May 17, 1932

LIB

James Malcolm

Liberal

Mr. MALCOLM:

I think I can explain the matter in a way to satisfy the hon. member for South Perth. A long distance call may be of any distance, provided the subscriber in his contract has the guarantee that he may telephone in a given district without a -long distance charge. The long distance charge, as popularly interpreted by telephone companies, is a charge for phone services beyond the terms of contracts.

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LIB
LIB

James Malcolm

Liberal

Mr. MALCOLM:

The hon. member for Southeast Grey was referring to -rural telephone companies in Ontario. To illustrate, the Bruce telephone system allows its subscribers to talk from Kincardine to Paisley and Port Elgin without any extra charge. Calls even of that distance are mot treated as long distance calls. But when we cross into the county of Huron o-r switch o-n>

to the Bell Telephone Company lines there is a switching -charge of five cents. The hon. member for Southeast Grey wishes to kn-ow whether the switching charge from the rural-'telephone system to the Bell, which gives the privilege of telephoning within a town, could be treated as a long distance

Special War Revenue Act

charge. * If the minister would repeat what he said to me I believe he would satisfy the bon. member for Southeast Grey. The minister told me that so far as he was concerned the switching charge was not to be treated as a long distance charge, and that no tax would be imposed thereon,.

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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

That is as I understand it.

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LIB

William Horace Taylor

Liberal

Mr. TAYLOR:

In the county in which I live the local telephone company have some three or four centrals. There is a rental for the use of the telephone. To call from one central to another costs five cents, or to call the county town would cost fifteen cents. Would that be considered as a long distance call over a local line?

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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

I am inclined to think so.

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Amendment agreed to. Paragraph agreed to. Paragraphs 3 to 5 inclusive agreed to. 6. (i) That the rate of consumption or sales tax as imposed by section eighty-six of the said act, as amended by section eleven of chapter 54 of the statutes of 1931, be increased to six per cent. (ii) That the following words be removed from the list of articles exempt from the consumption or sales tax set out in schedule III to the said act, as enacted by chapter 54 of the statutes of 1931, that is to say; "Bakers' cake and pies, not to include biscuits;" "and substitutes therefor" in line seven of the said schedule; "lard compound and similar substances, made from animal or vegetable stearine or oils;" "materials for use solely in the manufacture of any substitute for butter or lard;" "extract of rennet;" "ice cream;" "usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax;" "materials to be used exclusively in the manufacture of usual coverings to be used for covering goods not subject to the consumption or sales tax." Also under the heading "Goods Enumerated in Customs Tariff Items;" the following figures and words, namely:- "45. Milk foods, n.o.p.; prepared cereal foods, in packages not exceeding twenty-five pounds weight each;" "46. Prepared cereal foods, n.o.p;" And that the word "lard" where it first appears in line eight of the said schedule be struck out and the words "lard, when produced in Canada" be substituted. (iii) That the following words be inserted in the said schedule: "All articles manufactured or produced by the labour of the blind in institutions established for their care or under the control or direction of such institutions." (iv) That the following words be removed from the list of articles exempt to the extent of fifty per cent of the consumption or sales tax set out in schedule IV to the said act, as enacted by chapter 54 of the statutes of 1931, that is to say:- "Biscuits of all kinds."


LIB

William Duff

Liberal

Mr. DUFF:

Mr. Chairman, I should like to discuss in oommittee one or two matters contained in paragraph 6 of this resolution. This particular paragraph refers to the sales tax, and I notice that it has been increased from four per cent to six per oent. Two years ago the sales tax was only one per oent, and I can remember our Conservative friends in. the session of 1930 objected very strongly to the fact that the Liberal government and the Minister of Finance of that day had not done away with the sales tax altogether. They called it a poor man's tax. In spite of their arguments in 1930, the first year they were in power they increased the sales tax to four per cent. That did not satisfy them, and this year they make a further increase of fifty per cent, bringing the tax up to six per cent.

While I object very strongly to this tax in its entirety, there are one or two matters to which I take particular exception. Previous to last year an item of common consumption was on the exempted list. I refer to salt, which is used in the maritime provinces, Quebec, probably in the provinces adjoining the great lakes, and also British Columbia, for the cure of all kinds of fish. A particular brand of salt imported from foreign countries is used in this connection. As I said a minute ago, up until last year that salt was on the free list, but for some reason-and I think I am correct when I say that the then Minister of Finance merely slipped up, because I cannot understand why he would want to impose a sales tax on salt used in Canadian fisheries -the tax was put on. This salt is a raw material, and is used to cure a commodity of which 99.99 per cent is afterwards exported.

On page 25 of the Special War Revenue Act for 1931, which I now hold in my hand, the following words appear among the exemptions: "Salt, when manufactured or produced in Canada." The words, "when manufactured or produced in Canada" were added last year, and I cannot understand why the addition was made, especially in view of the fact that there is no salt produced in Canada which could be used to properly cure herring, mackerel and a great many other fish.

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CON

Robert Knowlton Smith

Conservative (1867-1942)

Mr. SMITH (Cumberland):

What about

Malagash salt?

Mr. DUFF; Malagash salt is all right for cerfcarn purposes. I am not saying a word against it, but the fact is that Malagash salt comes out of the earth, and there are certain strata in it, and when the salt is used in the curing of salt fish it leaves a scum, due to the fact that there must be earth mixed with the salt. Moreover, when the fish is cured

3026 COMMONS

Special War Revenue Act

and dried, the face of the article shows a dark colour. I think the people who produce the salt to which my hon. friend refers know as well as I do that my statements are correct. I have discussed the matter with Mr. Chambers, who is connected with the production of that commodity; my hon. friend is acquainted with him. I have made certain tests in the hope of using the Malagash salt, but have always found that this earthy scum would appear on the fish, and that consequently it was not possible to produce a white article. In the markets to which we ship, the fish must be white and clean, and therefore our salt must be purchased in Turks island, the West Indies, Torrevieja on the Mediterranean, or Cadiz, one of the Spanish ports.

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CON

Robert Knowlton Smith

Conservative (1867-1942)

Mr. SMITH (Cumberland):

I understand

that due to processing this salt is now free from the objection mentioned by my hon. friend.

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LIB

William Duff

Liberal

Mr. DUFF:

Only a year ago a scientist

named Doctor Barry of Halifax, Mr. Chambers, who is president of the Malagash Salt Products Limited, and myself made a number of tests. Doctor Barry, with whom I was associated, thought he could do something to take the strata out of the salt. Mr. Chambers brought some samples down to my own town, and a number of tests were made. We found, however, that it was impossible to get this foreign substance out of the salt. Although a good deal of the Malagash product is used, we find that it does not leave a white surface, and consequently is not satisfactory for our purposes. But even if the salt were as good as the salt which we import from other countries, I would still contend that this clause should not have been put in, because salt is one of the basic articles which the fisherman must use in his industry. Our fishermen should not be compelled to pay a six per cent sales tax when any company producing salt in Canada does not have to pay it. I do not think it is fair, I do not think it is right, and I am trying to be charitable in saying that some way or other these words "when manufactured or produced in Canada" were slipped into this exemption clause last year. I respectfully submit to the minister that it is not in the interests of the fishermen that they should be so taxed on their salt. I need not explain to the Minister of Finance the deplorable condition of that great industry of the maritime provinces at the present time. I should not be here asking the minister to take off this impost, I should be at home trying to do something

for the fishermen of my province. If my hon. friend does not do something to encourage the fishing industry of the maritime provinces, I do not know what is going to happen. I cannot understand why the minister did not give consideration not only to the idea of not having any sales tax on salt but of not increasing the tax to six per cent this year. Instead of not taking salt out of the exempted list, by this clause he deliberately increases the sales tax from four to six per cent.

Let me say something else to my hon. friend in regard to this sales tax on salt. Under a treaty with the island of Newfoundland fish produced there comes into Canada free of duty. I am in favour of that, because all the fish which comes in from Newfoundland is handled by the exporters of fish in Halifax and Lunenburg-I handle some myself -and it does not interfere in the slightest with the producers of fish in Canada; we are able to steady the market by handling a certain portion of Newfoundland fish. But I would bring this to the attention of my hon. friend as another reason why salt should go on the exempted list altogether, both as regards excise and sales tax. Our fishermen have to compete with the fishermen of Newfoundland, and if our fishermen have to pay a three per cent excise tax and a six per cent sales tax, the fishermen of Newfoundland can land their fish in Halifax, Lunenburg or any other Canadian port cheaper than can the Canadian fishermen. For that and other reasons I say to my hon. friend he should amend this clause and exempt salt from the sales and excise tax. It is bad enough for our fishermen to have to pay the excise tax on salt. Of course, if every other article imported is subject to the excise tax I am not going to object very strongly to the three per cent on salt, but I do urge my hon. friend that if it were possible to take both the sales tax and the excise tax off salt it should be done, because our fishermen need every little bit of help to encourage them in their industry. Our fishermen have not only to pay these taxes on their salt, but also on everything else they buy either for their families or to prosecute their industry. My hon. friend should take that into consideration and do something to hold up the hands of these people, and endeavour to encourage an industry that is practically at its last gasp.

Under this clause there is another hardship to our fishermen. Up to this year, as I said a moment ago, there were certain exemptions under schedule 3. If my hon. friend will look at page 4 he will notice the following:

Special War Revenue Act

"usual coverings to be used exclusively for covering goods not subject to the consumption or sales tax;" "materials to be used exclusively in the manufacture of usual coverings to be used for covering goods not subject to the consumption or sales tax."

Now, I would direct the minister's attention to the fact that this means a twelve per cent tax on every package which is used in the fish business, whether cask, butt, drum, herring barrel, mackerel barrel or box, because there is a six per cent tax on the finished article, the package itself, and there is also a six per cent tax on the value of the materials. Take herring and mackerel barrels. Men go into the woods and cut staves, which they sell to the coopers. There is a six per cent tax on the staves. There is also a six per cent tax on the lumber which goes into the casks, barrels and boxes. When the barrels or boxes are manufactured there is an additional six per cent. Surely the government never intended that the supplies of the fish industry, the apple industry, and the hundred other industries where boxes are used, should be taxed in this way. But I am pleading especially for the fishing industry-there are others better qualified to look after the interests of the other industries-and I say it is ruinous that the fishermen of this countiy should have to pay a twelve per cent tax on these packages. I plead with the minister now, if he has not an amendment in his mind -I have written to him and called his attention to it-in regard to the sales tax on salt and the sales tax on the materials which go into the manufacture of fish containers, that he should let section 6 stand and look into the matter with a view to relieving the fishermen of this great burden.

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CON

William Gordon Ernst

Conservative (1867-1942)

Mr. ERNST:

Mr. Chairman, for once I

find myself in complete accord with the hon. member for Antigonish-Guysborough.

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LIB
LIB

William Duff

Liberal

Mr. DUFF:

My hon. friend voted for the

budget, I did not; there is the difference.

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CON

William Gordon Ernst

Conservative (1867-1942)

Mr. ERNST:

I have no doubt, no matter

what was in the budget, my hon. friend would have voted against it. But I am confident of this, that we can combine our efforts for the benefit of the fishing industry and rise above politics, because I am going to protest against this provision by the Minister of Finance. Last year I was under the impression that salt was exempt, together with other commodities used by the fishermen, from the operation of the sales tax, and when I went home I was amazed, as I have no doubt my hon. friend from Antigonish-Guysborough was,

to find that the rider was added that the sales tax was taken off only when the salt was manufactured in Canada. As a matter of fact practically all the salt used by the fishermen in the province of Quebec and along the maritime coast comes from outside of Canada, and those channels of trade cannot be changed in a moment. The result is that this amounts to a six per cent tariff in favour of Canadian salt and a six per cent tax on Canadian fishermen. I have no hesitation in making that statement, and in view of the present condition of the industry such a tax upon the fishermen is unfair. This is an export product, and every product which is exported should be encouraged in every possible way. In addition we have the three per cent excise tax, making a total tax of nine per cent on the salt used by the fishermen.

I should like to see salt exempt from the application of the excise tax as well. I know the minister will say that the exporter can make a return showing the amount of salt which has gone into the product and recover ninety-nine per cent of the tax by way of drawback. Theoretically that sounds all right, but from a practical standpoint it is impossible. Salt is used by so many individual fishermen, who purchase it and pay the tax but do not export the fish, that there is no way under heaven of getting that tax back to them. The same argument applies to the fish containers. Casks containing fish which are exported cannot be used more than once, because it is not economical to bring them back. In many cases individual fishermen will buy these casks, or the barrels used for pickled fish; they will pay the tax, but they do not export the product so they cannot obtain the drawback. I contend that this is unfair, with the industry in its present condition. The same argument applies to apple barrels, which are used in Canada to a very limited extent only, and are almost entirely exported. They are used by the people in the Annapolis valley and are manufactured to a considerable extent 'in my own county. They too will be subject to the tax. The barrel will go to the exporting firm filled with apples, and the exporting firm may get a drawback but it will not go back to the individual who paid the tax.

There is one other difficulty in this connection. Many of these containers are made by small concerns or by individuals who hitherto have had no system of bookkeeping and would find it impossible to install such a system. Personally I do not see how the minister is going to collect the tax. He may say that is a matter for the Department of

Special War Revenue Act

National Revenue. I tell the Minister of National Revenue that he will find it impossible to collect the tax. The small firms and individuals who cut their own material in the winter and manufacture these articles during the summer and autumn will be in a constant state of turmoil and unrest. I cannot protest too strongly against this measure. The containers and the salt should be exempt from the sales tax, and that salt in particular should be exempt from the excise tax as well.

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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

While my hon. friend from Queens-Lunenburg agrees with my hon. friend from Antigonish-Guysborough, I submit that both hon. gentlemen are in error to a very substantial degree. In the first place, my hon. friend raised strong objection to the amendment with respect to the exemption provisions under the sales tax. As far as we are concerned this was not done this year; it was done last year, and I do not know why my hon. friend did not object then.

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LIB

William Duff

Liberal

Mr. DUFF:

I was in Nova Scotia looking after the fish business when the budget resolutions were discussed.

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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

Let me point out to my hon. friend that this provision simply means that if Canadian salt is used no sales tax is paid.

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CON

William Gordon Ernst

Conservative (1867-1942)

Mr. ERNST:

You cannot do it.

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CON

Edgar Nelson Rhodes (Minister of Finance and Receiver General)

Conservative (1867-1942)

Mr. RHODES:

Just one at a time, please. If you use Canadian salt you pay no sales tax and no excise tax. My hon. friend from Queens-Lunenburg says you cannot do it. He may be right, but I submit that this is not the entire story. We are capable of producing in Canada salt equal in quality to that produced in any other country in the world. My hon. friend, of course, is free to talk for the fishermen, and let me say that I do not yield to him or to anyone else in my desire to do everything possible to help the fishermen. But we have other people in this country who are just as worthy as the fishermen; we have . many men who could be engaged, and some who are engaged, in the salt industry. My hon. friend says Canadian salt cannot be used. In that I do not agree with him, and I do not need technical knowledge to hold that opinion, though I am prepared to subsitute for my own judgment the opinion of those who are experienced in chemistry. But let me say to my hon. friend that if imported salt is used and the bulk of the product is exported, they can get a drawback of almost the full amount of the sales tax paid on the salt.

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May 17, 1932