Agnes Campbell Macphail
It sounds like one.
Subtopic: DEBATE ON ANNUAL FINANCIAL STATEMENT OF MINISTER OF FINANCE
It sounds like one.
Well, probably all the
farmers down there are Liberals. What I mean to imply is this: I do believe that the
manufacturers and business men generally should cooperate with the farmers of this country, because after all if our farmers are not prosperous the wheels of our factories are not turning. I would ask hon. members to visit Essex county. I am satisfied they would find what I state to be true. We do believe in cooperation, we do believe in unity. We have heard a lot about national and racial unity. Let me make a plea for occupational or vocational unity. In the part of the country that I come from the Border Cities chamber of commerce is working in the closest cooperation with the Farm Bureau
The Budget-Mr. Gott
of Essex county. We recognize no race distinction, no distinction of creed, no distinction of vocation in Essex county; and I trust that that feeling will .pervade the entire Dominion. I believe that if we had more of the spirit of cooperation not only in this house but throughout the whole country Canada would be much better off.
In conclusion, Mr. Speaker, may I say that the budget brought down by the hon. Minister of Finance was well received in my district. I believe it was well received throughout the Dominion. May I say to him that if in the succeeding years of the life of this parliament he brings down similar budgets providing for lower and lower taxation, I do not think that hon gentlemen opposite need get ready to move over here for some time to come.
Mr. E OGLES J. GOTT (South Essex): Mr. Speaker, when the hon. member for East Essex (Mr. Odette), in the course of his speech was complaining of not having enough time, I ventured to interrupt and tell him that I did not think he would consume his full forty minutes. I did so because I know him so well-I know how he is inclined to exaggerate.
My first remark in reply to the hon. gentleman, significant though it may be, is the result of the inference that I draw from his words. I tell him that I am not a traitor to tradition, and I think his speech this afternoon is his first preparation for hangman's day.
I hope that is not to be taken literally.
That is the inference I draw from my hon. friend's speech, and at any time I can convey it to him privately, but he well knows what I mean. The budget speech of the Minister of Finance (Mr. Robb), has caused me keen disappointment, due to the fact that the government has failed to take cognizance of, or even to recognize, the most alarming and unfortunate condition that has ever faced the agricultural industry of western Ontario. Although in possession of firsthand knowledge of the deplorable and pitiable circumstances that surround the tobacco growing industry in western Ontario, the government has failed to take action. The Minister of Agriculture (Mr. Motherwell) made two personal visits to the tobacco growing section; his deputy, Dr. Grisdale, made three or more visits, and they recognized instantly the appalling situation that confronts our tobacco growers of that section, and more particularly those in the riding that I have the honour
to represent. They were privileged to meet in the city of Chatham five thousand tobacco growers clamouring for assistance. The main meeting held in the theatre was made up of nearly two thousand men, while the overflow meeting in the armouries filled the building to capacity. I do not want to charge the Minister of Agriculture with being insincere-I hold him in too high esteem and regard him as being too sincere to suggest that he and other hon. members opposite would seek to strengthen their political standing through the misfortunes of others. But I do hope that if the time ever comes during my term as a servant of the people that my success depends upon the misfortunes of others I will go down to ignominious defeat.
I will explain something later to the hon. member for East Elgin.
Mr. Speaker, there is no member for East Elgin; there is no such constituency.
I am very glad to answer any questions, but in making his interjection the hon. member did not act properly. He did not rise to make it.
Where is the hon. member for East Elgin?
Pardon me if I misname the hon. gentleman's constituency. Is Elgin correct?
No; the hon. member is not right yet. His geography is wrong; it is West Elgin.
The question is one that should not be tainted with party politics, and I am disappointed that hon. members on the government benches-
I rise to a point of
What is the point of
The hon. gentleman is reading his speech.
The question is one that
should not be tainted with party politics, and I am disappointed that hon. members on the government benches, who took such an active part in the tobacco campaign in western Ontario, did not accept the opportunity of drawing forcibly to the attention of this parliament the true condition. I say the true condition, for I believe that had these hon. gentlemen supported me, as I had hoped they would,
The Budget-Mr. Gott
*when they had an opportunity on the speech from the throne, such a strong plea could have been presented- as would have compelled the hon. the Minister of Finance to recognize our just recommendations.
I ask the hon. member for Kent (Mr. Rutherford); I ask the hon. member for West Elgin (Mr. Hepburn); I ask the hon. member for Norfolk-Elgin (Mr. Taylor); and I ask the hon. member for East Essex (Mr. Odette): How can they justify to their constituents, for whom their hearts bled but two short months ago-how can they justify their silence in this parliament? Was there nothing that the government could do? Was there nothing that the government should do? Apparently my presentation of the situation did not meet with the approval of these hon. gentlemen, and I realized that being in the opposition my effort was wasted unless I could1 stir the representatives of the tobacco growing constituencies either to support or to oppose my recommendations. But not a word. They were loud and outspoken on the hustings, but in parliament, where consideration could be given and remedies applied, they at once became disinterested representatives.
Now let me ask these hon. gentlemen whether they approve or disapprove of the recommendations that I made to the government? Or were they interested enough in the problem to read my remarks? Let me ask them to give an expression one way or the other on the three recommendations that I made:
1. A more extensive cooperative marketing system;
2. A reduction of the excise tax on cigars and cigarettes;
3. A higher duty on flue cured and other tobacco entering Canada from foreign countries.
These are the three major factors that enter into the solution of our tobacco problem. I asked for these conscientiously believing that each and every one was paramount to the solution of our troubles.
The excise on cigarettes is enormous-so excessive that we are sending hundreds of thousands of dollars annually to turn the wheels of industry in a foreign country, and bootlegging in cigarettes is flourishing. The manufacturer loses, the grower loses, the labourer loses, and our money goes out of the country never to return; and our laws force the average cigarette smoker at the border to hold our customs laws in contempt. Newspapers have contained articles from time to time on the desire of our Canadian authorities to cooperate with the United States government- through certain exports-which would facilitate
better law enforcement in the United States. Let me say to our authorities that we can obtain something in return for this extension if we ask it. We could ask that concessions be extended on an equal basis, and thereby we might be able to ascertain who the Canadians are that make such huge purchases of cigarettes in the city of Detroit and elsewhere. We might also be able to obtain from the large department stores information as to who are their best Canadian customers, and the extent of their purchases. Department stores in Detroit have dressing rooms, not especially for Canadians, but practically for them, in which Canadian women, and prominent Canadian women too, change or conceal their newly purchased garments in preparation for the contravention of the Canadian Customs laws, which follows Canadian purchases in American cities.
Getting back to the "bubble" budget-a budget that seems to have had Nero as the fiddler while Rome burned, a budget wherein I fail to see a provision that is of material assistance to any section of Canada-I would ask the Minister of Finance whether he is in any sense governed by the recommendations of the tariff board and if so, to what extent? Did the tariff board recommend a reduction in excise on cigars or cigarettes? Did the tariff board recommend a seasonal tariff on fruits and vegetables? If so, why was the minister not governed by the recommendation of the board? The board had volumes of evidence to substantiate the institution of a reasonable and seasonal tariff on fruits and vegetables. If the board did not make the recommendation, then I say that in view of the solicitation they had, and the evidence that was placed before them, they are an expensive and useless instrument and should be discharged. If the board did not recommend a reduction in excise on cigars and cigarettes, then, Mr. Speaker, I desire to repeat that, in view of the representations they had, they are useless and expensive, and harmful to some of the better interests of our great Dominion.
As regards tobacco products, I quote from the Canada Year Book:
Re: Tobacco Products 1901
Per capita consumption of tobacco: 2.375 pounds.
Per capita taxation on tobacco: $0.86.4.
Taxation per pound per capita: $0.36.4.
Per capita consumption of tobacco: 3.468 pounds.
Per capita taxation on tobacco: $3.11.8.
Taxation per pound per capita: $0.90.2.
The Budget-Mr Gott
Increase, 1901 to 1926 in tobacco taxation per pound per capita: $0.53.8, which is 148 per cent increase.
We therefore find:
Tax increase on liquors, per gallon per capita: 53 per cent.
Tax increase on tobacco, per pound per capita: 148 per cent.
Hence the consumer of tobacco has been severely penalized, and the time has come when, if the tobacco industry is to survive, the government must give some relief in the form of reduced taxation; otherwise the government must admit that they care but little for one of the largest industries in the Dominion of Canada. I will submit statistics to prove the size of the manufacturing section of the industry, and try to impress upon the Finance minister, if such a thing is possible, the handicap under which they operate as regards imposts levied and maintained by our Dominion government, from which the Finance minister has no desire to grant them any relief at the most critical time in their existence.
A spirit of optimism apparently prevailed in the fall of 1927, and the Canadian Cigar and Tobacco Journal, published in Toronto, contained in its October number the glaring headlines:
Cigar Industry Gains Receptive Hearing in Ottawa and Hopes Run High.
The only fault I find with that headline is that the word "receptive" probably should have been "deceptive." The article is as follows:
Hopes now are higher than at any time in recent years for a reduction in cigar taxation which will be sufficiently substantial to reduce prices and increase consumption.
Taking their case for the first time to the new' tariff board on Tuesday, September 20, the cigar manufacturers laid before that body a brief which quite evidently won its sympathy. It was in some respects the most elaborate brief which they have yet prepared and possibly the most elaborate the new board has received. Statistics obtained from a variety of sources have been compiled by Mr. C. S. Richardson into a convincing statement of the cigar manufacturers' case; short, pointed, logical yet complete in every respect.
The brief itself and the drafts which accompanied it are reproduced just as presented on the following five pages of this issue. One little detail which indicated the care taken to make their case impressive is the fact that the applicants W'ent to the expense of having the brief set up in type and printed, giving an ample and readable supply, not only for members and officials of the board, but for members of the customs and finance staffs as well as for press representatives.
So complete was the brief that practically nothing in the way of supplementary oral evidence was needed. A general discussion followed which had more to do with ways and means that w'ith information.
This is too lengthy to quote further.
Canada's cigar industry is back to a production basis of a quarter century ago; factories are reduced in number by sixty per cent; trade is staggering under economic burdens which react adversely to the government and its revenue. This, in brief, is a picture of present day conditions in the cigar business in Canada. By itself, the cigar industry is not a dying one, yet it is being slowly strangled by conditions beyond its control conditions which had their being in 1914 when war time levies were imposed on it for war taxation purposes, levies which have been added to and continued to the present. The proper readjustment of these duties will afford a great measure of relief to the entire industry from grower to manufacturer, without seriously lessening the revenue derived by the government. The schedule proposed by the manufacturers, while not drastic, affords some measure of relief and should go a long way in the rehabilitation of the industry.
A word picture of present day conditions has been presented, and a relief measure likewise has been brought forward for consideration. High lights of the dual presentation tell their own story and bring their own answer. On one hand we have "more than 42 per cent reduction since war tax imposed." There were 253 cigar factories in 1913 and 106 in 1927. and Canadians are smoking only one-quarter as many cigars per capita as Americans. Scores of old cigar firms have been eliminated from business and government revenues seriously curtailed. On the other side, we find United States duties cut in half in 1926, with 500,000,000 increase in production in the first year of the new United States taxes. There was a 50 per cent cut in American duties with a reduction of only 11 per cent in revenue, and Canadian leaf growers are benefiting by the lower taxes.
This is a precedent to support the claim of the cigar manufacturers for lower taxes, and there are records to substantiate their contentions. The United States, like Canada, sought to bolster revenue returns by increasing its duty on cigars, but notwithstanding the comparatively favourable condition of the trade in the United States, the war time levies throttled not only the industry but actually the government revenue. The United States gave relief by a 50 per cent cut in 1926, and to-day the big bulk of the cigars consumed in the United States are taxed at a lower rate per thousand than they were fifteen years ago.
* With this as a precedent, Mr. Speaker, and with uncontrovertible figures of the Inland Revenue department showing a drop from
The Budget-Mr. Gott
294,772,000 in 1913 to 173,912,000 in 1927 to back their claim they have confidently placed before the tariff board a long list of requests, all of which are reasonable. I am unable to put them on Hansard; I have not time to read into the record, but they are contained in the brief, given to that wonderful body, the tariff board.
Since the opening of the present century the cigar production of Canada has shown a tremendous fluctuation having gone from
141.000. 000 in 1901 to the high level of
294.000. 000 and back to 166,000,000. The production has been:
In 1914, immediately following the entry of Canada into the world war, the first increase in duties was imposed. It was a $1 increase on the previous tax of $2 per thousand. For three years that remained, but in 1917 the duty was doubled to $6 per thousand. This, too, was a direct war measure, specified as such and imposed as such. In the budget of 1922 the excise duty was reduced again to $3 per thousand, but the surcharges of excise tax now in force were
Merchandise cost of goods:
Imported raw leaf
Domestic raw leaf
All other tobacco
Total raw tobacco
Total merchandise cost of goods
Total manufacturing costs [Mr. Gott.l
then imposed. Now everything but the five cent cigars-those which sell to the trade under $40 per thousand-pays a tax even higher than before on account of the sales tax provision, which has been levied in its varied amounts against the duty-paid price of the cigars.
That wonderful responsibility-dodger, the tariff board, also heard the request of the cigarette manufacturers for a decrease in taxes, and a decrease in taxation is the only answer to the smuggling of American cigarettes. It is a question of whether Canada wants to help its retailers earn legitimate profits or whether it prefers to make law breakers out of peaceful citizens. It is certainly doing the latter; thousands of Canadian women as well as men, girls as well as boys, have deliberately defrauded our customs department of duties on smuggled cigarettes. It is being done every day, at every port, and without very much inconvenience to anyone except the Canadian retailer. He is making hardly any money on Canadian cigarettes, and he is losing money on the smuggled United States product.
Canada's merchant marine competes with steamers of other countries on a price basis, and every effort is made to bring down the price in order to get the business. The same principle should be applied in all departments; we should not force on one department the burdens and inefficiency of others. But that will be the state of affairs so long as taxation forces prices in a home country to be so high above the prices of another country that the cigarettes of the latter are preferred, and citizens will wilfully make lawbreakers of themselves in order to obtain them.
Reports of the Dominion Bureau of Statistics show that in 1923 there were 148 factories in Canada employing 8,700 people manufacturing tobacco, the total value of the output being $59,840,010. This represents the total costs of operating the 148 factories reporting:
The Budget-Mr. Gott Wraps, containers, etc.: Lead and tinfoil Cigarette paper, cigar bands Cigar boxes Shipping cases, etc Boxes, cartons, wraps, labels All other materials Total wraps, labels and containers Customs and excise: Customs on imported leaf Excise on domestic leaf Excise on manufactured Excise on smoking tobacco Excise on chewing and snuff Excise on cigars Excise on cigarettes Total customs and excise 276,775 172,854 540,311 319,089 766.358 103,387 3,178,774 6.208,399 31,181 322,954 2,591,017 1,447.312 915^116 13,884,488 25,400,467 Total cost of manufactured tobacco..
The first item in the last group, duty on imported leaf, amounting to $6,208,399, could be eliminated by a higher tariff. There would then be no importation, and our Canadian growers would produce the leaf.