July 13, 1944

LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Perhaps I misunderstood the hon. member for Winnipeg North Centre.

Income War Tax

I did not understand he was contending that we were making a hand-out to business, but if he was so contending I would not have agreed that that is what we are doing.

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CCF

Clarence Gillis

Co-operative Commonwealth Federation (C.C.F.)

Mr. GILLIS:

That is not what he said, either.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

No. The minister understood me correctly, but the hon. member for Rosedale did not quite get it.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

If the committee will permit me for just a minute, the hon. member for Rosedale is correct in saying that we have put on very heavy taxation; and we have certain rules about depreciation which may be regarded as normal rules applicable to business as a whole. In cases of new investments there is a relaxation of these rules to some extent. That is not a hand-out to business.

The attitude taken by the C.C.F. generally is that when you get heavy taxes on business, no matter how heavy they are you should keep them there; you should1 never relax. We are always criticized, I think, by the C.C.F. whenever we relax taxation on business, and that is consistent with the policy, as I understand it, of the C.C.F. party, because they regard it as in the public interest that burdens on private business cannot be too heavy because private business is old fashioned; the way to build a new country is to have an entirely different organization of business; therefore it is in the public interest to make the burdens very, very heavy, and it is always against the public interest to lighten those burdens in any way.

It is not making a hand-out to adjust your taxation to some extent in order to encourage the expansion of business, and I do not think the hon. gentleman accused us of trying to make a hand-out here. But that is what I understand to be the issue between us. I do not complain about the C.C.F. when they come along and say, as the leader of the C.C.F. did in his budget speech, that we should not lighten those burdens no matter how brutally heavy they are, that they should stay there; that these people should not be functioning in that way and that the heavier the burdens the better. That is the belief of my hon. friends of the C.C.F. party. It is not mine.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

I want to say, despite

such disagreement as there may be between the minister and myself, that his understanding as to the issue between us is quite clear. But there is just this change in emphasis in whi he has said now by way of describing C.C.F. policy in this respect to which I should like to point. The minister spoke as though

our only interest so far as taxation of business is concerned is to impose upon it the heaviest possible burden. Now, so long as you have the system of private enterprise, capitalism, in effect as we have it to-day, we feel that the taxes should be sufficiently heavy to drain off to the community as a whole the wealth of the community which in the first instance is getting into private hands.

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NAT

Harry Rutherford Jackman

National Government

Mr. JACKMAN:

It does not get into

private hands. It is double taxation.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

That policy must be distinguished from the positive policy which we feel should be taken under the kind of government we ourselves advocate. In power, our concern would be, not with what the minister feels to be negative forms of taxation, but with positive means of developing the economy of this country and increasing production. The difference between the minister and me, between the Liberals and the C.C.F., is that he and his party feel that production can be encouraged and employment increased by assistance to private industry such as the minister consistently provides; whereas we feel that these things can best be accomplished by the government itself in the name of the people taking the initiative, somewhat after the pattern which has been followed during the course of this war.

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Resolution agreed to. 25. That the provision permitting a taxpayer to deduct from tax the amount paid to any foreign country for income tax in respect of the income of the taxpayer from sources therein, be amended -by deleting the requirement that such foreign country in imposing tax allow a similar credit to persons in respect of income thereof from sources within Canada. Resolution agreed to. 26. That the provision whereby a special payment by an employer to make up a deficiency in an employees' superannuation or pension fund or plan may be deducted from income over a ten-year period be amended to permit annual payments of one-tenth, or less, of such deficiency to be deducted from income in the year of payment.


CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

I appreciate the arguments which the minister made about the taxation of annuities and also exemption from taxation in regard to payments into annuity funds, and I noted with interest his intention to set up a commission to study the whole matter. In the meantime, employees who make payments into superannuation funds find it difficult to understand the line of distinction drawn between some of these funds. For example, in the Canadian National Railways set-up, according to the information I have, payments into some of the pension funds are allowed as exemption from income before

Income War Tax

taxation, while payments into some other pension funds of the Canadian National are not allowed. I understand from a large group of electors I represent in Winnipeg North Centre, men employed in the Weston shops of the Canadian Pacific Railway Company, that payments they make into their pension fund, although they were allowable in connection with compulsory savings when that provision was in effect, are not allowable as deduction from income before taxation, and employees who are denied that right know that certain other employees who apparently are paying into the same kind of funds enjoy that right, and feel that there is an unfair distinction there. Can the minister give some explanation? While he is speaking on that point, he might give us some information as to his intention to have that commission set up.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

With regard to the setting up of the commission, that will be done at the earliest possible date. I cannot say more about it than that, but we intend to get ahead with it. With regard to the distinction between the treatment accorded certain groups of employees and that given some others, roughly speaking it depends upon their own election. The best way for the hon. gentleman to get information is to apply to the Department of National Revenue, because the provisions are complicated. The general principles, however, are these. If the payments in are free from tax the payments out are taxable, and if the payments in are taxed the payments out are free from tax. That is the general principle and it is up to the employees to make election as to which they prefer. In this city the payments into the superannuation fund of the Bank of Canada are taxed and the 'payments out are free of tax, but the reverse is true of payments into the superannuation fund of the civil service. There the payments in may be deducted from income of civil servants for taxation purposes and the superannuation payments out are taxable. Apparently, one group of civil

servants preferred the method applied to them, whereas the employees of the Bank of Carada, or the authorities of the bank, I do not know which, perhaps both, preferred the other plan. It is a question which is the more advantageous.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

Do employees in all cases have a say in the matter? Take the Canadian Pacific employees to whom I refer.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It is the trustees of the fund that make the election.

100-305J

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

A difficulty arises from the fact that most people live in the present, and the employees in one railway shop who are paying taxes when the rates are high feel that it is quite a discrimination against them that they do not get exemption where some employees in some other shops do. I suppose the best one can hope for is that the commission will get to work soon and iron out some of these differences which are perplexing to the people affected, and which they feel to be quite unfair.

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Resolution agreed to. 27. That dividends paid by a wholly-owned subsidiary non-resident company to a Canadian parent company be exempt from tax when received by such parent company.


NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

I do not wish to revert to a previous section, but I should like to inquire with respect to a particular matter and I am not sure that it is covered by any section so far as the resolutions are concerned. I have no desire to take up any considerable time, but could the minister indicate the present situation with regard to the commuters of Windsor district? This is a matter that has been drawn to the attention of a number of members of the house. There are 2,500 or 2,800 of these commuters.

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LIB

Paul Joseph James Martin (Parliamentary Assistant to the Minister of Labour)

Liberal

Mr. MARTIN:

Three thousand.

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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

My hon. friend knows

that better than I do. I should like an explanation from the minister as to why the government has seen fit up to the present time to refuse application for some adjustment with regard to these people who are working in Detroit and living in Windsor. I take it there are other districts that may be similarly affected, but my information comes entirely by correspondence and the minister will be able to clear the matter up quickly.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I do not see how in fairness we can permit the introduction of questions that have no relation to the resolution before the Chair, even by so distinguished a member of the house as the leader of the opposition. This may be brought up on other occasions. I, too, have had correspondence. I do not know that I can recall from memory the points at issue, but certainly they have no relation to this resolution.

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NAT

Gordon Graydon (Leader of the Official Opposition)

National Government

Mr. GRAYDON:

I was called out on some business for a moment when resolution 25 was being passed, and I felt that perhaps resolution 25 had a closer relationship to the subject

Income War Tax

which I wish to discuss than any other resolution, and it was with that that I was about to deal.

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LIB

Paul Joseph James Martin (Parliamentary Assistant to the Minister of Labour)

Liberal

Mr. MARTIN:

I had hoped-

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July 13, 1944