Mr. AVEIR:

You didma go back.

Mi. HEIR:

Just in case a wrong impression should get abroad following the remarks of the hon. member for Parry Sound as to the amounts of money that have been contributed to western agriculture, I might point out that the cheese bonus goes largely to Ontario; that the freight assistance on feed grain, the assistance in regard to fertilizer, the ceiling price on coarse grains as a means of assisting live stock producers, are all of particular importance to this part of the country and not of the same ad\ antage to us in the west. I mention these points as having some bearing on the remarks of the hon. member in regard to the contributions that have been made by the federal treasury to the farmers of western Canada.

I suppose under this section of the act we should be grateful for small mercies. I say to the minister without hesitation that the carrying forward of the income tax of the farmer over a period of two years is the

Income War Tax

recognition of a principle that is important. At the same time I submit that it does not go far enough, considering the industry as a whole and the hazards that are involved in it. I am not unmindful of the difficulties with respect to the principle of taxing agricultural incomes, from the point of view of the industry itself. The industry is hazardous; there are many things beyond the control of the farmer which influence his income in one year as against another, to a much greater degree than is the case in connection with ordinary business. Here under resolution 8 we are dealing particularly with the income of 1942 as a base, which represents a substantially higher income in the case of most farmers than they have enjoyed for some time. With the base so high this year there will be more farmers paying income tax than in any other period, certainly within the last ten or twelve years. Therefore I submit that this matter is of such importance as to deserve added consideration; I do not mean this item alone but the whole basis of taxing agricultural incomes. I will not urge the point, but I will go so far as to suggest that this is a matter which might be given to a committee of members of the House of Commons for particular study outside the house, where they might call in experts and review the whole question in minute detail.

I realize that there are different conditions in different parts of Canada. I submit that if the farmers are taxable they are willing to pay their tax, but there is so very much involved in the principle. I agree with the hon. member for Yorkton, and I believe there is plenty of argument in support of the suggestion, that it would be much fairer if the farmer's income could be spread over a base of about five years. I do not think that is unreasonable. I quite appreciate the argument put forward by the minister a few moments ago as to the difficulties involved, but I am told that in the old country they have a means of equalizing the income tax as between one year and another. If we could devise a scheme whereby the income tax could be spread over a period of, say five years, dropping off the fifth year and adding fhe new year and taking an average, it would provide a much more equitable basis.

I wish to go one step further, because in my opinion the business of the farmer is entirely different from any other business. I think we must recognize the principle that the farm is not only the business of the farmer; it is also his home, and when you consider the two together you have a situation very different from that of any other business.

There is, however, another feature with respect to this matter which I believe is of

some importance. During the period from 1930 onward the western farmer went heavily into debt, either through unsecured liabilities which he created or by placing heavy mortgages on his farm. Certainly at this time his income tax provision will not permit him to pay very much off his accumulated indebtedness. Perhaps he is not entitled to any more consideration in that regard than anyone else, but having regard to the difficulties the industry has experienced and the desire to see it on a reasonably satisfactory basis when this war is over, I submit that this point has particular significance at this time. Moreover, as an added thought-and with this I shall close -we have gone out and asked industry to expand their plants. We have assisted industry to do so, financially, by writing off taxation, and in other ways. Now we have come along and asked the farmer greatly to expand his production, which in turn means that he has been obliged to incur additional expense, perhaps by way of extra fencing or new buildings or a new well to provide for more live stock; but we are not giving him any consideration either financially or from the point of view of his income tax. Therefore I submit that he has a pretty good case in this matter and that we should not say he is merely comparable with other forms of industry.

I just advance these observations with the suggestion that the minister might be well * advised to make provision at some stage whereby this whole matter might be reviewed in minute detail, utilizing the expert advice of his departmental officials as well as of others who pay particular attention to matters of this kind.

Mr. WEIR (Melfort):

In the first place

manufacturers are being and have been bonused for a number of years-

Mr. WEIR (Melfort):

-under the government of hon. gentlemen opposite just as under our own.

Mr. WEIR (Melfort):

Cheese was selected, as I stated last night, for this reason. The value of our dairy industry is estimated at from 8175,000,000 to 8200,000,000 per annum; it is one of the greatest of the agricultural industries. The difficulty with the dairy industry I can perhaps demonstrate better by putting on record certain figures that will give a picture of it from 1920 to the present time, so that members of the committee will see what the trend has been. This statement shows the production of creamery butter in Canada by years:

Year: Pounds

1920 111,691,718

1925 169,494,967

1926 177,209,287

1927 176,978,947

1928 168,027,039

1929 170,810,230

1930 185,751,061

1931 225,955,246

1932 214,002,127

1933 219,232,546

1934 233,047,500

There has been an almost proportional decrease in the production of cheese in Canada, and I will give this for the comparative years:

Factory Cheese Produced in Canada

Year: Pounds

1920 149,201,856

1925 177,139,113

1926 171,731,631

1927 138,056,908

1928 144.584.619

1929 118,746,286

1930 119,105,203

1931 113,956.639

1932 120,524,243

1933 111,146.493

1934 99,754,500

It will be seen that one of the largest jumps in creamery butter production took place in

1931. The effect of the United States government raising their tariff against our milk, cream and other dairy products in the 1929-30 session of congress was such as to shut out from that country the equivalent of 52,000,000 pounds of cheese. Those products were turned back into this country and had to be marketed here because the market it had prior to 1929 and 1930 had been shut to it. The result is that the greater part of these products has gone into the production of butter.

Last night the question of consumption was raised. The following shows the changes in the consumption of butter, not only per capita but also for the whole dominion:

Per capita Total

Year' pounds pounds1925

27.36 256,248,60919<>6

28.44 267,014,5551927'

28.72 273,431,070ig28

28.54 280,657,0761929." "

29.26 293,434,0361930

30.59 312,224,4881931

30.76 319,191,8851932

30.49 320,367,5191933

30.18 322,319,6721934 ... 30.92 335,029,401

The year 1934 shows the highest per capita consumption we have on record.

On top of the difficulty that has arisen because of the market of the United States being closed to our dairy products, there has also been a tendency throughout the world, especially for countries marketing their products in the United Kingdom to produce more butter than cheese. For example, imports of butter into the United Kingdom during the calendar year 1934 were 9-9 per oent greater than during 1933 and 83-3 per cent greater than during 1924. That is, from 1924 to 1934 imports of butter into the United Kingdom had almost doubled1. At the same time imports of cheese into the United Kingdom during the calendar year 1934 were only 3-4 per cent greater than during the calendar year 1924. It is evident that the effect of the ever-increasing imports of butter into the United Kingdom is best illustrated by the effect this had on the world price of butter. The average price of Australian butter in London during 1933 was only T35 times the average value of Canadian cheese, tout with a 9-9 per cent greater import of butter into the United: Kingdom in 1934 than in 1933, the average price of Australian butter had further fallen and was only 1-28 times the price of Canadian cheese. Anyone familiar with the cheese and butter industries will realize this spread between prices for cheese and butter is out of line. On account of the disparity in the prices of

4176 COMMONS

Supply-Agriculture-Marketing Act

butter and cheese at London, it is desirable as far as possible for this country to export surplus dairy products in the form of cheese rather than in butter. In so doing it will not enl'y avoid breaking the entire domestic price structure 'by exporting a small surplus of butter, but will avoid' a break in the price of cheese.

Milk fat in cheese delivered to Montreal for export is worth about twenty-seven cents per pound as compared with twenty-one and a third cents peir pound for fat in butter delivered to Montreal for export, on the basis of the present export values. That simply means that we get a greater value for every pound of butter fat in cheese we export to the United Kingdom at present United Kingdom prices than we would for fat exported in butter. As was stated yesterday, and agreed to by the hon. member for Northumberland, through tariffs we have been able to increase the price of butter to the dairy farmers of Canada.. During the last year alone, talking the months of July, August, September and October, when there was the greatest production, it is conservatively estimated that the increased value to the dairy farmer due to this protection, in connection with creamery and dairy butter, amounted to $8,146,000.