Mr. RHODES:

The explanation is that there are other forms of salt imported which are not used in the sea and gulf fisheries, and they are subject to the tax.

Mr. BRADETTE:

Mr. NEILL:

The minister says that he

will consider this item, and I should be glad if at the same time he would give his attention to a minor aspect of it not touched upon by the hon. member for Antigonish-Guys-borough. I refer to cheap molasses used for cattle feed.

Mr. RHODES:

That is exempt.

Mr. NEILL:

Nowadays, when dairying is

so much in the red, it is necessary to economize at every turn, and in British Columbia they have adopted a system of supplementing the more expensive feeds by the use of screenings, which must be made palatable by the addition of molasses. The lower grades of grain and hay, off colour, can also be made palatable in this way. The molasses used for this purpose is of a low grade that could not be used either in the manufacture of candy or for domestic purposes. I know that the minister has been approached by different dairy bodies, the dairymen's association of British Columbia, for one, and I would ask

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him to consider very carefully their representations in this regard. There are two distinct grades, one of which I know is cheap. It could not be used for anything but cattle feed, and if* the minister cannot give way in regard to molasses used for domestic purposes as a substitute for sugar, I am sure he could exempt this other grade of molasses without any loss to the treasury. Can he not see his way to exempt that grade?

Mr. RHODES:

If my hen. friend will look at the sixteenth line on page thirteen he will find that calf, cattle, hog, fox and poultry feed are all exempt from the tax. Where the type of feed is not specified, the interpretation can be so broad, I am advised by the officials, as to include that low grade of molasses which is used for feed purposes. In fact, it is included.

Mr. NEILL:

Even when brought in in

bulk by itself, when not mixed?

Mr. RHODES:

Yes. The administrative

difficulty does not arise there as it does with molasses used for human consumption. It is therefore quite possible to classify it as tax-exempt under these provisions.

Mr. NEILL:

Thank you.

Mr. REID:

I notice the words "beet pulp." The Minister of National Revenue is present and I would direct his attention and also his colleague's to an important point in connection with this item. In the Fraser valley we have no beet sugar factory, but beets for sugar purposes are grown extensively and taken across the line for manufacture. The farmers are paid so much per ton for their beats plus the return of some of the beet pulp. That beet pulp is returned to them in part payment, but when it comes back the customs department imposes a duty of twenty per cent plus three per cent excise. On taking up this matter with the department I was informed that regulation 709 would apply. This regulation reads:

Articles and other goods, the growth, produce or manufacture of Canada, returned to the exporter thereof after having been exported without having been advanced in value or improved in condition by any process of manufacture or other means;

When it was drawn to the attention of the department that the beet pulp being returned to Canada had not advanced in value or had not been improved in condition, the officials began immediately to scan the act in order to protect themselves, and so they found a clause under which they could impose the

53719-288J

duty. This was clause 1 in regulation 709, which reads:

All articles for which entry is claimed as returned goods must be returned within five years to the person by whom they were exported, and in the case of articles the produce or manufacture of Canada the property in such articles must have continued in the person by whom they were exported.

I might say that it is impossible for a farmer who has exported beets to staite that the beet pulp being returned has been manufactured from the particular beets which he exported. When this regulation was put into effect I do not believe it was ever contemplated that the farmers should be taxed upon the beet. pulp which was returned to them after being manufactured from beets which were exported. The committee which investigated the investigating of sugar from beets did not approve of the building of further factories at this time. If there was a factory in the Fraser valley it could well be said that the farmers could have their beets processed in this country, but they must send their beets across the line to be manufactured into sugar. I ask both the Minister of Finance and the Minister of National Revenue to consider seriously the allowing of free entry to beet pulp which has been manufactured from beets grown by Canadian farmers and exported from this country. The farmers receive this pulp as part payment for the beets which they export. This pulp now pays a twenty per cent- duty plus a three per cent tax and there is some doubt whether or not the present sales tax will apply.

Mr. RHODES:

The complaint of the hon. member for New Westminster has to do with customs administration and has no reference to the clause under consideration. Under the schedule now before us, dried beet pulp is specifically exempted from sales tax. I shall be happy to confer with my colleague the Minister of National Revenue upon the representations made by my hon. friend.

Mr. REID:

There was no other item under which I could discuss this matter, and I took this opportunity as well as availing myself of the presence of the Minister of National Revenue.

Mr. EULER:

It is not my desire to revert again to the matter of the tax on sugar, but I note that while bread is still on the exempted list in connection with the sales tax, rolls, buns or similar goods produced by bakeries are not exempt. I suppose this classification would also include cakes. Why should these articles be subjected to a tax in

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addition, to that imposed on sugar? Cakes, buns and articles of the kind are used as food and a sales tax must be fairly difficult of collection. I should like to know just how much revenue is derived from the tax upon these articles. I think the minister should consider placing them upon the exempted list. I understand that representations have been made and I believe that these people have a good case to offer. Has the minister any intention of acceding to their request?

Mr. CASGRAIN:

I have received requests similar to those referred to by the hon. member for North Waterloo, and I should like to know just what tlhe government intends to do in this connection. Could the minister give us any idea as to how much money he expects to receive from the tax upon the articles mentioned?

Mr. RHODES:

The subject raised by the hon. member for North Waterloo and referred to by the hon. member for Charlevoix^Sague-nay is by no means an unimportant one. I think there have been more representations made in connection with this one matter than have been made in connection with any other dozen articles in the list. In the first place, I might tell my hon. friends that it is not a minor item so far as revenue is concerned. We receive about 8600,000 per year, the great bulk of which is received from the large bakeries. Collection is free from difficulty and is made without friction. The difficulty which does arise is encountered in the case of the small bakeries. These men are in the same unfortunate position as many other small shop-keepers in the country. That is not only true to-day but it was true when times were more prosperous. The small baker who has to face the competition of new merchandising methods is the one who complains most bitterly against the sales tax on cakes and pies but it would be a manifestly unfair form of competition to exempt him to a greater extent than the heavy taxpayer. Last year the man whose business did not exceed $5,000 per year was exempted, and it was found that this exemption created a very unfair situation as regards those who were paying the tax. As business became restricted in the regular bakeries, many hands were laid off. Many of these men started up a business of their own and became keen competitors with the regular manufacturers who were heavy taxpayers and large employers of labour. This year the exemption has been lowered from $5,000 to $3,000 in an endeavour to prevent a good deal of this unfair competition. I refer to competition only from the point of view

of revenue. Even though we were in a position to forego the receipt of a revenue of $600,000 per year, the matter would not stop there. In justice we could not exempt cakes and pies and impose a tax upon biscuits, cookies and other forms of confectionery. The tax upon these other articles brings in a revenue of $750,000. When we consider the sales tax as it is applied to cakes and pies, we are really dealing with a revenue-not in prospect but actually existing even under today's conditions-amounting to $1,350,000. That is a considerable item. I may say that I have had no deputation representative of those small bakers. I sympathize with them very keenly, but their difficulty is not the sales tax. It is one which is common to the small merchant and which has been increasing in recent years because of new methods of merchandising. Even if the sales tax were removed entirely, they would still do business subject to the same difficulties. I imagine we would find just as much flux and change in the case of email bakeshops under the old condition as we would under the new one where the sales tax obtains. If it were not for the need for revenue and for the large figures involved, this would be one of the first taxes I would wish to see removed, but in the circumstances and having regard to our necessity for revenue, I do not see how we can very well do away with it.

Mr. EULER:

I do not desire to prolong

the argument, but I should like again to impress upon the minister the very thing which he has admitted, that is that the situation as regards these small bakers is very difficult, even for those whose annual output is above $3,000. What makes the situation more difficult is the fact that the minister is imposing a very heavy tax on sugar which also enters into their costs. It is almost impossible for those people to add the additional cost to the value of their product. In that particular line of business there are standard prices and it is difficult in the case of buns, cakes and so on to charge the consuming public an increase in price commensurate with the increase in cost as a result of the tax on sugar and on their products. In, view of the fact that the minister has imposed a tax on sugar, the fact that these people have particular difficulties now and the additional fact, which I think is of extreme importance, that these are articles of food and we should tax them as little as possible, I urge upon my hon. friend to consider doing something by way of relief for these people.

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Mr. COOTE:

There is a little difficulty in hearing some of the conversation carried on between the minister and the hon. member for North Waterloo, and perhaps for the benefit of hon. members who may have just come in, the minister might explain why rolls, buns and similar goods are not exempted from the sales tax. In the last line or two of schedule III, it reads: [DOT]

Bakers' cake and pies when produced by any one manufacturer or producer to the value of not more than $3,000 in any one calendar year.

These are exempt. Do I understand from that that rolls, buns or similar goods if made by a producer where the value of such production does not exceed $3,000 in a year, would be subject to a tax, but pies and cake would not be?

Mr. RHODES:

No; if produced by a baker whose annual production is under $3,000 a year, none of those commodities would be subject to tax.

Not even the rolls or buns?

Mr. RHODES:

No, because they are

classed as cakes or pies.