June 6, 1951

CCF

Wilbert Ross Thatcher

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

Mr. W. Ross Thatcher (Moose Jaw):

Topic:   DEFENCE PRODUCTION
Subtopic:   DISTRIBUTION OF CONTRACTS-SASKATCHEWAN
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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Defence Production):

Yesterday, for want of a better subject, I spoke on the distribution of defence and defence supporting contracts. I have a distinct recollection that according to the break-down prepared by my department, the prairie provinces were getting a very reasonable share of these types of contracts. If I am fortunate enough to reach my estimates this session. I shall be very pleased to put the break-down on Hansard, and I am sure that my hon. friend will be highly gratified at the value of the contracts going to the prairie provinces.

Topic:   DEFENCE PRODUCTION
Subtopic:   DISTRIBUTION OF CONTRACTS-SASKATCHEWAN
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EXCISE TAX ACT

LIB

Alphonse Fournier (Minister of Public Works; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Hon. Alphonse Fournier (for the Minister of Finance) moved

the third reading of Bill No. 294, to amend the Excise Tax Act.

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CCF

Major James William Coldwell

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

Mr. M. J. Coldwell (Rosetown-Biggar):

Mr. Speaker, before the bill is finally adopted on third reading I want to make a few comments, particularly with reference to section 6, which increases the sales tax from eight to ten per cent, and which is therefore in effect an increase in the tax of twenty-five per cent.

During the discussion the Minister of Finance (Mr. Abbott) was good enough to say that he agreed that it would be well for members of the house to have the opportunity of expressing their opinion on this bill, and particularly on section 6. Yesterday afternoon the Minister of Finance reiterated that opinion. At page 3730 of Hansard he said:

When hon. members have completed the discussion, which I hope is nearing an end now, I shall be quite happy to have such a vote taken.

I drew attention to the fact that we were in committee, that a very large number of members of the house were unavoidably absent attending important committees of the house, and that therefore a vote taken under those circumstances would not reflect the opinion of the house. A recorded vote was taken in the committee, and there were forty-two in favour of section 6 and twenty-eight opposed to it, a vote of only seventy members of the house. The minister noted that himself and regretted that more members would not be able to participate in the vote when the house was in committee of the whole. Therefore I propose to move an amendment to the motion for third reading of the bill. I move:

That Bill No. 294 be not now read a third time, but that it be referred back to the committee of the whole house for the purpose of reconsidering clause 6 of the said till.

Excise Tax Act

I believe that is in order at this stage. I had thought of moving that the section be deleted, but I thought if I did that there might be some discussion on a point of procedure, and in order to avoid any such discussion the amendment is worded as I have indicated.

I do not want to recapitulate all the arguments that have been advanced during the prolonged debate of this increase in the sales tax. I do want to say, however, that in my opinion it defeats to a degree the objective the minister said he had in mind at the time the budget was introduced-that is, of reducing the danger of inflation. I believe the increase in the sales tax, as in some of the excise taxes already adopted by this house, will mean increased prices for most articles and a renewed demand for wage and salary increases, as well as increases in the prices of certain farm commodities. After all, while some farm equipment is exempt from the sales tax, in many respects this tax does enter into both the cost of production and the cost of living in rural and urban areas alike. Consequently I believe that to a degree it will defeat what the minister said was one of the objectives he had in mind in some of the taxes proposed in his budget.

As I have said on many occasions, and in all parts of Canada where I have had the opportunity of speaking from time to time, in my opinion the sales tax is an oppressive and a discriminatory tax, because it taxes those who are often least able to carry any additional burden. It is true that a sales tax may be instituted for a particular reason, and under some circumstances potent arguments may be advanced to support it. Nevertheless the principle of such a tax is fundamentally unsound and wrong. Therefore we are opposed to that type of taxation, particularly at this time when it should be the care of this government to see that nothing is done to increase further the already high cost of living, which, as has been noted on other occasions by many speakers in this house, has now reached the unprecedented level of 182 as compared with the 1935-39 basic level of 100. Therefore I believe hon. members should have an opportunity to express themselves on this clause of the bill now before us for third reading.

I said I did not wish to go into all the arguments that have been advanced, and I do not propose to do so. By this amendment hon. members have an opportunity to ask the government and the house itself in committee of the whole to reconsider this bill with particular reference to section 6. In the amendment I am not suggesting that such consideration should bring about the desirable

Excise Tax Act

result I hope it might have. It might result in quite the opposite, if a majority of this house so decided. But, all hon. members should have an opportunity to register their opinions. I would hope that many hon. members supporting the government will take the view we are taking and so express themselves in connection with this sales tax.

I am not going to say more, because in view of the long debate we have had on this bill I think it is unnecessary to do so. I am moving this amendment in the hope that it will receive considerable support, and will bring about an expression of opinion of which the government must take heed.

Topic:   EXCISE TAX ACT
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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. J. M. Macdonnell (Greenwood):

I

should like to add just a word. As has been said by the hon. member for Rosetown-Biggar (Mr. Coldwell), this matter has been fully canvassed and there is no need to review it at any great length. This amendment is substantially the same as the amendment I moved on second reading, and it is moved for the same reasons. I would just reiterate what I said on second reading: that the arguments presented during the budget debate, when we also asked that this increase in the sales tax be abandoned, I think have been strengthened by the lapse of time. I understand the reason for this amendment, in that the mover wishes to have a recorded vote on this question, which presumably will be substantially the same as the vote in committee the evening before last.

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LIB
?

An hon. Member:

How are you going to vote?

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LIB

John Sylvester Aloysius Sinnott

Liberal

Mr. Sinnott:

I am going to vote for the bill, much as I dislike its contents, because, as I say, the government must have money. No one likes taxes; but if my socialist friends get any comfort from the way I vote, I am prepared to accept that responsibility.

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PC

George Harris Hees

Progressive Conservative

Mr. George H. Hees (Broadview):

Yesterday, while dealing with the increase in the sales tax, I suggested that if it was necessary for the government to raise more money, it would be much fairer if they did so by increasing either the income tax or the corporation tax, or both. In reply the minister had this to say, at page 3721 of Hansard:

My experience has been that under existing conditions an increase in the income tax means that those paying the increase-and I am referring particularly to the larger groups of organized labour-are not prepared to accept less take-home pay. In other words they feel that they should get a wage increase which would offset any additional tax.

According to the minister, if we raise the money by increasing the income tax-a fair tax, based on ability to pay-that would be a bad thing, because the people would know what taxes they are paying, and would object to them. On the other hand, the minister feels that if we raise the money by increasing the sales tax-which is a bad tax, because it is a hidden tax, and bears equally upon the poor and the wealthy-that would be more desirable from the government's point of view, because the public would be unaware of the amount of taxes they would be paying, and would blame the increase in the cost of living on the retailer instead of on the government.

The minister said that if the money is raised by increasing the income tax, the unions would demand higher wages to make up the difference in their take-home pay, and that would be inflationary. Mr. Speaker, when the sales tax goes into effect, the unions are going to demand greater increases than they would if the income tax were increased, because under the sales tax the workingman carries a heavier share of the load than he does under the income tax. Therefore, I think it is obvious that an increase in the sales tax is more inflationary than an increase in the income tax.

From this I believe it is only possible to draw one conclusion, and that is that by raising the money which the government believes it needs, through an increase in the sales tax instead of an increase in the income tax, or the corporation tax, or both, the government is serving political expediency rather than a desire to impose the lightest possible burden on those who are least able to bear an increased burden.

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LIB

George Alexander Cruickshank

Liberal

Mr. G. A. Cruickshank (Fraser Valley):

Mr. Speaker, may I say just a word on this subject, in order to make my position quite clear. I intend to vote against the amendment, but I also believe that, while I am not speaking on behalf of the farm districts in others parts of Canada, the apparent spokesman for the government had no knowledge of the problem of the farmer or thought of the welfare of the people of Canada. I want to refer again, Mr. Speaker, to margarine.

Topic:   EXCISE TAX ACT
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?

Some hon. Members:

Oh, oh.

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LIB

George Alexander Cruickshank

Liberal

Mr. Cruickshank:

It is all very well for my friends from the maritimes to say "oh, oh". I want to make my position very clear.

Topic:   EXCISE TAX ACT
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?

An hon. Member:

You want grease.

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LIB

George Alexander Cruickshank

Liberal

Mr. Cruickshank:

If some hon. members in the back benches in that corner of the house in which I sat when I first came here have not the courage to get up and make a speech, they should not interrupt their betters. Mr. Speaker, to soften my remarks, may I state that I have had the privilege of being here longer than some members, but not as long as others. I have had the privilege of being here for about eleven years. I like every member in the house, and I hope they all like me. I respect their opinions, and I hope they respect mine. Irrespective of whether or not I agree with them, I realize that they are sincere in their beliefs. Even if a junior colleague from my own province should make irresponsible statements without the slightest foundation, reason, common sense or judgment, I respect his opinion. Incidentally, my province may be one of the junior provinces within confederation, but we do not consider ourselves a junior province in so far as good taste and good judgment are concerned. Mr. Speaker, I want to state to you, and through you to my colleagues, all of whom I respect, that I shall never divulge anything that occurs either within the secrecy of their home or on any other privileged occasion. I do not do business that way, because I do not have to do business that way in order to get a larger majority than I ever secured before. I can do that without the assistance of a member who took thirty days to neglect a promise to speak on my behalf campaigning all the time on his own behalf,

Excise Tax Act

while I had six meetings, and both of my opponents lost their deposits.

It has been suggested indirectly that I was disappointed that he did speak on my behalf. I believe, Mr. Speaker, it shows the supreme confidence that I had in the judgment of the people in the riding I represent that I was even willing to permit a member with apparently no idea of the welfare of Canada to speak on my behalf. I am asked by a very junior member from New Brunswick what that has to do with this amendment. I have forgotten what Brutus said or the minister of external affairs, but, come one, come all, if you want to interrupt me, knowing your names will not appear in Hansard, I am willing to take you on one or two at a time.

I want to make it quite clear that, while voting against the amendment I believe my colleagues and those who oppose me are sincere in their beliefs and are entitled to them. But, Mr. Speaker, representing as I do, a dairy district, I am entitled to the same consideration. I am sincere in what I am trying to put forward. I believe that this budget has not done justice to the dairy farmer. I may not be correct in that, but I sincerely believe it. I believe that, in the long run, the proposed excise taxes will not be of benefit to the people of Canada as a whole. I believe that the people of Canada will realize that, in the long run, the proposed legislation is not to their benefit, and it is definitely not to the benefit of the people I have the honour to represent. I have the honour to represent those people, Mr. Speaker, without referring to any conversation that I had with the Shah of Persia at the expense of the government. When I hear any remarks which I consider insulting to the great mass of farmers of our province, particularly the dairy farmers, I hope a correction will be made, from the source from which it should come, to the effect that they were not the expression of the policy of the government. Any man who insults the farmers of Canada and the dairy farmers that I have the privilege of representing should, I think, publicly withdraw any privileged statement made by the Shah of Persia or some deputy representative of Denmark or some other country. Denmark is a great country, I know. But my riding is a great dairying country, and we are proud of that fact. We make no apology to anyone for the way in which we conduct dairying in my riding or in my province.

I hope that I have had the last word in that connection, Mr. Speaker. I hope to say no more with regard to privileged remarks.

Excise Tax Act

I do not think the present form of taxation is necessarily the essential one to cover the matter. But, all things being considered, I believe that the government which I have the honour to support have evolved what is, in their judgment, the best form of taxation to cover all the people of Canada, in the best interests of all. But I take exception to it when any member goes, shall I say, beyond all limits. There has been an interjection here, Mr. Speaker, referring to the member for Springfield (Mr. Sinnott). But I want to tell the hon. member for Coast-Capilano (Mr. Sinclair) that while the hon. member for Springfield was not a Rhodes scholar, he knows what is decency and what is not, and will not betray a confidence given at a private house or a private luncheon.

Topic:   EXCISE TAX ACT
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SC

Frederick Davis Shaw

Social Credit

Mr. F. D. Shaw (Red Deer):

Mr. Speaker, having regard to the fact that on several previous occasions my colleagues and I have given reasons why we consider this increase in the sales tax unsound, unfair and undesirable at this time, it will not be necessary for me to recapitulate the arguments which we have thus far advanced.

Speaking in the House of Commons on April 10, the evening on which he delivered his budget, the Minister of Finance (Mr. Abbott) spoke as follows-I quote a short paragraph with reference to the sales tax, as reported at page 1813 of Hansard:

I have therefore come to the conclusion that the sound thing to do from the economic point of view, and the fair thing at this time, is to increase the sales tax. I believe also that this is the choice that will be preferred by the great majority of our people.

We take the position, Mr. Speaker, that the twenty-five per cent increase in the sales tax is not sound. We consider it unfair, and we have advanced arguments giving our reasons why we so consider it. We are also thoroughly convinced that the majority of the people of Canada do not favour this tax at this time. We therefore stand together in support of the amendment submitted today by the hon. member for Rosetown-Biggar (Mr. Coldwell). (Translation):

Topic:   EXCISE TAX ACT
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LIB

Joseph-Omer Gour

Liberal

Mr. J. O. Gour (Russell):

Mr. Speaker,

I am not surprised that the hon. members of the opposition seized this opportunity to criticize our tax structure and more especially the new taxes proposed in the present budget. It is natural for them to criticize but they do it all the more willingly when they realize that by so doing they will reap political advantages. However, what never fails to surprise me is to hear these

(Mr. Cruickshank.]

hon. members of the opposition, day after day, call upon us to furnish larger sums of money for various purposes, bonuses according to some,- compensation according to others, or plain gifts, according to others.

I know it is their duty to seem like good fellows in the eyes of their constituents. It is all the easier for them, I admit, to ask that millions and billions be given away since they know full well that they are in no way responsible for such donations. Having voiced requests of that kind, they find it easy to criticize the government for suggesting taxes to meet the proposed outlays.

The budget calls for expenditures of more than three billion dollars. There are times when I would be inclined to envy their position. But I still prefer to be on this side of the house, where I can express my opinion sincerely, without attempting to derive any political advantage.

I am astounded to hear those hon. members criticize present taxes, since the official opposition is always demanding the expenditure of additional billions for defence, charging that we have not yet spent enough in this regard and that we should have spent four or five times as much.

The socialists would have us give more than Canada has or can possibly have within the next ten years. They want huge sums of money to be paid into pension funds of all kinds, bonuses, etc.

Our good friends, the Social Crediters, would like the government to build a printing bureau for the sole purpose of printing banknotes, to be distributed to all citizens. After a quick calculation of the several amounts asked for by the opposition, I have discovered that we would need more than $6 billion to cover these expenditures, whereas the estimates provide for the levying of only $3 billion. In other words, if we were to accede to their requests, we would have to double the taxes the government now requires.

Just a few words about the additional two per cent sales tax. First of all, may I be permitted to remind the hon, members of the opposition that we dislike imposing taxes even more than they do, because we can derive no political advantage thereby. Tax increases go against us. Had it been possible not to increase the tax we would have been doubly happy. Tax increases help the opposition but not those who sit on this side of the house because such increases are not welcomed by the electors.

I know something about the matter as I am among the first to be penalized. As a merchant, I have to keep a heavy stock of goods. Part of these goods were already subject to an eight per cent tax. From now on another part of them will be subject to a ten per cent tax. Therefore my stock will be made up of certain goods subject to an eight per cent tax and other goods on which the tax will be ten per cent. This tax increase means that I have to protect a surplus of money against loss and fire. Five or six years ago, I paid taxes on certain goods I was unable to sell. In fact, the public does not pay more than before, because large quantities of goods are being sold at reduced prices. Then, let us not forget that when certain wares become out of fashion, they have less value. How much of those are sold below cost price? In such a case, the public does not pay the eight or ten per cent. The true businessman knows of no other country he would rather live in. Ask any businessman; he will tell you he prefers Canada to any other country.

I regret the hon. member for Fraser Valley (Mr. Cruickshank) is not here. I would have told him he is the best promoter of margarine in Canada. He is a great help to the newspapers and to the producers of margarine. I wonder why he insists on talking about it so often in this house. The Liberal government had prohibited the production and sale of margarine as long as it could and I was always pleased to support our leaders in this regard.

But now, the provinces control the production and sale of margarine, a second rate substitute, the nutritional value of which is not one-quarter that of butter. Those who wish to see the matter definitely settled should turn to their respective provincial governments. I blame the government of my province for not having forbidden the sale of that product.

Unlike some people, I do not claim that this foodstuff is not fit to be eaten. I objected to the sale of margarine because I represent what is almost exclusively a farming constituency.

Farmers do not make a fortune but thanks to the sound administration of this government they live decently. Those who are always clamouring for the removal of taxes should try instead to bring prices down by asking workers, farmers and businessmen to 80709-2401

Excise Tax Act

work a few hours longer than at present. On the other hand, we in the House of Commons who spend half our time arguing, at tremendous cost to the taxpayer every day, should avoid useless repetitions and get down to work.

This is only the second time I have spoken in the house this year, and I do so without preparation. If members enacted bills more speedily instead of making so many speeches to please their constituents, it would be less costly to the country and things would go much better.

(Text):

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CCF

Joseph William Noseworthy

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

Mr. J. W. Noseworthy (York South):

Mr. Speaker, I have already set forth my objections to the sales tax, and I shall not repeat them at length. However I should like to comment upon a statement by the Minister of Finance (Mr. Abbott) as it is reported at page 3731 of Hansard for June 5, where he said:

I have answered my hon. friend1 as to why we think a tax on spending, such as the sales tax, is less inflationary than an increase in the personal income tax or a lowering of the exemptions; because I believe the imposition of such an additional tax would at once result in fairly widespread demands for wage and salary increases to offset it.

In the first place, I do not know of any group in the house that asked for an increase in the income tax at the lower levels. A number of alternatives were offered to the minister, such as an increase in corporation taxes, a graduated excess profits tax, and even an increase in income tax in the higher brackets. No group in the house has advocated an increase in income tax across the board as an alternative to the sales tax now under consideration.

Secondly, I challenge the minister or his parliamentary assistant, or any member supporting the government, to show where labour has gone to employers asking for any increase in wages because they felt they were bearing more than their share of income tax, or asked for an increase in wages on the ground that they were paying too much income tax. Ever since the government released its control on the cost of living, industrial workers have sought increases in wages to offset the increased cost of living. The government has been notified time and again by organized labour that, if it was willing to stop inflation and the rising cost of living, labour was willing to sit down and to iron out with the government the whole question of wage increases.

Excise Tax Act

Every demand for wage increases since the war has been made on the basis of the increased cost of living, and I submit to the minister that the imposition of an additional sales tax will be one more incentive to organized labour across the country to ask for increased wages, thus increasing inflation. It is that, and not the fact that industrial wage earners have been called upon to pay taxes, that has been the cause of the demand for increased wages throughout the year.

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PC

Gordon Francis Higgins

Progressive Conservative

Mr. G. F. Higgins (St. John's East):

Mr. Speaker, I wish to make only a few brief comments. I intend to support the amendment of the hon. member for Rosetown-Biggar (Mr. Coldwell), because I consider the increased tax unjust, inequitable and unnecessary at the present time. If the government intends to pursue the policy that apparently it is now aiming at, a policy of combating inflation by the measures it is taking, by imposing credit restrictions in various forms and by increasing the cost of living, then the only assumption one who is not greatly versed in financial matters can come to is that* the government intends to combat inflation by creating depression. And if it is not very careful there will be a depression on the government's doorstep within a very short space of time.

I certainly intend to vote for the amendment.

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PC

Arza Clair Casselman (Chief Opposition Whip; Whip of the Progressive Conservative Party)

Progressive Conservative

Mr. Casselman:

I was paired with the hon. member for Portage-Neepawa (Mr. Weir). Had I voted, I would have voted for the amendment.

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June 6, 1951