Playing Hop-Scotch With Our Taxes

We have only ourselves to blame if we don't vote for economy-pledged candidates for 1925.

J. HERBERT HODGINS December 15 1924

Playing Hop-Scotch With Our Taxes

We have only ourselves to blame if we don't vote for economy-pledged candidates for 1925.

J. HERBERT HODGINS December 15 1924

Playing Hop-Scotch With Our Taxes

We have only ourselves to blame if we don't vote for economy-pledged candidates for 1925.

J. HERBERT HODGINS

JUNIOR, at six years, cannot understand why we have no motor car in our domestic entourage. I satisfied my small son only temporarily when I explained that motor cars “cost a lot of money and daddy can’t afford to buy one.”

“I see,” he nodded, but I sensed that, although for the time being he might be satisfied, some subtle suspicion still stirred within him. Boys are like that!

That night I heard Junior telling his mother what I had said. “Automobiles cost a lot of money,” he repeated, “and daddy says we can’t afford one. But it’s all right, mother,” he confided. “I’ll just ask Santa Claus to bring us one.”

Oh, the super, unquenchable confidence of Youth!

Our Hit-and-Miss Taxation

TF ALL our financial worries could be dis-*■ missed as lightly! Sometimes it appears to the tax-perplexed business man and to the high-cost-of-living-burdened family man that only an all-generous Santa Claus could permanently relieve the insidious situation which a hop-scotch system of taxation has built up across the Dominion.

Taxation is invariably the result of an orgy of expenditure; luxury’s seduction of the public ;purse. There is a strange psychology to most persons; thrifty in their individual homes, where community spending is concerned, they give scant thought to the future.

Who is to blame for the wide extension of municipal services which has penetrated our social fabric?In the main the people; too frequently, unfortunately, because the man on the street thinks the other fellow rather than himself will foot the bill.

Yes, the other fellow—the so-called “rich man”-—pays the bill, immediately and directly, but in the final analysis the cost reverts by a thousand, unseen, indirect ways to the average man’s pocket book.

Because of the ever-changing panorama of taxation, Canadian industry is handicapped in its cost production budget, and as a result not only is industry stopped from forecasting lower prices to the consumer, but it must submissively anticipate possible elimination from world market competition. The warning has come from an outstanding, representative man of Canadian business, John C. Macfarlane, of the Canadian General Electric Co., Toronto. In the course of a penetrating analysis of our revenue-producing legislation, Mr. Macfarlane has made clear the relation of crippling taxation to the cost of living of even the humblest citizen.

With taxation menacing industry, what is to become of our daily jobs?

We have seen where over-extension of community services helps to pile up our costs of running civic machinery. We have seen, too, how by unsound finance—specifically the neglect and the abuse of the sinking fund —municipal administrators have measurably added to civic debt and taxation for the coming generations.

There is yet another economic ill.

It is inefficiency.

Inefficiency is Costly

TNEFFICIENCY in administration is one of the costly ' factors of our national life. Mayor McLagan, of Westmount, Quebec, reminded a recent gathering that “the people should continually exercise their influence upon legislators and upon executive governments to see that all proper economies are observed in taxation and expenditures.”

Unquestionably Canada requires economy in government. And as a prime means to this end there should be a concerted effort toward coordination of all units of our national' existence. The need for it is patent, in the astounding fact that, of recent

years, there have been thirty-three tax enactments within the Dominion. This “inefficiency” alone has increased the cost of doing business. To illustrate—• a manufacturing industry with branches throughout Canada is obliged to be fully conversant with and to

fulfil the requirements of three Dominion tax measures, ten provincial corporation taxation acts and twenty municipal realty and business taxes—thirty-three widely differentiated enactments and all continually in a state of legislative flux.

Mr. McFarlane tells of the necessity of having to file sixty-two different official company returns ranging from Dominion-wide statistics of monthly commercial transactions or annual profits to widely distributed provincial or municipal reports of wages paid to employees and dividends to shareholders. Large corporations, as a result, are compelled to maintain departments

How We’re “Soaked” in Canada

T E. HOWES, speaking at the Citizens’ Research Institute of Canada conven* tion, in Montreal, last September, said: “I believe that if the Canadian income tax rates are left at a higher rate than those in the United States, capital will be driven to the latter country, and that receipts from our income tax will dwindle further. Lower income taxation in Canada might increase rather than diminish the returns.”

The following figures show how Canada’s income tax rates compare with the United States rates since the neighboring republic initiated a reduction. The figures are for a married man with no dependents:

Income

$ 3,000 ................

4.000 ................

5.000 ................

6.000 ................

10,000 ................

20,000 ................

50.000 ................

100,000 ................

1,000,000 ..................... 696,349.50

Canadian Tax . $ 40.00

80.00 126.00

178.50

619.50

2.089.50

9.649.50

32,749.50

U.S. Tax ! 7.50

22.50

37.50

57.50 207.50

1.017.50

6.137.50 22,617.50

429,617.50

In Great Britain, since 1921-22 (the peak year) income tax rate has been cut twenty-five per cent., with only a fifteen per cent, decrease in receipts resulting. Canada has experienced a thirty-one per cent, decrease in federal income tax receipts in the same period—with no decrease in rate

exclusively to meet these Government demands—and departments mean additional “overhead.”

Is this not an undue hardship confronting the industrial tax payers? Is it not, further, a demonstration of wasteful,' haphazard methods of running a country?

At Ottawa, the federal government has erected a machine for the collection of the federal income tax. Is it too much to expect that this machinery be utilized as the tax gatherer for all Canadian purposes? Prof. A. B. Clark, economist of the University of Manitoba, at the recent convention of the Citizens’ Research Institute of Canada in Montreal, made a strong plea “for reconsidering the present allocation of our tax burdens and the need for further co-ordination among our tax gatherers.” Prof. O. D. Skelton emphatically concurred.

“Why is it not possible,” asked Professor Séligman of Columbia University, recently discussing this point, “to secure all the ends of general suitability by having the tax administered by the national government under direct national supervision, and to secure all the ends of adequacy and fiscal necessity by having the proceeds apportioned to a large extent at least to the various states, perhaps to be further apportioned by the states in part or whole to the localities?”

It is no more than big business would do,

Watch the Spendings

TX7E ARE in an era of business to-day which » V requires the most meticulous attention to outlays. Pruning of expenditures is equivalent to minor profits. Canadian bankers, for instance, have been impressing upon their branch managers the vital need of minor profits, as contributory elements of major earnings. If experts appreciate the need of watching expenditures, how much more vital it should be, then, for our civic spenders.

What do we find, for instance, as regards collection of taxes? The Dominion government collects the federal income tax and the business taxes. The provinces of British Columbia, Manitoba and Prince Edward Island separately collect their provincial income taxes. And in the the provinces of Alberta, Saskatchewan, Ontario Nova Scotia and New Brunswick the municipal incomé tax, in force, is collected by the individual municipalities.

In the Province of British Columbia, for example, they have the provincial income tax and they have a very complete collection system, for getting information as to how much a man’s income is and how much he ought to pay on it—and the Dominion government, just a few blocks away, has another organization in thé same city for the same purpose.

In Toronto and indeed in every city in Ontario there is an organization more or less like this. And there is a Dominion income tax organization in the city of Toronto, taxing the same people out of the very same income and collecting information from different sources. Here are the two “overheads” that the same people have to pay for as part of the privilege of paying taxes for two forms of government.

In Ontario there is no graduated scale of rates for the income tax, the general municipal “mill” rate being applied. Out of this situation have arisen some interesting anomalies. Municipalities under legislation are compelled to impose an income tax. Yet around cities, like Toronto, Hamilton or London there are rural communities—where if the income tax is imposed it is spasmodic. The tax rate is usually lower than that of the city, with the result that men live just outside the city limits and by so doing escape income tax, or a large part of it, on account of the difference in rate. It means, often, that where they enforce the tax a man who lives in the city will pay on the basis of thirty mills, whereas the man in the rural district—perhaps not a block Continued on page 59

PlayingHop-Scotch With Our Taxes

Continued from page 23

away—will pay fifteen mills. Clearly the thing is inequitable.

The tax burden upon municipal ratepayers finds another striking reflection in the volume of tax-confiscated lands which have reverted to municipalities— through the tax process. Calgary has acquired nearly five million dollars’ worth of lands. This is mainly due to the pre-war land speculation, but has been aggravated by the tax burden. Calgary has taken over some forty-two sections of land, which means forty-two square miles, an area greater than the entire city of Toronto.

The Winnipeg tax rate in 1917 was seventeen mills. It is 28 mills for 1924, with an additional six mills for water district levy on the lands. The tax on land, therefore, has more than doubled in seven years, although it is now slightly lower than in 1922 when it reached 30 mills plus 7.17 mills water district levy. At the 1924 Winnipeg tax sale held last June, to meet the city’s claims for tax arrears and costs amounting to $659,000, property of an assessed value of $4,000,000 was offered for sale and was taken over by the sinking fund trustees, which was not an entirely healthy process.

Accumulating Tax Arrears

AMONG the municipalities whose high tax rate has had, as its natural concomitant, large tax arrears may be cited the following (based upon data of the Citizens’ Research Institute of Canada):

Per capita Per capita Per capita tax rate tax arrears tax sale lands held by city BRITISH COLUMBIA — North Vancouver $43.54 $19.36 $ 64.39 Port Coquitlam . 40.69 17.80 162.72 Prince Rupert. .. 50 .22 30.96 9.50 Victoria........ 51.88 28.14 53 66 ALBERTA — Red Deer...... 50.46 57.61 54.96 Calgary........ 53 .88 22.21 68.63 Westaskewin 56.90 26.50 10.00 Edmonton...... 54.35 20.95 131.35 Lethbridge..... 51.61 20.33 49.79 Medicine Hat. .. 43.39 40.92 81 .39 SASKATCHEWAN — Estevan ........ 38.33 17.85 88.41 Melville........ 36.43 16.42 32.48 North Battleford 48.71 53.06 80.73 Prince Albert . .. 44.49 20.47 83.82 Swift Current. . . 44.92 4 .37 228 89

Weyburn . .. 59.72 20.19 94.26 Y orkton 43.54 32 .40 33.16 Moose Jaw . 54.14 40.90 38.57 Saskatoon .. 49 .34 19.95 44.42 MANITOBA — Portage La Prairie 30.64 23.18 Selkirk......... 29.29 22.94 38.28 Transeona...... 41.94 56.50 117.36 St. Boniface .... 72.18 65.60 68.64 Brandon....... 42.21 34.06 15.07 ONTARIOFort William ... 51.60 17.03 Niagara Falls . . 38.92 12.09 Owen Sound . . . 30.34 24.20 Port Arthur . . . 59.92 57.09 Sault Ste. Marie 30.93 15.19 Toronto....... 48.82 12.64 Windsor....... 49 .25 12.91 York Township 32.46 22.16 Amherstburg ... 47 .71 10 .48 Burlington..... 40.26 7.30 Cochrane...... 27.76 15.75 Ford City..... 49.64 17.53 Fort Francis .. . 36.41 21.38 QUEBECLachine....... 35 10 3.97 20 .97 Outremont..... 26.88 2 51 17.11 Three Rivers . . 28.13 16.50 NEW BRUNSWICKMoncton...... 29.48 8 90 13.39 NOVA SCOTIA — Glace Bay...... 38.95 16.66 50 00

The vast accumulation of tax arrears is a significant barometer. It warns of the need for a searching examination of every community balance sheet.

When you and I reach an impasse in our domestic finances, when we can no longer make our income and our outgo properly balance, one thing remains to be done. We must “pull in our horns.”

Why should not communities do likewise?

The solution is up to you and to me. The year-end brings us, as taxpayers, to the time when we may publicly register our opinion. We should definitely align ourselves with those candidates for municipal office who pledge themselves to municipal thrift for 1925. Let us “cut out” folderols, when we can not afford them.

As I see it, most of our communities are like small boys. They want what they want, when they want it! Which is by no means good, even for small boys.

Soundly financed, soundly administered communities will surely bring a contented people and a sounder basis for our national life.

Those Municipal Income Taxes

A RESIDENT of the small but picturesque town of Renfrew, Ontario, paying income taxes, last year, was deprived of at least 8% per cent, of his income. The federal government demanded 4 per cent, of his normal income: the municipality 4.45 -per cent. He was lucky if he was compelled to pay no further direct taxes. .... .

Under Ontario’s legislation the municipalities of the province impose a tax upon income, according to their individual “mill rate.” Renfrew presents a significant illustration of the possible fluctuations of the tax rate.

The following figures will give an idea of the revenues which municipalities are securing from the municipal income tax, which it must be remembered is paid on top of the federal impost:

Toronto ...............$2,281,112 Hamilton .............. 297,167 Ottawa ................ 344,183 London ................ 174,024 Windsor ............... 53,500 Brantford ............. 57,677 Kitchener ............. 31,162 Kingston .............. 43,597 Peterborough .......... 29,150 Sault Ste. Marie ....... 28,799 St. Catharines ......... 51,018 Fort William .......... 26,347 Guelph ................ 17,791 Stratford .............. 17,744 St. Thomas ............ 15,110

Port Arthur ........... 20,907 Niagara Falls ......... 16,347 Sarnia ................ 22,357 Chatham .............. 10,046 Galt .................. 31,158 Belleville .............. 15,743 Owen Sound ........... 17,628 Woodstock ............ 7,049 Brockville ............. 32,038 Welland ............... 8,526 Renfrew............... 4,369 St. John, N.B.......... 369,265 Fredericton ............ 60,655 Moncton .............. 123,203