In Edmonton the first attempt to widen the city's basis of taxation came in 1917 when the city council obtained an amendment to its charter, by which it was authorized, subject to ratification by plebiscite: (a) “to levy a tax on buildings and improvements assessed at not more than 25% of their value; (b) to levy a business tax not exceeding 6% of a business assessment, equal to the ful annual rental of the premises occupied." The proposal to tax buildings and improvements failed to carry, but the proposed business tax was ratified. In 1918, however, another charter amendment fixed the assessment of buildings and improvements at 60% of their actual value. These had been exempt since 1904. The business tax was also made a graduated tax from 6% to 25% of an assessment of the full rental value, according to the nature of the business.

The city of Calgary, as already noted, had never gone quite as far as Edmonton into single tax, but by 1912 the assessment on buildings had been reduced to 25% of their value. This was the lowest point touched. In 1915, power was obtained for the assessment of special franchises on the full value of all buildings, improvements, plants, equipment and apparatus used in their operation at 60% of the actual value. This amendment really touched only two large private corporations operating in the city, the gas company and Calgary water power company.

In the same year a modern business tax on a rental basis was devised to replace a personal property tax. In 1919 the assessment on buildings and improvements on the land was brought up to 50%, where it now stands.

In Lethbridge in 1917 the assessed value of improvements was increased from one-third to one-half, with a reduction on the assessed value of outlying and unimproved property.

At the present time all the cities of Alberta assess buildings and improvements.

Lethbridge has also endeavored to expand its revenue by an increase in the poll tax from $3 to $10, this being applicable to all inhabitants of the city of the age of 21 and not assessed on the assessment roll; and by replacing an assessment on personal property, with a rental and floor space tax, really a business tax.

Medicine Hat has not adopted the business tax based on the floor space, but levies a rental tax. In the case of all premises occupied for dwelling house purposes a charge is made of 10% of the rental value and collected monthly, along with charges for gas. water and electric light. If not paid the city has the power of shutting off the gas and water as in the case of utility bills not paid. It is not surprising that under these conditions city officials report that the tax is practically 100% collectible.

In 1918 amendments to their charters were sought and secured

by Calgary and Edmonton to enable an income tax to be levied. The right was limited, however, to two years, and in view of this Calgary did not avail itself of its power. The Edmonton tax was progressive, rising from 1% on the first $1000 of taxable incomes to 8% on all taxable incomes over $10,000. The exemption for unmarried persons, widows or widowers without dependent children is $1000, for all other persons $1500. There was exemption also of income derived from land and building within the city, and under certain conditions the income tax might be set off against the real property tax. Despite these provisions, which obviously limited its yield, this tax gave a fair return, but in 1921 the provincial government declined to continue the privilege. It was intimated that the provincial government was considering a provincial income tax. In lieu of the income tax, however, the cities of Calgary and Edmonton were given permission to levy the so-called service or community tax.

In Edmonton the service tax was given a trial in the year 1921. It provided for a levy of from $5 to $25 upon every person, male or female, of the age of 21 years, or over, but gave the city council the right to differentiate between the amounts payable by different classes of persons. The council, by by-law, ordained that persons living in their own home, whose total assessment value was not over $3000, should pay the minimum rate, otherwise the assessment should be graduated according to the person's income. The maximum levy of $25 was reached at the $3000 income class. This measure aroused the greatest antagonism, was successfully evaded. and in every instance was difficult to collect. The tax was expected to yield $200,000. The actual yield was $85,000. Although the charter was amended to increase the maximum levy to $100 and to allow for payments to be set off against tax payment on land or business assessment, the service tax was dropped for the present year in Edmonton. It is not likely to be employed again, or at least not until the feeling aroused by the original service tax has to some degree died down. Calgary, however, has adopted it, but reports are not yet available as to its success.

To sum up, in the main, the cities of Alberta rely upon the taxation of land, improvements, and upon the business tax. The business tax, rental tax, service and poll tax, all represent efforts to lift part of the burden of taxation from the owner of land, and place it upon the tenant occupier or citizen who is not a land owner. As a matter of actual experience the land owner has found himself unable to shift the tax. One civic official reports "there is a general feeling that the ordinary tenant is getting off lightly, and is enjoying fire and police protection, use of streets, parks, and other advantages, for which at one time only the property owner was paying, the rentals in this city being so moderate

that the property owner gets very little return for his investment, and in some cases nothing at all." In connection with the rental tax it is pointed out that "during the fall and winter months, people flock into the city from the rural districts with their families, and take advantage of the good schools there, for which they pay nothing, and the rental tax is the only means of getting some contribution from such people towards the upkeep of the city institutions. A court of revision is held each year, as in the case of land assessments, when testimony is heard as to houses being assessed too high or too low a rental value, and adjustments made according to the merits of the case. There was considerable objection to this tax when first imposed, but many of the objectors now favor it."

The cities of Alberta are still looking for an additional source of income. To quote the last report of the department of municipal affairs: "It is quite evident, although the cities have been changing their charters under legislative enactment for many years, that they are not yet on a solid and permanent basis for the levy of taxes and the production of the proper income."

The cities feel keenly that the provincial government should forego part of the receipts it receives from the amusement tax and the automobile tax. Further, they have urged strongly their right to employ the income tax, but that depends on whether the provincial government will forego this resource. At the present time this seems to be unlikely, for the province is encountering similar difficulty in supplying itself with adequate revenues. It is possible that it may consent to give a share of the proceeds of the proposed income tax to the cities. This is still, however, on the lap of the gods. The prospects are that the cities will have to seek elsewhere for an adequately widened basis of taxation.

CHAIRMAN WHITE: I believe Mr. J. J. Smith, minister of local affairs for Saskatchewan, is not with us. Will the gentlemen from Saskatchewan advise me whether he has sent a paper to be read?

DELEGATE: Mr. Chairman, Mr. Smith is not at present with us. and as far as I know he has not sent in a paper to be read.

CHAIRMAN WHITE: If one of the gentlemen from Saskatchewan would care to make a few remarks regarding recent tax legislation in Saskatchewan or any other province, I think the meeting would be glad to hear him.

E. G. HINGLEY: Mr. Chairman, I am here as a visitor myself. I have not prepared anything at all to place before the meeting and I did not expect to be called upon, so I think it would be only imposing upon the meeting to give anything at the present time. I am sorry Mr. Smith was detained by ill health. He intended to come, but at the last moment he found he could not get away.

CHAIRMAN WHITE: I will now call upon Mr. L. W. Donley, chairman of the Manitoba tax commission, to read the paper prepared by Professor Clark.

L. W. DONLEY, chairman of the Manitoba tax commission: Mr. Chairman and ladies and gentlemen of the congress: I am here today to read a paper prepared by Professor Clark of Manitoba University, who I regret is unable to be here, on account of this being the opening day of the University, and Professor Clark found that he would have to stay home. However, I take pleasure in presenting the paper that the Professor has prepared in regard to some of the tax reforms which have taken place in the Province of Manitoba.

THE TAX REFORM MOVEMENT IN MANITOBA

ARCH B. CLARK

Professor of Political Economy, University of Manitoba

There has for some years been a pronounced movement of opinion in the urban centers of Manitoba in favor of broadening the basis of municipal taxation, and in particular in favor of the recognition of the income tax principle.

It is true that in the Manitoba cities and towns, where improvements have been taxed on a percentage up to two-thirds of their value, the need of a wider tax base has never been so acutely felt as in the cities of the provinces of the west, where the policy, at one time popular, of exempting improvements and concentrating taxation on the unimproved value of land has greatly aggravated the financial difficulties of the municipalities, arising from the collapse of real estate values.

But even in Manitoba the steady growth in number and expensiveness of the general services for the performance of which the municipal authority is held responsible has undoubtedly furnished a strong argument for recognizing more fully in municipal taxation the principle of faculty or ability to pay.

The efforts of the reformers, moreover, now give fair promise of bearing fruit, albeit of a variety certainly somewhat different from that at first contemplated. The original demand was for some form of municipal taxation of income; the outcome seems likely to be a provincial income tax for provincial revenue purposes. The difference between the early dream and the present promise, though as we shall see greater in form than in substance, is yet, it will be admitted, material. The explanation of this change in the outlook, however, at once becomes apparent if we take a retrospective glance at the historical development of the movement—a glance which at the same time incidentally reveals very marked progress in public appreciation alike of the fundamental principles

of taxation and of the difficulties involved in their practical application.

THE MOVEMENT FOR A CITY INCOME TAX

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It is now almost six years since the Winnipeg city council consequence of persistent complaints of the unequal incidence of the existing business tax, based on rental value, and of the growing burden of the real property tax-instructed the board of valuation and revision to conduct a public inquiry into the methods of assessment and taxation.

The outcome of that inquiry was a report recommending the substitution for the rental value business tax of an income tax" on all incomes originating within the city. The declared object was to broaden the basis of civic revenue and thus bring about a more equitable distribution of the burden of municipal taxation, which was held to be concentrated to a dangerous extent on the owners of real property.

But on further discussion it became clear that, however desirable the end in view, that end was unlikely to be attained by the proposed tax. (1) In the first place, it was objected that as the basis of income under modern conditions is not local, a city income tax standing alone could give little promise of proving in operation either equitable or productive. (2) It was further maintained that in any case the proposed tax, being confined to that part of income arising within the city, was not a true income tax, since it had no necessary relation to ability to pay. (3) Finally, it was pointed out that the introduction of an income tax, based as it must be on ability to pay, would in no way justify the abolition of the municipal business tax, the economic basis of which is benefit received.

ONEROUS AND BENEFICIAL TAXES

That the discussion had been distinctly educative became appar · ent when, early in 1918, the city council by resolution recognized the essential distinction between municipal expenditure on specifically local services on the one hand, and on those of a general, provincial or national character on the other. The fact that no hard-and-fast line of division can be drawn between the two classes of services does not render the distinction less real and important. From expenditure on services preponderantly local in character the owners of real property, and those engaged in business in the locality, may be held to derive, not certainly the exclusive benefit but yet a direct and special benefit more or less commensurate with the tax burden such expenditure entails. Services of this class may properly therefore be provided for by taxes based on benefit received, such as the real property tax and the business tax.

But the same cannot be said of expenditure on the more genera!