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say, that they had included in their claims for exemptions that which the law did not permit to be exempted.

DELEGATE: What is the schedule of depreciation ?

MR. LEASON: That is limited to certain percentages, at the discretion of the minister.

MR. WHITE: Limited to certain percentages ?
MR. LEASON: No set rate, but it cannot exceed fifteen per cent.
MR. WHITE: What limitation is there on salaries?

MR. LEASON: Well, they are exempting fifteen hundred dollars and two hundred dollars for each child under the age of eighteen years.

Mr. WHITE: That is the individuals, but I mean in your corporation tax.

MR. LEASON: No exemption whatever; flat rate of two per cent on the income, on the receipts, as you might call it, on the volume of business done.

Mr. White: But you say certain expenditures were not allowable. That includes salaries ?

MR. LEASON: Excessive salaries paid to superintendents and so forth.

Mr. Wute: Were those superintendents members of the corporation or were they employees?

MR. LEASON: They are employees in some cases and in some cases not. When we demanded from them returns, we found they were escaping taxation.

MR. White: The employees were escaping taxation ?
MR. LEASON: Yes.

MR. H. B. Fernald of New York: Wasn't there one provision there that you cannot deduct any salary paid to those who reside outside of the province, who don't pay a tax on those salaries; is that the essence of that provision ?

MR. LEASON : Yes, but to a very large extent I don't think that has been in vogue.

One of our great difficulties is to define what a service is worth. I will give you an instance of a concrete case, a partnership of three, and their return showed an assessable income of fifteen thousand dollars. One said my service is worth five thousand, another said mine is worth five thousand, and the third said his was worth five thousand dollars, and each received five thousand, and they said there is nothing to assess, that those are our salaries. But as a partnership is treated as an individual for the purpose of taxation, they are only permitted to deduct one fifteen hundred dollars.

Question: What per cent of the gross tax does it cost to collect, about what per cent ?

MR. LEASON: I haven't those figures at hand. As I say, I only had two hours' notice in leaving, and I did not have an opportunity to bring any data along with me.

CHAIRMAN WHITE: Does the province return to the municipalities any share of the income tax?

MR. LEASON: No, sir, they are getting enough now. The municipalities are not agitating for permission from the legislature to inaugurate income taxes. They were given the option last year of levying an amusement tax or personal property tax. In some cases they did take advantage of that, and also the poll tax, but not in many cases.

I should like to express my thanks to the gentlemen and particularly to the officers and reception committee. I arrived here last night and hardly found a place to sleep, but they accommodated me, and I assure you if you come to British Columbia we shall be pleased to reciprocate.

CHAIRMAN WHITE: It occurred to me that probably some of the gentlemen here would want to ask the previous speakers a few questions regarding points raised in the papers read. For myself I thought of asking Professor MacGibbon what experience the City of Edmonton has had regarding the large amount of unpaid taxes which I think they found themselves confronted with a few years ago.

PROFESSOR MACGIBBON : In the last year or so failures have not been large, and at the present time land taken by the city can be sold, free of certain building restrictions and so forth, to customers, and they are endeavoring to sell land as fast as they can to purchasers.

CHAIRMAN WHITE: Then the vacant land which the city has taken back for taxes, I presume there is no market for it at present. is that the situation ?

Professor MacGIBBON : There is apparently a slight market beginning, that is, for some of it, but a large amount of it is simply going back into farm lands on a reduced valuation-suburban lands. Property that is closer in, a certain amount is bought and sold-just beginning

C. J. Buell of Minnesota: May I ask Professor MacGibbon: How do you pay for your street improvements, your sewers and water mains, your paving, side-walking and all that sort of thing?

PROFESSOR MACGIBBON : By special assessment.
MR. BUELL: Special assessment against the property?
PROFESSOR MACGIBBON : Yes.

MR. BUELL: That is an illustration of the theory of paying according to the benefits received.

PROFESSOR MACGIBBON : I should like to point out in that connection that the general effect of that has led to fifty to seventy per cent of street corners being unplatted. With taxation running on two sides of a lot, you find cities built excepting the corners.

MR. BUELL: You mean to say the assessment on both streets resulted in the corners being unbuilt on ?

PROFESSOR MACGIBBON : Yes.

MR. BUELL: Don't they have to pay for the sewers and paving and so on whether they build on the corner or not?

PROFESSOR MacGIBBON : Oh, yes; but the point I tried to make was that a large amount of this property was handled by speculators and that as a result the people avoided buying corner lots.

CHAIRMAN WHITE: I should like to emphasize to the gentlemen asking questions in the future of the different speakers that they give the reporter their names. They are not always known to the chair and the reporter would like to have the names of the gentlemen asking questions.

I might supplement the remarks that have already been made by the speakers on Canadian topics, and give you a few words about the finances of the Province of Ontario. Our financial wants for ordinary expenditure run a little over thirty millions of dollars. We make no direct levy on the municipality, our sources of revenue being just an amount that is refunded to the different provinces from the Dominion Government. That is known as the subsidy which the province receives from the federal government. That amounts to about one-eighth of our total revenue in the province.

We collect also from corporations, banks, railways, trust and loan companies and so on, and from inheritance taxes and motor vehicle licenses, amusement tax and tax on race-track winnings, which we find sufficient for the purposes of the government, and I think in a year or two we are not going to be worried about financial affairs in the province.

I might say for the province of Ontario that the people are in the happy position in many of the localities of really having experienced in the past few years a substantial reduction in taxes. While not directly in taxes, it has the effect of being a reduction in taxes. I am referring to the hydro-electric activities of the provincial government. The province has a hydro-electric commission which functions throughout the province and covers nearly the entire province. The intention is that eventually it will cover the entire province. That commission provides power to different municipalities, and they in turn provide power, light and heat to the inhabitants of the municipality. The result has been that bills for the small consumer and householder for light, heat and power for domestic purposes have been reduced by about sixty per cent. Where formerly they paid three dollars to the privately owned corporation, they now pay one dollar to the hydro-electric commission, and that price is estimated and is fixed to repay the capital cost within forty years, as well as upkeep and depreciation.

MR. BUELL: May I ask a question in that connection ? I saw the last report of your commission and I got from it what appeared to be this inference, that your electric lights throughout the province are costing you somewhere from three to five cents kilowatt hour. Is that pretty near right?

CHAIRMAN WHITE: I am not familiar with the prices.

MR. BUELL: I think the highest rate anywhere was five cents, and the lowest rate was three cents, if I remember rightly, and that heat and power are proportionately cheaper than that.

CHAIRMAN WHITE: I am not familiar with the prices. I am speaking roughly, and part of it is from my own experience, from what I paid in my own house. Remember, the price at which the privately owned corporation supplied the power in large blocks to manufacturing enterprises, and so on, would not depreciate to the same extent that the small consumer would be benefitted.

MR. BUELL: Of course with us the matter of price is a matter of very great importance because we are paying ten and eleven cents per kw. hour to private corporations, whereas you are paying three, four and five for the same kind of service.

Ralph W. Smith of California: I want to state for the information of the convention that in California this year we have initiated a measure on the ballot whereby we are contemplating the issue of five hundred millions of dollars in bonds to purchase our public utilities, such as water and light, and follow along in the way that Ontario has led.

Mr. Douglas SUTHERLAND of Illinois: I should like to ask a few questions. First, to what extent was this hydro-electric commission publicly financed in its inception? What was the initial financing ?

CHAIRMAN White: The commission has authority to issue its own bonds for the purpose of purchasing privately owned corporations. The province in addition to that has authority to issue provincial bonds for hydro purposes and sell those on the market and hands over the money to the commission, and that was the method used in financing the construction of the Chippewa canal, which was made use of at Niagara Falls. The province has supplied some eighty millions of dollars to the power commission for increased developments of power at Niagara Falls.

MR. SUTHERLAND: That was for initial expense?
CHAIRMAN White: Initial capital expense.

MR. SUTHERLAND: To what extent is the province now appropriating money for the continuance of the work, for operation ?

CHAIRMAN White: Just whatever money the commission requires. The provincial government has not seen fit to call a halt to any hydro enterprise, except in the case of the hydro railroad. The commission wished to go on with the construction of hydro railroads, but the matter, after investigation, has been held up and they decided it was not a propitious time to enter upon the hydro railways.

MR. SUTHERLAND: During the last fiscal year, what was the average operating expense for the commission ?

Chairman WHITE: The commission submit to the government their probable expenditure for the year, the amount they will require on capital account. If necessary, the government will issue bonds to supply the commission with money. That is accounted for to the government by the commission. The government pays the commission a sinking fund each year. During the first five years of the operation there is no sinking fund provided. The sinking fund commences five years after the capital expenditure is used.

MR. SUTHERLAND: For the first five years some of the current operating expenses are financed by bond issue proceeds?

CHAIRMAN WHite: Yes.

MR. BUELL: In reading your report I got the inference that finally the taxpayer would pay nothing, that it would be in no way any burden upon the general taxpayer, that your hydroelectric commission will be able to handle its own affairs in its own way and have a surplus to pay to the government finally, if anything.

CHAIRMAN White: That is quite right. The scheme does not provide for the province paying one cent of the cost of hydro. The price charged to the consumer is sufficient on the estimates of the engineers to cover the capital cost and the cost of producingcarrying it out.

MR. WHITE: Has any taxation been levied upon the general public for the inauguration of this scheme?

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