The House resumed at 8 p.m.
RETAIL SALES TAX AMENDMENT ACT (CONCLUDED)
Mr. B. Newman: Mr. Speaker, my comments are not going to be lengthy concerning Bill 27, An Act to amend the Retail Sales Tax Act, but I do want to bring to the government’s attention the flip-flop that has occurred on their side of the fence.
Mr. Haggerty: Listen to this.
Mr. B. Newman: Yes, and when I say a flip-flop I really mean a flip-flop.
I can recall back in 1969 when the Hon. Charles MacNaughton was the provincial Treasurer and how he vehemently spoke for a retail sales tax, stating that a retail sales tax on production machinery would have no detrimental effects whatsoever. His successor, the Hon. John White, in 1970 maintained that same attitude. In fact, we on this side of the House tried to point out to the government of the day the harmful effects that there could be.
I can recall raising the issue when Bendix-Eclipse of Canada contacted me, or wrote me a letter; Hull-Thomson Limited -- these are all concerns in my own community; many of them are very small operators but they depended on production machinery to be a viable operation -- Kelsey-Hayes Canada Limited; Tamco Limited; Fabricated Steel Products (Windsor) Limited; Somerville Industries Limited; Auto Specialties Manufacturing; Fabco Limited; Champion Spark Plug Company of Canada Limited; Duplate Canada Limited, and many others.
At that time we tried to point out to the government the detrimental effects of imposing a five per cent sales tax. It was only five per cent in those days. I’ll read this comment only. This was in the November 5, 1969, issue of the Windsor Star.
“Ontario Revenue Chief Defends Surcharge:
“A provincial five per cent sales tax surcharge on production machinery will not have a detrimental effect on Windsor’s industry, Minister of Revenue John White said Tuesday.” That’s Tuesday, November 4, 1969.
He made that statement, by the way, in comments after I had raised a question in the House concerning the harmful effects of the imposition of a retail sales tax, especially on my community, because of the fact that its industries have to compete with American companies and the dollar was on par at that time. They had to compete with American industry where the American industry was a little more productive than the Canadian. Had the government not imposed the five per cent sales tax at that time, I’m fairly certain that many of these small industries in here could have developed to the point where even the imposition of the sales tax at a later date may have not had the detrimental effect.
I bring this to the attention of you, Mr. Speaker, and the members of the House, to show how, in the short period of nine years, the government has completely flip-flopped, maintaining at one time that the imposition of the sales tax would have no harmful effects and now, seeing the light of day after it was pointed out at that time and also by many of the industries since then, that this imposition would have a detrimental effect.
I am pleased to say regarding the Minister of Revenue (Mr. Maeck), for whom I have a very high regard, having been on one select committee with him and knowing his capabilities, that I would hope and I would think that maybe his judgement led the government to see the detrimental effects that this imposition of a sales tax at that time has had, and it has taken some nine years, eight-to-nine years, before they saw the light of day and decided now to eliminate the sales tax.
Mr. Lawlor: Mr. Speaker, in this hodgepodge of various inastute recommendations, I shall only select two for comment this evening.
One has to do with an area that has got scant cognizance. Try as I may, Sherlock Holmes as one might, looking through the Ontario budget as to what the alterations in the sales tax picture may be, no mention, not a phrase, is dedicated to a peculiarly interesting and a peculiar concept. It has to do with promotional materials and a definition for promotional distributors: whether, as I believe the representatives of the ministry will say, this has been in effect all along -- that is the business of loss-leaders or the business of promotional material, something given away or discounted down in price in order to sell a good or a particular service, and then the ministry coming along and setting a true valuation or a fair value on the head of that particular good; and then secondly, of course, imposing its tax upon its then set valuation.
What the condition has been to date, I am not clear or sure. Certainly on the basis of the rather elaborate new sections being interjected into the Act, the government has had no authority to do whatever it was doing. There is a note in here which says that the clarification, as the government benignly put it, of the section in question, the clarification of the Act with respect to its application on promotional distributions is necessary because of a decision earlier this year of the Supreme Court of Canada and the interpretations given in that decision to the analogous provisions of the statute of the province of New Brunswick. The amendments proposed in the bill with respect to the promotional distributions are intended to preserve the application of the Act, and therefore I assume that it has been in effect all the way along; and quite illegitimately, again reading the elaborate provisions that the government has now inserted.
If one looks at subsection (4) of section 1, the definition of promotional distribution is quite elaborate; and then, at 8b, the bill seeks to define promotional distributors. I would like some clarification as to what presumption or effrontery the government has been up to in this particular area at this time. What, in terms of a quantitative measurement, does this new section mean? Third, I am very much concerned with respect to just how the government proposes to make it work.
There are areas in which one has to concede; if you are marketing kewpie dolls and they have a pretty set value and well known, then if you start giving the kewpie dolls away in order to get a tube of toothpaste, then I suppose some valuation can be reached. But there must be a very broad range of goods, and services particularly, upon which this very nice mesmerism or gazing into crystal balls by this ministry will be brought into play, and the sheer administrative complexity would seem to me to cause the minister some pause and halt. Is the minister going to have a group of inspectors fan out, men well versed in kewpie dolls, to be able to determine this? Or, if a particular service has been rendered, these people would have to have acquired a fair expertise in what, in surrounding circumstances, that particular service is likely to be worth, or to elicit that information. The possibilities of this particular manoeuvre boggle the mind -- at least they do mine.
I think this kind of legislation, leaving such great areas of variables and vacillation, probably can only be more costly in the process of its being administered than it would ever hope to bring in revenue over against it. What about all those problems that arise? Ought this section not be reconsidered in full?
The second area with which I am concerned has to do with rolling stock. This is a benighted area indeed -- benighted in its implementation and purblind in its conception -- if this tax is directed primarily against the federal government, as I surmise is this government’s nefarious intent, because it has become a tradition with this government in a roundabout way to siphon away money from what would otherwise remain within federal coffers, or affect federal institutions, into the provincial Treasury -- that’s where the chief weight would lie; that would be one element of the whole picture.
The second element has to do with the province of Ontario itself and the impact of this particular tax on public transportation in terms of the rolling stock involved and then a fortiori on Metropolitan Toronto, which is the only city in the province that will be vitally and substantially affected by this particular tax, even in a very severe and possibly crippling way.
I put it this way: What I would like to have is the whole picture of the total moneys being brought in, or which the minister estimates -- and he is pretty shrewd in the estimate, I trust -- arising out of this particular taxation. What portion will be borne by the Ontario Northland Railway, the GO system, and the light transit system operative within Metropolitan Toronto? And what portion, over against that, is this government expecting to garner from the federal government or from federal agencies? I can throw in the CPR, which I trust will soon fall within that demesne. In any event that division would be terribly important. If it is two-thirds/one-third, perhaps the tax is not as iniquitous as I suspect it may be.
But let us confine our attention for the moment to Metropolitan Toronto. If the TTC decides to spend $100 million on capital goods in transportation within this city, which is a great alleviation to environmentally and otherwise a hundred things, as we know -- and I won’t go into them -- and which is the direction of the future, particularly if we don’t find a methane substitute for oil, because the shortage will be upon us very soon and public transportation will become crucial for all of us and it will have to expand in order to accommodate us.
If they spend $100 million, 75 per cent of that comes from the provincial government, 25 per cent of it comes from the municipality itself. Here is Josiah. He gives with his right hand and he takes away with his left; because out of the $100 million, obviously $7 million of it will fall under taxation, so the total amount forthcoming would be $93 million.
Within that particular picture, if you make a breakdown of these sums of money, you will find that Metropolitan Toronto, in effect to get the same amount of capital goods, would have to spend $32.2 million in order to get $25 million worth of what it would otherwise get before this tax came into being.
So who are you penalizing? As far as your government is concerned, you’re taking back with one hand, as I say, from the contribution or grant that you’ve already made that’s on the 75. So you’re no longer giving 75. Is everyone supposed to wink their eye and not to notice this particular piece of sleight-of-hand?
On the other hand you bring the full weight to bear upon the transit riders, in the Metropolitan Toronto area at least, by making them not only pick up that particular amount of money which you’ve taken back, but to find moneys for tax purposes on top of it, over and above the portion which they are obliged to spend in any event.
It’s a retrograde piece of business on the whole. The increase to Metropolitan Toronto -- hold on to your hat -- is 37 per cent. That’s what it’s going to cost them for all the benefits you’re going to achieve in this particular regard.
So without prolonging the debate, and taking the whole picture into consideration, on a reply we would like to know the total picture here as to the distribution and who’s going to bear the brunt, so that we can estimate what the particular brunt being borne by the people of Ontario, and particularly the people of Toronto, might be.
Mrs. Campbell: Mr. Speaker, I too would like to have something of the rationale and something of the facts in so far as the city of Toronto is concerned. I don’t know what this government is thinking about, but it seems to me that every time we turn around they’ve got another hatchet out for this city. I think it’s time that we get some explanation as to what the costs are to the citizens of Toronto.
The government has already put us in a very preferred position on the matter of educational costs. We are unique. We know we’re unique, but I don’t know that we want to be so unique that we’re the only municipality that gets no assistance from this province grant-wise for its public school system. Now we get this kind of thing, and since the city of Toronto is covering off a good deal of the metropolitan costs, it seems to me we ought to have those facts and the minister ought to see that we do have them.
Every single proposal that is brought in, particularly by this ministry, or under this minister’s jurisdiction, seems to be an attack on this particular area of the province; this is another case. Metro is not in a position, at this time, to be able to cover up all the costs that the government wishes to shove upon it. It is no longer a growing or an affluent municipality. It now has to have some consideration.
If we are going to have any kind of a system in this particular area which will be useful to the people of it, we certainly should be giving some encouragement, rather than imposing further and additional costs. I trust the minister will give some answers to us before we’re asked to go further on this bill.
Mr. Swart: I would like to make a few comments on this bill, because I share the concern of my colleagues about the sales tax which is going to be imposed on rolling stock. It may be said at the present time that it is not a great amount. My understanding is that perhaps it will cost Metropolitan Toronto this year about $50,000 net because of this tax, which would be a total charge against the transit system of something like $200,000.
That $50,000 may not seem to be a very large amount and the government might think we shouldn’t put up an objection to this, but I think what we recognize in this bill is that it is the first step towards reciprocal taxation by the government. Perhaps that isn’t the best term to describe it, perhaps what should be said is it is the first step on the part of this government to see that every public agency pays just as much taxes as private agencies.
We know from the budget that perhaps next year, whether property tax reform comes in or not, but at least when it is introduced -- and property tax reform is a misnomer too; what we really mean or did mean at one time was market value assessment -- they are going to introduce certain other taxes against municipalities. There will be full sales tax imposed against municipalities, according to the statement in the budget; there will be full licence fees imposed against municipalities; and there will be full taxes on such things as gasoline and all other things that the municipalities use.
Again it is my understanding, from the information which I have received from the Ministry of Revenue, that this will probably amount to about a $30 million additional payment that municipalities annually will have to pay over and above what they pay now.
Mr. Speaker: I must remind the hon. member that this is the Retail Sales Tax Act.
Mr. Swart: Yes, I’m coming to that, Mr. Speaker.
Mr. Speaker: I wish you would.
Mr. Mancini: That’s why he is in the second row now.
Mr. Eaton: Some time down the road he is coming to that.
Mr. Swart: In fact, I think I have been dealing with that. This principle of applying taxes against public agencies and reciprocity may not be that bad in principle, but what I want to say here is that this and the measures which the Treasurer tells us are going to come later with regard to taxation on municipalities, can’t be considered in isolation from transfer payments and assistance from the government to municipalities and to the public agencies.
The reason I am concerned about this bill and have real reluctance to support this bill is that it is significant that they bring in this part of the bill first. Before they deal with the matter of transfer payments to help the municipalities pay these additional charges, they are bringing in the charges against the municipalities. From the history of what has taken place with this government in the last few years, with the breaking of the Edmonton commitment and all of these other measures where they have backtracked on their commitments to public bodies and to municipalities, I have real reluctance to see a further levy against transportation, even if this one only applies to Metropolitan Toronto, without seeing what other measures they are going to introduce to assist the Toronto Transit Commission.
Finally, I want to say there has to be something a bit weird about a budget and a measure like this which was stated in the budget, which on the one hand says, “We are going to remove the sales tax from such things as storm doors because we want to conserve fuel, we want to encourage good insulation,” and then, by the next measure, they say, “We’re going to apply additional costs against our public transportation system,” which inevitably is going to mean in the long run that fewer people are going to use it, they’ll have higher costs, and more people will be providing their own transportation. I say it’s a contradiction and we have very real difficulty in supporting a bill such as this.
Hon. Mr. Maeck: The members have certainly raised some interesting questions in this debate, and I’ll probably try to deal with each member separately, if I can. I’ll deal first with the member for Erie who was the first speaker. He spoke about the rolling stock, as almost all members did. I would like to point out to all members of the House that this isn’t something new. This was already in the Act and was exempted. All we are doing is removing the exemption. It’s not something that’s new.
Mr. Haggerty: That’s bad enough though.
Hon. Mr. Maeck: It’s already in place in British Columbia, it’s in place in Manitoba; it’s in place in Quebec.
Mr. Haggerty: What about Alberta?
Hon. Mr. Maeck: And it’s in place in Saskatchewan.
Mr. Haggerty: What about Alberta?
Hon. Mr. Maeck: No, Alberta does not have it.
Mr. Haggerty: Alberta doesn’t have any sales tax at all.
Mrs. Campbell: Are you going to equate that to OHIP premiums?
Hon. Mr. Maeck: No, I’m not going to equate it to OHIP premiums at all. That’s not under discussion at this particular moment.
Mr. Speaker: Order. Order.
Hon. Mr. Maeck: The member for Erie also talked about the exemptions on storm doors and windows and so on, and I think perhaps for the record it might be wise for me to read into the record the actual exemptions that are now used -- at least the rules for exemption that are used by the federal government, which we intend to use. There aren’t that many of them but perhaps it would help to clarify this particular section of the bill for all concerned.
“Storm doors and storm windows, commonly marketed as such, qualify for exemption. Principal doors and entranceways and similar doors containing small double-glazed window-panes do not qualify for exemptions. An entranceway with the principal door, door-frame and threshold and sidelight unit does not qualify for exemption. Should this unit contain a secondary or storm door, the value of that door may be deducted from the overall unit price when determining the value.”
Mrs. Campbell: What size bureaucracy are we going to have?
Hon. Mr. Maeck: I listened to the member for St. George quite carefully. I would really expect her to pay the same respect to me. She may not like all the answers I am going to give her, but I think I should have that much respect from her.
Mrs. Campbell: I agree.
Mr. Roy: Try not to so provocative.
Hon. Mr. Maeck: “Double-glazed windows and window units incorporating the insulating features of the double-glazed units; permanent or removable storm units qualify for the exemption, provided that the units are sold complete with their storm units; double-glazed patio doors and patio door units with double-tracked door systems which incorporate the glazed insulating feature qualify for exemption; double-glazed storm windows, screens and slim-shades imported for shop assembly as double-glazed windows with a built-in operating dial at the bottom corner of the sash to enable the slats to be adjusted may be imported exempt of federal sales tax,” and also our tax.
There are two more items. “Window frames for sealed-glass window units: sealed-glass window units qualify for exemption; window frames installed separately from the sealed-glass window units are subject to sales tax. If the window frame is sold already installed with the sealed-glass window unit as one complete unit, the frame would be considered as part of the storm window and therefore exempt from tax.
“Heat pumps for use principally to provide heat in the heating system of a building are exempt. Heat recovery units and devices for extracting heat from exhaust air or waste water for recovery of energy are exempt. Solar cells designed to produce electricity directly from the sun for charging batteries are exempt.” Those are the items that are exempt under the proposed amendment to the Act.
I believe the member for Port Arthur asked about the triple glazing, and I would inform him that it is also exempt. I think that was one question he asked me.
The member for Erie suggested that perhaps sales tax should be lowered. Of course, that again is a matter that is decided by the Treasurer (Mr. McKeough) and not by the Minister of Revenue. But I would point out that any time we lower the sales tax the money has to be raised somewhere else. I didn’t hear any suggestions as to where that money would come from if we lowered the sales tax. That’s the other half of that coin.
Mr. Reid: You can fire whoever wrote the speech for you.
Hon. Mr. Maeck: This isn’t a speech, I’m ad libbing for a change.
Mr. Roy: You know what to do then, eh?
Mr. Reid: You shouldn’t have admitted it.
Mr. Deputy Speaker: Order.
Mrs. Campbell: What is the cost of the bureaucracy in this bill?
Hon. Mr. Maeck: The member for Hamilton Mountain also spoke about rolling stock. He wanted to know if any studies had been done regarding the effect on industry. He was referring, of course, to those firms that manufacture rolling stock. I’m informed there should not be an effect on that industry. There is no charge as far as the industry is concerned; they don’t pay any sales tax. It’s the people who purchase these cars and equipment who are the ones who will pay the sales tax; so it should not really affect the manufacturers in any way, shape or form. The only way it could affect them would be if, because of the sales tax, they weren’t able to buy as many, but experience in other provinces would indicate that doesn’t really bear very much fruit.
Mr. Swart: Which provinces?
Mr. Foulds: Who else has a TTC system?
Hon. Mr. Maeck: I am still waiting for an answer from my staff as to the effect that the rolling stock tax would have on the city of Toronto. As soon as that is at my desk -- maybe it’s here now.
This is a very rough breakdown of the $15 million that is anticipated being raised: public transit authorities, including GO Transit, approximately $1 million; and CNR, CPR, Ontario Northland, Algoma Central and United States carriers -- this would be for parts and repairs -- $14 million. The breakdown between railways really is not available. It’s just taken on an average.
The member for Halton-Burlington (Mr. Reed) asked some questions regarding the chimneys and so forth. I see he’s not here now --
Mr. Roy: Yes, but he asked me to be careful about the answers; I am making notes.
Hon. Mr. Maeck: Okay. He can get the information in Hansard.
With regard to the exemption for insulating materials, the Treasurer was quite specific about the insulation items that are to be exempted. As members opposite know, those decisions are made by the Treasurer and not by the Minister of Revenue. If, however, there is confusion about the interpretation of the insulating materials, my ministry is prepared to re-examine this whole issue and clarify any areas that may be causing difficulties. Also, Thermopane is exempt as well as triple glazing, which I mentioned earlier.
In further reply to the inquiries of the member for Hamilton Mountain (Mr. Charlton), the railway rolling stack is taxed by other provinces, as I indicated, and therefore the competitive position for manufacturers in Ontario should not be more than in any other province. They should all be pretty well in the same boat.
I indicated earlier the expected revenue is $15 million annually. The Treasurer announced in the budget reciprocal taxation between municipal and provincial levels, which the member for Welland-Thorold talked about, which should leave municipalities no worse off because of the removal of exemptions, and this again is the Treasurer’s policy.
The member for Lakeshore mentioned the promotional distribution. Valuation of promotional material is calculated on the basis of cost of material, plus labour costs, plus percentage of overhead. This is a common method of valuing tangible personal property. The legislation makes no change in the method of -- I am having a little difficulty in reading this --
Mrs. Campbell: Get an interpreter.
Hon. Mr. Maeck: -- evaluation and the application of the tax. The method has been in use for many years, I am informed, and poses no additional administrative costs. Revenue estimates of tax collected on promotional material for the last two years amount to approximately $50 million. The member is quite correct in saying that as far as the promotional material is concerned it has been in effect all of these years. Because of the court case in New Brunswick, we felt that it’s best to tidy up the legislation --
Mr. Lawlor: I guess so.
Hon. Mr. Maeck: -- and that is the reason this amendment is here.
Mr. Lawlor: If I were a promoter, I would sue you and get my money back.
Hon. Mr. Maeck: As a matter of fact they did sue in New Brunswick, and that is the reason for strengthening the legislation. We are not changing any policies. It is a policy that has been in effect in this province since I believe something like 1961.
Mr. Lawlor: You make it retroactive too.
Mr. Deputy Speaker: Order. Would the hon. minister please disregard the interjections.
Mr. Lawlor: If he is going to disregard them how can we talk?
Hon. Mr. Maeck: That’s quite true. It’s retroactive. It goes back two years.
I would like to take this opportunity to thank the member for Windsor-Walkerville for the kind words. I appreciate it very much, and also the kind words that I received from the member for Port Arthur. I don’t know whether he was trying to curry my favour a little bit but --
Mr. Foulds: No, no.
Hon. Mr. Maeck: -- perhaps it was sincere.
Mr. Foulds: You are beyond currying favour with, I know that.
Hon. Mr. Rhodes: He’s got a home buyer’s grant he wants to get straightened out.
Hon. Mr. Maeck: I believe that I have covered most of the questions that have been raised, Mr. Speaker.
Motion agreed to.
Ordered for committee of the whole House.
MUNICIPAL ELECTIONS AMENDMENT ACT
Mr. Ashe, on behalf of Hon. Mr. McKeough, moved second reading of Bill 30, An Act to amend The Municipal Elections Act, 1977.
Mr. Deputy Speaker: Does the hon. member have an opening statement?
Mr. Ashe: Just extremely briefly, Mr. Speaker, this Bill 30, the amendment to the Municipal Elections Act which was only enacted by this Legislature late last year, is principally in response to many queries and concerns and possible interpretational misunderstanding by many municipalities. In effect, the amendments hopefully clarify same of the procedures and take out some of the maybe slight ambiguity in one or two sections of the Act as originally proclaimed.
Mr. Epp: Mr. Speaker, I would like to indicate that we on this side of the House would be pleased to support this bill in principle. We have a number of thoughts that we would like to express at this time.
First of all, I am somewhat surprised that less than four months after the other bill was passed by this House, after much discussion and after the ministry consulted municipal leaders over the past two- or three-year period, it was already necessary, within four months as I indicate, to bring in a number of amendments in order to clear up these ambiguities and vagaries that the parliamentary assistant has indicated exist within Bill 98, as it was called last year when it was passed.
The changes make sense because they are a little more explicit. They are particularly important because they emanate from the municipalities themselves. I am at a loss to know where the ministry has been in dealing with this bill when it had the advantage of the municipalities and their suggestions in originally proposing the amended bill last year. When we dealt with this bill last October and November we dealt with a number of important changes. For instance, we changed the election date for municipalities from the first Monday in December to the second Monday in November.
This party brought in a couple of important amendments at that time, including the elimination of the qualification that British subjects could vote. We wanted to make it equal for all people within the province, in that everyone who was a Canadian citizen could vote, which would mean that one could be here three years and then vote rather than have a particular group be a privileged group within the Municipal Elections Act.
Additional powers were given at that time to the clerks of municipalities. They were empowered to delegate responsibilities to their assistants. This was particularly important in case of emergency. Another amendment at that time was that we removed the occupation of a candidate from the ballot itself. Some of these things were included in the other Act, with the exception of two proposed amendments that didn’t pass this House but which will in the near future, I am sure, when the other two parties see the wisdom of those two amendments we proposed.
Nevertheless, we are prepared to support Bill 30 and we will be looking forward to dealing with the various amendments when it goes into committee.
Mr. Swart: We too are going to support second reading of this bill and ask that it go to committee for at least one amendment, or perhaps two which we may introduce.
This bill is before us, as the member for Durham West has said tonight, to tidy up Bill 98 that was passed last fall. Some of the things in here are absolutely necessary for the functioning of the municipal elections. I am not going to put all the fault on the government for missing these things. I guess all of us on all sides of the House had some responsibility for not catching these contradictions or omissions. The government has far more staff, so I suppose the prime responsibility has to rest with it.
Although we are supporting this in second reading, my party has concern about two specific sections of the bill. I want to deal with those briefly and deal with them now, because I have some hope that the parliamentary assistant to the Treasurer might be willing to incorporate them and accept the amendment, or at least give some thought to them before they are actually introduced.
Section 1 of this bill does two things: First, it assures that council and local board members’ term of office this year will expire on November 30 and not December 31; this makes that clear, and it wasn’t clear from the bill.
The second thing it does is it legislates that all such members will get for this year only eleven-twelfths of the remuneration which is set by their bylaw if it is an annual remuneration. That second function of this section, in fact, again has two principles with it.
The first is that because they’re only putting in eleven-twelfths of a year they should only get eleven-twelfths of the remuneration. That principle, I guess, might be acceptable, but I think I should point out that in many municipalities at the present time the last month is a very slack month. There is not one-twelfth or anything like it of the work done in the municipalities in that month. Very frequently, after the elections are held most municipalities have only one council meeting. That is very short and deals with non-contentious matters.
In the month of December they perhaps put in one-half to one-tenth of the time that they would put in during the month of March. So it may not be quite fair to arbitrarily state that they should only get eleven-twelfths of their remuneration. It is certainly going to create some injustice between those municipalities which pay on an annual basis and those municipalities which pay by the meeting, because if there is only the one meeting in December, those members of council and those members of school boards and so on will lose very little remuneration, a very little percentage of their remuneration, whereas those who get paid on an annual basis will lose one-twelfth of it.
In spite of that, I suppose we could go along with that principle, but the thing we can’t accept and to which we object is that this government is telling local governments what they must do about their remuneration. For decades -- I was in municipal government for a large number of years -- municipalities fought to have their full rights in setting the remuneration for the members of council and for the various boards. Previously limits were set by the Municipal Act that they could only get so much depending on the size of the municipality. Municipal people said, with justification, “Surely when this money is all raised from the local taxpayers and we are accountable back to them, we should have the right to set our own remuneration?”
The government conceded and passed the necessary legislation and now sections 205, 211, 238 and 389 of the Municipal Act all give full authority for councils to set their own salaries, their own stipends, their own remuneration -- whatever you want to call it -- and on what basis, whether it’s on a meeting basis or whether it’s on an annual basis.
Now the government is backing off. It is saying to the municipalities, to the municipal leaders, to those who are elected by the local taxpayers, “You are not capable of determining what remuneration you should get this year and we’re going to arbitrarily role that you’re going to have one-twelfth of your annual remuneration deducted.” I suggest that this section must be based on one of three premises.
One is that they think councils through inadvertency will not deal with this issue, or may not think of the fact that they’re only serving 11 months and may not, therefore, consider any reduction because they don’t think of it. I say if that is the case then the Ministry of Treasury, Economics and Intergovernmental Affairs could simply notify the municipalities, reminding them that this was an 11-month year and they may want to give consideration to the amount of remuneration that they are going to receive and may want to make some change. If that is not the premise then it must be that the government thinks municipal people are not capable of deciding whether they are entitled to 11 months or to 12 months, whether or not they are entitled to full salary; or else the third presumption must be that they are going to grab it all for themselves when they’ve got the opportunity.
I suggest this is a degree of paternalism that members of municipal councils and school boards and the other boards don’t need. I suggest that they are capable themselves of assessing whether any changes should be made in remuneration because it’s an 11-month period instead of a 12-month period.
I think it is particularly true that they should have that right when every penny they receive for their services as members of council or the board comes from the local taxpayers. The province does not pay one cent towards that remuneration. They should be accountable to the local taxpayers for that and not be told by the government that they have to make these changes.
The second section of this bill that I am concerned about is section 2. We recognize that change is necessary in that clause to some degree, because by the time the court of revision is held to determine finally who is eligible to be an elector, nomination day has come and gone. Thus the 10 nominators of the local government candidates cannot be determined fully at that time; they can’t be on a final voters’ list and they can’t be determined to be eligible voters, at least by a voters’ list.
Mr. Haggerty: Should be 100.
Mr. Swart: They can be determined but not by a voters’ list, so there had to be some change. But the change is bad, it is not well thought out and it is backward step.
The principle of nominators has always been that they should be eligible voters, that they should have the right to vote within that municipality for the offices they are nominating people to fill. This is clear whether we go back to the old Act -- and I want to read these because I am very seriously trying to impress upon the parliamentary assistant what the change we have here really means; if I can find this quickly: The 1972 Municipal Elections Act, amended up to 1976, had this clause, “A person may be nominated as a candidate for an office by filing with the office of the clerk during the normal office hours a nomination paper described, upon which shall he signed at least 10 electors whose names are entered in the polling list of electors entitled to vote in the election to such office.” I agree that at that time -- and I’m sure the parliamentary assistant would agree -- the final court of revision had taken place and they would know who were eligible voters. Nevertheless, it said people “entitled to vote in an election to such office.”
Bill 98, the one we are amending now, had a section which said: “The nomination papers shall be signed by at least 10 electors whose names are entered or entitled to be entered under section in the polling list of electors entitled to vote in an election to such office.” This is the section which we are amending.
The reason we must amend it is that it refers to the final list of electors, and as that list is not prepared by nomination day we have to amend it. I point out that it says: “Shall be signed by at least 10 electors whose names are entered and entitled to be entered under section 33 in the polling list of electors entitled to vote in an election to such office.”
If we go then to the provincial Election Act, Revised Statutes of 1970, we find there the same principle expressed.
Mr. Deputy Speaker: Order, please. There are a number of private conversations, which may be necessary but I believe they are unnecessarily loud.
Mr. Roy: Who is that, Mr. Speaker?
Mr. Swart: Thank you, Mr. Speaker.
Mr. Roy: Try to keep it down over there.
Hon. B. Stephenson: The member for Windsor-Walkerville (Mr. B. Newman) is talking.
Mr. Swart: The provincial Election Act states: “Nominations shall be by writing, signed by at least 100 duly qualified electors of the electoral district,” et cetera. All it says is that they must be duly qualified electors.
Then we come to the bill which we have before us at the present time and we find that it does not in fact say that. It says: “shall be signed by at least 10 electors, either whose names are entered in the preliminary list of electors or who have furnished to the clerk an affidavit in the prescribed form that they are entitled to vote in the election to such office.” In no place does it say that those preliminary lists of electors are people who shall be entitled to vote.
The courts of revision are held after the nomination papers are submitted. It is conceivable, then, that in any nomination paper there could be one person whose name was taken off because he doesn’t live in the municipality; for a great variety of reasons his name could be taken off. It is conceivable, although unlikely, that one could end up with the nomination of a candidate who wasn’t nominated by a single qualified elector in the municipality from the way this is written.
I suggest that was not the intent of the parliamentary assistant or even the minister, but I do suggest that is exactly what this says. Therefore, some consideration should be given to changing the wording in that section so that only duly qualified voters -- people who are entitled to vote -- should be eligible to sign the nomination papers.
I’d just say again that may not happen very frequently, but I suggest at some time in the future that it will be one of those chickens that come home to roost. Somebody will have a nomination paper which was not signed by 10 duly qualified electors or 10 people entitled to vote and some other candidate will challenge that. Yet under this Act they’d not be able to do anything about it, even though he is not duly nominated.
The other part of this section that bothers me is where it says, “or who have furnished to the clerk an affidavit in the prescribed form that they are entitled to vote in the election to such office.” I think we have to take that within the context of what the Municipal Elections Act now provides. It provides, first of all, that the clerk need post only two lists of the preliminary lists of electors and that one will be in his office and the other in some other public place.
There really is not the opportunity now that there was formerly. Granted many people didn’t use it, and the lists often didn’t stay up on the poles. Nevertheless, it provided greater opportunity than is now provided for a person to find out if his name was on the voting list, and therefore he was eligible to nominate a candidate. But the other aspect of this, and I hope the parliamentary assistant will recognize and admit this, is that under the present Municipal Elections Act there is a requirement that the preliminary list, the list that is going to be posted in two places, has to be up only one day ahead of nominations. The sections of the Act provide that very clearly and if the parliamentary assistant is not aware of it, I will tell him to check sections 25(2) and 25(3), which will tell about the posting of the lists and require they be posted 22 days prior to election day; and section 35(1), which says that nominations shall be 21 days prior to election day.
The facts are that the opportunity for an elector to find out if his name is on that preliminary list before he signs the nomination papers involves a minimum one-day posting and two lists, one in the municipal office and one elsewhere. From a very practical point of view, of course, what will happen is that a person will expect his name is on the voters’ list as it has been for the past 10, 20 or 30 years and will sign that nomination paper; when the candidate takes it in, he’ll find that name is not on there. He may be able to rectify that, but we know of instances in this province where people, top-notch candidates -- and that’s a subjective view -- have been unable to run because their nomination paper was short one name; they found one name wasn’t accurate or something of that nature. I suggest that the parliamentary assistant should take a pretty good look at those sections. I’m sure he’d have to agree that it only requires but one day.
Not only is that a minimum, of course, but I would point out that in any year when there is only 62 days between the start of the enumeration and election day, the timing is such that the clerk will not be able to post that list ahead of that deadline and, in fact, there will only be that one day. When there are 69 days between those dates, as there will be in some years, then there will be a bit more time.
I think what has been done in this change probably has been done at the request of the clerks, in that they didn’t want any responsibility for determining whether the names on those nomination papers were, in fact, eligible voters in the election; therefore, this lets them off the hook from even having to give opinions, although the Act itself, the Municipal Elections Act, says that the onus is on the candidate to determine that he submit a bona fide nomination paper.
I would ask the parliamentary assistant whether he might consider wording something like: “It shall be signed by at least 10 electors who are entitled to vote in the election to such office” I think that would clear it and overcome any of the difficulties that I have mentioned. I leave that suggestion with him to think about before we go into second reading of this bill.
Mr. Speaker: Does any other member wish to become involved in the debate?
Mr. Foulds: Mr. Speaker, I just want to speak on the last point that my colleague from Welland-Thorold has raised with regard to the timing. I just want to say to you and to the House that if the parliamentary assistant and the government had accepted some of the amendments that my colleague had put forward on the original debate on the bill we wouldn’t be into the difficulties that we are into now in having to rectify this legislation so early on. I suspect that we’ll actually have an encore every four or five weeks, having spotted a new weakness in the bill that the parliamentary assistant piloted through the House in the last session, once again adopting in half-hearted measure some of the more pungent and straightforward amendments that my colleague had submitted earlier. Too bad we didn’t accept them at that time.
An hon. member: The party of perfection.
Mr. Foulds: No, no.
Mr. Speaker: If there are no other speakers, the parliamentary assistant.
Mr. Ashe: Mr. Speaker, I will try to cover the various points that have been made. As far as the reason and necessity for the bill, I would suggest some of the changes are, yes, possibly slight misinterpretations or not enough clarity in particular sections; but as was already indicated by the hon. member for Waterloo North, all through the procedure the government was working with a committee set up by the municipal associations and they were quite convinced that the words in the legislation were sufficient to describe what the intent was. In actual fact, in some of these sections we still do, but on the basis that there are some municipalities that maybe because of their size do not have the sophisticated personnel to be involved in some of these questions, they were a little concerned and had some few questions, so we felt that since we like to protect and respond to the needs of all municipalities, whether they be small, large, rich or poor, for the sake of amending a few clauses to make it clearer we would be very happy to bring forth this kind of an amending bill and take the wrath of the opposition, if you will, in criticism and get them through to protect these municipalities, their municipal clerks and so on.
The hon. member for Welland-Thorold has proposed two amendments, one of which I did receive by telephone at noon today. The other one I have still not received, the second one. I do have the one regarding the amendment proposed to section 1. I am not prepared actually to acknowledge that his amendment is a good one. I would go so far as to say it is a very poor one and whether you want me, Mr. Speaker, to go through all the reasons now or wait until committee, I suppose it can be debated one way or the other.
Just touching upon some of the issues very briefly, I support many of the thing that the hon. member has said regarding the municipal councils’ right to set their own pay, et cetera, and it’s exactly for that reason and it is exactly because they do have to be accountable to their electorate that this particular amendment is put forth the way it is in this particular piece of legislation. We have had questions from municipal clerks, from treasurers --
Mr. Swart: Explain that. I don’t understand.
Mr. Ashe: -- from heads of council saying that if their bylaw now reads “per annum” some of them took the literal interpretation that they could not make that eleven-twelfths even if they wished to by their own decision. The member can challenge whether somebody should ask that kind of question or put forth that kind of statement --
Mr. Swart: Change the bylaw.
Mr. Ashe: -- but we got them. We also had a lot of just straight questions. “What do we do? Do we have two councils in office during the month of December? Do we pay two councils in the month of December?” Of course the answer that we are making very clear is no. If a council does feel that eleven-twelfths of what would normally be its per annum salary is not sufficient to pay for 11 months of work -- and I acknowledge what the hon. member has said relative to the work load over the year, that December has not been considered to be one of the busier months, although I think with the new term of office it will become somewhat busier -- let the council take the option that it now has to amend its bylaw rating to compensation. If councils now have a bylaw that says it shall be $5,000 per annum, they can amend their bylaw as soon as they wish and change it to a different sum if they feel they are being short-changed for having a pro rata salary for the whole year because of the month of December.
There was reference made to the inequity between those councillors who are paid on an annual basis versus those who are paid on a per diem basis, and in the strictest sense again the argument is probably relatively true, but I would also submit that in actual fact, generally speaking -- and I appreciate there are exceptions to this -- those councils that are on an annual basis are usually receiving a significantly higher sum per diem than if they were being paid on a per diem basis. Therefore I don’t think the inequity that in theory is there, actually exists in fact.
Last but not least on this particular section, we are, I think, making it sound like a real big deal. It is for clarity. We also know that probably 75 per cent of those in office today will be in office December 1, 1978; 50 in actual fact we are talking about a relatively small percentage of turnover in the council. It is that group of people to whom the council should address itself in terms of the adequacy of the remuneration.
So on that basis we do not feel that the proposed amendment by the hon. member for Welland-Thorold (Mr. Swart) is the right one. We think that the section, as proposed, is the way the municipal people, both elected and otherwise, have asked that it be. They said, “Make it very clear. We know how to handle it after that; but make it very clear what you mean.” We feel that the particular section in the bill, clause 1, does make it very clear; and the municipalities and the municipal councils can judge their actions accordingly, both to themselves and to their electorate for any change they feel necessary in their remuneration bylaw.
On the proposed amendment to clause 2, I must say I don’t buy the argument of this one day business again, not in the least I would go so far as to say that any potential candidate, whether he is at present in office or not -- and I don’t mind this being in print -- but anyone who goes forward with 10 names on his nomination list and stops there probably shouldn’t be a candidate for office in any event.
So again I think we are talking about virtually no one in the province who does that. They are going to get 12, 13, 15, 20, 25 -- so you’re not worried whether one or two or three; or 10 even --
Mr. Davidson: You had better check with the former mayor of Cambridge trying to run for alderman.
Mr. Ashe: -- as in the case put forward by the hon. member, would be declared ineligible.
The posting of the list means nothing. Think about it: Whoever has really suggested that nominators go and look at the post -- even when the lists were on the posts -- to see if they were on the list before they signed. Surely it is not only implicit in the legislation but even in common sense that it should be up to the particular candidate to make sure that the nominators he is getting on his nomination forms are legitimate, or at least appear to be legitimate electors.
There is one point in his argument that I do agree with --
Mr. Foulds: Appear to be, at least appear to be; it’s okay if they appear to be.
Mr. Ashe: Probably appear to be.
We have to make it clear that the municipal politician, or potential politician, has to think for himself. The hon. member has been saying this over and over, and I agree with that. It may appear to him, it may not appear to others.
Mr. Foulds: But there may only be two copies of the list he can check against.
Mr. Ashe: In any event, as I was saying, there is one part of his argument that I do buy, and that is to possibly further clarify the clause, which is now section 2 of the bill, to further clarify at the beginning, “shall be signed by at least 10 electors, either whose names are entered in the preliminary list of electors” -- and there it probably should be clarified -- “and are entitled to vote in the election to such office” -- as well as saying it again when we talk about the affidavits. So that part of the amendment I think is reasonable and probably it should say that anyway. It possibly does say it in other sections, I really haven’t had the opportunity to fully check; but clarifying it even further there would ensure there was no ambiguity.
Mr. Foulds: You use a lot of split infinitives, do you know that?
Mr. Ashe: I see nothing wrong with leaving the section in relating to the affidavits. These affidavits, by the way, will be available with nomination papers, so anyone who wants to stop it at 10, 11, or 12, and has any hesitancy about some of his nominators can have the affidavit attested to by one or more of his nominators.
The main reason -- and the hon. member did touch upon this -- that this section is being put in, is the clerks, I think, generally as a group, through at least some of their spokesmen, felt that the onus should not be on them to make decisions that were not really, in their minds, their responsibility to declare whether somebody may or may not be ultimately an eligible elector. I think with that one addition the clause is correct, basically, in its present form.
Motion agreed to.
Ordered for committee of the whole House.
TOBACCO TAX AMENDMENT ACT
House in committee on Bill 25, An Act to amend the Tobacco Tax Act.
On section 1:
Ms. Charlton: I move that subsection 1(e) of section 1 be amended by adding thereto:
“thereafter an additional three cents for each additional five cents or part thereof that the price at retail of a cigar purchased by him exceeds 90 cents.”
Mr. Peterson: Why are you punishing the Premier (Mr. Davis)?
Hon. Mr. Maeck: On a point of order, Mr. Chairman, I would refer you to rule 86 of the standing orders which says: “Any bill, resolution, motion or address, the passage of which would impose a tax or specifically direct the allocation of public funds may not be passed by the House unless recommended by a message from the Lieutenant Governor, and may only be proposed by a minister of the Crown.” I submit to you that this amendment falls into that category.
Mr. Deputy Chairman: The member for Nickel Belt on the point of order.
Mr. Laughren: I find it passing strange that the minister chooses to take this position in view of the fact that the tax already exists on the cigars. It’s not as though the member for Hamilton Mountain was proposing a tax that does not presently exist. Secondly, it is even more passing strange in view of the Treasurer’s (Mr. McKeough’s) behaviour with the OHIP premiums that the minister would see fit to take a position based on standing order 86 when in fact what the member for Hamilton Mountain is proposing is simply to make an existing tax more equitable.
Mr. Roy: He is changing it.
Mr. Deputy Chairman: The member for Port Arthur on the point of order.
Mr. Foulds: Mr. Chairman, I’m a little confused. I thought the procedure was at least for the Chairman to read the amendment that was put before we discussed whether or not it was in order.
Mr. Deputy Chairman: The amendment was put and immediately the hon. minister rose on a point of order and I must hear the point of order as soon as it is raised. I have no alternative.
Mr. Foulds: Then I will speak specifically to the point of order that was raised as it is enunciated in standing order 86. I submit to you that in the strict interpretation of that standing order the amendment as put forward by the member for Hamilton Mountain does not fall into that category. It is not a motion, it is not an address, it is not a resolution, it is not a bill; it is an amendment to a bill and nowhere in our standing orders is there a definition that defines motion, address, resolution, bill in the terms that have been put by the member for Hamilton Mountain; I would suggest to you that the suggested change is entirely within his rights and is proper and is in order.
Mr. Deputy Chairman: Do you wish to speak further to the point of order, Mr. Minister?
Hon. Mr. Maeck: Yes, Mr. Chairman. I would only direct your attention to the phrase, “specifically direct the allocation of public funds”. I believe that is pretty definite, that members of the opposition, or as a matter of fact any private member, does not have the authority to bring in this type of amendment.
Mr. Davidson: Mr. Chairman, in speaking to the point of order, I would just like to refute what the parliamentary assistant has just said. The proposal, as put by the member for Hamilton Mountain, is in no way specifically allocating the direction of public funds.
Hon. Mr. Maeck: Yes, it is.
Mr. Davidson: Raising them, not allocating them.
Mr. Peterson: On a point of order, Mr. Chairman. I would have to say very clearly this is out of order and I have to support the minister in this particular matter. If one allowed this kind of amendment it would open a door and the floodgates to all sorts of amendments to all sorts of bills, changing tariffs or financial structures of certain taxing statutes. And clearly, in my judgement at least, the opposition has no right to introduce this. This could clearly become a matter of confidence, if you chaps so decided that it became such; and if you wanted to punish the Premier in some of his bad habits, of smoking cigars, you could certainly come out against this.
But it is my view that the opposition has no right to amend this kind of a section in a bill, and therefore we would have to side with the government on this issue.
Mr. Davidson: Do you agree with the principle?
Mr. Foulds: On a point of order. I would simply like to indicate, to the best of my knowledge, -- and nothing that the Chair or any other member has pointed out has brought it to the attention of the House -- that any of the subjects -- if I may use the grammatical phrasing -- in rule 86, which is the basis that the minister cites -- have been defined or included in what my colleague from Hamilton Mountain has proposed. May I suggest that when the minister rises and uses the second half of the phrase “specifically direct the allocation,” et cetera, he must make the connection grammatically, and the connection is to bill, resolution, motion or address.
Mr. Deputy Chairman: Mr. Charlton has moved that section 1, subsection 1(e) of Bill 25, An Act to amend The Tobacco Tax Act, be amended by adding after the words “90 cents and” in line six the following: “Thereafter, an addition of three cents for each additional five cents or part thereof, that the price at retail of a cigar purchased by him exceeds 90 cents”; and further that section 1, subsection 1(f) of Bill 25 be deleted.
Firstly, Mr. Charlton has moved a motion. It is a motion of amendment but it is definitely a motion as defined in clause 86. Secondly, on reading the motion and studying it, the motion does increase the amount of taxation that would be imposed on cigars and therefore is imposing a tax. Therefore it is a motion, the passage of which would impose a tax. And that is contrary to section 86 of standing orders.
I therefore must rule the motion out of order.
Mr. Foulds: I have no desire whatsoever to challenge the ruling, but I would --
Mr. Deputy Chairman: Then you may not debate the ruling.
Mr. Foulds: I think you have explained the position of the Chair very well. I wonder if you could cite a precedent or two, or the case for your definition as it is included in rule 86.
Mr. Deputy Chairman: I do not have any precedent as such, but I think the precedent is very simple. Any imposition or increasing of a tax is considered to be imposing a tax, and the fact is that the motion increases the amount of taxation, which makes it out of order.
Are there any further discussions on Bill 25?
Mr. Foulds: That is a good amendment.
Mr. Laughren: I regret that the Chair has ruled the member for Hamilton Mountain out of order.
Mr. Peterson: If you don’t like the ruling, challenge it.
Mr. Laughren: I was worried about that, I must confess to you. For that reason, I have prepared another amendment on the same section.
Mr. Peterson: The one-two punch of the NDP party.
Mr. Foulds: The P stands for party.
Mr. Laughren: I move that section 1(1)(e) of the bill be amended by deleting the words “and does not exceed 90 cents” in the sixth line.
Further, Mr. Chairman, I could move on to clause (f) if you wanted to do them at the same time.
I then further move that section 1(1)(f) of the bill be deleted.
If I could speak to my motions, they clearly are not the same kind of amendment as put by my colleague from Hamilton Mountain.
Hon. Mr. Maeck: I’ll have to say actually the same thing about this amendment as I did about the last one.
Mr. Laughren: You’re predictable.
Hon. Mr. Maeck: I believe it’s contrary to rule 86 of the standing orders, and as such I rise on a point of order and ask for your decision, Mr. Chairman.
Mr. Laughren: I don’t want to delay this on a technical hassle. I really would ask the Chairman to look at it seriously and consider the fact that “does not exceed 90 cents” is simply deleting a proposed change in the legislation and does not impose any new tax on cigars. That’s in clause (e). In clause (f), deleting the section, you would have to use some legal gymnastics to interpret that as imposing a new tax on cigars.
I would ask you, Mr. Chairman, to try to make the distinction between the amendment that was put by the member for Hamilton Mountain and this amendment. Truly there is a distinction in the fact that while in the other you might, and you did, put the case that it was the imposition of a tax, in this one you can hardly do that in view of the fact that it’s just asking you to delete an existing one, and secondly, to delete a section which makes reference to the price of a cigar and the amount of tax.
Mr. Charlton: To reiterate and perhaps further clarify what the member for Nickel Belt just said, the Tobacco Tax Act as it presently exists imposes a tax of two cents for every five of retail price over 15 cents with no ceilings. That tax is already in existence. All that the member’s amendment is doing is deleting a new cap on that tax. The deletion of that cap will merely leave the existing tax in force. It is not a new tax and it is not an increase in tax. As for as we can see, this is a perfectly legitimate amendment.
Mr. Foulds: On the point of order, I would draw to your attention before making any decision, Mr. Chairman, that in my view the proposed amendment by my colleague from Nickel Belt is an administrative amendment rather than a taxation amendment. It’s virtually a housekeeping amendment. I would point out to you that rule 86 specifically uses the word “impose.” The amendment, as suggested by the member for Nickel Belt, does not impose a tax.
Mr. Laughren: That’s right.
Mr. Foulds: Nor does it, as is specifically outlined in that section, specifically direct the allocation of public funds. Those are the only two operative points of standing order 86.
The two verbs are “impose” -- this amendment does not impose a tax; and the other verb is “direct” -- this amendment does not direct the allocation of public funds.
Those are the only two conditions -- because they are the operative words in the rule -- that prohibit a bill, resolution, motion or address, or in your interpretation an amendment, from being put forward to deal with the matters subsequent. Thank you.
Mr. Peterson: May I assist on this? It’s strictly my understanding of this, and I would again have to agree with the minister, where under standing order 86 it says, “the passage of which would impose a tax.” it is my judgement that this would impose a specific tax.
Let me use a specific example: If you had, for example, a $3 cigar, the kind which the Premier (Mr. Davis) is used to smoking.
Mr. Laughren: The tax exists.
Mr. Peterson: As I read the legislation now, the maximum tax on that cigar would now be 39 cents.
Mr. Charlton: That is not legislation.
Mr. Peterson: If that section was removed, there would be an incremental tax, an additional two cents for every five cents over 15 cents. So in fact there would be a very much higher tax at a higher level.
Mr. Charlton: That tax already exists.
Mr. Peterson: And I think that in effect what you’re doing is imposing a higher rate of taxation on that particular item which --
Mr. Davidson: The tax is already in effect.
Mr. Peterson: -- in my judgement, at least, is precluded under 86 of the standing orders.
Mr. Deputy Chairman: The member for Port Arthur.
Mr. Foulds: Thank you. I would draw to your attention the parallel situation in debating of the estimates. It is generally accepted that the opposition parties have the right to reduce expenditure, that a motion could pass to delete the minister’s salary, for example, or part of the salary, or we could eliminate a vote. What is generally agreed is that the opposition doesn’t, in the estimates debate, have the power to add to the estimates. I would suggest that the tax exists. We’re not imposing a tax by the amendment as proposed. We are simply, as my colleague from Nickel Belt said, introducing a housekeeping administrative amendment.
Mr. Deputy Chairman: The member for Ottawa East.
Mr. Roy: Mr. Chairman, I’ve listened to the debate on this point of order and of the previous point of order as well. I would not like to differ with my colleague from London Centre but I’d like to make this clarification, and make this very clear to the Chair.
An earlier comment by the minister concerned me when he said there was a proposed amendment to this Act. I clearly had the impression from the statement by the minister that it would become exceedingly difficult for the opposition to bring any amendments to any legislation dealing with any taxes or any revenue legislation. That concerns me. I would like to make very clear to the Chair the importance of its role in this, that each amendment must be looked at very closely so that if we in the opposition feel that a particular amendment is an amendment that has merit and it receives the support of the majority of the members in the House, then that amendment should not be ruled out of order because it happens to be a particular amendment to revenue legislation.
I just wanted to make that point very clear. It’s important that the Chair, in reviewing whatever amendment is brought forward, look at it and scrutinize it very closely, so that standing order 86 is not used as a shield or as an umbrella to deflect any amendment brought forward by the opposition pertaining to revenue legislation. I just wanted to make that point clear.
The other point is that, obviously, the first amendment brought forward was clearly an additional tax, but I’m not sure on this one. My colleague, the member for London Centre, understands this type of legislation better than I do, but possibly the minister will tell us this: what happens if this is deleted? Is there an open ceiling then, as my colleague from London Centre says, so that there’s no limit up to 90 cents and then the tax is imposed for every other above? If that is in fact the case, that may well be an additional tax and in that sense may well be out of order.
I am not saying anything about the merit of it or not, I am just saying on a point of order, if it is not in fact -- if we revert to the legislation that at present exists as to how that is taxed -- then that is another matter. I must admit to the Chair that I am not very clear on it and possibly we should get some clarification or some undertaking on the part of the ministry, because it seems to me that this amendment is one that, on its face, is not absolutely clear as being an additional tax.
Mr. Charlton: Mr. Chairman, could we just reiterate again that the legislation, the Act, as it at present exists, already imposes the tax of two cents for five cents of retail price with no limit, That tax already exists, is already in force, is already being collected. We as an opposition party, with this amendment and these deletions, are just very simply stating our preference for the existing legislation as opposed to the new and proposed legislation. We are not proposing an amendment which creates a new tax. We are not proposing an amendment which increases the present tax. We are proposing an amendment which deletes sections of an amending bill and shows a preference for an existing piece of legislation.
Mr. Roy: Just on that point, if I may, Mr. Chairman, to the member for Hamilton Mountain, I am not sure that that is in fact the case. You are not deleting the whole section; you are deleting parts of it. I am just wondering whether the existing part of the section in fact becomes the operative section if the amendment is allowed to pass. That’s just what I am wondering.
Mr. Deputy Chairman: I would first like to thank the member for Nickel Belt for giving us a copy of this earlier. I have had a chance to study the amendment and the effect of the amendment, and compare the amendment to the existing legislation. If the bill were amended as recommended by the member for Nickel Belt, the net effect of the total bill would not leave the tax as at present on cigars over 90 cents.
The net effect of the total bill would increase the amount of tax on cigars over the price of 90 cents. As such, the effect of the amendment as proposed by the member for Nickel Belt would increase the amount of taxation over the present amount and therefore the amendment is out of order because it is imposing a tax.
Mr. Foulds: Just on a point of clarification, Mr. Chairman, are you saying it raises the level of taxation or simply that the revenues --
Mr. Deputy Chairman: The amount of taxation on a cigar over 90 cents would be more under the bill if it were amended under the terms of the member for Nickel Belt. It would be more than the present amount of tax; and therefore it is imposing a new tax and therefore in my ruling would be out of order.
Hon. Mr. Maeck: Mr. Chairman, if I might just clarify a little bit --
Mr. Deputy Chairman: You cannot debate a ruling.
Hon. Mr. Maeck: I wasn’t really going to debate it but there are some questions on the opposite side and I only wanted to clarify them. I am not going to debate it.
Mr. Deputy Chairman: When we get to the section then.
Mr. Foulds: On section 1(e), it seems to me that the form of taxation that the minister is suggesting in this clause is an unfair form of taxation. Basically the bill pretends to be a luxury tax bill, but by putting the limitation that he has in this particular clause, it seems to me he has refused to take that luxury tax concept to its logical conclusion. That is, he is not using a progressive form of taxation within this kind of taxation, because on the more expensive item he has put a limitation on the taxation level, and therefore the tax does not escalate as it does with other parts of the tax, and that the expensive cigars that have been referred to previously, proportionately speaking, get off at an easier rate of taxation than do middle-income cigars. I would therefore oppose this section.
Mr. Chairman, I think you have ruled out of order a couple of what I thought were pretty sensible amendments but the section as it stands does not deserve to pass. I would feel it is a bad section and that the minister should rethink the section and either amend it himself so that there is a form of progressivity in the taxation or withdraw it.
Mr. Roy: In relation to section 1(1) on the raising of taxation by taxing cigarettes and cigars, I was at one time going to make a long-winded speech on the demise of the five-cent cigar --
Mr. Peterson: But he smokes so much he can’t speak that long.
Mr. Roy: -- and small wonder with the taxes being imposed. I would just like to say to the minister that I know he is not the initiator of the tax but, as we have seen over the years, the fellow who takes the flak is often not the one who causes the problems. Be that as it may, it is your function and you will have to suffer the slings and arrows of the opposition, considering that your boss, the minister imposing the tax, is not around.
It just seems to me, and I think my colleague from London Centre said this before, that this government over the years has lacked an awful lot of imagination in relation to the raising of revenue in this province. It seems that every time they overspend -- and, God knows, they have been doing that regularly since 1971 -- the only thing they can possibly turn to is either liquor or tobacco. In this case, we have tobacco.
I find it somewhat strange that a government with the number of experts and the so-called competence of some of the people within that government can’t find more imaginative ways of raising revenue, apart from every year imposing a new tax on cigarettes or alcohol.
Mr. Foulds: You will note they found OHIP recently.
Mr. Roy: OHIP is another matter, and I don’t want to be out of order. But I do want to say that it’s some reflection of the competence and the imagination of that government that from year to year when the budget comes along, there are only two things that are really certain, at least since we’ve been here and many of us have been here since 1971. One is, there is going to be a deficit, and a huge one. Second, taxes are going to be raised in the areas of cigarettes and liquor. I find it passing strange that this government which prides itself on having imagination, competence and so on can’t find a more imaginative way of raising revenue.
As a closing shot, I might say I suppose that the Premier knew some time ago they were going to be raising additional revenue from cigars and that’s one of the reasons he switched from cigars to a pipe.
Mr. Foulds: They are not raising it as much.
Mr. Peterson: He wants to be like you.
Mr. Roy: Yes, he wanted to have a bit of class. I am sure the Minister of Health (Mr. Timbrell) would have us believe that it was on his expert medical advice the switch took place. But I would hazard to think that possibly he had some lengthy forethought. He had some premonition of what the Treasurer was bringing forward and he thought it would be cheaper to suck on that pipe than those big, fat cigars.
Mr. Eaton: A great contribution. We could have got along without that.
Mr. Peterson: An excellent contribution.
Mr. Charlton: I just don’t think subsection 1(e) of Bill 25, the section that we in this caucus find objectionable, can be supported. I am very disappointed that both our amendments were ruled out of order.
Mr. Eaton: Wasted the time of the House and now you are leaving, eh, Albert?
Mr. Laughren: You would see it that way.
Mr. Charlton: A number of the government members feel -- and one is shouting out there -- that we’re wasting the time of this House --
Mr. Eaton: I was referring to the member for Ottawa East.
Mr. Deputy Chairman: Order.
Mr. Charlton: This may seem like a trivial point to some, but the principle that is laid out in this bill in subsection 1(e), this precedent of reducing taxes on a luxury item at the most expensive end of that luxury spectrum is just a principle which is not acceptable. It may be a small thing in terms of dollars but it is just not acceptable. Where will this particular direction take us next? OHIP increases are bad enough, but this kind of principle is just outrageous and we find that we cannot accept it. We cannot accept this subsection 1(e) of the bill as it presently stands.
Hon. Mr. Maeck: Very shortly, the member for Hamilton Mountain completely ignores the fact I stated earlier that there are some small cigar manufacturers who produce expensive cigars. If we were to go ahead with the type of taxation that is being proposed by the NDP we could effectively put some of those people out of business.
Mr. Peterson: In Havana.
Mr. Haggerty: Why don’t you buy it from Cuba?
Hon. Mr. Maeck: That’s one of the reasons we decided not to impose the tax on the more expensive cigars. I mentioned that in the debate this afternoon. You chose to completely ignore it and that’s your privilege, but I think it should be taken into consideration. There is more to this story than just the one side.
Mr. Peterson: This is supporting your friends, the cigar makers in Havana.
An hon. member: You should consider it overall, before you propose a tax.
Mr. Haggerty: I just want to speak on section 1(1) of the bill for clarification. It says, “Every consumer shall pay to Her Majesty in the right of Ontario a tax computed as follows: 1.1 cents on every cigarette purchased by him.” It goes all the way through there in four sections; it says, “by him.” Does this tax not apply to both sexes?
Mr. Foulds: I fail to follow the logic of the minister when he says that the ministry considered this matter long and hard and decided not to impose a tax on luxury cigars because there are one or two small manufacturers of such items in this province.
Mr. Breaugh: Who are they?
Mr. Foulds: If that is the main argument of defence that the minister is going to use, I would suggest that he apply that right across the board and give up the whole idea of taxation, because any form of taxation on any manufacturer large or small, but particularly small, will in fact perhaps, using his logic, adversely affect that industry. Yet in another bill the minister says the imposition of the sales tax, for example, on rolling stock will not affect the manufacturers.
Mr. Chairman, I submit to you that the minister and his colleague, the Treasurer, cannot have it both ways. When a tax is imposed either it affects the manufacturer or it doesn’t. If he’s going to use the argument that the imposition of the sales tax on this item will adversely affect the manufacturer, then he must also accept that logic when talking about the retail sales tax with regard to roiling stock for railways.
Mr. Deputy Chairman: Any further discussion on this bill?
Shall the bill be reported?
Mr. Foulds: No. You haven’t asked us if the sections are carried.
Mr. Deputy Chairman: All right. Shall section 1 carry?
Those in favour will please say “aye.”
Those opposed will please say “nay.”
In my opinion the ayes have it.
Section 1 agreed to.
Sections 2 to 5, inclusive, agreed to.
Bill 25 reported.
RETAIL SALES TAX AMENDMENT ACT
House in committee on Bill 27, An Act to amend the Retail Sales Tax Act.
Mr. Chairman: Are there any comments or discussion on Bill 27? Mr. Charlton, are you talking to the entire bill or to one section of the bill?
Mr. Charlton: There are a number of sections which I wanted to refer to.
Section 1 agreed to.
On section 2:
Mr. Charlton: My concern here again is the discussion that we have already had on railway rolling stock. For us, the Minister of Revenue, the Treasurer, no one, has effectively been able to say that the government knows or has any realistic idea how this tax is going to affect the industry that produces the rolling stock. He gave us the breakdown on some of the -- I think the minister mentioned that it was going to cost the municipalities $1 million -- specifically Toronto, and GO Transit. We have had no indication where that money is going to come from, or if the province is going to make it up. The minister himself suggested that as a result of this tax perhaps those who buy the rolling stock from the industry would not be able to purchase as much. In other words, the minister has admitted the possibility of an effect on jobs in this province.
But the government doesn’t know, and it seems to us a bit premature and almost a bit ridiculous for the government to be proposing legislation such as this at this time when unemployment in Ontario is at its highest since the great depression -- when they don’t know what effect the tax is going to have on the employment situation. They don’t know exactly where the city of Toronto and the TTC are going to come up with the extra $1 million to pay for the additional costs in the TTC. This section, although it may be valid, hasn’t been proven. For the government to offer this without the projections, without the facts from studies, just seems a bit premature to me.
Mr. Laughren: This is one of the frustrating parts of debating with the Minister of Revenue. I am fully aware that the Treasurer has said this is the way it is going to be, and the Revenue minister must defend it. But what I don’t understand is when we asked the Treasurer in the Legislature about the imposition of a seven per cent sales tax on rolling stock he said, “Don’t worry about jobs; the purchaser pays it.” He really had us scratching our heads over here as to what in the world he was talking about. He can’t in one breath say that because the purchaser pays it, it will have no effect on jobs, then turn around and be talking about the seven per cent sales tax exemption on the hospitality industry and say that because the purchaser pays it this will create jobs in the hospitality industry.
I don’t know how you can defend your colleague with those kinds of gymnastics that he went through, but there are some quantum leaps in logic there, I know it is difficult to ask the Minister of Revenue to defend anything that the Treasurer does, in view of the dirty tricks that the Treasurer plays on him. But, I really think this minister needs to have more information from the Treasurer (Mr. McKeough). I would like to know what studies the Treasurer has done or what documentation is available to show that removal of the seven per cent sales tax on storm windows and storm doors will have a significant bearing on the purchase of those products; and secondly, to an extent that it will be any kind of meaningful energy conservation program. I really find that hard to believe.
I would also like to know, in terms of the hospitality industry, what studies have been done to show that the utilization of rooms is so closely related to a seven per cent change in price. He must feel that way or he would not have granted the exemption and it would not be in this bill.
I would appreciate knowing, first of all, if the Minister of Revenue has access to the documentation; whether or not he has the documentation. I would like to know whether it has been made available to him by the Treasurer, or whether he said, “Well, here it is. This is what we’re doing. Get your people to put it in the form of a bill.” Or perhaps there was more of a sportsman-like approach to it and he said, “Look, if you’re going into the arena in there, Lorne, you’ve got to have some information at your fingertips,” and, in fact, he gave the minister the documentation and said, “Now you’ve got something to defend it vigorously with,” so you could proceed to fight off the socialist hordes over here who are attempting to make the tax system more equitable -- and not just equitable, but to make more sense, because that’s a pretty sad excuse for an energy conservation program. The same is true in terms of the additional tax being imposed on rolling stock when we’re attempting to increase the utilization of public transit, for example, in the province.
I would be very surprised if the Minister of Revenue has information, but I certainly wait with bated breath while he tells us of all the documentation he’s been provided by the Treasurer.
Hon. Mr. Maeck: I wonder whether it wouldn’t be better if I replied to each speaker as he speaks, rather than attempt to remember what each one says and reply to them all at once.
Mr. Roy: You could make notes.
Hon. Mr. Maeck: I would remind the member for Nickel Belt that there are other energy exemptions that were already in the Act and this is an addition to them. So it’s not a case of this being the only one to conserve energy. It’s just an addition to what we already have. I would be happy to go over them with him if he wants to hear them all. I have them here. There’s quite a list. But I’m sure he’s aware of them.
It’s very difficult to project what effect the seven per cent reduction of sales tax in the hospitality industry is going to have. I don’t think anyone can come up with a proper projection as to what’s going to happen in a situation like that. I think all that can be done is that it can be assessed after the tax is eliminated to see if it is effective or not.
I understand there were some projections from the Ministry of Industry and Tourism. They talked about a figure of something like $30 million, which doesn’t seem to make very much sense to me, because the tax exemptions are going to cost the coffers of the government something like $20 million.
I’m sure the members opposite realize the tourist industry in the province of Ontario is in some difficulty. The reason for bringing in the exemption of sales tax in that area is to give that industry a shot in the arm to try to assist it. It’s not going to be the answer to all of that industry’s problems -- there’s no question about that -- but it will assist it. The members will realize, of course, that this exemption is only for a certain period of time, until the end of 1979.
I don’t believe anyone could produce a proper study that would project what effect this exemption of sales tax would have on the tourist industry. I don’t think that’s possible.
Mr. Laughren: Has the minister met the whiz-kids in the Ministry of Treasury, Economies and Intergovernmental Affairs? They’ve got an econometric model for everything. I would suggest to the minister that if they’re saying the decrease in revenue is going to be $30 million a year --
Hon. Mr. Maeck: No, I read $20 million.
Mr. Laughren: No, they say tax cuts in tourism will amount to $30 million; I assume that’s what they mean. That decrease in revenue is shown on page 18 of the Ontario budget statement. The minister is saying it will increase revenues by $20 million.
Hon. Mr. Maeck: No, I didn’t. Pardon me, I said Industry and Tourism had mentioned a figure of $30 million that they hoped the tourist industry would benefit by. But I’m saying it’s costing the Treasury of the province $20 million to reduce the taxes.
Mr. Laughren: If I could just correct you. It’s costing the ministry $30 million, unless there is some other tourism gift that I don’t see in here. It’s costing $30 million in revenue, and if the industry is going to benefit to the tune of $30 million, it’s costing you dollar for dollar for all benefits to the industry, which seems a bit much to me.
Mr. Swart: It’s a great employment program. It’s very effective.
Hon. Mr. Maeck: These figures I have before me --
Mr. Laughren: Look at the budget paper.
Hon. Mr. Maeck: I’m more interested in my own figures because they come from my own ministry.
Mr. Laughren: I know.
Hon. Mr. Maeck: What I’m saying is that it’s $20 million.
Mr. Peterson: I want to speak very briefly on this because this seems to me to speak to the problem with your government. I think you’re hitting on two of the most fundamental problems that we have in the economy in this province today. Number one is the energy problem that I’ve spoken upon at great length and I will continue to speak upon. It’s the single biggest drain that we have in our economy here. We’re running about an $8 billion energy bill, roughly 10 per cent of our gross provincial product, and the best you can come up with is a dismal exemption on storm doors and windows.
Mr. Ashe: Speak to your friends in Ottawa.
Mr. Peterson: It has absolutely nothing to do, in my judgement, with an integrated energy policy. When we in this province are the highest per capita consumers of energy in the entire world, you have an obligation, as a member of Her Majesty’s cabinet, to do something more worthwhile than you are doing. I don’t blame you exclusively. I blame the Treasurer mostly. I blame the Premier even more than that and I blame the Minister of Energy (Mr. Baetz).
I have a real problem with the way the Premier has handled the administration of this province. He’s always treated energy as a junior portfolio. He’s either stuck in a guy on his way up or his way down and most of them, with the exception of the one about two ago, have been on the way down. He’s never treated it seriously and we come up with a hodgepodge of miscellaneous proposals that have nothing to do with an integrated energy policy.
There is probably very little you can do. Obviously, we’re going to support this bill but it’s a dismal, feeble attempt. If I were you, as Minister of Revenue, I would use your new-found power, the power that you projected out of your licence plates and all the good things that happened to you therefrom, and use it to develop something worthwhile for this province in terms of an integrated, conserver, renewable form of energy policy that we need so desperately.
Mr. Laughren: Put the Treasurer in his place.
Mr. Peterson: I will continue to argue this way with the Minister of Energy and with the Treasurer. I see these as miserable little sops to two of the most important problems we have in this province. I am so terribly disappointed when it is an established fact that it is so much easier to save a barrel of oil -- to save a few megawatts of power -- than it is to create them. It is so much cheaper.
It strikes at the heart of our economy, particularly when we’re so vulnerable. When we are importing 80 per cent of our energy, when every barrel of oil that we import strikes at the cost of living index and at the number of jobs in this province, you have an obligation to do something far more constructive and worthwhile than you have done. I’m disappointed that this is such a paltry, miserable little effort in that area.
We in our party have listed, and my colleague from Halton-Burlington has talked of, hundreds of things that would be constructive. I, in my halting way, have talked about things that I think should be done -- not that they necessarily will create more energy tomorrow, but they will save more energy starting tomorrow morning. This is just one of the very small steps. If you’re serious, you’d put storm windows on this building, to start off with, and show a little bit of government leadership. The government leadership shown in the energy conservation program, frankly, has been abysmal.
I feel very strongly about that. I will continue to hound you and will continue to talk to anybody who is listening. You happen to be here tonight and you happen to be on the receiving end of some of these slings and arrows because we in this party feel so terribly strongly about it.
We also feel that every person in the province is going to have to make some sacrifices. They aren’t going to be major sacrifices and really, in a meaningful sense, they aren’t going to affect anyone’s standard of living or anyone’s happiness. But it is going to call for a massive collective effort with strong government leadership and you people are a very long way from providing that leadership, and I don’t regard this as significant or meaningful whatsoever.
You should come up with an entire series of proposals in your portfolio. Why aren’t you exempting, for example, assessment on renewable energy in homes, solar devices and wind-generated devices? Why don’t you use your imagination?
As the new Minister of Revenue coming in with a new broom -- and we have seen lots of examples of new ministers coming in with a new broom, with new ideas -- don’t get hung up on the old establishment idea of just hanging in and covering your behind. Come up with something creative, because I can assure you that we will support you and I am sure that our friends to the left will support some creative new ideas too. And don’t let that guy who sits one in front of you and one to the left bully you around. It’s time that you guys started bullying him and telling him what should be done. Use your new-found power, I say to you, Mr. Minister, because it’s important.
Mr. Laughren: Borrow a Band-Aid from the Liberal minister in cabinet, Lorne.
Mr. Peterson: Just to speak for a minute to this exemption for hotel rooms; again, I regard this as just a very superficial thing. I understand that the former Minister of Industry and Tourism (Mr. Bennett) yelled for a long time about this and I gather he will consider it a great feather in his cap, particularly now that he is the Minister of Housing. But I say to the Minister of Industry and Tourism who is sitting in the back row yapping, he should be doing far more than he has been doing. It is my experience, when I see new ministers, that they at least have two or three months’ good grace. When you get into a portfolio, use your energy, use your creativity and come up with something more substantial than a miserable little exemption on some hotel rooms. You should be coming up with an integrated policy to develop tourism in this province.
We have lots of good ideas. We are willing to share them with you. We are willing to sit on your goofy committees. We have all sorts of expertise on this side of the House. And I say with great pride that my colleague from Victoria-Haliburton (Mr. Eakins) knows more than you do about this job and frankly, he should have it, and I say with some pride that he will have it in the very near future.
Mr. Foulds: As soon as you form the coalition.
Mr. Peterson: But I say to all you guys over there that it’s a very, very dismal little patchwork, paltry --
Mr. Foulds: Hear that, John; when the coalition comes you are out.
Mr. Peterson: -- miserable little attempt at strategy, at policies or any kind of co-ordinated approaches. You can certainly do better.
Hon. Mr. Parrott: Get serious.
Mr. Peterson: And I say to both of you -- you are both new ministers -- use whatever good grace you have. I assume that the Premier treats you with some degree of respect for the first two or three months in the portfolio.
Mr. Roy: I am not sure.
Mr. Peterson: I am not sure about that. I really don’t know how that --
Mr. Roy: You have been seriously abused, John.
Mr. Peterson: -- mind can operate, but if you have any credibility, use it. Use it before you get ground down. And I say to you, particularly the Minister of Revenue, you have got an opportunity, use it. Obviously, we are going to support these; how can you help but support these miserable little contributions to these great and fundamental issues? But I say you have a far greater role. Use it. We will support you and we will show Darcy McKeough and Bill Davis that there are better men in this House, and we can all do better.
Mr. Roy: Point of order.
Mr. Deputy Chairman: A point of order, the member for Ottawa East.
Mr. Roy: Mr. Chairman, I am sure you would not forgive me and my colleagues here would not forgive me if I didn’t advise the members of the House that we have the honour of having here a visit by the former member for London South, Mr. John Ferris, who is visiting us under your gallery.
Mr. Peterson: He will be back.
Mr. Roy: Just on temporary absence.
Mr. Foulds: I am disappointed that the minister didn’t respond to that peroration by the previous speaker. There is, however, a sort of echo in his phrasing about the far, far better things that can be done. Of course the guy who said that went out and got himself hanged; I should remember that.
Mr. Foulds: I certainly would like to point out to the Chairman that in essence the previous speaker said two things -- one, that when the coalition government comes, John Rhodes is going to be out of a job and John Eaton is going to be in --
Mr. Peterson: We like John; we’ll still invite John to dinner.
Mr. Foulds: -- and two, he said these are miserable, unimportant --
Mr. Peterson: Paltry. Scrawny.
Mr. Foulds: --paltry, scrawny amendments. And he said, “How can you help but support them?” I want to point out to you, what you are getting is miserable, scrawny, paltry support.
Mr. Chairman: The debate is becoming repetitious.
Mr. Foulds: I would like to speak to the principle of the section, section 2, that we are debating; I think the debate got slightly off the rails. We have before us four subparagraphs in section 2, all of which deal with different matters. It does seem to me that the point that was made on second reading by my colleague from Hamilton Mountain (Mr. Charlton), my colleague from Nickel Belt (Mr. Laughren) and, if I may be immodest for a change, myself, about the inconsistencies in the taxation policy of the Treasurer and the inconsistencies in taxation are apparent within this section itself.
On the one hand the government removes the taxation on storm windows and storm doors, and we say, “Good for you, one minuscule step in the right direction.” One of the arguments used by this minister and used by the Treasurer is (a) that will help the conservation program, and (b) it will help create jobs; i.e., by removing the tax we will help create some jobs, because the purchaser, no longer having to pay the tax, will purchase more of these units and have them installed.
Then when we get to paragraph 2 we say, in one part of it, that we are going to impose a tax -- that is with the item that will be now numbered in the original legislation 41 and then 41(a). Sorry, with paragraph 2 we are also removing a tax; we are removing the tax on the hospitality industry, and we are saying and the argument is that by removing that tax we will create some jobs. We don’t know how many, we don’t know who is going to benefit.
What strikes me is that it would appear, because he has not entered into the debate, that the Minister of Industry and Tourism (Mr. Rhodes) -- if I could have his attention for a moment -- is not going to do any studies, at least I haven’t heard him make an announcement that he is going to do any studies, on the effect of the removal of the taxation on the hospitality industry, and also do a comparison of the year or year and a half that the tax was in effect as to what effect the devalued Canadian dollar is having on the tourism industry. I would suggest to him, if I might through you, Mr. Chairman, that both those factors should be monitored in terms of the effectiveness of this particular clause.
We also see within this section that the railway rolling stock exemption will be removed. In other words, we are imposing a tax. In two cases we have made the argument that by removal of a tax, by providing an exemption from taxation, we will be creating jobs. But the Treasurer and the minister have argued that by imposing the tax on the manufacturers of rolling stock for railway transit, subway cars for public transit, that will have no effect whatsoever on employment in the manufacturing sector, the supplier to the purchaser. I simply don’t follow that logic.
The minister himself has indicated that large purchasers such as the Toronto Transit Commission, the Ontario Northland Railway and the GO Transit system may purchase fewer cars. They could; they may purchase fewer cars as a result of the imposition of this tax.
Hon. Mr. Maeck: I didn’t say that; I said they could.
Mr. Foulds: I would suggest to the minister that if that happens, then jobs will be threatened and possibly lost at the Canadian Car plant in Thunder Bay and at the Hamilton Steel plant in Hamilton.
Hon. B. Stephenson: National Steel Car, you mean.
Mr. Foulds: National Steel Car. That seems to me to be a fairly serious matter, and that’s one argument to which we have not yet had a satisfactory answer from the Treasurer or from this minister.
The other side of the coin is that the imposition of the tax, i.e., the removal of the exemption for rolling stock, will add to the cost of public transit and will therefore discourage an expansion of public transit, the very thing we should be encouraging in terms of convenience and in terms of wise use of energy. It seems to me, therefore, that this particular section is a particularly bad one.
The taxation policies of the government are riddled with inconsistencies; they are highlighted in this particular bill and specifically in this section 2.
Hon. Mr. Maeck: Mr. Chairman, so many members have referred to the removal of the sales tax on storm doors and windows as being such a pitiful little effort that I thought perhaps I should inform the House at this point in time of all the mailers that have been exempted since April 20, 1977. This is just an addition to those items that I will now tell you about.
Mr. Laughren: Dispense.
Hon. Mr. Maeck: “Thermal insulation materials; thermal insulation material is defined to be batt, blanket, foam, loose fill, rigid or reflective insulation that is acquired exclusively for the purpose of preventing heat loss in a building but does not include weather-stripping and caulking materials, windows and doors of any type and frames.” Remember, this is dated April 20, 1977, and we’ve taken into consideration some of these things in the proposed legislation now.
Mr. Laughren: We understand.
Mr. Foulds: We follow.
Hon. Mr. Maeck: “Pipe, boiler and duct insulation and wrapping materials; acoustical insulation and acoustical materials; wallboard or drywall; or any materials incorporated into a building primarily for their structural or decorative value and materials serving functions other than thermal insulation, whether or not such materials have thermal insulation properties.”
Mr. Foulds: What are the ones that are not included?
Hon. Mr. Maeck: These are the ones that are not included, don’t get me wrong.
“Energy conservation equipment,” which is included: “Heat pumps which are principally used to extract heat from an area outside the building for the beating of which they are installed; heat recovery units which extract heat from exhaust water, air or gases that are not intended for reuse or recycling in any manufacturing or productive process or otherwise; solar cells used to produce, directly from sunlight, electricity to charge batteries” -- all batteries are excluded from the exemption and are therefore taxable -- “solar furnaces, panels and tubes especially designed to collect and convert solar energy into heat for use in a solar heating system” -- all auxiliary equipment is taxable -- “windmills and wind-powered generators, but not including the frame or other supporting structures; automatic timer controls for electrical equipment which are used to control energy and electrical lighting equipment.”
The exemption does not include the timer controls used in the operation of any manufacturing or production process or timer controls sold for domestic household use. “Wood-burning stoves and wood-burning furnaces which have a fully enclosed solid combustion chamber to produce heat for cooking or for heating a building. However, stoves and furnaces that are capable of using other solid fuels are exempt if they are designed to bum wood and all the other requirements are met. The exemption excludes fireplaces and stoves that do not have a fully enclosed combustion chamber, wind deflectors which are attached to trucks or the cargo carrying unit of a truck. All other deflectors are taxable. All parts used to repair or maintain the equipment noted in clauses (b) to (i), except as specially provided in the exemption, are taxable.”
All of those things were in a package on April 20, 1977, and we added the other two items, the doors and the windows, to that package. It is not such a bad package when you look at the whole picture. I wanted to bring that to the members’ attention and put it back on the record so that people would know that we have done a little more than just bring in those two items.
The argument regarding the rolling stock appears as if it is going to be an ongoing one. I don’t know what additional information I could give the members. No one knows for sure whether it is going to affect employment or not. I don’t personally think it will, because it has already been done in four other provinces. They are already being taxed, and our information is that there has been no reduction in production or in capital expenditures in those other provinces. So, hopefully, it will not happen here either.
As far as TTC is concerned, it must be remembered that we do supply 75 per cent of the grant for capital investment of the TTC--
Mr. Laughren: Are you going to increase the grant in the amount of the tax?
Hon. Mr. Maeck: -- and we would also be supplying 75 per cent of the tax, so it wouldn’t be that costly for the TTC, particularly the TTC, because it’s on a 75 per cent capital grant.
Mr. Laughren: Will you increase the grant because of this tax? Is that what you are saying?
Hon. Mr. Maeck: No, we are not going to increase it beyond 75 per cent, except that the capital costs will include the tax and they will get 75 per cent of the cost plus the tax. I don’t think we are going to hit them that hard.
Mr. Laughren: You are still, in effect, reducing their grant.
Mr. Chairman: Order.
Hon. Mr. Maeck: However, as I say, it can be an ongoing argument as far as rolling stock is concerned. Obviously the members of the parties opposite have different viewpoints, but all I can stress again is to say that it has been and is being collected in four other provinces and there doesn’t appear to be any disastrous effects.
Mr. Foulds: On that specific point, perhaps the minister could bring me up to date. I would like to know what other specific province in this country has a public transit system on the scope of the TTC, for example. To the best of my knowledge, the only other city in Canada that has a subway system using rolling stock is Montreal, and I believe that their system is not as extensive as Toronto’s. Therefore, it seems to me that the comparison that he is using in terms of the effect on the purchaser is not a valid one, because the scale is so different.
If I might continue, Mr. Chairman, I can see his argument as it refers to railway rolling stock, particularly CNR/CPR, but I don’t see the argument as it affects rolling stock for public transit systems, particularly subway cars. I have some reservations about the comparison with Ontario Northland and GO Transit, although I suppose there is probably a comparison between Ontario Northland and the provincial British Columbia rail system. I really would like some further explanation of how the argument about other provinces applies to the public transit as it affects subway cars.
Hon. Mr. Maeck: I guess the only example I can give you is that Quebec does have this tax and, as you indicated, Montreal does have a subway system. I know of no disastrous effects in Montreal because of the imposition of the tax. That’s about the only information I can give you on it. I am not familiar with the amount of grants that the city of Montreal receives from the province of Quebec as far as the subway system is concerned, but I would venture to suggest that it wouldn’t be any more than what our grants are.
Mr. Conway: They’ve got DREE designation, John Rhodes tells us.
Mr. Chairman: Order.
Mr. Foulds: I don’t want to belabour the point, but it does seem to me that it is the responsibility of the Treasurer, if not the Minister of Revenue, to do a sound analysis of the effect of the taxes, to do comparisons that are not superficial such as we’ve received in the House tonight, and actually to have some research done before he puts together a budget that imposes taxes such as this. It does seem -- very strongly, may I say -- that we developed a budget by guess and by gosh and the taxation system that is emerging from it is not one that is consistent, logical or well-thought out in terms of development, either internally of our manufacturing industry or in terms of the development of public transportation.
Mr. Chairman: All those in favour of section 2 standing as part of the bill will please say “aye.”
All those opposed will say “nay.”
In my opinion, the ayes have it.
Section 2 agreed to.
Sections 3 and 4 agreed to.
Bill 27 reported.
Mr. Conway: The Minister of Revenue will be a hero in South River tonight.
On motion by Hon. Mr. Maeck, the committee of the whole House reported two bills without amendment.
The following bills were given third reading on motion:
Bill 25, An Act to amend the Tobacco Tax Act.
Bill 27, An Act to amend the Retail Sales Tax Act.
On motion by Hon. Mr. Maeck, the House adjourned at 10:30 p.m.