Frederick James (Jim) Hawkes: Mr. Chairman, is that standby charge deducted from Cabinet Minister's cheques?


Douglas Glenn Fisher: In our system, as I understand it, the deduction is made at source. I think it might be quite interesting to see how Bill Davis or Peter Lougheed handle it with their people.


Frederick James (Jim) Hawkes: Do we have the Minister's assurance that those amounts vary from Minister to Minister, that it is not a common amount?


Douglas Glenn Fisher: The standby charge is as defined in Section 6(2) of the Act, so it will be based on the exact experience of the particular individual and the vehicle that he is driving. It would not matter whether it was a Cabinet Minister, a businessman, a salesman-


Paul James Cosgrove: Or Leader of the Opposition.

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Douglas Glenn Fisher: That's right, the Leader of the Opposition has the same experience. The personal use of the vehicle is taxed according to the definitions in Section 6(2) of the Act.


Frederick James (Jim) Hawkes: Mr. Chairman, is that amount deducted monthly?


Douglas Glenn Fisher: Yes.


Frederick James (Jim) Hawkes: How can you know how much it is in advance?


Douglas Glenn Fisher: The amount that is deducted is done according to the established procedures that we have lived with for 12 years. If the Member does not know that, he will never know.


Frederick James (Jim) Hawkes: Is it deducted according to the mileage travelled for personal use each month?


Douglas Glenn Fisher: Yes.


Frederick James (Jim) Hawkes: It is mileage travelled for personal use each month, not a set amount.


Douglas Glenn Fisher: As I understand it, that is how you determine that there is personal use. You keep records. You know how far the car has gone, and a standby charge is applied. If at the end of the year there is an adjustment, that would show up on the individual's tax return.


Frederick James (Jim) Hawkes: It is deducted monthly on the basis of the mileage or the kilometres used each month. Can I just get that clear?


Douglas Glenn Fisher: Mr. Chairman, I would have to refer back to the document to answer that as precisely as asked for by the Hon. Member. However, it would be like all taxable charges or exemptions. It would be rounded out at the end of the year. The Member for Burlington raised a case of concern on his part. Obviously there is time when the return is made by the taxpayer to make any adjustments necessary.


Frederick James (Jim) Hawkes: Mr. Chairman, are operating costs included in the amount deducted?


Douglas Glenn Fisher: They will be, once this Act is passed.


Frederick James (Jim) Hawkes: Was that done in 1982?


Douglas Glenn Fisher: I would have to double check that. If they were not deducted at source at that time, they would have to be applied retroactively, because this measure applies to 1982.


Frederick James (Jim) Hawkes: Is that done in proportion to what is deducted, the 2 per cent value of the car, or 2 per cent per month of the value of the car plus 2 per cent per month of the combined operating costs in a situation where a car is driven 12,000 kilometres or more?


Douglas Glenn Fisher: It does not matter who it is. Let me remind the Hon. Member that for all Canadians who are in these circumstances, the operating costs are totalled and then prorated for personal use and applied to income as a benefit. The standby charge is separate from that.


Frederick James (Jim) Hawkes: Mr. Chairman, the standby charge is based solely on the value of the vehicle then.


Douglas Glenn Fisher: The cost of the vehicle, not the value of the vehicle.


Frederick James (Jim) Hawkes: The cost of the vehicle when it was purchased new?


Douglas Glenn Fisher: Yes.


Frederick James (Jim) Hawkes: Then we can assume that with the Prime Minister of Canada using a $120,000 a year vehicle, that portion for personal use would be deducted at 2 per cent per month?


Douglas Glenn Fisher: There is a specific set of circumstances involving the use of a vehicle for personal use. If the Hon. Member wants to have us read those off, one of the things that affects the definition of personal use in the presence of security for the individual, whether it be the Hon. Member, some Minister, the Prime Minister or a private citizen-I am sorry, not a private citizen, but any Member of the House. Under the policy, if the Prime Minister has with him his security people, that would not be considered personal use of the vehicle.


Frederick James (Jim) Hawkes: Where in the law do we find the exclusion because you are accompanied by a security person?


Douglas Glenn Fisher: I would refer the Hon. Member to Revenue Interpretation Bulletin IT 63R. By the way, Mr. Chairman, the fact that I can quote it so readily merely underlines the fact that this is established practice. Our comments are no longer relevant to the Bill because we are dealing with something that was established 12 years ago, not something that is set out in the Bill. As the Minister said a few minutes ago, maybe it is about time that the Hon. Member started exploring new frontiers instead of going back over well-worn paths.


Frederick James (Jim) Hawkes: Mr. Chairman, did the Parliamentary Secretary just indicate that it is not part of the law but it is part of an interpretation bulletin? Is that what I heard him say?


Douglas Glenn Fisher: In fact, as I was just reminded by my colleagues, the Hon. Member could probably get a very accurate description of this by asking the Right Hon. Member for Yellowhead who had the same benefit. He would be able to explain all the deductions to him in great detail. The former Prime Minister would know all about this because it is the same policy.


Frederick James (Jim) Hawkes: Mr. Chairman, may I just review that we have been told again. This applies to Members of the House of Commons, not to other Canadians, Premiers, etc?


Douglas Glenn Fisher: It is a policy of the Government of Canada which applies to Members of the Cabinet. It is our own policy
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and it defines the personal use of Government vehicles by Cabinet Ministers. I would presume that Hon. Members of other Governments would have similar policies, which they would apply to themselves, to define what is official use and what is personal use. We would not presume to dictate our own international policies to other Governments.


Frederick James (Jim) Hawkes: I thought we were talking about a Revenue Canada interpretation bulletin which is available to all Canadians as a piece of information and as a ruling. Are we not talking about a document which lays out the situation for all Canadians? Are we talking about an internal memorandum or something of that kind? Which is it?


Douglas Glenn Fisher: As I understand it-and again I am amazed that we can give these instant answers, and the only way we can give these instant answers, Mr. Chairman, is because they are there in the law and they are there in practice-they are not something new and not something coming out of this Bill. They are something which has come from past practice. The Hon. Member has asked how we build the policy which affects Ministers of the Crown federally. The answer to that is, our revenue interpretation bulletin IT 63 R sets out the general rules which apply to all Canadians. The policy which I am referring to takes those rules one step further and ensures that Ministers of the Crown do, indeed, pay when they use their vehicles for private benefits. The Ministers are no different from any other Canadian. They pay standby charges for personal benefits derived from the use of their cars. That bulletin sets out the policy for their use. Bulletin IT 63R is the basis for the internal memo.


Frederick James (Jim) Hawkes: Have you not also told us, with respect to any Cabinet Minister who travels with security personnel, regardless of purpose, that there is no way that can be considered personal use? Is that the internal policy? Are you teling us it is not part of a Revenue Canada interpretation bulletin? There is an interpretation bulletin. Have you now a policy which you have decided on?


Douglas Glenn Fisher: Mr. Chairman, I believe it is only reasonable that the Government of Canada would have guidelines, like any other large employer, whether it be Bell Canada or a hydro corporation, or any other company which has large numbers of vehicles and large numbers of people who drive those vehicles. The Hon. Member will find, if he chooses to explore around, that these companies have guidelines for their employees which dictate what is and what is not acceptable business use of cars. I am quite confident that those internal memoranda of all those other organizations will be acceptable to Revenue Canada because the internal memoranda would not be drafted without some knowledge of the intentions of Revenue Canada. There has been 12 years of experience. The rough edges have been smoothed. The Government of Canada, just like all these other organizations, has guidelines for its employees and its Ministers which dictate the business versus the private use of vehicles.
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Frederick James (Jim) Hawkes: Is it, therefore, Government policy that any rich businessman in the country who chooses to travel with security personnel is deemed to be on business and there is no personal use involved for tax purposes?


Douglas Glenn Fisher: I never made any such claim. I would not like the Hon. Member to distort it in this way. Again, I refer him to established practice. The Minister has pointed out that we are wasting a lot of time now with the invented fantasies of the Hon. Member for Calgary West. I do not believe anyone is going to thank him for doing this. If the rich businessman, whom he has invented or imagined, is busily engaged in business practices, then that is tax exempt. That is the principle and always has been the principle.


Frederick James (Jim) Hawkes: That is the principle for businessmen but not for Cabinet, is that what I just heard?


Douglas Glenn Fisher: Pardon?


Frederick James (Jim) Hawkes: Is that the principle for businessmen but not the principle for Cabinet? Is that what I just heard?


Douglas Glenn Fisher: It is the same answer. It is a distortion from the Hon. Member's imagination.


Frederick James (Jim) Hawkes: Can you explain to me where the distortion is? I believe you have told Hon. Members of the House that when a Cabinet Minister travels with security personnel, that cannot be construed as personal use. You have also stated that when a businessman travels with security personnel, he must defend his case as to whether or not it is business. It may in fact be personal. It may in fact be business. Are the facts as I have explained them incorrect in some particular?


Douglas Glenn Fisher: You are exactly right. The Hon. Member has described the situation accurately, Mr. Chairman, but he left out a couple of things. First of all, both the Cabinet Minister and the businessman must be engaged in business activities in order to be tax exempt. Over and over again we keep coming back to this fact. Whether it is the Hon. Member for Yellow-head or the current Prime Minister, there have been guidelines set out to indicate a Prime Minister's use of a limousine or a vehicle. Equally, whether it be the Hon. Member for St. John's West, who is a former Cabinet Minister, or the Hon. Member for York-Scarborough, who is a current Cabinet Minister, there are guidelines involving their use of their car for business versus private use. The Government of Canada laid out these guidelines to ensure there was proper payment for personal use and to guide the Ministers in making that definition.


Frederick James (Jim) Hawkes: Could we have the name of the individual who set out these guidelines and his position? Who set out these guidelines?


Paul James Cosgrove: Mr. Chairman, it certainly was endorsed and subscribed to by the politically responsible Minister of the former Government, the Right Hon. Member for Yellowhead, who, if he were here today, I believe would be sitting in the seat next to the Hon. Member.

March 11, 1983
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Frederick James (Jim) Hawkes: Are you saying that the Joe Clark Government made up these guidelines?


Paul James Cosgrove: No, Mr. Chairman, I am saying that it operated under the guidelines under the appropriate Minister in charge, who would be the Minister responsible for the Treasury Board, the Hon. Member who would be the seatmate of the Hon. Member asking the question.


Frederick James (Jim) Hawkes: May I again ask, who made up the guidelines in the first place?


Douglas Glenn Fisher: As I recall, Mr. Chairman, the document which I looked at, and referred to this morning, was a 1978 document from the Treasury Board.


Frederick James (Jim) Hawkes: Has Revenue Canada ever reviewed that document?


Douglas Glenn Fisher: I do not know. We would have to double-check that, but I would presume that Revenue Canada is aware of it, since the Minister would be paying a standby charge under its guidelines.


Frederick James (Jim) Hawkes: If a Minister requires security personnel at all times, and certainly the Prime Minister does in the present context, how can the Prime Minister be paying a standby charge?


Douglas Glenn Fisher: I am sorry, I missed the last part of your question.


Frederick James (Jim) Hawkes: If the Government's definition of "business" hinges on the presence of security personnel, how can the Prime Minister, who is surrounded by security 24 hours a day, ever incur a personal-use standby charge?


Douglas Glenn Fisher: Mr. Chairman, I would assume that is the Prime Minister's business and not mine.


Frederick James (Jim) Hawkes: In theory, perhaps; if the Prime Minister is accompanied 24 hours a day by security personnel, and if the definition of "business" hinges on being accompanied by security personnel, then how is it possible, even in theory, for the Prime Minister to incur a stanby charge like all other taxpayers?


Paul James Cosgrove: Mr. Chairman, I believe one of the reasons might be that it is very difficult to determine in all of the cases of all taxpayers when a person is on "business", but I believe we might reason that if a Minister of the Crown, or the Prime Minister, is being advised by security officials that he must conduct his personal affairs in ways which are designed to avoid security risks-in some ways the Prime Minister's time and decisions are not his own, in fact-under those circumstances he would have no choice. He is being directed by the Government for security purposes and, therefore, in that sense he is at the disposition of service to the Government at all of those times. It is, I suppose, a very regrettable kind of circumstance which happens to Ministers and public officials from time to time in all countries, but I would think that might be the philosophy. The Government has to act to protect its public
officials, and in doing that, regrettably, the Prime Minister has no time of his own under those very difficult circumstances.


Frederick James (Jim) Hawkes: The first time I was on my feet I mentioned the case of an RCMP constable who works 24 hours a day, is tied to a radio in a small town, and I was told there is some personal use of that automobile. Why the difference in the two cases?


Douglas Glenn Fisher: Mr. Chairman, I remember that example clearly, and I think it is only appropriate that the Minister correct me. Not only did he do so as a Minister but he drew on his experience in municipal politics. He pointed out very clearly the importance of the car in the policeman's presence around town. He talked about the attitude that municipal Governments have towards their police and the way they encourage their police to do precisely that which the Member has described. He pointed out that the municipality would regard such behaviour as business, that a 24-hour standby car driving around town and the calming, peaceful presence of the policeman in the neighbourhood would be viewed as business rather than personal use. So the Minister, quite rightly, corrected me, and my view should not stand on the record; we should listen to the Minister on this.
I would like to go back a little bit here to basic principles. The Hon. Member, by his opposition to this measure, is not promoting the fairness he thinks he is promoting. He is asking all other Canadians to chip in a little bit of money for the personal use of automobiles by individuals whom he pretends to favour. He wants all other taxpayers to pay for that personal use. We on this side at least have a sense of stewardship. We believe that the tax money put in our hands has to be spent responsibly, and we believe as well that exemptions which are the same as expenses have to be treated responsibly. So the Hon. Member, both explicitly and implicitly, is opposing that fairness.
We did not ask that people stop driving company cars. In fact, we have made it quite clear over and over again that if the use of a vehicle creates economic activity, then that use is a justifiable and legitimate deduction for the company and tax exempt for the individual. We accept that. I think most right thinking people see the logic in that. It is not a perk, it is a productive activity. When the Hon. Member asks us to push the boundaries on that, he is asking us to take other people's money and spend it on some individuals who happen to be fortunate enough to have a company car at their command. I do not understand how he justifies that. How can he justify that his neighbour should purchase a vehicle for personal use out of after-tax dollars but he himself, or some other hypothetical Canadian, should be able to drive a vehicle for personal use without paying tax? We are not asking for detailed, complicated new procedures or paper work. I assure the Hon. Member that we are dealing in an area where people know
March 11, 1983

how to keep records. They keep their gas receipts, they have a general idea every day of the mileage they drive for business reasons, and that is usually reinforced by records such as day books, diaries or whatever else. All of those records are acceptable to Revenue Canada. We are not asking for a minute-by-minute accounting or 100 per cent perfection. However, we are indicating to people that responsible records should be kept and a responsible line drawn between productive business activity and private personal benefit. That is all we are asking.
When the Hon. Member stands up here and tries to create an exception for all his friends, then he is really standing up here and suggesting that a whole bunch of Canadians should chip in some money to pay for his friends. I reject that, as 1 think most Canadians do. I want the Member to know one other thing: the more he drags out all these exceptions, the less he adds to the debate, because he knows they are hypothetical and extreme exceptions. What he is doing is to cast considerable disrepute and doubt over the tax system. I would ask him to be a little bit more careful. If he has concerns, do not invent them, do not come up with imaginary or hypothetical examples. Rather, let him come up with cases from his riding which we will be happy to handle for him. Let him come up with new problems relating to new legislation, not go back 12 years and give us examples of things he thinks happened 12 years ago but do not happen today.


David P. Smith: Living in the past.


Douglas Glenn Fisher: Yes, indeed, living in the past. Not only that, he is dragging Parliament down into that history in an unproductive way. So 1 would ask him to stop doing that and at least come forward with some genuine behaviour and realize that the people who are watching us from the outside world and drawing on this transcript for some guidance about our intentions are finding from his examples encouragement to go off into wild extremes which are only going to get them in trouble. They are not going to be extremes which are going to be useful guidance for sincere Canadians in the future.


Some Hon. Members:: Hear, hear!


Frederick James (Jim) Hawkes: I rise on a point of order, Mr. Chairman.


Roderick Blaker: A point of order, not debate?


Frederick James (Jim) Hawkes: A point of order, not debate. I think if you look in the history of the House, you will find it is common practice to give a Member 20 minutes worth of House time during Committee of the Whole. The Minister has taken 20 minutes, and 1 think the record will show I have had three or four. It has been a filibuster on the part of the Minister, and I think the only way procedurally-


Roderick Blaker: Order, please. This has been referred to, I think on Wednesday of this week, and the then occupant of the chair reminded Hon. Members in Committee that since 1975 the practice has been for each Member to be recognized in debate for a period of 20 minutes, and that answers given
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during that time to questions put by the Hon. Member who has the floor are taken from the 20 minutes. That has been the practice. I understand that it is feasible, as the Hon. Member for Edmonton West put the issue a couple of days ago, that a Member might take one minute to ask a question and another Member or Minister might take 19 minutes to give an answer. If there were such a situation, I think the Chair would have to take some responsibility for examining that. I did so, incidentally, on Tuesday of this week, although not in the same circumstances present here.
Therefore, in accordance with current practice, the Hon. Member has had 20 minutes and, as he well knows, he has been using that opportunity and he is able to come back for a further 20 minutes immediately following the next Hon. Member who wishes to put questions.


Frederick James (Jim) Hawkes: Mr. Chairman, by way of interpretation, do I understand that you have ruled that the Minister answered my question as opposed to having made a speech or discourse? Is that the sense of your ruling?


Roderick Blaker: It is not my responsibility to indicate whether or not the Hon. Member has received what he regards as an answer, whether it is satisfactory or unsatisfactory, a comment, or anything else. As long as it is relevant to the Bill and the debate, the Chair is satisfied with the procedure. The Hon. Member for Ontario.


Thomas Scott Fennell: Mr. Chairman, the Hon. Parliamentary Secretary talked about sales problems earlier. I would say that the little dialogue he just went through creates a sales problem. I would like to refer back to the amendment or the motion we are talking about. The Parliamentary Secretary used some other terminology. He said: "A little bit of money", and he said "fairness". This is what we are talking about, and I believe that we are being totally unfair. Let me give you one example of unfairness. His Government cars are self-insured so there is no cost for insurance-well, if you can prove it, then I will withdraw it.


Douglas Glenn Fisher: Yes, Mr. Chairman.


Thomas Scott Fennell: I would like the Parliamentary Secretary to look at it, and then I will ask my question.


Douglas Glenn Fisher: They are commercially insured.


Thomas Scott Fennell: Thank you, I did not know that.


Douglas Glenn Fisher: You are welcome.


Thomas Scott Fennell: It used to be the other way at one time. They are taken into consideration, but I am talking about fairness. If a person pays $10,000 for a car, as soon as he or she drives it out of the showroom, the Parliamentary Secretary and I both know that it is worth $6,666; that is all the person could get for it on the market.

March 11, 1983
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As a car gets older, it is worth less, but the repair bills get larger. Hon. Members opposite and I have had cars. We are fully aware that as cars get older they are worth less.


Douglas Glenn Fisher: It is happening to my body.


Thomas Scott Fennell: I can understand that; perhaps it is self-imposed, but I am talking about the poor car. After four years, salt eats into a car and it has to be repainted. That goes on to these standby costs; that does not go on to a new car. After a period of time the transmission goes. This is why there are so many transmission plants and repair shops. Older transmissions wear out after so many miles. I am appealing to the Minister and the Parliamentary Secretary to consider this amendment and take it on the undepreciated value at the end of each year. I know the Minister's argument. I know he will say that this has been in force for seven years and that I am not talking about this Act. I am talking about this Act which is doubling the amount, and I feel it is totally unfair.
If we take the example of a $9,000 Chevrolet, by the end of four years it is worth about $1,000, according to the Blue Book. I am sure the Parliamentary Secretary knows what the Blue Book is. Usually that amount is about the depreciated value, taking off a third on the reducing balance. I believe this idea is equitable and that the Government would make many friends with a lot of people who are hurting.
I would like to turn the discussion around for a minute and say that there is a positive side to what is being done. From the point of view of my riding, we would produce more cars because people will not keep their cars as long, because after four years the cost of repairs is greater. There could be a benefit there, but also there is a disadvantage to the Government. By selling a car at the end of two years, taking about 50 per cent of the price back and then buying it back, the Government can only charge 2 per cent on the price paid for the car.
I feel this amendment should be approved. I think it is equitable. It is balanced. It is not a big bookkeeping operation. Hon. Members opposite know as well as I do that corporations do it throughout the country; every corporation takes depreciation off their cars. I see the Minister shaking his head. I am talking about any corporation in the fortunate position of making money, any small business or any individual. If a salesman owns his own car, he can depreciate it against his income. I think Government Members are treating it incorrectly and inaccurately. If their goal is to get rid of company cars and have salesmen purchase their own cars, they will accomplish it. 1 can guarantee that, and it will free up capital for companies to do what they should be doing rather than providing cars to salesmen.
I still do not have a grasp of why the Minister and the Parliamentary Secretary are against fairness. I am asking for fairness, for a 2 per cent charge on a fair value. It is not charged on fair value if it is on the original value. That is really my question. I would like to hear their answer.


Paul James Cosgrove: Mr. Chairman, on the question of one standard of fairness, that the same formula for the calculation
or imposition of a tax should be applied to everyone and that it should not differ for different people, we believe that one formula has been in effect since 1971. We are merely increasing that from 1 per cent to 2 per cent. In fairness, because it applies to everyone who takes advantage of personal use beyond the mileage allowed, everyone is dealt with in the same manner. The issue is how we arrived at that formula.
If we adopted the amendment of the Hon. Member for Mississauga South, and using my own standard as well as the standard which the Hon. Member for Ontario is urging, that is the same rule for everyone affected by the law, we would be grossly unfair because the amendment, as I have indicated, only applies to firms which can take advantage of undepreciated capital cost. This is not the case for all small businesses.
Also I think it is grossly unfair because, although some large firms are able to take advantage of the systems in place now to record a complicated depreciated allowance for every vehicle, taking into account every change in the operation of the vehicle, the same advantage is not available to small-businessmen who do not have hired help available to assist them.
Finally, as the Hon. Parliamentary Secretary indicated, it is not fair to the rest of Canadians. We are told that the effect of the amendment of the Hon. Member would result in a $20 million revenue loss in the first year because the formula would be averaged over the life of the vehicle rather than on a year-by-year basis with graduated depreciation. If he is not prepared to give this group of people an additional $20 million, which the rest of us would have to pay as taxpayers, he would have to increase the rate from 2 per cent to 3.5 per cent. I cannot fathom why the Opposition is moving an amendment which in effect would increase the charge from 2 per cent to
3.5	per cent when the Government has already reduced it from
2.5	per cent to 2 per cent.


Donald Alex Blenkarn: You increased it from 1 per cent.


Thomas Scott Fennell: The Hon. Minister should look at the large cars in golf club parking lots in Scarborough. The greatest number of them-and I ask him not to smile at this-are owned by small-businessmen. I will not argue that there is an inequity there, but large corporations are getting away from such tremendous perks because they have been required to cut back. I maintain that the 1 per cent, the way in which the Government did it in the first place, was unfair. That is the point. It was unfair because it was not based on the undepreciated value. Possibly we did not raise it at that time. We probably did but no one listened, as is usually the case. I maintain that the person pays $2,400 in the fourth year but he still has $1,000 or perhaps $3,000 worth of repairs, whereas in the first year he pays $2,400 and has maybe $200 in repairs. This is inequitable.
If the Government wants corporations to get rid of their cars, that is fine. The Minister made another statement, that small businesses do not benefit. If they do not benefit by the second tax year, they are in financial trouble, but they have
March 11, 1983

not paid taxes because they can write it off. Many of them, as a result of the lower tax rate for small business, benefit greatly by bringing a 50 per cent rate down to a 20 per cent rate because of these write-offs.
I think the Government has to deal with this, not just pass over it. The constituency out there is somewhat annoyed. People are hurting. How much does the Government want to hurt Canadians? Does it want to remove itself from power forever? Surely it should look to the future and do something to help the people who supported it in the past.
There are options available. There is the Blue Book value or the depreciated value; the Government must take one or the other, not a straight line. Another alternative would be to take the average cost of repairs in the first year, and anything in excess of that amount could be deducted from the capital cost after the first year. That would be another way of getting around it. I am just saying that it is inequitable and, if the Government made some adjustment in this regard, it would be fair. I would like to know what the Government is considering because I know it is stonewalling us on it.


Douglas Glenn Fisher: Mr. Chairman, I would like to remind the Hon. Member that no one who purchases a car for personal use can apply the calculations he is talking about. Therefore, when we ask about personal use company-owned cars, we simply ask that people have the same rules and the same treatment. That is all we are saying. If the Hon. Member wants to come up with a sliding scale of values that reflect the resale value of the car, perhaps the Hon. Member could explain how he would apply that same sliding scale to private purchases so that people could get equal benefit on private automobiles rather than company automobiles. All we are asking for is the same treatment for the same use.


Donald Alex Blenkarn: How about putting it together again?


Douglas Glenn Fisher: If we take an example of a car with a lease value of $300 a month and add perhaps another $100 a month for operating costs, then we are probably looking at $3,600 added on to an individual's taxable income in a year. If that individual is at the 50 per cent tax bracket, then he would pay $1,800 tax to get a car, pay for his gas, insurance, repairs and everything else. I do not know how many people have a personal car that only costs them $1,800 a year. There are not very many. Under the existing law, which we are amending, that same car would only be worth $1,200 in a taxable benefit which, at a 50 per cent rate, would result in a $600 bill. Even at $1,800 the car is the cheapest car on the block. You cannot get a cheaper car than that.


Donald Alex Blenkarn: How about year four?


Douglas Glenn Fisher: We are talking about a $300 a month leased car that is operated and worth only $1,800 to the individual in the highest tax bracket.
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What about a person with a 33 per cent tax rate? Let us add on this $3,600 benefit. It costs the individual $1,200 a year to drive a car, pay for his gas, insurance, and maintenance. That is a pretty cheap car. I think the Hon. Member should put the numbers down in black and white before talking about inequity. It is not inequitable. The very proposal he is recommending is inequitable because of the complexity and the paper work involved, which would be enormous. I would remind the Hon. Member that a spokesman for his Party in the House of Commons yesterday, as reported in Hansard at page 23668, said:
The Progressive Conservative Party position is as follows: While the principle of taxing this benefit is not unacceptable, the rate of taxation and the method of calculation is suspect. The negative impact of the tax increase overshadows the benefits of increased revenues. It should be amended downward. The sections of the Act dealing with calculation of benefits should be clarified along with the regulations.


An Hon. Member:: That is exactly what we are talking about.


Douglas Glenn Fisher: I want to contrast that lofty sentiment with the figures. The figures I just gave indicate that a taxpayer in the highest tax bracket, after the passage of this measure would pay $1,800 a year for gas, insurance, maintenance and the vehicle. That is pretty cheap. If Hon. Members want that geared down, Mr. Chairman, maybe they would like us to give a free car to everyone instead of taxing them.


Thomas Scott Fennell: Mr. Chairman, I would rather not hear that. That may be another one of the Liberals' give-away programs. We cannot afford what the Liberals have done already.


Paul James Cosgrove: That is what you are recommending.


Thomas Scott Fennell: No, I am not. I am recommending fairness and equity. Your explanation in the first year is fair. But as a private individual driving a car, which I am now, because I do not get an allowance for using a car around here, I am much better off to own my car rather than take 2 per cent on the capital cost. To me, the price is unfair. If it were on a graduated scale, it would be equitable, but the Government's formula is inequitable. It is unfair. Let me give one other argument.
We do not have enough salesmen in this country. We do not have enough people pushing Canadian products. As a result, we are dependent upon imported products. We should give salesmen encouragement, rather than discouragement. I think salesmen are a very important segment of our society. I say they are being unfairly treated.
I believe in equity and fairness. I do not disagree with the Minister for the first year. I heard the Minister say the Government was going to put it up to 3.5 per cent.


Paul James Cosgrove: That is your amendment.


Thomas Scott Fennell: The Liberals are always finding new ways to grab new bucks. That is the name of their game. You look everywhere for bucks. That is the game it plays. The National Energy Program is a prime example. It did not work. It is going to blow your brains out. With respect to the subject
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under discussion, I say to the Minister, do not let this come back to haunt you the way the National Energy Program will.
I hear the Minister's comments. While the Liberals are in power, they can say whatever they want. But I am talking about constituents, those people who elected you who may think twice the next time.


Paul James Cosgrove: Two per cent is better than 3.5 per cent.


Thomas Scott Fennell: I am talking about equity. I am saying that in the first year it is fair. I hear the Minister again. You are skimming funds right off the top. You have a way of skimming money from the public. You will take it any way you can, and then you pay off people to the tune of $1 million like Gillespie did to set up a plant that was not going to be worthwhile in the first place.
Let us be realistic. If the Government looks after its expenditures, it can look after its income. Because expenditures are out of control, the Government cannot look after its income. I say, be equitable. The first year, fair ball. I agree. The second year, a depreciated value, including repairs. I agree with that totally. The third year, another one-third off and the repairs. I agree with that.


Paul James Cosgrove: There goes S20 million.


Thomas Scott Fennell: It is not $20 million. If you can show me the figures that show it kisses $20 million goodbye, I will accept them, but I will analyze them very carefully. The Government is cutting its own throat by putting this Bill through. Salesmen have written to the Minister. I hope he has read their letters. I have answered all of their letters even though they were not addressed to me, because I am concerned about them. The Government almost put the life insurance people out of business. They lobbied so hard the Government had to retract much of the law. You have not listened to the salesmen of this country, and I think you should.
I plead with the Minister to consider allowing a fair amount in depreciation each year so that the salesman is not paying the same amount for capital costs in the fourth year as he is in the third year. I am delighted to see one of the Minister's own colleagues agreeing with me on this point. Even the Minister's own people agree with me.


Some Hon. Members:: Hear, hear!


Thomas Scott Fennell: It is fair. These people need that help. They are not selling as many products. They are not producing as much income, and now the Government is going to tax retroactively that much harder. I ask the Minister to consider this.


Douglas Glenn Fisher: Mr. Chairman, I have a brief comment on the statement just made which was so eloquently and passionately expressed. If I ever go back into sales, I will certainly be looking up the Hon. Member. He is a real spokesman.
On the other hand, I would like him to follow the example I gave him. I indicated to him that a car with a leased value of $300 a month which costs $100 more for gas, oil and all the
rest, would total $3,600 in the first year. At a 50 per cent bracket, the individual would pay $1,800. He said that was fair. I would like him to follow that example through. Over four years there is an expense to the taxpayer in after-tax dollars of $7,200. That is a four-year expense for leasing and operating that vehicle. A vehicle held on a $300 a month lease is a $10,000 vehicle.
If his neighbour were to purchase the same vehicle, he would have a $10,000 vehicle.


Thomas Scott Fennell: He is better off.


Douglas Glenn Fisher: The Hon. Member says that he is better off, but he is not. He is $10,000 in the hole, whereas the taxpayer we are talking about is only $7,200 in the hole. Of course, the difference is that when the vehicle is traded in, he will hopefully be given a $3,000 trade-in after four years.
I would ask the Hon. Member again to go back to the data and not just make impassioned speeches, because his speeches are really hiding the fact that the standby charge that we have here reflects current values. It does not, as he says, distort the values over the years.


Thomas Scott Fennell: Just one point, Mr. Chairman.


Roderick Blaker: I appreciate the Hon. Member's desire to speak but I must indicate to him that his time has expired and I should move on to another Hon. Member. He may wish to seek unanimous consent of the House to make his comment. Is there unanimous consent?


Some Hon. Members:: Agreed.


Thomas Scott Fennell: There is just one thing to keep in mind. When a salesman drives a car, the car is driven more miles and receives far greater wear and tear. The Hon. Member knows that as well as I that the cost of maintaining the car in the fourth year is much higher.
Perhaps the way for the salesman to get around this is to lease a car for one year, lease it at a lower rate at the end of the first year and lease it again in the third year at a lower rate. Perhaps there is a way around the law, but that still does not acomplish what he is dealing with. I hope the Government does not change the law because I brought this up.
Whenever a law is made, people will think of ways to get around it. I would recommend to my constituents that that is what they do. I would tell my local dealer to lease the car for one year, lease it the second year at a reduced amount and again in the third year at a reduced amount. Avis and Tilden do it that way, and perhaps they will get all the business and leave the other leasing companies with none.
I wanted to raise that point, particularly about the fact the amount of miles that a salesman puts on his car is much harder on a car than family use.
March 11, 1983


Douglas Glenn Fisher: Mr. Chairman, the obvious corollary to that, in the case of a salesman using his vehicle, is that he should not use it for personal use.


Mr. Bosley:: Mr. Chairman, I want to pursue that with the Parliamentary Secretary. I want to ask him about the question of equity between owning and leasing, because that is clearly a business decision. I think the Parliamentary Secretary would accept that.
Let us use the example given by the Hon. Member for considering the value of buying and operating a car versus leasing a car. Suppose that a person owns and operates a car for six years for which the standby charge will be the same every year. Suppose a person leased the same kind of car, with the same operating costs, the same mileage and personal usage factors, for the normal period of three years, and then leased it again at a lower rate. The result will be that the salesman who drives the company-owned car is charged, based on the ownership standby, the same amount for every year for six years, whereas in the alternative, the company that leases the car which has the same mileage and operating costs will have its tax effect fall in the last three years on a renewed lease.
In other words, leasing will allow people to benefit from the amendment. This can be extended to the previous Member's comments, because leasing can be done annually or semiannually. Why is it wrong to allow people who choose to own the car to benefit from the amendment?


Douglas Glenn Fisher: Mr. Chairman, as our official indicates, it is an interesting example, particularly because most leases are for two years, not six years. However, there are such things as six-year leases.
I think it bears some examination. The equal principle here, which I appreciate the chance to state now, is that such arrangements are the private matter of the taxpayer. They are not matters into which we want to intrude. If a taxpayer decides to lease instead of purchase, or decides to own an expensive car instead of a cheap one, that is the taxpayer's concern and not ours.
I urge the Hon. Member to read some of the debate on the issue in 1971. I remember very clearly that all of these types of issues were raised at that time. People said over and over again, as did the Hon. Member for Ontario a few minutes ago, that salesmen would stop using company cars and that we would see exotic dodges on the tax law and we would see different methods used. That did not happen.
All that has happened is that the standby charge has become dated as the automobiles have increased in value. In effect, we are updating the standby charges to reflect the market value of the vehicles.


John William Bosley: Mr. Chairman, that is mythical. That is the theory which says that as values rise, tax rates should rise. That has to be one of the greater nonsenses expressed in the House.
The Parliamentary Secretary is saying that there should be a bias in the tax system. The Minister is now making the same assertion that there should be a bias in the system in order to
Income Tax
save tax by leasing. The effect of that bias in the tax system means that those who finance vehicles should make more money than those who buy them. That is the effect of allowing an individual to achieve a reduction in the taxable benefit through leasing annually. I find it unbelievable that the Government does not realize that.
My question is with respect to leases themselves. It is a question asked by a constituent for which 1 do not have the answer. If I trade in an automobile worth $4,000 and take a new car on a lease, as opposed to buying it, let us say that it would cost $350 a month to lease the car. Therefore, I presumably would owe the charge on $350. If I trade in my old car and its credited value reduces the lease cost to $250 per month, will I be charged tax on $350 or $250?


Douglas Glenn Fisher: This is indeed a technical question and one that we can verify for the Hon. Member. I take it that it is a question from his constituent, and I will ask our officials to give him an answer as quickly as possible.
I would remind him, however, that whatever answer is forthcoming it is based on 12 years of experience. It is not one that will come as a result of this law. This law does nothing but change the rate, and the Member is asking us about an established tax practice. We will give him the technical answer to that question. I understand the intention of what he is asking, and we will make sure that he gets a reply.


John William Bosley: Mr. Chairman, it relates specifically to this amendment. I suspect that the answer to the question in my example is $250. Therefore, I suspect that there continues to be a bias toward leasing. If I am in a situation where my $10,000 automobile, which is now worth $4,000, will cost me as though it were worth $10,000 for tax purposes, it is worthwhile for me to trade it in with its $4,000 value and lease either a new or a used car and lower the cost on which tax is charged. Therefore, it is important to the amendment and goes back to my belief, from what I have read, that the Government's practice is to push people toward leasing as opposed to owning. That is a principle to which I do not subscribe.


Douglas Glenn Fisher: Mr. Chairman, I take it that the Hon. Member feels that the law, as it exists now, is biased toward people who lease. He believes that the increase in the rate will increase that bias. Our officials have not found that to be the case.


John William Bosley: Mr. Chairman, I would like to pursue the matter, because I was interested in the debate between the Hon. Member for Calgary West and the Parliamentary Secretary with regard to this issue. I do not want to be taken the wrong way, because I know the Parliamentary Secretary did not like the range of questions. However, this is the question: if I, as an ordinary Canadian, take my children to a movie on Saturday night in a company automobile, that is considered to be personal use of the automobile. Is that correct? The Parliamentary Secretary is shaking his head. If the Prime Minister of Canada takes his children to a movie on

March 11, 1983
Income Tax
Saturday night and is required, for the safety of the office and the person of the Prime Minister-


Paul James Cosgrove: Or the Leader of the Official Opposition.


John William Bosley: -to have this security-it is a very simple question, Mr. Minister. There is no reason to interject. It could be the Leader of the Official Opposition.


Paul James Cosgrove: Then stop fooling around and stop using the Prime Minister as an example.


John William Bosley: I would not use the Prime Minister as an example of anything for any Canadian.


Paul James Cosgrove: Then what are you doing, and why are you asking the question?


John William Bosley: I am asking a question about the law.


Paul James Cosgrove: You are being political and wasting the time of the House.


John William Bosley: Some Liberals might pay attention to questions about the law. I know Liberals do not like the law. It interferes with their habits.
My question is this simple one: if a Cabinet Minister takes his children, or if the Leader of the Opposition takes his children-


Mr. Blais:: His child.


John William Bosley: -to a movie on Saturday night and security is required, is it any less a personal use of the automobile? If it is no less a personal use of the automobile, will personages in that situation, whether they be the Leader of the Opposition, a Cabinet Minister, a Premier of a Province or the Prime Minister of Canada, be required to pay personal tax on the use of that car for that evening?


Douglas Glenn Fisher: Mr. Chairman, I will certainly investigate to determine the basis for this one standard concerning security personnel, and will try to answer the question for the Hon. Member. I do believe, as he said himself, that the issue is a bit distorted. I only ask him to remember that this is one of several guidelines in the Treasury Board bulletin to Ministers which indicates the difference between personal and public or business use of a vehicle. Bell Canada, Ontario Hydro, General Motors and all other large organizations have similar manuals for their employees. I am sure that there are also standards in those manuals which give rise to questions of equity like this one.
I would think that after some scrutiny, with the reasonable amount of experience we have had over the past 12 years, we will find that these guidelines are explainable and acceptable. We are dealing with a body of experience, and every large organization will try to give to its employees the benefit of such experience in the form of guidelines. The guidelines will then dictate the dividing line within that organization between personal and public use or personal and business use. I think it is reasonable to have guidelines. That is all we are reflecting upon here. If the Hon. Member wants a technical answer on
the use of one guideline out of many to define the difference between public and private, then we will provide him with that explanation. That is a reasonable question and we will provide it to him.


Jean-Jacques Blais: I rise on a point of order, Mr. Chairman. The Hon. Member for Don Valley West, just before the Parliamentary Secretary commenced his reply, commented to the effect that Hon. Members on this side did not respect the law or found the law to be inconvenient. I am sure that, upon reflection, he will want to withdraw those remarks. Even though it is 4.15 p.m. on a Friday, it is surely not in keeping with the character of this House to trade personal abuse across the floor, especially the allegation of illegalities or illegal conduct. I take very strong personal exception to those comments. If the Hon. Member wants to stick around this particular institution for a long period of time, he will surely respect the institution and the Hon. Members within it.


Douglas Keith Anguish: Mr. Chairman, 1 hope that you, the Minister and the Parliamentary Secretary will carefully listen to my remarks. Much time has been spent on interventions with regard to Clause 1. I know that the questions which have been raised are very pressing to a certain group of people. I think they have been more than adequately covered with regard to Clause 1. In my own situation, I suspect that less than 1 per cent of the people in my entire constituency would be affected by the Clause. The concerns of any who would be affected have already been covered in the interventions I have heard.
The questions which I pose to the Minister and the Parliamentary Secretary are connected to Clause 1 in that if the Bill does not soon pass, there will be many people who will be inconvenienced because income tax returns will have been filed and duly processed by the Revenue Canada taxation branch as best it can, but I understand it does not have the authority to issue cheques to these people. Some two million income tax forms have been processed by Revenue Canada and placed in the computer. Once Bill C-139 is passed, it will only be necessary to punch a button and the cheques will be issued through the computer system-


Donald Alex Blenkarn: Do it right now. It will do it.


Douglas Keith Anguish: -to people who are eligible for income tax refunds. The people of Revenue Canada do not feel they have the authority to do that. They have done a very good job in processing the applications they have received. However, if there were some change to the parliamentary and democratic process of the House as a result of Bill C-139, it could cause some horrendous problems for them in terms of recalling payments or making adjustments to some of the cheques which had been sent out to people. That could cause very serious concern to the Department of National Revenue, unless it did not issue the cheques.
There are other Clauses which concern me more than Clause 1. My colleagues and I will be speaking to them as they
March 11, 1983

would affect our constituents. The Committee of the Whole in the House of Commons is a very good forum in which to discuss legislation, presenting both sides of the argument. Once both sides of an argument have been presented on a certain Clause, I wish that we would move on. I am concerned about those two million people who have had their income tax returns processed and are waiting to receive their cheques. There will be millions more by the end of this month.
Can the Parliamentary Secretary or the Minister tell us what will happen if, by some chance-


Donald Alex Blenkarn: The Bill doesn't pass.


Douglas Keith Anguish: -it does not pass? At which point will those taxpayers receive the refunds for which they are eligible? Is it completely contingent on the passing of Bill C-139? Will refunds be made to some two million people whose forms have already been processed and many millions more whose forms will be coming within the next couple of weeks?


Paul James Cosgrove: Mr. Chairman, the Minister of Finance has indicated that he is desirous of having this income tax Bill passed by the House, first, because it includes provisions which were first made public in 1981 and, second, because it includes subsequent amendments to the 1981 Bill or new initiatives of the Minister of Finance in the budget of June, 1982, or some of the resulting amendments introduced in the statement of the new Minister of Finance on October 27, 1982. He has urged this on the House in recognition of the fact that any income tax bill will have mixed effects, that it will affect different people differently. I assume the majority of Canadians represented by the Hon. Member for the Battlefords-Meadow Lake who has just spoken would benefit by the advantageous Clauses of this Bill. For example, they would benefit by the increase in the Child Tax Credit of $50 per child; by the reduction of the general rate to those in lower income levels, and by the new introduction of the $200 spousal allowance which, generally speaking, is of benefit to those of lower income levels. All of these would be available to those people when the Bill is passed.
Quite frankly, that is my personal motivation in seeing the House conclude consideration of this Bill as quickly as it can. Without having done a scientific analysis, I am convinced that of the many thousands of unemployed people in this country, many are the very people who will receive tax refunds. They are people who have paid taxes earlier in the year, who have then become unemployed, who are looking for some cash to assist them in a difficult time and who will be assisted by their refunds. That is why I support the Minister of Finance in doing as we have always done, having this legislation concluded before he introduces the next budget. That is my major motivation in urging the consideration and conclusion of this Bill as quickly as possible.


Douglas Keith Anguish: Mr. Chairman, I appreciate that and I would observe that if things continue as they have on Clause 1, it
Income Tax
could be past the end of April by the time we have Bill C-139 passed. I find it very disheartening that this amount of time would be taken, that the Chair, or whoever is responsible, allows the continuous and sometimes irrelevant interventions by some Members of this House on points that have already been covered in many instances.
If in fact those Members wish to continue to do that, what are the options that are open to the Government to see that the constituents of Canada get their income tax returns much sooner than would normally be the case if this kind of activity continues through the other Clauses of Bill C-139?


Yvon Pinard: Mr. Chairman, since this is in relation to House business and the Hon. Member asked for an opinion regarding how it can be made possible for this Bill to be adopted as early as possible in order to allow the refunds to be made, there is one simple Standing Order, namely No. 81, which would allow the Hon. Member's Party to agree with the Government to allocating a reasonable length of time, but a fixed length of time, to complete the debate.
If his Party is speaking in good faith, and I never doubted it, all he has to do is to ask his House Leader to come to an agreement on a reasonable period of time to conclude debate on the Bill. If the Hon. Member reads Standing Order 81, he will see that that option is available to him even if, as he deplores it, another Party in the House seems to be dragging its feet and filibustering this Bill at this time.


Douglas Keith Anguish: Mr. Chairman, following on that comment my question is that I would have trouble agreeing to that suggestion regarding the entire Bill because some sections could take up the whole amount of time that has been agreed to, and therefore some of the sections that we want to deal with would never in fact be dealt with in Committee of the Whole. My question would be, can this procedure that the Hon. Member has just outlined be used on a Clause by Clause basis?


Yvon Pinard: Sorry, Mr. Chairman, I missed the last part of the question.


Douglas Keith Anguish: My question was, can this procedure that has been outlined be used on a Clause by Clause basis?


Yvon Pinard: No, Mr. Chairman, unfortunately it cannot be done on a Clause by Clause basis because Standing Order 81 deals with stages of a Bill and not Clauses of a Bill. Standing Order 37 would be available to limit debate on specific Clauses, but I do not think that this would be appropriate.


Donald Alex Blenkarn: Mr. Chairman, I just want to wrap up the debate on this particular amendment we have before the Committee. In my view the amendment has been explained pretty well. I just want to ask the Parliamentary Secretary one question. He will appreciate that in his example of the person who had a car which was rented for $300 a month and there was $100 in repairs, he came up with a 50 per cent tax cost and said that that would cost the employee $1,800 a year and that would be a pretty modest cost for a car. He will of course appreciate that this is a standby cost. It is not the employee's

March 11, 1983
Income Tax
car. It is a car that is owned by someone else for business purposes, because if the car was not a business car the company employing the employee could not deduct the car at all for business purposes. It has to be used in the business.
What we are talking about here, so the Parliamentary Secretary will understand, is that portion of the value in the vehicle and its repairs and so on that is attributable to the personal use of the car that can only be owned by the company if the car is a company car for business purposes, not for personal purposes.
I want to point out to him that if the employee has paid $7,200 for an automobile that he does not even own, it is probably not worth any more than a couple of thousand dollars at the end of a four-year period, that his own example has pointed out how horrendously unfair the 2 per cent standby charge is, and how horrendously unfair the percentage of maintenance cost is. If he would only look at it that way, let him take a look at the amendment we have proposed because our amendment is proposed on the basis of fairness.
I want to make it very clear that as far as we are concerned, employees should pay tax on the personal use of their cars owned by their employers, but that tax should be fair and should be fairly calculated. Two per cent is probably not bad, provided you calculate it on the value of the car. As the car gets older, the benefit gets smaller on the value of the car. That is probably fair that way. The Parliamentary Secretary will remember that we discussed this matter in the Standing Committee, and he will recall that the 2 per cent standby charge was before the Standing Committee, but the matter of charges for repairs or maintenance was not debated in the Standing Committee. He will know that it was only on the basis that the maintenance charges were not included and that the 2 per cent included the maintenance that the Standing Committee, of which he was a member, came to the conclusion that perhaps it was not all that bad. But you have added in the maintenance. So if you took the maintenance out, we could accept it the way it is. The problem is that the maintenance has been added in and the 2 per cent has been left in. In other words, the burden has been increased. That is what the objection to Clause 1 was all about in the first place.
Does the Parliamentary Secretary not realize that what we are looking for here is fairness? We are not trying to give anyone an advantage. We are trying to impress upon a Government, that will not think and will not move, what fairness is all about.
Before the Parliamentary Secretary gets up, he might also reflect on the fact that the Minister in his statement said that he saw $20 million in lost revenue because of this. He saw $80 million in lost revenue because of the annuity provision. He has lost all of the revenue there. He is not going to get any revenue, because of what he did yesterday. He got himself into employee benefits. He figured he would pick up some revenue because of employee benefits. I want to tell him that he probably lost revenue there with respect to professionals. What we want is an Income Tax Act that is fair, reasonable, honest and makes sense. The proposal here is to do that, to follow the
concepts that we discussed in the Standing Committee so that we can get a Bill before and out of this House, one that makes sense. That is the reason for the amendment. I would like the Minister's comment on that at this point. Then let us put that amendment because we would like to put another amendment with respect to maintenance costs.


Douglas Glenn Fisher: Mr. Chairman, the Hon. Member should be reminded about a second question that arose in the Finance Committee, the question of complexity and the law, I would urge the Hon. Member to think about that principle before he begins to argue that the value of the car be a declining amount. Can he imagine the calculation that would be involved in such a process for an operation like Bell Canada? There would be an enormous amount of calculating that would have to go on long before the reporting of the individual could be made. I urge him to look at that.
Second, our officials tell me that reimbursable operating costs are already in the law and that the current section clarifies it because we have had some serious problems with reporting.
Third, I would suggest that he is probably right about my comments on repairs and $100 a month. I suspect that is overstated. I did it to round the figures out to a nice, even $3,600 a year. It looked like an easy calculation for me, but I think that is overstated. That is not what people will be smacked with in the early days of a car's operation. It may work out that, later on, the amount that is assigned would go up somewhat higher, but in the beginning of a car's life, I doubt that that would be the case. I also wonder whether an employer would keep a car around that would have heavy repair costs later in its life.
Finally, I would point out that the big question here is the question of whether it is fair or not fair to ask people to pay for personal use in after-tax dollars, and do we have an accurate amount. I would say yes in both cases. I would say that the amount here generally reflects the value of the car and reflects the replacement value of the car for the individual if he were to buy it personally. I think that is fair.


Donald Alex Blenkarn: Mr. Chairman, the Parliamentary Secretary raised the question of complexity. He will of course know that Form TD-5 must be taken by an employee to an employer and completed by the employer. It sets out the year and model of the car, the period available, the day and month, the number of 30-day periods available and calculated to the kilometres driven in that period. He will know that is one of the forms that is presently around under this statute as it is now. He will know the very complicated nature of the calculations set out on the reverse side of that form. He will know that these complications are there because of the way this statute is now worded. To say that you only charge it on the depreciated value of the vehicle and say that that adds complication is absolute, complete and total drivel, and he knows that.
March 11, 1983

We have made a suggestion to him to try to achieve some fairness. We have tried to come along with the position which was similar to the position taken by the Standing Committee with respect to automobiles. We said that if he wants to treat 2 per cent or two-thirds of the lease and get rid of all the maintenance and repair nonsense that is there, we could perhaps go along with that Clause completely. Otherwise, if they want to vote down this amendment, we have a further amendment with respect to maintenance and repair costs.


Roderick Blaker: Is the Committee ready for the question?


Some Hon. Members:: Question.


Roderick Blaker: Those in favour will please say yea.


Some Hon. Members:: Yea.


Roderick Blaker: Those opposed will please say nay.


Some Hon. Members:: Nay.


Roderick Blaker: In my opinion the nays have it.


Some Hon. Members:: On division.


Roderick Blaker: Accordingly the motion is negatived.
Motion (Mr. Blenkarn) negatived.


Donald Alex Blenkarn: Mr. Chairman, with respect to Subclause 1(4) of the Bill, the effect is that the employee is required to pay tax on the maintenance cost of the vehicle. That maintenance cost, by all possible definitions, includes insurance that the employer would have to pay anyway. You cannot own a company car and not have it insured. The employee has to pay his share of the insurance just because he uses it personally.
The same applies to licences. If a company is going to own a car, it has to licence it. It could not be used for company business unless it was licensed. Therefore, there is no reason why an employee, directed by his employer to drive a company car, should have to pay a portion of the licence cost as a personal use item.
Indeed, there is no reason why the maintenance of the car in terms of grease, oil, tires and paint should be paid by the employee at all. After all, it is not his car. He cannot be given the car that he has used principally for enjoyment and only secondarily for business. It has to be a business car in order to be deductible. Therefore, what we are talking about is a business car.
The question really is whether it is fair that he should pay tax because the company decided to insure the car for SI million or $2 million. Is it fair that he should pay insurance on the basis that it was a business car and therefore subject to all sorts of additional insurance costs? He has to bear that in his personal tax because he may use it on the weekend part-time. Is it fair? I say it is not fair. If we are going to charge maintenance, we should do this. Therefore I move:
That Subclause 1(4) of Bill C-139, an Act to amend the statute law relating to income tax (No. 2) be amended by adding the following, immediately after line 24 on page 4;
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"(2.2) For the purposes of subparagraph 6(l)(e)(iii) a benefit relating to the
operation of an automobile shall only be the cost of motor fuel paid for by the
employer but utilized by the employee in personal use of the automobile"


Paul James Cosgrove: Mr. Chairman, we have considered the philosophy behind the amendment placed by the Hon. Member for Mississauga South. There is nothing new or dramatically different in the position that he has put from the position that has been argued in many interventions on behalf of Members opposite. We believe that the grease, oil, wheels, etc., are part of the vehicle. There is an equitable formula in place in the legislation before us which prorates those expenditures, that is the insurance and licence expenditures, etc. and charges only the portion attributable to the time in which the vehicle is used for personal use. That is eminently fair. The Government has considered this. We believe that the provision is equitable. The provision in the Hon. Member's motion is inequitable, costly and produces complications. It has further complicated the Act. Therefore, we cannot support it and we are prepared to vote on the matter now.


Frederick James (Jim) Hawkes: I guess the most onerous part of this Bill to the Opposition is the Government's method of defining expenses. Will the Minister indicate to us the difference, for instance, in the insurance costs of a taxicab versus a car which is used by a salesman?


Paul James Cosgrove: Mr. Chairman, the officials advised that the Section is one which has been administered by Revenue Canada since the introduction of the charges in 1971 and, again, I do not think it is very fruitful talking about an area which has been in force for these number of years and has been the practice of the Department. That, as the Hon. Member for The Battlefords-Meadow Lake has indicated, is really an area not germane to the Bill which is before us. I am most reluctant that we would even employ a further 20 minutes going into administrative practices which have been the policy of the Government and in place since 1971.


Frederick James (Jim) Hawkes: Is the Minister indicating to the House that operating costs have been part of this Bill since 1971?


Paul James Cosgrove: What I am saying is that that has been a basic part of the interpretation of the existing law since it was introduced in 1971.


Frederick James (Jim) Hawkes: The Minister is saying that people who have used company cars partly for their business and partly for their personal use since 1971, have had to pick up a portion of the insurance costs?


Paul James Cosgrove: I refer the Hon. Member, Mr. Chairman, to Subsection 6(1).


Frederick James (Jim) Hawkes: Can the Minister give me an example of anywhere else in the Income Tax Act where an individual's tax liability goes up as their expenses go up?

March 11, 1983
Income Tax


Paul James Cosgrove: Hotels. Mr. Chairman, again, I would rather restrict our efforts to the legislation which is before the House.


Frederick James (Jim) Hawkes: Mr. Chairman, we are trying to look to the Act for some equity and fairness. I would like a ruling from you as to whether or not this question is germane to the Bill. Is there anywhere else in the tax Act where as your expenses go up, your tax liability goes up?


Paul James Cosgrove: Mr. Chairman, I really cannot adopt the practice of the Opposition of taking the time of the House on matters which are not before it. I really do not want to do that.


Frederick James (Jim) Hawkes: Is the tax Act before the House, does Clause 1, contain in it the principle that as your expenses go up, your tax liability goes up? That is a basic principle of Clause 1 which is before us. I am simply asking if this is the only place in the tax Act where we have that principle? To put the question differently: is this the only place in the tax Act where we have the principle that as your expenses go up, your tax liability goes up?


Paul James Cosgrove: I refer the Hon. Member to Subsection 6(1) Mr. Chairman.


Frederick James (Jim) Hawkes: What is the impact of Subsection 6(1)?


Paul James Cosgrove: I would have to repeat my answer, Mr. Chairman.


Frederick James (Jim) Hawkes: Can the Minister indicate to us the intent of this amendment? Why do we have an amendment which mentions operating costs? What are we changing in the law?


Paul James Cosgrove: Nothing, Mr. Chairman.


Frederick James (Jim) Hawkes: Why do we have, then, an amendment mentioning operating costs if we are not changing anything in the law?


Paul James Cosgrove: For greater clarification, Mr. Chairman.


Frederick James (Jim) Hawkes: Can the Minister give us the thrust of the greater clarification?


Paul James Cosgrove: I refer the Hon. Member, Mr. Chairman, to the explanatory notes to a Bill amending the Income Tax Act issued by the present Minister of Finance in December, 1982. If he has not had the time to look at it since the month of December, 1982, I find it tragic that he is taking the time of Parliament on that matter now when there are people looking for refunds.


An Hon. Member:: Hear, hear!


Frederick James (Jim) Hawkes: Mr. Chairman, the Hon. Minister, who is so busy pounding the table, took objection to the comments of the Hon. Member for Don Valley West when he indicated that sometimes the law interferes with habit. Could the Minister indicate to us whether or not the law requires the Government to give refunds?


Paul James Cosgrove: That would be a repetition of what has been said three times in that debate, Mr. Chairman, and I am very reluctant to go around that wheel the fourth time.


Frederick James (Jim) Hawkes: Mr. Chairman, the Minister just indicated to the House that the law did not require them to give refunds. My understanding of the law is that it does. Is my understanding correct or is the Minister's understanding correct?


Paul James Cosgrove: I really would not want to comment in public on the Hon. Member's understanding or lack thereof.


Frederick James (Jim) Hawkes: Can I put the question simply to the Minister again? Does the present tax law of Canada require the Government to give refunds, yes or no?


Paul James Cosgrove: We are ready for the question, Mr. Chairman.


Frederick James (Jim) Hawkes: I will repeat the question, Mr. Chairman. Does the present law of Canada require the Government to give refunds, yes or no?


Roderick Blaker: 1 believe the Chair should intervene at some stage to indicate to Hon. Members-I would have to look seriously at the precedents and authorities on the subject, but it is my impression that after a question has been repeated three or four times and an identical answer has been given, it would seem to be a matter of order in the House that the Chair might have to intervene to prevent nothing more than a recording of the same question and the same answer persistently. I do not have at my fingertips a reference to a Standing Order or to a Citation of Beauchesne to back that up, but I am sure the Hon. Members would understand that it would be disreputable for the House to be seen to be repeating in identical phrases the same question and the same answer for hours on end. I would ask both the Hon. Member and the Minister to take that into consideration.


Donald Alex Blenkarn: On that point of order, Mr. Chairman, I have a difficult time in following this question and answer with the Minister. I was wondering if the Minister really would explain the Clause which is set out in the Act. The Clause which we would like him to explain on page 2 of the Act, Subclause (iii). That is what is being amended by the amendment before the House. It has solid lines on it, so it is new in the Act. I believe it is imperative and fair to us and to the House that the Minister give us that explanation. I believe that is what the Hon. Member for Calgary West is asking. Rather than taking some sort of high-handed attitude toward it, I really do think that the Minister has an obligation to explain the statute.


Paul James Cosgrove: Mr. Chairman, against my better judgment I will refer the Hon. Member again to the explanatory notes to a Bill amending the Income Tax Act, a document issued by the Minister of Finance, in December, 1982, which presumably has been in the hands of the Hon. Member for Mississauga South since December, 1982. Possibly he missed the first Clause in the document headed, "Inclusions in Income From
March 11, 1983

Employment", Clause 1(1), Income Tax Act, Section 6(l)(a)(iii).


Frederick James (Jim) Hawkes: Mr. Chairman, the Minister may remember that there was a Summit meeting held in Ottawa not too long ago, and in anticipation of that, the Government of Canada designed cars to have special features, including some bulletproofing. At the conclusion of the Summit those cars were shipped to various embassies abroad where it is felt that the Canadian diplomats are at some risk because of the nature of those countries. It is obvious, I think, that the value of those cars is considerable. If an ordinary car in this country costs between 510,000 and $15,000, I think the value of these specially equipped cars would certainly be in excess of something of the order of $50,000. It is also, I think, a fact in Canadian tax law that Canadian diplomats, wherever they are in the world, are deemed resident in Canada. Can the Minister enlighten us on the repercussions on the standby charge on Canadian diplomats serving abroad where they have to use these specially equipped automobiles?


Paul James Cosgrove: Mr. Chairman, I can appreciate that diplomats serving Canada abroad in a very difficult world climate right now are probably, in most cases, offering service beyond the call of duty, something that should be encouraged as an- example to most Canadians. We have had a number of recent examples of leadership by our diplomatic personnel abroad. However, I must admit that my major concern with this legislation before us is the internal impact, the effect it has, on ordinary Canadians, but probably more so the effect on lower income Canadians. I think I would be doing a disservice to those people who are looking, for example, for an income tax refund when this Bill is concluded, to really go down the esoteric route of the Hon. Member as he hast just invited me to do. In good conscience I could not waste the time of the House doing that.


Jean-Jacques Blais: I have a point of order, Mr. Chairman. I have been sitting here all day listening to the questions raised by Members opposite. I also listened to a very good intervention by the Hon. Member for The Battlefords-Meadow Lake. I think Members of the Official Opposition are really disrupting the proceedings of this House. Indeed, Mr. Chairman, their whole attitude has been to engage not in a filibuster but simply in advancing spurious amendments. As a matter of interest, the Hon. Member for Mississauga South introduced an amendment this afternoon knowing full well that he did not have the Members to give it a proper showing. He accepted defeat on division knowing that he did not have the troops in order to have that particular motion introduced.
The point, Mr. Chairman, is that people are waiting for refunds, and all Members of the House are getting telephone calls in their constituency offices on a regular basis concerning this, but the returns cannot be processed until this Bill is
Income Tax
passed. Now, the Tory Opposition, for their own partisan purposes-


Roderick Blaker: Order, please. I have to ask the Hon. Minister to come to the point of order.


Jean-Jacques Blais: I think the point is made.


Roderick Blaker: The Hon. Member for Mississauga South rises on a point of order?


Donald Alex Blenkarn: My point of order is, Mr. Chairman, that I was hoping we would clear up this section this afternoon. We have had suggestions that somewhere along the line we got off the topic on to whether the Government is required to pay rebates. When you come to the question of rebates, that is not the Clause we are dealing with. The question of rebates in income tax is dealt with in Section 152(1) of the Income Tax Act. The Minister will know that that Section says that the Minister shall, with due dispatch, examine a taxpayer's return and assess his tax.


Roderick Blaker: Order, please. Would the Hon. Member come to his point of order?


Donald Alex Blenkarn: That is my point of order.


Frederick James (Jim) Hawkes: Mr. Chairman, I guess this afternoon is turning into an incredible experience. I was a new Member of this House in May of 1979, and Parliament met that fall. I guess when you are a newcomer you remember the initial legislation with which you were faced better than you may remember subsequent pieces, because they go by very rapidly sometimes. One of the first pieces of legislation the Clark Government had to bring before the House was the budget brought down in the fall of 1977 by the then Minister of Finance. If you follow the Minister's logic, you would have to conclude that there were no refund cheques sent out on the basis of the 1977 or 1978 tax years. We all know that is simply not true. The Clark Government was the Government which obeyed the law of Canada, and the law of Canada requires income tax refunds to be sent. There is a law, and if one is a Cabinet Minister and respects the law, one sends out refund cheques. If one chooses not to respect the law, there are many ways in which Parliament or Members of the Opposition can force Government Ministers to respect the law. We can implore them to do it. We can suggest they do it, but there is something particularly dishonourable and discredible when you have Ministers of the Crown standing in the House and telling Canadians that a law exists when in fact it does not exist.
I challenge the Cabinet Minister who spoke on the point of order or the Cabinet Minister responsible for this Bill to stand up in this House and tell us where in the law of Canada the Government is required not to send out refund cheques. Tell us. If they want to say the law says they cannot send them out, let them quote us the law, give us the paragraph. I challenge the Minister to do that.


Paul James Cosgrove: Question, Mr. Chairman. We would like the question.

March 11, 1983
Income Tax


Roderick Blaker: Is the House ready for the question? It is not. The Hon. Member for Calgary West.


Frederick James (Jim) Hawkes: Mr. Chairman, I guess I can take that as affirmation, that there is no law which currently exists and says to the Minister, the Government or Revenue Canada, that they cannot send out refund cheques. If no such law exists, then where in our system can they be held accountable when they stand in the House and tell us that they cannot do something because of the law? Surely, Mr. Speaker, if they have full knowledge that there is no such law and continue to assert in the House that there is such a law but do not provide proof, then we get very close to the necessity of the Opposition standing up and using unparliamentary words. It gets to be deliberate and we begin to wonder whether Canadians are being misled or just the House. If they continue to move in that direction, then I do not think we have much choice but to do that.
Can I repeat a question I asked earlier?


Douglas Keith Anguish: No.


Jean-Jacques Blais: Mr. Chairman, there was a question asked concerning legality relating to refunds. The question has been canvassed and recanvassed. The fact is that for the assessments to be completed this law has to be passed. You cannot send a refund unless you have assessed the returns. The returns
cannot be assessed until the law has been passed. You cannot assess a return in expectation of a law being passed.


Donald Alex Blenkarn: You have been assessing taxes that way.


Jean-Jacques Blais: You would have to go back to the existing law and provide a refund under the old law. That is clear, and the hon. gentleman knows that. All this pussyfooting around is indicating that they are not serious. They do not want to pass this Bill. What they want to do is to go through with their leadership campaign, and they do not care who suffers as a result.


Roderick Blaker: Order, please.


Jean-Jacques Blais: They want to interfere with the process of this House.


Roderick Blaker: Order, please. It being five o'clock, I will interrupt the proceedings.
Progress reported.


The Acting Speaker (Mr. Blaker):: It being five o'clock p.m., this House stands adjourned until Monday next at eleven o'clock a.m. pursuant to Standing Order 2(1).
At 5 p.m. the House adjourned, without question put, pursuant to Standing Order.

Monday, March 14, 1983