Mr. BENNETT:

This is only a reduction

in the British preference?

'Mr. DUNNING: There is a considerable

amendment both in wording and in rates. Perhaps I had better read my notes, in order that the committee may be fulled seized of the matter and so that there may be no misapprehension as to the effect.

Up to the present time unmanufactured tobacco enumerated under tariff item 142 has been free of duty upon all tariff. That is to say, it has been imported nominally free of customs duties, but immediately under the Excise Act became subject to excise duties of 40 cents per pound on unstemmed leaf and 60 cents per pound on stemmed leaf. To carry out an undertaking given to Southern Rhodesia under the conference agreements of 1932 it is now proposed first to establish a preference on both stemmed and unstemmed tobacco of the type commonly known as Turkish or Oriental, and second to transfer the duties from the excise to the customs realm. It will be remembered that when we were dealing with the excise amendments these excise taxes were cancelled. The proposal to transfer this item to the customs realm is of course inevitable if the undertaking to Rhodesia is to be carried out, since it would seem to be undesirable if not indeed impossible to provide preferential treatment in the excise field of taxation as distinct from the customs field.

It is proposed therefore, in brief, to divide the item in such a manner as to separate the so called Turkish type of tobacco from all other types and, in respect of the Turkish type, to reduce the British preferential rates of duty from 40 cents to 20 cents per pound on the unstemmed and from 60 cents to 30 cents on the stemmed. The requirements

of the Canadian tobacco industry and therefore of the Canadian tobacco consuming public demand the use of a certain amount of the Turkish type of tobacco. It is estimated that the Canadian use of tobaccos of the Turkish type amounts to about 300,000 pounds per annum, all of which up to the present has been supplied from non-empire countries, chiefly Macedonia, Greece and Abyssinia. I do not suppose we are getting much from there just now, but this has been one of the few articles we have imported from that country. In recent years Southern Rhodesia has established quite a reputation for Turkish type tobacco, and the Union of South Africa is known to be producing tobacco of this type which has gained commercial favour. The Rhodesian product is finding acceptance in the British market, and in establishing the preference now proposed the government feels that it may be giving Southern Rhodesia a greater opportunity to cater to Canadian requirements in this particular product. There is no reason to feel that the preference now being granted under the British .preference to Turkish type tobacco will react in any way whatsoever on the Canadian production of those types which Canada has demonstrated her ability to produce and sell. It is, however, confidently expected that empire sources of supply will fill the demand of this market and that by accepting tobacco from Southern Rhodesia Canada may make it possible for that country to provide a wider market than at present for certain Canadian commodities. I am assured that the change here proposed has no bearing whatsoever on the Canadian production of tobacco, which is of an entirely different type from that now being given a preference.

Mr. DONNELLY:

The excise tax has been removed completely?

Mr. DUNNING:

Yes.

Mr. BENNETT:

My memory is that this is in accordance with the arrangement that was discussed with Southern Rhodesia-

Mr. DUNNING:

Yes.

Mr. BENNETT:

-but we declined to give effect to it until we were satisfied that by so doing we would not interfere with the production of Canadian tobacco. Once that was settled definitely we were prepared to give them a preference. I think that was the arrangement, if my memory serves me aright, and this is to give effect to it, as I understand it.

Mr. DUNNING:

Yes.

Customs Tariff

Mr. BENNETT:

They had our promise that as soon as we satisfied ourselves that Canadian interests would not be adversely affected we would bring about that change. The only difficulty was just how it was to be done. The cancellation of the excise tax and the transference of it to the customs tariff was the suggestion of one of the officers of the department, who doubtless is responsible for its being done in this way.

Mr. DONNELLY:

What is the excise tax on ordinary tobacco?

Mr. DLTNNING:

It is 40 cents a pound.

Mr. DUNNING:

The only difference is in connection with the stout item, with which I dealt in the budget. The Irish Free State requested some consideration with respect to this product of Ireland, and in view of the balance of trade that exists between the two countries we were pleased to find a few commodities, even though only a few, on which we could give a preference to the Irish Free State.

Mr. CLARKE (Rosedale):

Will that saving be passed on to the consumer, in the opinion of the minister? In some cases, in connection with some of these other items, the saving is retained by the dealer.

Mr. DUNNING:

That is rather a difficult question for me to answer, in view of the fact that the sale of this commodity, as in the case of all other liquors, is under the control of the various provincial governments, and of course it would depend upon their action as to whether Guinness stout will become any cheaper to the consumer. That is what my hon. friend has in mind, I know, and I am informed that it is a very good article, especially for invalids like the hon. gentleman.

Mr. McIVOR:

Mr. Chairman, I am opposed to this reduction, for very reasonable reasons. I think the tax on anything that tends to put on fat and does not develop muscle and brain should be as high as possible. Also, coming as I do from the Green Isle, I know that porter and stout do not tend to develop manhood and character. Not even an Irish-

man can carry much of it and be his normal self. Anything that tends to make a man or a woman less a man or less a woman should be taxed to the very highest point. I do not like to be "agin the government," but in this case I am convinced that the tax should not be reduced. If any of the hon. members wish to go out to-night and see our baseball game-

The CHAIRMAN:

Order.

Mr. McIVOR:

I was just going to use the illustration of athletes who get along without the use of stout. That is all I have to say, Mr. Chairman, because I do not believe in talking when I have finished.