February 25, 1916

LIB
LIB

John Gillanders Turriff

Liberal

Mr. TURBIFF:

Yes, the $35,000,000 that the Minister of Finance wants. Let us see just what the Minister of Trade and Commerce did say. Here are his words, and I give him credit for them:

The same remark applies to the question of patronage. I said I was disposed to be perfectly frank on both of these points. There are expenditures now-there have been expenditures from Confederation up-which have been put into the Estimates, passed and carried out in the country, that were neither useful nor expedient. There is no doubt about that; it has been done under all Governments-

I quite agree with that.

-it probably is being done under this Government.

I must confess I agree with that.

My opinion is that until a different method is pursued with respect to our expenditures upon public works, in their authorization, we shall be open to these troubles and to that criticism. My view is that every application for a public work, or a public improvement, should go before a competent board of engineers and business men, should be reported upon by them for the information of the Government, and that every application should have to show some cause of necessity, of public benefit, or of future usefulness before it was passed and put into' the Estimates. I do not believe that we will ever get down to a proper system of husbanding the resources of our country, as we are bound to do as trustees for it, or of confining ourselves to useful and necessary public works until we get some machinery of that kind.

Those were the words of my hon. friend the Minister of Trade and Commerce, and very fine words they were. While I believe there are men in this Government who could never be brought to look at the matter in that light-the Minister of Finance is not .one of them-such is the stand-

ing of the Minister of Trade and Commerce in this country, and so great is his ability and power, that I believe he could compel the other members of the Government to come round to his views. If he, succeeded in doing that, it would be the greatest work that had ever been accomplished in this country, and no future government of this country would dare go back to the old system, for the people would not stand for it.

We are living in changed times. Look at what has happened in Great Britain during the last year -and a half. Why should we not, in these momentous times, adopt the policy outlined by the Minister of Trade and Commerce?-but which, I notice, has not been advocated by any of the hon. gentlemen behind him who have spoken since. Let us see what a saving such a committee as the Minister of Trade and Commerce has suggested would effect. If all questions in regard to public works had had to go before a committee of engineers and business men who would certify that the work proposed would serve some present purpose, or be of value to Canada in the future, aid would never have been given to the Canadian Northern Railway in building its road from Edmonton to Vancouver, and millions and tens of millions of dollars would have been saved. Do you think, Mr. Speaker, that such a committee would have approved of the vast expenditures being made on Victoria harbour and Vancouver harbour? No, they would have realized that the work in both those places could have been done for half the money, and millions would have thereby been saved to the people. And the same may be said with regard to Halifax harbour, on which it is proposed to spend some thirty odd million dollars. I have heard it stated that the whole work at Halifax could be done at from one-half to one-third of the proposed amount. Look at the money that is being squandered on St. John harbour, on wharves that cknnot stand up straight. There is no question that the Minister of Trade and Commerce is the ablest man in the Government.

Topic:   THE BUDGET.
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CON

George Eulas Foster (Minister of Trade and Commerce)

Conservative (1867-1942)

Sir GEORGE FOSTER:

Don't pile it on too thick.

M|r. TURRIFF: I am not piling it on at all. 'The Minister of Trade and Commerce is a credit to the people of Canada. He is the strongest man in the Government at the present time, but, unfortunately for Canada, bad influences are also very strong with the Government. For all that, I have

confidence in the ability and integrity of the Minister of Trade and Commerce, and I am sure that if he set himself to this task he could accomplish it. He would have public opinion behind him, and that helps a great deal. I venture to say that any man in Canada who lives up to the ideals propounded by the Minister of Trade and Commerce the other evening will have the people of Canada, Liberals and Conservatives alike, behind him.

Ever since this session started, and in debates in previous sessions, hon. gentle-^men opposite have been giving sly digs at gentlemen on this side of the House in connection with the naval policy. My hon. friend from Annapolis (Mr. Davidson) had a great deal to say about that the other evening. If hon. gentlemen opposite want to discuss the naval question, and the attitude taken in regard to it by hon. gentlemen on this side of the House, as contrasted with the position taken by hon. gentlemen opposite, let them bring the subject up in this House whenever they like. We are ready to debate that question at any time, but this habit of giving sly digs is unfair and unmanly. If gentlemen opposite want to discuss this question let them discuss it in an open way. We have nothing to fear. Fronj the day the Minister of Trade and Commerce introduced his resolution iij 1909 up to this moment, the right hon. leader of the Opposition and hon. gentlemen sitting behind him have not changed their policy with regard to the navy one iota, not to the extent of dotting an " i " or crossing a " t." We stand to-day exactly where we stood in 1909, and in 1910, and in 1911; that is, for a Canadian navy, built by Canada, manned by Canadians, at the call of the British Empire whenever she is at war. Had our policy been carried out-and hon. gentlemen opposite had it in their power to carry it out-we should not be in the position we are in to-day, without a ship on the sea, and having to depend upon Japan and Australia for the protection of our western coast; we should not have had to buy two obsolete submarines, at double the proper price, to protect Victoria and Vancouver-^submarines without a torpedo in them. A great protection they

would be to anything or anybody! Had the hon. gentlemen on the treasury benches carried out the policy for which they voted in 1909, we would have had torpedo boats of our own on the Pacific and Atlantic coasts and cruisers to protect our trade and our transports as our soldiers

crossed the Atlantic in order to take part in the war of the Empire.

Just here let me say that we on this side of the House stand exactly where we stood on the 18th day of August, 1914, when the House was summoned in order to vote the first war credit. We are behind the Government absolutely in carrying on this war; we are prepared to support them in everything; but we want a fair and reasonable accounting of the expenditure of all moneys voted for war purposes. A year ago the Government asked for $100,000,000 and we voted it without question. My hon. friend the Minister of Finance this year says, " We want $250,000,000," and we will vote that. We are not one whit behind in the field or in the trenches or in the Parliament of Canada in anything connected with carrying on this war and bringing it to a successful issue; and, to-day, when the fiercest battle of the waT is raging, I think every one in "this country can say that Canada is doing her duty fairly well, and will continue to do her duty to the end. If more money than the $250,000,000 is necessary, no complaint will come from this side of the House as long as that money is expended in carrying on the war; but we do not want tens of millions of dollars to be turned over to private raiders of the treasury, as has been done in the past year in connection with the manufacture of shells. We want to see an end put to that, and those men who got illegitimate gains punished by at least half of those gains being taken away to help in the carrying on of this war.

One of the main objections, Sir, to the industrial tax is that it is so absolutely unfair, because it taxes one man heavily and lets two or three others escape. When the Minister of Finance proposed to tax all corporations on the same basis by taking their capital stock as paid-up stock without going behind it to see what was the true capital, I am sure that a gentleman with the business experience of my hon. friend must have seen that such a proceeding is eminently unfair, because he is as well posted a man oh affairs of this kind as any man in Canada. Let me illustrate this point: One man put $100,000 into a business, and, as he is an honest, decent man, going about his business in a conservative way, he issues $100,000 of paid-up stock. His neighbour going into the same business also organizes a company, but he makes his capital $1,000,000, and he takes his $100,000 and buys certain property that the new company will need,

and he sells that new property to the new company for $1,000,000; that is, he gets $1,000,000 of paid-up capital. Both companies start business. Suppose the first man, who has $100,000 of capital stock, makes $15,000. $7,000 of that is exempt

and he has to pay 25 per cent on the balance. The second man, however-, who is a kite-flier, who goes in for speculating in watered stock, who has the get-rich-quick idea, has $1,000,000 of capital, and he can put $70,000 per annum in profits into his own pocket before he is called upon to pay one cent under the legislation proposed by the Minister of Finance. From what my hon. friend said last night, he has some intention of making a change in that regard, and I am quite satisfied that he will make a change. Why? Because there has been a general protest in all parts of the country from the Atlantic to the Pacific against the absolute unfairness of such a proposition. One of the strongest protests I have seen has come from Sir E. B. Osier, a member of this House, and a wealthy man, who has pointed out that the proposed taxation is eminently unfair. So faT as I know, no one in this country objects to paying a fair tax for the carrying on 'of this war, a

Another point is that if every one had to pay, the Minister of Finance would not have to call for 25 per cent of the profits over 7 per cent, because in that case 10 per cent of the surplus profits over 7 per cent would give him all the money he requires. Why should one man pay 25 per cent of his surplus profits over 7 per cent and another man not pay anything at all? Would it not be much better to work out the tax so that every one would pay practically the same percentage? No one expects that under a proposition of this kind every one will be treated exactly alike, but it is a gross injustice to let one man escape and another man pay two or three times over. I am sure that if the minister, when he brings this Bill before the committee, will make a change that will spread the tax equally over the community, he will be doing something in the interest of the people of Canada as a whole, and will give general satisfac-

tion and not leave the heart burnings and the bitterness that the carrying out of the present proposition will do. Just think of the injustice of two companies earning the same profits and one company not paying a single dollar and the other company having to pay $100,000. Do you imagine, Sir, that the shareholders of the company that have to pay that $100,000 will sit quiet when they see the shareholders of the other company, who inflated their stock with water, .set off without paying one cent? Do you not think there will be dissatisfaction and some very hard things said about this Government if it should put such a proposition in force?

At six o'clock the House took recess.

The House resumed at eight o'clock.

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PRIVATE BILLS.

THIRD READING.


Bill No. 15, respecting the Pacific Northern and Omineca Railway Company.-Mr. , Green.


CONSIDERED IN COMMITTEE-THIRD READINGS.


Bill No. 17, to incorporate Canadian Indemnity Company.-Mr. Schaffner. Bill No. 18, respecting W. C. Edwards & Company, Limited.-Mr. Fripp.


THE BUDGET.


Consideration of the proposed motion of Sir Thomas White (Minister of Finance) for Committee of Ways and Means resumed.


LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

When the House rose at six o'clock I was pointing out that the system of taxation on industries as proposed by the Minister of Finance is uneven and unfair; that some companies will be taxed, and others will escape altogether. Under the provisions of the legislation proposed, my hon. friend does not by any means get at the general wealth of the country. Wealthy men all over the country are practically exempt from taxation, and unless my hon. friend makes some changes in his proposals, many persons will not be obliged to pay anything. Let me give you one or two instances where wealthy men will not be called upon to pay one single cent of the $30,000,000 or $35,000,000 that the minister is looking for. Some few years ago the late owner of the Canada Atlantic Railway sold that line to the Grand Trunk Raliway Company for $14,000,000 worth of 4 per cent guaranteed bonds. Four per cent of $14,000,72

000 is $560,000-and the owner of these bonds is not called upon to pay one single cent. Does the hon. Minister of Finance think that is a fair deal? Is it fair to let this man off scot free, while a man who is struggling to make an honest living with a capital bf $55,000 or $60,000 is taxed 25 per cent on everything that he earns over 7 per cent? I leave it to the justice and fairness of my hon. friend as to whether such a measure as that will appeal to the good sense and to the commonsense of the people. Many men, though willing to stand behind the Government in carrying on this war, will not like to see 25 per cent of their profits over 7 per cent go to the Government, while many huge concerns like the one I have mentioned, controlled by millionaires whose money is in real estate and bonds, are not (tailed upon to pay one cent.

I recall another instance of a gentleman in this city, walking around the streets with nothing to do, with $3,000,000 in first-class bonds which yield him a revenue of $150,000 a year. That man is not called upon to pay one dollar, while hundreds of other men in this city, who are with difficulty making their businesses go, will be called upon to pay. Surely hon. gentlemen opposite must see that such a tax cannot appeal to the country, cannot be successful, and will leave heartburnings throughout the whole Dominion of Canada, and justly.

I wish to place before 'the House the names of a few companies that will get off scot free and others with equal or smaller

profits that will have to pay large taxes

to 'the Government. I am now quoting

from the Montreal Financial Times ofFebruary 19, 1916. These are shown inthe following table: ApproximateCompany. Net profits amount of tax forBell Telephone .$ 1,650,838 one year. $ 97,710C. P. R . 35,575,109 2,681,844Canada Cement . 1,286,963 Can. Con. Rubber.. . . 1,108,845 193,465Canada Locomotive. . . . 44,501 Carriage Factories.. . . 267,230 24,807Can. Foundries . *1,000,000 216,400Dom. Bridge . 1,344,347 222,337Dom. Textile . 1,230,767 186,750Hollinger . *2,350,000 535,000Kaministiquia. . ". . . . 181,332 12,382Lake of Woods . 419,920 41,980Laurentide . 787,191 28,800Lyall Construction. . . . 137,696 Maple Leaf Milling-.. . . 875.437 131,360Montreal Cottons . . . . 337,306 Montreal Power . 2,596,743 320,186Montreal Tram . 1,185,820 243,955Nat. Breweries.. .. [DOT] . 334,000 N.S. Steel and Coal . . 1,613,063 254,515

* Approximate earnings.

Approximate

amount

Company. Net profits, of tax for

one year.

Ogilvie Flour $ 1,519,594 $ 201,150Ont. Steel Products. .. 76,745Penmans, Ltd

260,315 6,133Shawinigan

1,069,032 29,040Sherwin-Williams .. . . 384,495Smart Woods

351,658 22,023Toronto Railway.. ., .. 1,192,489 88,122Total $5,537,959

Let me compare the burdens imposed on some companies that have made about the same amount. Take the Bell Telephone Company, whose profits amount to $1,630,000 and their tax to $97,000. The Nova Scotia Company made profits of $1,613,000, just a little less than the Bell Telephone Company, and they are called upon to pay over a quarter of a million dollars, whereas the Ogilvie Milling Company makes $1,500,000 and has to pay $201,150. Then, the Canada Cement Company makes $1,286,000 and pays nothing. The Dominion Bridge Company makes $1,344,000 and pays $222,337. The Dominion Textile Company makes $1,200,000 and pays $186,000. Nothing more unfair could be devised. If the minister had tried to get a system that would tax one man heavily and let others off scot free, he could not have devised anything more efficient than this. Take the Hollinger Company which has to pay over half a million dollars for this year. For the two years the shareholders of that company will be called upon to pay up over a million dollars to this Government.

I turn now to a list of companies whose taxation I have figured out for myself, taking the figures from the Annual Financial Record Review of 1914:

Approximate

amount

Name of Company. Net profits, payable

under tax

Asbestos Corporation ..$270,932.37 Ames Holden & Mc-

Cready 351,390.10

Lake Superior Co 419,179.91

British Columbia Breweries 109,898.86

Canada Bread Co 88,689.96

Canadian General Electric 821,067.97

Cockshutt Plow Co.. .. 321,273.39

A. McDonald Co 228,073.20

Riordan Pulp Co 640,010.79

Steel Co. of Canada.. .. 214,325.07 Tuckett Tobacco Co- .. 151,773.99 Wayagamack Pulp Co... 148,980.32

Winnipeg Glass Co 884,626.89

Canada Permanent Loan. 285,815.47 Central Canada Loan . . 371,970.38

Huron & Erie 351,056.10

rMr. Turriff:]

Nothing.

Nothing.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

I do not like to interrupt my hon. friend, but his figures are wholly erroneous, wholly inaccurate.

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

If my figures are wholly inaccurate, my hon. friend had better get hold of this annual Financial Review, and see that it does not publish erroneous figures. I have taken these figures from that Review-I can turn up the page, if necessary-and the figures I have given are correct, if the Financial Review is correct.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

My hon. friend

is not applying the tax properly. In the first place, he is not taking into consideration the question of reserves; and, in the second place, he is not taking into consideration the fact that there is in the Bill a definition of paid-up stock under which, as I stated last night, and on Tuesday last, there will be no undue advantage to overcapitalized companies. If he would take these facts into consideration, his figures -would be worth listening to. ,

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

My hon. friend brings

forward a resolution, on which his Bill is to-be based, and in that resolution he does not say what he has stated to-night. In the resolution he states that it is impossible to go behind the capitalization of the companies. That is what the minister stated,

and, in order that there may be no misunderstanding about it, I will quote his own words from Hansard of February 15, pa*e 849: '

It will be observed that incorporated companies are taxed upon a higher basis than individuals and partnerships. The reason for this is-that capital in the case of joint stock companies frequently represents intangible assets or capitalized earning power or goodwill. We found it a practical impossibility to go behind the capitalization of companies and endeavour to ascertain the precise cash value of their assets as can be done in the case of individuals or partnerships. The cases of railway, public franchises, and so-called holding companies, mining and other corporations, illustrate the difficulty to which I am referring. In addition there is the further fact that shareholders have purchased their shares and receive their dividends upon the basis of issued capital stock.

If these words mean anything, they mean that the paid-up capital stock is the basis on which the companies would be taxed. I am very glad, however, to have the statement of my hon. friend the minister tonight. Since 15th February, the minister has seen a great deal of light, and he has come to realize, not from anything we have said on this side of the House, but from the influence brought to bear upon him by supporters of the Government, by industrial institutions who support hon. gentlemen opposite, the absolute unfairness, and the absolute inequality of the system of taxation proposed, one man being taxed heavily, while many others are left off absolutely free. Then there is a difference in regard to the capital in incorporated companies, and the capital in partnerships, but it is too late for me to go into that at the present time.

Another point to which I desire to call attention is, if I understood my hon. friend rightly, that he proposes to let life insurance companies off absolutely, with the exception that they have to invest in Government bonds one half of their extra assets earned during the years 1914 and 1915. I think that the ordinary life insurance company, which has put up bonds earning from 4 per cent to 45 per cent, will be only too glad to exchange these bonds and the securities they have for Government bonds which will yield 54 per cent. Is that putting a tax on life insurance P I would like to know why a difference is made between life insurance companies and accident insurance companies. It may be said that, if you tax life insurance companies, they will charge . a 'higher premium on their policies; but does that argument not apply hr the same degree to fire insurance companies? If fire insurance companies are taxed, will their

72i

policy holders not have to pay higher premiums? I would like to know on what grounds the life insurance companies are exempted, and in fact given a bonus, while the other insurance companies are to be taxed, and very heavily taxed.

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

The reason is that a tax upon life insurance companies would fall upon policy holders and their beneficiaries.

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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

A great deal would fall on the policy-holders, on the men who are paying the premiums.

Topic:   THE BUDGET.
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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

The policy-holders would suffer.

Topic:   THE BUDGET.
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LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF:

I am not very well posted on life insurance matters, but I have a couple of small policies, and therefore I am a policy-holder.

. Sir THOMAS WHITE: We do not want to tax you.

Mr. TURRIFF; Why should you let'me off, and tax the man who is paying fire insurance? That is what I am trying to get at. Why should the man who has life insurance get off scot free; why allow to get off scot free those insurance companies that have a very small amount of capital, but that have piled up millions and tens of millions of dollars, while the shareholders of fire insurance companies, marine insurance companies and accident insurance companies are to be taxed? 'It seems to me that it is giving an unfair advantage to life insurance companies as against the other insurance companies.

There are a couple of other classes of companies that my hon. friend puts in the same position as the companies 1 have mentioned-the mining and lumber companies. It seems to me to be altogether unfair to put a mining company in the same class as an industrial company or a loan company, because the mining company is using up its capital every year in taking ore out of the ground. It is always considered that unless a mining stock is paying 20 per cent the stock is not worth par, and the same argument applies to lumber companies. And yet lumber companies are put by the hon. minister in exactly the same position as commercial companies, notwithstanding the fact that every year they are digging out of their capital. For every thousand feet of lumber they take out, there is so much less standing timber out of which to make lumber. Take again the mining companies which should pay, and pay well;

my hon. friend lets them off altogether. Under the present proposition there is- no attempt whatever to tax the big nickel industry of Canada. That industry is owned outside of Canada. The Canada Copper Company in Sudbury own the largest nickel properties on the earth. They mine more nickel than any other company. There are only three concerns in the world handling nickel. We in Canada own 85 per cent of all the nickel that.has ever been discovered. The only place, outside of Sudbury, Canada, where nickel 'has been discovered is the island of New Caledonia, near Australia, and that deposit is owned by the Anglo-French Nickel Company. They control about 15 per cent of the product of the world; the other two companies own the balance, and those two companies are the Canada Copper Company and the Mond Nickel Company, an English concern who mine their ore near Sudbury, smelt it into matte, and ship the matte to England where it is refined. The Canada Copper Company is only a subsidiary of the International Nickel Company. They have at Sudbury the largest mine in the world. They are producing a huge amount of nickel, copper, gold, a certain amount of silver, and a large amount of platinum, with its great value. This is all sold by the Canada Copper Company to the International Nickel Company at a price that gives a moderate profit to the Canada Copper Company. Xhe Canada Copper Company will pay probably a Small tax to the Government in this connection, but the great big profit is made by the International Nickel * Company, that purchases this matte, takes it down to the state of New Jersey, refines it, and puts it into commerce. They have the big end of the profit, but they do not pay one single dollar of taxes to this country.

Of all mistakes that this Government have made during the past year or two this is one of the greatest. I charge this Government with being absolutely unfair to Canada; I charge this Government with standing in with the Huns, our enemies, in so far as they 'have refused to exercise their power to prevent the exportatioir of nickel to the United States. Who are the International Nickel Company? The Krupps, of Berlin, and German-Americans own and control that company. The hon. member for North Simcoe (Mr. Currie) stated the other day that Germany cannot make armour plate, and cannot make guns, without the nickel that comes from Canada. Here we

are supplying our enemies with nickel with which to make their armour plate. Canada has it in her power, and has had it in her power ever since the war began, to prevent the Germans from getting any further armour plate to build their battleships, and the Government have refused to exercise this power. What have they done to prevent our nickel going to Berlin to make guns and warships to kill our sons? Nothing, and I charge them with that dereliction of duty. But take it on the commercial side alone. The International Nickel company have 2,000 men at work in New Jersey refining our nickel. Why are they not refining it in Canada? That is something for the Government to answer. Two thousand men at work drawing 'big pay!

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CON

William Thomas White (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir THOMAS WHITE:

How long have they 'been refining nickel in New Jersey? Were they refining nickel down there four or five years ago? .

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February 25, 1916