an omission. Until now the wholesale licensed manufacturer who imported goods free could sell them free of sales tax, but where they were produced in Canada the sales tax applied. We want to make it clear that the sales tax applies also when he imports the goods.
get the sales tax on liquors that are sold and claimed to be exported but for which no landing certificates or actual proof of export can be shown. It is the recommendation of the royal commission, and I think it is quite right. We have had one case decided in our favour in the courts, although the decision may be appealed. We claim that we are entitled to sales and gallonage taxes amounting to $5,000,000 from brewers and distillers, and we want to make certain that we do not have to go into the courts to collect what we think belongs to us.
I move, Mr. Chairman, that after the word "bond" in the twentieth line the following words be inserted, "by the manufacturer thereof."
sure that I understand what the minister has in mind. I assume, in the first instance, that he does not wish to do anything to hinder the export business of Canada, and that on the other hand he wants to keep Canadian costs down so that the Canadian producer may be well equipped to meet his foreign competitor. As I understand it the position is this: Notwithstanding everything that we have been doing, the minister is still of the
Special War Revenue Act
opinion that a great deal of liquor is illegally exported, and it is thought that we should get our tax on it.
the case, what else can there be in it, because there is to be no tax if it is shown that the export is legal? The section says that this is not to be applied to cases where foreign landing certificates satisfactory to the minister are produced as proof that the goods have been landed at the place designated in the export entry. I take it that what that means is simply this, that that certificate would show illegal exportation, not only illegal exportation so far as the laws of Canada are concerned-the minister shakes his head. Well then, the idea is that the department is of the opinion that notwithstanding everything that has been done towards aiding the United States in connection with their enforcement, there is still a considerable quantity of liquor illegally entering that country from Canada. Am I right in that?
The words that have just been inserted, "by the manufacturer thereof," should clear the matter up. To be quite frank, the exportations of liquor now going out of Canada at Windsor or along the border to the United States are perfectly legal, but our contention is this, and this is the crux of it, that the manufacturers, the distillers or the brewers, are not the exporters. That is exactly the point upon which the case against Gooderham and Worts was fought out in the courts a week or two ago. We contend that the goods are sold in Canada to somebody who comes from the United States to, say, the port of Windsor; and because of the fact that the sale takes place in Canada it is subject to the sales tax. That is the whole story. We want to make absolutely certain that in future we can collect that sales tax. And why should we not? The exporters of liquor and beer and ale are now paying the excise tax of $9 a gallon, which they would not have to pay if they could prove that the goods were actually exported by them. Why should they not pay the gallonage tax and the sales tax? I see no reason why they should pay one and not the other. More than that, in many cases they collect the sales tax and do not turn it in to the government. They
collect that sales tax for the day when they may have to pay it by process of law, and then charge it against their income, thus escaping the income tax as well. Under those circumstances I do not feel that they deserve much consideration. When they make a bona fide export sale outside the country and send the goods out under the bond of a guarantee company, as we now demand, and show proper landing certificates-we are very careful that, they are genuine landing certificates-then they are exempt from this tax, as they ought to be, because it is a bona fide export sale. But with regard to sales that go across the border-and I am not trying to interfere with export trade-we do contend-and most legal men agree with us-that when that sale is made in Canada it is subject to sales tax.