June 16, 1920


, On motion of Sir Henry Drayton (Minister of Finance) the House resumed, from June 15, consideration of the proposed resolution precedent to the amendment of the Special War Revenue Act, 1915, Mr. Boivin in the Chair.


L LIB

Georges Henri Boivin (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Laurier Liberal

The CHAIRMAN:

When the House was last in committee on this resolution we had reached paragraph (d) of resolution 7, to .which an amendment had been moved, which will be found on page 3723 of Hansard.

Topic:   EXCISE TAX RESOLUTIONS CONSIDERED IN COMMITTEE OF WAYS AND MEANS.
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UNION

John Harold

Unionist

Mr. HAROLD:

Is the Minister of Finance going to add to the list of exemptions the materials and supplies that enter into the manufacture of binder twine?

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CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

As the fibre

which is used in the manufacture of 'binder twine is the important item, and as we are not adding in any way to the burdens of agriculture, I move to add to the list of exemptions after the words "heating purposes" in the amendment to paragraph (d) .of resolution 7, the words " fibre for use only in the manufacture of binder twine."

Amendment to the amendment agreed to.

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Amendment agreed to.



(e) That the provisions of this Resolution respecting a tax on sales shall he deemed to have come into force on the 11th day of May, 1920, and to have applied to all goods imported or taken out of warehouses for consumption on and after that day, and to have also applied to goods previously imported for which no entry for consumption was made before that day. . Mr. ROBB: Inasmuch as there have been some amendments to the resolutions since they were brought down, how does the Minister of Finance propose to readjust the payments that have already been made?


CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

So far as these new proposals are concerned, the whole of them will have to be straightened out in the Bill which will be brought down. We are now considering merely the principle. ,The principle will be, of course, that the resolutions shall take effect in accordance with the usual practice, when they are brought down, and similarly with the .amendments.

, Resolution agreed to.

8. That a stamp tax of two cents he imposed, levied and collected on promissory notes and hills of exchange of the value of one hundred dollars or less, and that a tax of two cents additional he imposed on every one hundred dollars or fractional part thereof in excess of one hundred dollars.

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CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

There is an

amendment to this resolution, of *which notice has already been given. It appears that credits in certain businesses evidenced by promissory notes, are renewed from day to day. In the grain business, for example, the custom is to give a demand note showing the exact amount of advances each day. The usual period of credit is three months, and if the two cents were to be charged on every hundred dollars of each note each day there would be a multiplication of the tax, although noit of credit. iSome of the elevator companies have shown that transactions often involve a balance of from five to six millions dollars at the end of the day's work, and that there may be changes resulting from sales cutting that down probably a million or a million and a half, while there may be further obligations resulting from purchases which might increase it a million or a million and a half or two millions. But the note for the whole amount is taken in each instance. It is proposed to modify that in the Bill. Then, in order properly to cover the question, it is also necessary to place a similar tax on advances made by banks hy way of overdraft. Such advances are probably the most unsatisfactory method by which the banking

business can be carried on, and it is the only way in which an advance is not evidenced, as it should be evidenced, by the signature of the debtor. Advances by way of overdraft are entirely illegal in the United States. It is not proposed here to make them so at the present time, but simply to make the credit which is obtained by the advance subject to the same two cent stamp tax as the credit given by the promissory note is subject to.

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L LIB

Jacques Bureau

Laurier Liberal

Mr. BUREAU:

Is the bank going to

charge that every evening? When they balance up their books and there is an overdraft, are they going to charge the two cents on every $100?

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CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

The full details will be given in the Bill. It is proposed that it should be on the maximum amount of the overdraft for the month so as. to avoid pyramiding.

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L LIB

Jacques Bureau

Laurier Liberal

Mr. BUREAU:

If a man has an overdraft for twenty-four hours for $15,000 he has to pay on that $15,000?

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CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

He has to pay the 2 cent tax.

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L LIB

Archibald Blake McCoig

Laurier Liberal

Mr. McCOIG:

This seems to be hitting the man who can least afford to pay. It is taxing the man who has to borrow money in his endeavour to conduct an honest business. He must necessarily have overdrafts, and as he borrows money for thirty days, sixty days, or ninety days he has to be continually paying a tax. Suppose a man puts in a number of collateral notes that he has in his own favour, he will have to pay the tax on those notes if he wants to borrow money from the bank. The bank will lend him money at ninety days or four months, and when he renews, the not he has. to pay the tax each time. He has to pay from time to time during the year and he will probably pay three or four times on the money he has borrowed. This seems to be an injustice to the man who is trying to carry on a humble business and who has to go to the bank for assistance. He is being unfairly penalized under this clause.

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L LIB

Jacques Bureau

Laurier Liberal

Mr. BUREAU:

The small business will suffer.

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CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

This is not

novel legislation at all; it is old. It is novel so far as we are concerned, because we are really only starting to tax directly; but is a very old form of taxation. The stamp tax on cheques, promissory notes, drafts, etc., is not new, and the proposal which we are now making is exactly the same, so far

JUNE 16. i020

as promissory notes and drafts are concerned, as the legislation in force in United States, and I have not heard of any real hardship resulting from it there. They apparently do not mind it, and it is a method by which revenues can be easily raised.

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L LIB

William Daum Euler

Laurier Liberal

Mr. EULER:

Is the minister certain

that it has not been abolished in the United States? I am informed it has been.

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CON

Henry Lumley Drayton (Minister of Finance and Receiver General)

Conservative (1867-1942)

Sir HENRY DRAYTON:

My information is that it is an existing tax in United States.

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L LIB

Jacques Bureau

Laurier Liberal

Mr. BUREAU:

The injustice of the process is this: If I give a note at thirty or ninety days and pay my two cents on it, I owe the bank for a definite period. But if I overdraw my account to-day $10,000 and pay the tax, an urgent transaction to-morrow may necessitate my borrowing three or four thousand dollars further, and I have to pay another tax; and there is nothing definite in regard to time so far as this borrowing is concerned. A man may overdraw sometimes for twenty-four hours or two days and he knows that he has five or ten thousand dollars on the road coming in with which to meet that overdraft; yet he has to pay his two cents per hundred. This is unfair, and I think there ought to be a definite time limit fixed in regard to overdrafts. This legislation as it is will work an injustice on the man doing a legitimate business. A man cannot get $20,000 or $30,000 at a snap of his fingers, and practically always when he wants to overdraw, he has a positive assurance of being able to meet the overdraft by money which he has coming in on the road. I do not see why a man ought to be penalized if he overdraws his account for two or three days.

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June 16, 1920