May 30, 1922

EDITION


The Budget-Mr. Lewis



very seriously. Now, in regard to the cigars which were valued at $14,102,399, how much do you think we got in the shape of duty? Just a litle over one million dollars; the actual amount was $1,085,866.87. Now, Sir, I am not taking any exception to this, I think that is a duty for revenue purposes only, and the minister is quite justified in imposing it; hut I do not believe in the discrimination, that is all there is about it, and I will give you reasons for my belief. In my hand I now hold a cigar, and the value of that cigar is 20 cents. An. hon. MEMBER: I will take it.


PRO

Arthur John Lewis

Progressive

Mr. LEWIS:

My hon. friend can take it if he likes; he probably smokes this kind of cigar. But this is a 20-cent cigar, and it costs $200 per thousand, and there is an " enormous " tax upon it of $10 per thousand. What does that mean? It means that when I buy this cigar I pay a duty of one cent. Very good. Now, here is a cigarette which costs 10 cents a package. What do I pay in duty on that? On cigarettes there is a duty ranging approximately from 90 cents to $1.10; but on the cigar the duty is less than 5 cents. Now, Sir, it has been argued by certain hon. members who spoke on the Government side that taxation was being brought in which would be levied on the rich man, who was able to pay, and removed from the poor man. Who are the men who can smoke cigars selling for 20 cents or higher? They are the men who are to be found in the Chateau Laurier, the Ritz Carleton, the Fort Garry or other hotels of like character. When these men buy a cigar for 20 cents they only pay a duty of one cent, whereas when I buy twenty cents worth of cigarettes I pay in duty 22 cents. If the Finance Minister really wants to bring in a tariff for revenue only let him remove this discrimination. I am not complaining about the duty on cigarettes, I am quite willing to pay duty of one cent on every cigarette I smoke; but I do say that the man who smokes a 20-cent cigar should also pay an equivalent rate of duty. If the Minister of Finance will remove this discrimination and put smokers on an equal footing in this regard I have not the least doubt but that he will increase his revenue from this source to $12,000,000 and that allows for the 10 per cent decrease in revenue which he anticipates as a result of the increased duty on cigarettes.

Now, I want to make a comparison with the duties levied on cigarettes and cigars

CMr. Lewis.]

in the United States. Over there, if I buy one dollar's worth of cigarettes I pay an excise duty of 71 per cent; if I buy one dollar's worth of cigars I pay a duty of 31 per cent. In Canada, on the other hand when I purchase a dollar's worth of cigarettes I am subjected to a duty of from 90 to 110 per cent; but when I buy a dollar's worth of cigars the duty only amounts to five cents. Now, I claim. Sir, that the men who smoke these cigars are just as well able to contribute towards the Dominion tax for revenue purposes as the ordinary individual-or the rich man for that matter-who smokes a cigarette. I commend the removal of this discrimination to the Minister of Finance; and if he only acts upon this suggestion he will increase his revenue by at least $12,000,000.

Now as to the matter of cars. Certain hon. members opposite have argued that a car was not a luxury. Well, a Ford car may not be a luxury; but it does seem to me that in the case of cars of a value which runs all the way up from $2,000 to $6,000 an excise tax is justifiable, but the tax should be graduated according to value. In the case of the cars of higher value, which are undoubtedly a luxury, a larger tax should be required in the interests of the revenue. In this way a tariff for revenue would operate beneficially.

I have carefully studied the income tax imposed in this country and compared it with the tax collected in other countries. I must admit that I am favourably disposed towards it because it exceeds the tax in vogue in a great many other countries. At the same time I want to say this: The man who enjoys an income of $10,000 up to $60,000 is almost missed. After the income gets to $60,000 the tax increases by leaps and bounds, until it is tremendous when it applies to incomes of a million. Very few people, however, receive that amount of income; and therefore the heavy tax applies to comparatively few. On the other hand there are thousands of our citizens with incomes between $10,000 and $60,000, and that is where the Finance Minister should apply his income tax and make hay while the sun shines. He can begin at an even earlier stage if he likes. I am quite willing to pay my share of the country's burdens; as long as I help to get Canada out of debt that is all I care about at the present time.

Let me say a word or two about the luxury tax. That tax was repealed some time ago, and why? Because from the very first it Was made obnoxious; it was

The Budget-Mr. Manion

obnoxious to the women folk and it was obnoxious to the men folk. When you went into a store and bought certain commodities which were considered luxuries, the shopman told you the price and to it he added the luxury tax. That was a thing that stared people in the face all the time and caused a great deal of bother. Politics intervened, I understand, and the thing was removed. Now, Sir, the people who buy luxuries ought to be taxed. If they are able to buy a $300 fur coat, or similar costly garments, I say they have a right to be taxed. There is no reason why the luxury tax should not be collected in the same way as the sales tax. In the case of the latter we do not know what we are paying. We go into a shop to buy a certain commodity and they tell us the price. We have a sort of unconscious feeling at the back of our heads that we are paying a tax, but we do not know how much. It should be the same with the luxury tax; it can be reimposed, I believe, with a great deal of profit.

In conclusion, let me say this: I understand that last year the revenue on imports from Great Britain realized $18,741,531, the value of those imports being $117,134,570. From the United States we imported goods to the value of $516,105,107 upon which duty to the amount of $72,254,714 was paid. Now there, I think, was a splendid opportunity for the minister to have put into effect his ideas with respect to freer trade. When I look at the average ad valorem duty going with the preferential tariff, I find it is 16.2 per cent from Great Britain and other places. When it comes in the general tariff from .United States it is 14 per cent. I think it would have been a master stroke of business if the minister had so reduced all these tariffs that it would have brought it down to an average all round of 10 per cent on the general and preferential tariff. As far as our reckoning goes, it would have decreased our revenue to a certain extent, but that could have been easily overcome by the increased revenue on cigars, luxury taxes, a more specific graduated tax on cars, and the income tax. There is no reason why we could not reduce these, because, I think, I have amply shown that, as far as our people are Concerned, the reduction in the taxation would have increased the consumption and given them the opportunity to buy, whereas, on the other hand, the people who delight in luxuries, and have the money to smoke expensive cigars and enjoy other things

144J

would have still retained that privilege, and they would have more than made up for the reduction of revenue by the decrease of tariff. I hope that before the hon. Minister of Finance (Mr. Fielding) removes the mantle from his shoulder, he will see the great ideal of his life consummated, reciprocity with United States, a 50 per cent reduction with Great Britain, and freer trade all round, with its accumulated prosperity and peace to this Dominion.

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CON

Robert James Manion

Conservative (1867-1942)

Hon. R. J. MANION (Fort William and Rainy River) :

Mr. Speaker, I can very

sincerely join in the congratulations to my hon. friend, the Minister of Finance, (Mr. Fielding) on the fact that he has had the good health and strength to deliver, I think, his sixteenth budget in this House. I am sure that, irrespective of party affiliation, everybody will welcome the fact that he has yet health and strength and wish him a continuation of it. At the same time, I regret that I cannot congratulate him quite so sincerely upon his budget as upon his health.

I should like to deal with the statements which he made regarding the loan made by the present Government. He spoke of it as as a one-hundred-million-dollar loan made recently in New York and compared it with some of the loans made by the former government. I have nothing to say against the fact that recently, in New York city, the Minister of Finance succeeded in selling bonds to the value of one hundred million at 5 per cent, and that the bond issue was taken up in a few hours. That is all to the good, but I notice in the press that the same day on which my hon. friend succeeded in selling that loan, New Zealand, a country of a population of about one-seventh or one-eighth of the population of Canada, and with a debt three or four times as much per capita, floated a $25,000,000, 5 per cent loan, in London, and it was taken up in a few hours. I have no criticism to offer, except that I believe both loans were floated by reason of the fact that the money market has eased down throughout the world.

I do not wish to take up time discussing the Liberal or Progressive platforms and pointing out the discrepancies between them and the present budget. It is sufficient to say, as everybody in the House knows, that in no shape, manner, or form does the present budget carry out either the Liberal or the Progressive platform.

There is one question with which I wish to deal for a moment, and I deal with it

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PRO

Edward Joseph Garland

Progressive

Mr. GARLAND (Bow River) :

If the statement has been made in this House that $500,000 is the amount of relief received under the customs tariff, why does my hon. friend raise it to $1,000,000?

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

I like the Government opposite, and I wish to give them the benefit of the doubt. Let us take it at $1,000,000, so that I cannot be criticised for underestimating the amount. As my right hon. friend (Mr. Meighen) beside me suggests, that takes in everything. But, supposing that relief amounting to $1,000,000 has been given to the farmers of this country, an amount of $35,000,000 has been added in taxation. Supposing the population of the prairie provinces amounts, as it does, to about 2,000,000, that is about one-quarter of the people of this country. Thus the Minister of Finance has added to the expenses of the people of the prairie provinces something like eight, or nine or ten million dollars for the million dollars which he has taken off the shoulders of the people of the country in general. Therefor, if there is anything in this budget that the farmers have any reason to cheer about, I for one, fail to see it.

In this budget there is no sign except one of free trade. There is, by virtue of the exchange situation, free trade with Germany. I am not a flag waver; I am not a German hater; and I am not one of those who believe in stirring up hatreds amongst nations; but at the same time, if I have any favours to give, I prefer to

give them to my friends. On an occasion like this, I would prefer to favour the people who fought with us, the British, Americans, French, Italians, or some other nations which fought with us.

Just to show conditions that exist in Germany at the present time, let me read three brief extracts from literature which I have read recently, and such instances can be multiplied indefinitely. Mr. J. M. Keynes, a short time ago, wrote a book called "A Revision of the Treaty", and in that book he pointed out that up to the end of 1920, Germany was supposed to send coal to the Allies at the rate of about two million tons per month, and upon this the Allies were to pay a small amount towards the cost of production, this amount to be in proportion to the cost of coal production in England and France. But, due to exchange, this small amount not only paid Germany for the production of the coal, but gave her a good profit upon it. That illustrates the condition of exchange at the present time in Germany.

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PRO

Robert Forke

Progressive

Mr. FORKE:

Is Mr. J. M. Keynes not, at the present time, the foremost advocate of trading with the German people?

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

That has nothing whatever to do with my argument. I am not discussing him; 1 am giving this quotation from his remarks as a quotation on the exchange situation between Germany and other countries. I do not care what he advocates. He might be the Angel Gabriel or the reverse; that would not matter at all as regards my argument. In an article in the English Review for October, 1921, Mr. J. Austin Harrison, an Englishman who is not advocating trade with Germany, says:

Germany is doing a brisk trade, is industrially prosperous, has few unemployed and has a growing export which, to the consternation of the Allies, threatens to grow more real and valuable as the depreciation in the value of Germany's currency increases. This will still further close British markets, increase unemployment, because Britain is forced to buy food at a great loss to herself and cannot compete in Europe with countries [whose currency is depreciated.

The final quotation that I will give is from the Literary Digest for November 26, 1921, just six months ago. It says:

Returning travellers report Germany humming with industry, her workers well paid and well clothed and fed, with taxes the lowest in Europe and a promising export trade stimulated by her cheap money which permits her to under-bid England, France and America on foreign orders. Thus the cheap mark helps Germany and hits everyone else.

The Budget-Mr. Manion

That shows the condition of trade in Germany. It shows that Germany requires no favours; and yet, by virtue of the fact that the Minister of Finance has removed restrictions which have existed and which he says are not perfect-I admit probably they are not-he has, on account of the low value of the mark, virtually given free trade to Germany. The restrictions that existed on the foreign exchange did not apply to the French franc or to the British pound, because they had never decreased to a value of 50 per cent. I know the Minister of Finance had a difficult task to perform in making his budget ; but at any rate, to my mind, he should not have 4 p.m. removed those restrictions without in some manner attempting to put the Canadian producer on a par with the German producer. The Americans live in a country which is one of the richest and one of the most highly developed industrial countries jn the world; but they have found it necessary-or at all events they have performed the act-to put restrictions upon German trade. I have a synopsis of some acts which were brought in recently, one in March, 1922, only two months ago, with that purpose in view. This is a synopsis of what they have done in that regard:

If the President, upon investigation of the differences in conditions of competition in trade in the markets of the United States of articles wholly or in part the growth or product of the United States, and of like or similar articles wholly or in part the growth or product of competing foreign countries, shall find it thereby shown that an industry in the United States is being or is likely to be materially injured by reason of the importation into the United States of foreign merchandise, that in such cases and upon the proclamation by the President becoming effective, the advalorum duty, or duty based in whole or in part upon the value of the imported article in the country of exportation, shall thereafter be based upon the American selling price.

Further down in the same act, a regulation is given which permits the President to exclude any merchandise from the United States where extreme unfair competition exists, or he may assess such additional duties as he thinks fit.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

Will my hon. friend

add that that is not the law of the United States to-day, and that it may never become the law of the United States?

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

My hon. friend may be correct, and I should not like to cross swords with him on that point; but I am informed that that is the law in the United States at the present time.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

My hon. friend, I am

sure, is mistaken. I think it is part of the legislation which has been proposed, but which has not yet been adopted. That is my recollection.

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

I will accept the statement of the hon. gentleman. I do not know whether that is correct or not; but I have no doubt that he is as sincere in his statement as I am in mine. But supposing that this is proposed legislation, it bears out my argument just the same; it shows that the American people understand the necessity of bringing down legislation such as this.

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LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING:

That does not deal

with the question of depreciated currency, but with the question of American valuation, which is a different question.

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

That is true, but any

unfair competition on the part of foreign countries can be dealt with under that law. Germany is not mentioned at all; but I understand that Germany is aimed at and this legislation would apply to Germany just as to any other country. Before I go further, I had better say that I do not and would not for one moment think of implying that my hon. friend was any more pro-German than I am. Such a thought never entered my he^d, and I do not wish any misunderstanding in that regard. My hon. friend is as good a patriotic Canadian as I am, and, perhaps, better. I am simply saying that I think he made a mistake in permitting such restrictions to be removed. As I said before, if we have favours to give, we should not give them to the men who fought us recently in the war, to the men who invaded France and who took advantage of France as the Germans did; we should give them to our own friends. What is the use of barring out by our immigration law as it does, mechanics and artisans of other countries, if W3 permit their goods to enter Canada without any restrictions and to compete with goods of Canadian artisans?

I know some of my friends to my left will say that these are cheap goods, and that to remove restrictions is in accordance with their ideas. "We want cheap goods " will be the cry of a great many people. Well, Mr. Speaker, I do not agree that cheapness alone should be the absolute desire of any nation. I consider that it is much more important to have our people employed in earning good wages

22G5

The Budget-Mr. Manion

than it is to merely ensure them cheap goods. For example, supposing to-day you could buy a suit of clothes or a pair of boots for a shilling, those cheap clothes and boots would be of no use to the army of returned men who are marching to Ottawa, and who were mentioned in the question which my hon. friend from North Toronto (Mr. Church) put to the Government this afternoon. Cheapness is not what those men want; they want employment. And if men are employed in making dear goods, it is better for them than that they should be idle although goods are cheap. That is my attitude upon the question. The real test of a country's social and economic standing is the average wages earned by its working people, not the cheapness of its goods. One can go to China, or India, or southern Italy, and get cheap goods, but I do not think we want reproduced in this country the conditions that obtain in those countries.

It is true that this tariff may be made to suit the names that have been given to it at various times. I notice that the last speaker (Mr. Lewis) used one of the names which were applied to the tariff in the last election. For example, my hon. friend the Prime Minister (Mr. Mackenzie King) used various expressions throughout the country, his favorite expression being " a tariff for revenue "-repeated to-day by my hon. friend from Swift Current. But what is a tariff for revenue, anyhow? My hon. friend from Marquette (Mr. Crerar) has on a number of occasions this session spoken of a tariff for revenue. I asked him once or twice to explain what he meant, but so far he has not given an explanation which I think is correct. A tariff for revenue is a tariff such as England has, or had, under free trade. Under a tariff for revenue you may have, first a tariff on luxuries-you may have that under any system. Secondly, you have a tariff upon non-competing articles, that is, upon articles which are not manufactured or produced in the country, and therefore not competing with those imported. Thirdly, you may have a tariff upon goods which are produced in the country, but you must then have a corresponding or equivalent excise tax to take away the protectionist feature. That is a tariff for revenue; in other words, a tariff under free trade system, a non-protective tariff. But that is not the way my hon. friend the Prime Minister used the term throughout the

country during the election. He spoke of a tariff for revenue-to attract votes 1 presume-implying thereby that he was in favour of bringing in something different in the way of a tariff. As one of my friends beside me remarks, although the Prime Minister spoke in that way, he was not in favour of anything of the sort.

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LIB

William F. Carroll

Liberal

Mr. CARROLL:

Will my hon. friend permit me a question? Does that quite exhaust my hon. friend's knowledge of a tariff for revenue purposes?

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

It may exhaust my hon. friend's knowledge, but I do not think it exhausts mine. I do not quite know what my hon. friend is aiming at. Perhaps he will enlighten the House with some of his brilliant knowledge when he takes part in this debate.

The Prime Minister also used to speak of " a tariff for producers and consumers"; that was another of his favorite phrases during the campaign. I think he is the only member of the Government who used that phrase. I know the Minister of Finance (Mr. Fielding) never used that or similar phrases, even though he does laugh in his sleeve at the present time at the idea of a tariff for producers and consumers. Every one knows that producer^ and consumers are the same people. We are all producers and consumers in this country, with the exception of those unfortunates confined in our asylums and gaols. Perhaps they, and children, do not come within the description, but outside of them every man and woman in this country is a producer and a consumer. Therefore, I say that this budget may have been made with the thought of trying to suit it to some of those titles, but it is certainly not a free trade budget, and it is certainly not made with any thought of its appealing to the farmers-or rather the thought is there, but the budget contains nothing that will commend it to them.

In my opinion there is no possibility of our ever becoming a free trade country. I do not believe it is possible to have free trade here. The free trade cry, it seems to me, is entirely sectional, proceeding from certain interests in the Prairie provinces who are thinking only from their own standpoint-and quite rightly perhaps-believing that it will lower their cost of living, but they are not worrying if free trade injures our industrial sections. The demand for a compulsory wheat board is another sectional cry, for such a board

The Budget-Mr. Manion

would put the grain trade out of business. I am not saying whether a compulsory wheat hoard is good or bad; that matter will come up for discussion later. The demand for a continuation of the Crowsnest Pass agreement is another sectional cry along the same lines, that is, to benefit one section of the people possibly at the expense of the rest. The objection by the province of Quebec to the building of the St. Lawrence canal is also sectional. My hon. friend the Prime Minister mentioned yesterday that the Government are not going to take up this question with the American government at the present time. In fact, I take it that every piece of legislation will naturally appeal more to one section of the country than to another; but some of these measures-and free trade to my mind is one of them-appeal only to one section and would be ruinous to all other sections of this country. There is this to be pointed out, that it does not matter much what the Government does apparently m response to the demands of my hon. friends from the West, if we may judge with how little they are satisfied on the tariff question. In view of this satisfaction I presume there -is no necessity for the Government to worry what their views are on the Wheat Board and the Crowsnest Pass agreement.

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UFA

Alfred Speakman

United Farmers of Alberta

Mr. SPEAKMAN:

My hon. friend has referred several times to the cheers with which the members in this corner have received the budget and their satisfaction with it. He has even ventured to prognosticate how we of the Progressive party intend to vote. I wonder just how much knowledge he has of our intentions, and where he got his knowledge?

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CON

Robert James Manion

Conservative (1867-1942)

Mr. MANION:

The only knowledge I could have, Mr. Speaker, is derived from the speeches that have been made by hon. members of the Progressive party. I did not say anything about their cheering the budget; my hon. friend is putting those words in my mouth. What I implied was that from the speeches which had been made by hon. members of the Progressive party no one could draw the conclusion that any of them have any intention of voting against the Government on this budget. That is what I said.

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?

An Hon. MEMBER:

Hear, hear.

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May 30, 1922