Resolved that it is expedient to amend the Income War Tax Act to provide- 1. That a war surtax of 20 per centum of the -total income tax otherwise payable under the said act be imposed upon all persons other than corporations. 2. That the rate of tax applicable to corporations and joint stock companies, except those filing consolidated returns, be increased from 15 to 18 per centum. 3. That the rate of tax applicable to corporations _ and joint stock companies which file consolidated returns under the said act be increased from 17 to 20 per centum. 4. That voluntary donations to approved patriotic organizations and institutions in Canada during the present war be allowed as a deduction from income, up to 50 per centum of the net taxable income of the taxpayer. 5. (1) That the amendments proposed in resolutions 1 and 4 hereof be applicable to the income of 1939 and all fiscal periods ending therein and of subsequent periods. (2) That the amendments proposed in resolutions 2 and 3 hereof be applicable to the income of 1940 and all fiscal periods ending therein after March 31, 1940, and of subsequent periods.
Mr. NEILL:
Will the minister tell me why, if the increased taxation proposed to be imposed on individual taxpayers applies, as I read it, to the 1939 period, it does not also apply to the 1939 period with respect to corporations?
Mr. ILSLEY:
A great deal of thought was given to that matter. I do not know just how I can put it in the shortest language, but the taxation of corporations is tied up pretty well with the excess profits tax, which is dealt with in a separate bill. The taxation is worked out in such a way as to take into account the incidence of both forms of taxation, and it was not thought proper to impose the excess profits tax on corporations for periods that ended before March 31, 1940. If you did, you would be taxing them over a considerable prewar period, and therefore perhaps the first decision that was made was to impose the excess profits tax on periods ending on or after March 31, 1940. The hon. gentleman says, why do you not treat individuals just the same? Well-
Mr. NEILL:
Pardon me. The minister has answered me in connection with excess profits. This is income tax.
Mr. ILSLEY:
What I was trying to say is that the two were considered together. Perhaps there is some ground for that when the weight of the taxation is considered; it was considered that you would have to take into account the income tax itself and the excess profits tax too. The income tax is allowed as a deduction in arriving at the excess profits tax; it was thought that the two should be imposed for the same period, and that is the reason why it applies to this period. For individuals the same reason does not apply at all, or it applies to a very much lesser extent, and so we applied the individual income tax for the present calendar year. In other words, we shall collect the individual income tax next spring, in April or thereabouts.
Mr. NEILL:
Sounds like inequality of
sacrifice!
Mr. COLDWELL:
I happened to be called out when the minister was dealing with the excess profits tax. Could he give us an illustration of how that will work? I mentioned this afternoon some figures which the minister
Ways and Means
said were incorrect. I should like to know just how this will affect a profit on, say a thousand dollars, in two or three of these categories.
Mr. ILSLEY:
If the hon. member will put a case, I will give him in a few minutes the exact tax that will be pajmble. I think that is the best way to get at it.
Mr. COLDWELL:
Supposing we have a capital of, say a thousand dollars. We will take the first clause here; we will say there is a profit of ten per cent. What would be the
tax payable?
Mr. ILSLEY:
I shall have that worked out. It includes two taxes. I will give it to the hon. gentleman on the bill. We are not on the bill now.
Mr. LAWSON:
Would the minister glance for a moment at item 4 under income tax resolutions, voluntary donations to an approved patriotic organization or institution. Who is going to do the approving?
Mr. ILSLEY:
The Secretary of State for Canada. That is provided for in the bill.
Resolutions reported, read the second time and concurred in.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 6, to amend the Customs Tariff.
Motion agreed to and bill read the first and second times.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 7, to amend the Excise Act, 1934.
Motion agreed to and bill read the first and second times.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 8, to amend the Special War Revenue Act.
Motion agreed to and bill read the first and second times.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 9, to amend the Income War Tax Act.
Motion agreed to and bill read the first and second times.
Mr. MACKENZIE KING:
Now that all of the budget resolutions have been reported and the bills have been introduced and gone through their first and second readings, I move that the house agree that Bills Nos. 6, 7, 8 and 9, namely, the four bills which are based on the four resolutions, be referred to committee on one motion. That is adopting
the same practice with respect to these bills as is adopted as a general rule with regard to private bills, the standing order being that:
All private bills reported to the house by any committee may, on one motion be referred together to a committee of the whole house and such committee may consider and report one or more such bills at the same sitting.
That will help to expedite the matter.
Mr. LAWSON:
Are they printed?
Mr. MACKENZIE KING:
Three are
printed and the fourth is on the way to the house.
Motion agreed to.
The house in committee on Bill No. 7, to amend the Excise Act, 1934-Mr. Ilsley-Mr. Sanderson in the chair. Bill reported, read the third time and passed.