June 28, 1938

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes. What I had in mind was the three per cent excise duty, whether that is covered by it or not. I am told they do collect it, but I was looking for the authority for it.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Sales tax is not collected 5n the three per cent.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I was told that it was.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

The sales tax applies on the same price as that on which the three per cent applies. The amount collected on imported goods is eleven per cent. It is eight per cent on the duty paid value and it is three per cent on the duty paid value.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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Section agreed to. [Mr. Ileley.l On section 3-Licensed wholesaler or jobber.


CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

What is the reason for this?

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

The desire is not to extend but rather to limit the issuing of wholesale licences. The issue of licences to wholesalers is not an advantage to the crown, because it delays the payment of sales tax, sometimes for a long time. It is thought desirable for the future to limit the issue of wholesalers' licences to the wholesalers who make the greater part of their sales to licence holders, because in those cases they would have to apply for a refund anyway and you might as well give them a licence.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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Section agreed to. Section 4 agreed to. On section 5-Additional penalties.


CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Subsection 3 declares a

principle which the senate did not adopt in the Lord's Day Act bill as to the liability of the directors of a company in connection with violations of the act. Whether this may not go too far I am in some doubt. It looks to me as though possibly it goes further than it should-this idea of condonation, and making them liable for acts that are done if the knowledge is brought home to them. That, it seems to me, is extremely difficult. The Lord's Day Act came back here from the senate because of their belief that we went too far and that there was no reason why we should depart from the general principles of the law with respect to other statutes. This is an endeavour by the use of words to cover everything, as is very often the case. This subsection declares that "every officer, director or agent of the company who directs, authorizes, condones or participates in the commission of the offence, shall be liable to the like penalties as such company and as if he had committed the like offence personally," That goes pretty far. It may be difficult of enforcement. I merely point it out because of the attitude taken in connection with the Lord's Day Act.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

The reason for the enactment is that it was discovered that many concerns formerly partnerships have incorporated themselves for the sole purpose of evading payment of the sales tax and escaping personal punishment. There may be a difference between this and the other act.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Undoubtedly, but they

took a view that would be applicable to this.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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Section agreed to. On section 6-Schedule II repealed.


CON

Harry James Barber

Conservative (1867-1942)

Mr. BARBER:

Would discussion of

schedule I be in order under this section?

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Yes.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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CON

Harry James Barber

Conservative (1867-1942)

Mr. BARBER:

There is a matter to which I should like to direct the attention of the committee at this time-I know that for the last two years the minister has been made acquainted with it-and it has to do with the excise tax known as the sugar tax. In Canada there is a primary industry, forming part of the great industry of agriculture, known as the fruit and vegetable industry. Of the products of this industry it is necessary to preserve a large quantity in cans in order that provision may be made for their consumption at other seasons of the year. The complaint is that this industry is subject to the sugar tax while imported fruits and vegetables in the same form are not so handicapped. The manufacturer of canned fruits and vegetables in Canada, also of jams, jellies and marmalades, pays a tax of one cent per pound on the sugar used as an ingredient in the finished product. The complete exemption from this tax accorded to imported canned fruits and vegetables and the freedom from the tax of substitute domestic products such as are listed here-honey, maple syrup, peanut butter, and so on, which are competitive with jams-places this industry, we believe, in an entirely different position from that of certain other industries in justifying the granting of relief from the tax. The tax collected from this industry in 1936 was $608,996, representing between 20 and 25 per cent of the value of the sugar used.

This tax is not applied by the government on the sugar content of imported processed fruits and vegetables, which means that the manufacturer abroad is placed at an advantage over the Canadian producer of identical lines to the extent of this sugar tax. The special war revenue excise tax, subsection 6 of section 80, provides that the sugar excise tax shall be imposed on the sugar content of imported goods, but as stated, this provision has not been invoked in respect to processed fruits and vegetables. It is the desire of the Canadian industry that they be placed on a parity in respect to exemption from the sugar excise tax with producers of like goods shipping their products into this country.

The production in Canada of processed fruits, with a sugar cost varying from 7i to 25 per cent of the material and labour cost in the case of fruits preserved in syrup, and to over 50 per cent of the material cost in the case of jam in the year 1936-the latest period for which figures are available-was $10,132,383.

51952-273J

Special War Revenue Act

Exports were $1,495,969, leaving $8,636,414 as the domestic consumption. All of the sales in Canada carried the excise tax.

During 1936 the importations of canned fruits, and so on, were $1,771,255. None of the foregoing imports paid the excise tax, and analysis of those imports shows that in 1936 they comprised 26,205,704 pounds of canned pineapple, chiefly from Singapore, and 5,119,740 pounds of peaches, pears, apricots, principally from Australia in 1936, and about 1,000,000 pounds of miscellaneous processed fruits from other sources.

While the Singapore pineapple is not directly competitive with an identical Canadian product, there can be no doubt that its cheapness-about 3 cents per pound as compared with 8 cents per pound for honey and 10 cents per pound for jam-owing to the conditions under which it is manufactured, and which cheapness is accentuated by freedom from excise tax on its sugar content, has greatly facilitated its sale in Canada, and that this has tended to displace to a considerable degree Canadian canned fruit. It might be mentioned incidentally that this imported canned pineapple enters free of duty.

In the case of jam, jellies and marmalade, in which by far the largest proportion of sugar is used in any of the branches of the industry, while they are not subject to the same extent as canned fruits to the competition of imports, they are in direct competition with other domestic products which are not subject to the excise tax and which have the still greater advantage of exemption from sales tax. Some of these commodities are peanut butter, tabfe syrup, and honey.

I have here a table giving the production of peanut butter and honey for the five year period 1932-36, but it is not necessary for me

to put it on Hansard. I may point out, however, that honey has a sugar content of approximately 75 per cent. As an illustration, the sugar tax represents, as an item of cost in the production of jam, from 7i per cent to 12J per cent, but when it is borne in mind that this item of cost also carries the sales tax, the above percentages would be increased. The effect of these taxes including the sales tax brings it up to 27 per cent of the total cost on jam, which is the poor man's product. The complaint is that the tax is applied to the goods sold on the domestic market and not applied to those imported.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

No change is being made in the schedule. Two considerations are pointed out by the hon. member: first, that certain competing products, such as honey, are free of sales tax- .

Special War Revenue Act

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
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CON

Harry James Barber

Conservative (1867-1942)

Mr. BARBER:

I did not deal particularly with the sales tax because I understand it does not come under this clause. I was dealing with the excise sugar tax.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
Permalink
LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Well, that was one of the reasons given by him and by the industry in making their representation, that their products are subject to sales tax while competing products are not.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
Permalink
CON

Harry James Barber

Conservative (1867-1942)

Mr. BARBER:

I was dealing with the excise sugar tax, which is not applied to imported fruits but does apply to the domestic.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
Permalink
LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

That is the second consideration. The difficulty about exempting sugar used by manufacturers of canned goods is that it would undoubtedly lead to other exemptions. It would be impossible-or it has always been so felt-to remove the one cent sugar tax from manufacturers without also removing it for housewives and people generally who use sugar for canning and preserving. I am afraid there would immediately be a great outcry about discrimination if we lifted the tax from the manufacturer and not from the ordinary user, the housewife who is using sugar for canning and preserving. It is true that the imported product has an advantage, provided there is not a corresponding sugar tax in the country from which the product comes. It must not be assumed that the competitors of our canners in other countries are themselves free of tax in their own countries. In fact they are not; there is high taxation in nearly every country in the world to-day. At the worst I would point out that this discrimination, if such it is, merely cuts down somewhat the protection which the fruit canner in Canada enjoys. He does enjoy protection. There are duties I think on practically all canned goods coming into the country. If he were relieved of the sugar tax he would have a little more protection, that is all.

Topic:   SPECIAL WAR REVENUE ACT
Subtopic:   AMENDMENTS TO PROVIDE CERTAIN EXEMPTIONS AND ADDITIONAL REGULATIONS
Permalink

June 28, 1938